JUDGMENT : I.P. MUKERJI, J. In or around 1998 Kolkata Port Trust decided to build a fully mechanised multipurpose berth (No. 4A) at Haldia Dock Complex. It did not propose to build and operate it itself, but wanted to entrust it with a contractor. It invited tenders to build, manage and maintain it. On 17th September, 1999 Haldia Dock Complex, on behalf of the Kolkata Port Trust, issued a letter of intent to International Seaports (India) Pvt. Ltd. to construct and maintain a multipurpose Berth 4A in Haldia. On 28th January, 2002 International Seaports (India) Pvt. Limited and the respondent entered into an agreement. International Seaports would be responsible for berth construction and operation at Haldia Dock Complex. It would handle the cargo of coking coal of the respondent at the port. This would involve loading and unloading the cargo, transferring it to the stockyard, removing it from the stockyard and loading it on to wagons /rakes. On 14th May, 2002, a formal agreement was drawn up between International Seaports (India) Pvt. Limited and the Board of Trustees for the Port of Kolkata. On 17th June, 2002 this organisation assigned with the consent of Kolkata Port Trust, their rights and obligations under the said agreement dated 17th September, 1999 read with the agreement dated 14th May, 2002 to International Seaports (Haldia) Private Limited the petitioner. By an agreement dated 6th August, 2003 the rights and liabilities of International Seaports (India) Pvt. Ltd. in their agreement with the respondent dated 28th January, 2002 was also assigned in favour of the petitioner. On 7th August, 2003 the respondent accepted it. The respondent was importing coking coal in bulk at Haldia Dock Complex. Inside the dock area, there was a railway network to carry the cargo after it was unloaded. From the shore the cargo would be carried to the stockyard. Thereafter it would be loaded onto railway wagons rakes and despatched to its destination. Certain terms and conditions of the agreement dated 28th January, 2002 are very important. The same are set out below: 4.11. Despatch Instructions---SAIL shall furnish 7 days prior to the commencement of the month, rake movement plan. The movement plan shall not exceed six rakes in two days subject to a maximum of 4 rakes on any one day. 4.12. Wagon Indents-SAIL shall prepare the wagon indents/forwarding notes and hand it over to ISPL for submission to Railways. Despatch Instructions---SAIL shall furnish 7 days prior to the commencement of the month, rake movement plan. The movement plan shall not exceed six rakes in two days subject to a maximum of 4 rakes on any one day. 4.12. Wagon Indents-SAIL shall prepare the wagon indents/forwarding notes and hand it over to ISPL for submission to Railways. However the wagon procurement would be the responsibility of SAIL. 4.13. Freight Payment: Arrangements for payment of railway freight in respect of despatches to the respective steel plants on freight pre-paid basis shall be carried out by SAIL. ISPL shall not be responsible for any delay on this account. 5.14. Loading of wagons: Subject to clauses 4.11 and 4.12 ISPL shall load 6 rakes every two days and maximum 4 rakes per day. ISPL shall ensure that wagons are cleaned of all foreign materials before commencement of loading of the wagons. ISPL shall complete the loading of wagons within the free time permissible and as per the carrying capacity of the wagons. ISPL shall ensure that all wagon doors are closed and secured with wooden plugs appropriately. ISPL shall ensure trimming of the wagons and also lime spraying before the wagons are drawn out. ISPL shall be responsible for any demurrage due to delay in loading the wagons for reasons directly attributable to ISPL. 5.16 Weighment of Rakes----ISPL shall ensure that every wagon is weighed and weighment particulars are recorded and furnished to SAIL. In the unlikely event that the in motion weighment system is not functioning, volumetric measurement shall be carried out by an independent surveyor to establish the weight of the cargo. This volumetric measurement shall be subject to a maximum of 5% of the total quantity in a quarter i.e. in motion weigh bridge down time will not exceed 5% of the volume handled beyond which receipts shall be jointly surveyed at plant site to arrive at the quantity. 7. Payment of Bills: ISPL shall use a billing cycle of 16th of the month to 15th of subsequent month. This bill shall be paid within 7 days from the date of submission. Bills shall be prepared and submitted for a quantity despatched during the billing cycle at the rate as per clause 4.1 (for bill purpose the R.R. Weight will be deemed as the quantity despatched). This bill shall be paid within 7 days from the date of submission. Bills shall be prepared and submitted for a quantity despatched during the billing cycle at the rate as per clause 4.1 (for bill purpose the R.R. Weight will be deemed as the quantity despatched). ISPL is entitled for an advance up to 30% of the rate on the discharge quantity to be paid after discharge of each vessel, which shall be adjusted against their final bills. Such advances will be accounted and adjusted vessel wise. 8. Dispute Resolution: Any dispute or difference whatsoever arising between the parties out of or relating to the construction, meaning, scope, operation or effect of this contract or the validity or the breach thereof shall be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties.” A very interesting problem has been raised in this writ. By their letter dated 4th November, 2015 the respondent claimed a demurrage amount of Rs. 32,61,894 from the petitioner for delayed berthing of vessels for their delay in issuing the “No Objection Certificate”. The letter attached a chart showing the calculations. It relates to six vessels. The dates when each vessel should have berthed and actually berthed are shown. A demurrage rate per day is quoted and the demurrage calculated on the number of days delay of each vessel. On 2nd December, 2015 the respondent wrote to the petitioner that the wagons at berth (No. 4A) were not been loaded to capacity. Clause 5.14 of the agreement was pointed out. Under this clause the petitioner had to load the wagons according to their carrying capacity. It also specified that they would be responsible for any “demurrage” due to delay in loading the wagons “for reasons directly attributable to ISPL”. The letter further added that a claim on account of dead freight was contemplated and that the petitioner should pay the amount. On 19th January, 2016 the respondent wrote to the petitioner that during December, 2015 a total of 64 rakes had been despatched to different steel plants of the respondent. It made a claim of Rs. 1,41,32,621.81p on account of dead freight for December, 2015 according to a chart attached to this letter, showing the calculation of this amount. It is indeed a very detailed chart. It made a claim of Rs. 1,41,32,621.81p on account of dead freight for December, 2015 according to a chart attached to this letter, showing the calculation of this amount. It is indeed a very detailed chart. It is prepared date wise for December, 2015. For every date, it shows various data like, quantity of cargo loaded on to a wagon, net weight of the cargo, the date of the railway receipt and the weight of the cargo mentioned therein, the extent of under loading based on the admitted carrying capacity of a wagon and wasted freight or dead freight calculated per mt. There is nothing to show that any one of the railway receipts relied upon was disputed or the information contained therein wrong. The claim is computed in this way. The net weight loaded in subtracted from the maximum loading capacity of the wagon. The amount of under loading in mt. for one wagon is obtained. Then that under loaded quantity is multiplied by the freight per mt. to get the dead freight claim for a wagon on a particular day. In the letter of 19th January, 2016 the respondent asked the petitioner to refund the above bill amount within three days of receipt of the letter. This goes to show that upto 19th January, 2016 the petitioner had received payment of their bills. What has brought the petitioner to this court is an email sent on 25th January, 2016 by one Bharat Kumar of the respondent threatening to deduct “under loading charges from their existing pending bills”. Fine points of law are raised. The basic content of the submission of Mr. Bachawat, learned senior Counsel for the petitioner was that the claim of the respondent for dead freight was in the nature of damages. A claim for damages by itself does not indicate any pecuniary liability of the person against whom that claim is made. Damage is the compensation which a party gets upon its assessment by the court. A pecuniary liability in damages does not exist unless it is assessed by the Court, he argued Learned Counsel also submitted that there was no clause in the agreement empowering the respondent to make the deduction. Damage is the compensation which a party gets upon its assessment by the court. A pecuniary liability in damages does not exist unless it is assessed by the Court, he argued Learned Counsel also submitted that there was no clause in the agreement empowering the respondent to make the deduction. He relied on Union of India V. Raman Iron Foundry (Civil Appeals No. 1224 and 1225 of 1973 ) and Union of India v. Air Foam Industries (P) Ltd. ( Civil Appeals No. 1330, 1224 and 1225 of 1973) a two judges bench decision and reported in AIR 1974 SC 1265 , [ (1974) 2 SCC 231 .] In this case the Court was interpreting Clause-18 of the contract between the parties. This clause is set out herein below: “ 18. RECOVERY OF SUMS DUE: Whenever any claim for the payment of a sum of money arises out of or under the contract against the contractor, the purchaser shall be entitled to recover such sum by appropriating in whole or in part, the security, if any, deposited by the contractor, and for the purpose aforesaid, shall be entitled to sell and/or realise securities forming the whole or part of any such security deposit. In the event of the security being insufficient, the balance and if no security has been taken from the contractor, the entire sum recoverable shall be recovered by appropriating any sum then due or which at any time thereafter may become due to the contractor under the contract or any other contract with the purchaser or the government or any person contracting through the Secretary, if such sum even be not sufficient to cover the full amount recoverable the contractor shall on demand pay to the purchaser the balance remaining due.” In that context the Supreme Court remarked as follows: “It, therefore makes no difference in the present case that the claim of the appellant is for liquidated damages. It stands on the same footing as a claim for unliquidated damages. Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. It approved the following dictum of the Bombay High Court in Iron and Hardware (India) Co. v. Firm Shamlal and Bros. reported in AIR 1954 Bom. It approved the following dictum of the Bombay High Court in Iron and Hardware (India) Co. v. Firm Shamlal and Bros. reported in AIR 1954 Bom. 423 : “In my opinion it would not be true to say that a person who commits a breach of the contract incurs any pecuniary liability, nor would it be true to say that the other party to the contract who complains of the breach has any amount due to him from the other party. As already stated, the only right which he has is the right to go to a Court of law and recover damages. Now, damages are the compensation which a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant.” The Supreme Court went on to add: “A claim for damages for breach of contract is, therefore, not a claim for a sum presently due and payable and the purchaser is not entitled, in exercise of the right conferred upon it under Clause-18, to recover the amount of such claim by appropriating other sums due to the contractor”. Learned Counsel also cited S.K. Roy Chowdhury v. The Collector of Calcutta & Ors. reported in AIR 1985 (1) CLJ 332 . In it Mr. Justice Chittatosh Mookerjee of our Court said. “Therefore, when a person complained of a breach, his remedy was to file a suit for recovery damages. Learned Counsel also cited S.K. Roy Chowdhury v. The Collector of Calcutta & Ors. reported in AIR 1985 (1) CLJ 332 . In it Mr. Justice Chittatosh Mookerjee of our Court said. “Therefore, when a person complained of a breach, his remedy was to file a suit for recovery damages. The Division Bench in M/s Marwar Tent Factory v. Union of India ( Supra) held that there is no word in clause (xviii) conferring upon the purchaser to adjudicate its claim for damages and to convert the amount claim into a binding debt. They refused to read a power to adjudicate implicit in the clause because they would amount to constituting the purchaser as a judge in its own cause.” …………………………………………….. Liability for damages and power to fix the extent of the damages were entirely distinct things. Therefore, the Government was incompetent to fix the liability of the petitioner. It was further held that no man could be a judge in his own cause and in case of a dispute about a contract a person cannot be both party and a judge.” Mr. P.K. Ghosh, learned senior Advocate for the respondent tried to show that there was nothing unliquidated about this claim of the respondent. Its derivation was shown in a detailed chart. There could be no dispute with regard to the data contained in the chart. Therefore, this court should not wait for a formal quantification of this claim and allow deduction from the bills of the petitioner. He also submitted that a claim in damages against a debtor may be withheld by a creditor, while paying the former’s bills. Mr. P.K. Ghosh cited M/s H.M. Kamaluddin Ansari & Co. V. Union of India and others reported AIR 1984 SC 29 . It is a three judges’ bench decision of the Supreme Court departing to some extent from Raman Iron foundries case. It authorises a creditor to withhold the debt including damages, due to the debtor, from the bills of the transaction in question as well as other transactions claim in damages. He also relied upon Wehner and Others v. Dene Steam Shipping Company and Others reported in AIR 1905 King’s Bench Division pg. 92. Learned Counsel submitted that his client had a lien in respect of his amount due to the petitioner from the respondent. He also relied upon Wehner and Others v. Dene Steam Shipping Company and Others reported in AIR 1905 King’s Bench Division pg. 92. Learned Counsel submitted that his client had a lien in respect of his amount due to the petitioner from the respondent. MY CONCLUSION:- The dispute in this case relates to the areas of set off, counterclaim and abatement in common law. In Halsbury’s Laws of England, fifth edition 2009 volume 11 at para 634 it is stated: 634. Scope and significance of set-off. This part of the title is concerned with the situation where A has a claim against B and B has a cross-claim against A. It deals with the following situations:- (1) B’s right, where his cross-claim consists of a moneyclaim, to deduct from the amount paid to A a sum representing his cross-claim; and (2) B’s right to raise legitimately and successfully sucha cross-claim in a claim brought by A, so as to reduce or extinguish A’s claim and to establish any right of B to an excess over A’s claim. “Whilst much of the jurisprudence applicable to this part of the title appears to bear a procedural hallmark, the doctrines of abatement and set-off represent, to some extent, rules of substantive law: the substantial advantage which B derives from the relevant doctrines is that he may defer meeting A’s claim, wholly or in part, until a court has adjudicated on his own cross-claim. Typically, the doctrines of set-off, counterclaim and abatement are concerned with deductions made by B. if these are permissible and B has a triable cross- claim, then B is entitled to withhold payment, wholly or proportionately, until his cross-claim has been resolved by the Court. If the deductions are impermissible, B may at least have to meet A’s claim at once, the trial of his cross-claim being deferred to a later hearing; at worst, B may have placed himself in breach of a continuing contract thereby entitling A to repudiate, or may be met by an applicable time-bar in his later action.” 639. Meaning of ‘set-off ’. Meaning of ‘set-off ’. Where A has a claim for a sum of money against B has a cross-claim for a sum of money against A such that B is, to the extent of his cross-claim, entitled to be absolved from payment of A’s claim, and to plead his cross-claim as a defence to an action by A for the enforcement of his claim, then B is said to have a right of set-off against A to the extent of his cross-claim. 641. Distinction between set-off and counterclaim. Set-off is distinguishable from counterclaim both in its application and in its effect. In its application set-off is limited to money claims, whereas counterclaim is not so limited. Any claim in respect of which the defendant could bring an independent claim against the claimant may be enforced by counterclaim subject only to the limitation that it must be such as can conveniently be tried with the claimant’s claim. Thus not only claims for money, but also other claims such as a claim for an injunction or for specific performance or for a declaration may be the subject of a counterclaim. In its effect set-off is essentially different from counterclaim in that set-off is a ground of defence, a shield and not a sword, which, if established, affords an answer to the claimant’s claim wholly or pro tanto, whereas counterclaim as such affords no defence to the claimant’s claim, but is a weapon of offence which enables a defendant to enforce a claim against the claimant as effectually as in an independent action. Where facts pleaded by way of counterclaim constitute a set-off they may be additionally pleaded as such. 653. Nature of the right. The right conferred by statutes of setoff was a right to set off mutual debts arising from transactions of a different nature which were due and payable and could be ascertained with certainty at the time of pleading. Thus no legal set-off could exist against a claim which sounded in unliquidated or uncertain damages, nor could a claim which sounded in such damages be set off at law against a claimant’s claim. The fact that a claim was framed in damages precluded the raising of a set-off at law, notwithstanding that the claim might have been differently framed in a way which would have permitted such a set-off. The fact that a claim was framed in damages precluded the raising of a set-off at law, notwithstanding that the claim might have been differently framed in a way which would have permitted such a set-off. Where a claim for a liquidated debt was joined by a claimant with a claim for damages, set-off at law might only be pleaded in defence to the former claim. Set-off at law operates as a defence.” Each of these concepts has shades of difference with the others. When A and B have cross claims so that if B succeeds he entitled to be absolved from payment of A’s claim then B is said to have a right of set off against ‘A’ to the extent of his cross claim. Set off is only limited to a liquidated debt and does not apply to damages. A counterclaim includes all species of claims, liquidated, unliquidated and others. As would appear from the above passage from Halsbury’s Laws of England, a creditor can withhold the claim of his debtor, asserting his counterclaim. The exercise of the right of set off and counterclaim is subject to adjudication in a proper forum. Thus, in common law, a liquidated debt or claim or a quantified amount or a claim in damages can easily be set up as a defence against a cross claim. When set off is claimed by a debtor, he actually deducts that amount from the debt of the creditor. In exercise of his counterclaim, the debtor can only withhold payment. Exercise of the right of set off and counterclaim has to be ultimately established in a court of law. The Supreme Court in the above two decisions has laid down the principle that a claim in damages becomes a debt, when it is quantified in a court of law. In both the cases the Court was dealing with the interpretation of Clause-18 in a government contract which empowered the government to deduct from the claim of the contractor any sum which was due and payable by the contractor to it. In M/s H.M. Kamaluddin Ansari & Co. V. Union of India and others reported AIR 1984 SC 29 the issue was whether the government could deduct its claim in damages from the sums payable to the contractor in other contracts. The answer of the Court was that the government was entitled to withhold payment. In M/s H.M. Kamaluddin Ansari & Co. V. Union of India and others reported AIR 1984 SC 29 the issue was whether the government could deduct its claim in damages from the sums payable to the contractor in other contracts. The answer of the Court was that the government was entitled to withhold payment. I think in this case the problem is not with the description of the claim but with the nature thereof. The petitioner might assert that the respondent’s claim sounds in damages. The respondent may say that their claim is an ascertained sum of money based on an unimpeachable debt. They might also contend that the claim is liquidated or that it is a liquidated debt. The question is: When can a contracting party deduct his dues from the money in his hands belonging to the other contracting party? As would appear from Halsbury’s statement of the laws of England, in common law, a creditor has the right to appropriate any money of the debtor lying in his hand “in set off” of his liquidated claim. He can withhold payment alleging a counter claim. An unliquidated claim is not treated as a debt of the debtor. It cannot normally be appropriated as the Supreme Court has said in the case of Union of India V. Raman Iron Foundry reported in (1974) 2 SCC 231 . A unliquidated claim has to be liquidated or ascertained in a court of law before it could be called a debt. Before that ascertainment it cannot be adjusted against any money of the debtor in the hand of the creditor. A claim in damages falls in this category. The same Court in M/s H.M. Kamaluddin Ansari & Co. V. Union of India and others reported AIR 1984 SC 29 has affirmed this principle and added that a claim in damages may be asserted by withholding payment of the bills of the debtor. The principles to my mind are these. Instead of being technical about the meaning and extent of various terminologies like “liquidated claim” “unliquidated claim” “ascertained sum” “debt” etc one must look at the claim of the creditor. Say, for example, a claim may be on account of price of goods sold and delivered about which there is no dispute, admittedly unpaid. This claim without hesitation, falls in the category of a liquidated claim. Say, for example, a claim may be on account of price of goods sold and delivered about which there is no dispute, admittedly unpaid. This claim without hesitation, falls in the category of a liquidated claim. So does the claim on account of unpaid rent. There is yet a different category of claims. For example, the terms and conditions of carriage provide that if a plane ticket is cancelled at different time periods before the departure of the plane, different amounts would be deducted from the amount of fare, as cancellation fee. Now, suppose a traveller cancelled his tickets 15 hours before the departure of the flight. It is very easy for the airline authority to calculate a cancellation fee. Yet, when the airline tries to deduct that amount from any money payable to the traveller by the airline, the traveller resists the deduction on the ground that the claim is unliquidated or in the nature of damages. Sometimes, the dividing line between liquidated claim and unliquidated claim is very thin. Sometimes, a claim which seems to be unliquidated can be liquidated or ascertained with exactitude without adjudication. The claim of the respondent in respect of “ dead freight” appears to be of that nature. Date wise, the respondent has tabulated the net weight of goods loaded on to the wagons on the basis of railway receipts which are not disputed, the extent of under loading in metric tons, based on specific maximum carrying capacity and net weight of cargo actually loaded, based on the information in the railway receipts and the dead freight calculated on the basis of freight for metric tons to the extent of under loading. Not one of this data has even been disputed by the petitioner. Therefore, although the claim is, hyper technically, a claim sounding in damages, in reality it is as much a liquidated sum as price for goods sold and delivered or rent receivable. Therefore, there is nothing wrong if the respondent deducts this amount of dead freight Rs. 1,41,32,621,81 from the unpaid bills of the petitioner lodged with them, as claimed in the respondent’s letters/emails dated 2nd December, 2015, 19th January, 2016 and 25th January, 2016. However, the respondent will furnish an account of such deduction to the petitioner. However, the claim for demurrage for alleged delay in berthing the arriving vessels cannot be placed in the same category. However, the respondent will furnish an account of such deduction to the petitioner. However, the claim for demurrage for alleged delay in berthing the arriving vessels cannot be placed in the same category. It is certainly not a liquidated debt or claim, the alleged delay in berthing the vessel may be disputed. The demurrage rate may not be accepted by the petitioner. Demurrage has to be established by detailed evidence. On the basis of the above law, even this amount, in the nature of a counterclaim in damages may be withheld. Hence, the respondent will be entitled to withhold the bills of the petitioner to the extent of their claim as mentioned in their letter dated 4th November, 2015, but should keep the same in a separate interest bearing account. The law is clear that any set off claimed or counterclaim made is subject to adjudication in a court of law. This application is accordingly dismissed. Certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.