Facts of the Case
- Ram and Shyam jointly sold wheat to Sohan and Mohan for Rs. 10,000.
- Sohan individually sold cloth to Shyam for Rs. 12,000.
- Sohan filed a civil suit against Shyam to recover the cloth price.
- In response, Shyam claimed a right of set-off for Rs. 10,000 — the value of wheat he and Ram sold earlier.
- The transactions are separate and involve different parties in a combined and individual capacity.
Issues in the Case
- Can Shyam claim a set-off against Sohan in a transaction that originally involved Ram as a co-seller?
- Does Shyam’s right to set-off extend to a composite contract made in joint ownership?
- Is there mutuality of parties and claims between the suit and the counterclaim?
- Does Section 6 of the Civil Procedure Code, 1908 (Order VIII, Rule 6) apply in this context?
Principles Associated with It
- Set-off is permissible only when the claims are legally recoverable and arise between the same parties in the same capacity.
- Under Order VIII Rule 6 of the CPC, set-off must be:
- For an ascertained sum of money
- Legally recoverable
- Arising out of a debt between the plaintiff and defendant in the same legal capacity
- Joint sellers cannot individually enforce or resist a claim related to the joint sale unless all joint claimants are included.
- Mutuality of claims and identities of parties in both transactions is essential.
Judgment
- Shyam cannot succeed in claiming a set-off for the wheat price.
- The wheat transaction involved Ram and Shyam jointly, while the cloth transaction was exclusively between Sohan and Shyam.
- There is no complete mutuality between the parties in both transactions.
- The court will not entertain a set-off claim where the parties are not identical and the claim is not of the same nature or capacity.
