MUHAMMAD FAHEEM WALL, J.- The petitioner/plaintiff, GI-IC International Pvt. Ltd; has invoked the constitutional jurisdiction of this Court under Article 199 of the Constitution Of the Islamic Republic of Pakistan, 1973 ("Congtitution"), to call into question the Order dated 16.11.2024 passed by the learned Additional District Judge-VI, Peshawar ("revisional court"), whereby the revision petition filed by the respondent/defendant was accepted and the Order dated 25.01.2024 passed by the learned Civil Judge-X, Peshawar ("trial court") was set aside.
2. Factual matrix of the case are that the petitioner instituted a civil suit before the learned trial court against the respondent, Mr. Tariq-- Sadeeq, seeking a decree for declaration and recovery of an amount of Rs. 24,000,000/-(Rupees Twenty-Four Million Only), alleged to have been advanced to the respondent as a loan from time to time through various cheques issued from the petitioner company's account. The stated purpose of the loan was the construction of a residential house in Hayatabad and for clearance of certain debts. The petitioner further claimed Rs. 1,000,000/- (Rupees One Million Only) as damages on account of financial loss allegedly suffered due to non- repayment of the said amount. Upon service of summons, the respondent entered appearance and filed a written statement wherein he raised a plea of set-off, alleging that the petitioner was instead liable to pay him a sum of Rs. 95,905,889/-. Consequently, the matter was fixed for arguments on the maintainability of the suit in light of the pecuniary jurisdiction of the trial court.
3. After hearing the parties, the learned trial court, vide order dated 25.01.2024, held the suit to be maintainable, observing that pecuniary jurisdiction is to be determined based on the valuation of the claim made by the plaintiff alone. Aggrieved by this finding, the respondent preferred a civil revision before the learned revisional court. The learned revisional court, through the impugned order dated 16.11.2024, accepted the revision and set aside the order of the trial court. It held that the combined value of the petitioner's claim and the respondent's plea of set-off exceeded the pecuniary jurisdiction of the Civil Judge (trial court). Accordingly, the revisional court directed the trial court to return the plaint to the petitioner/plaintiff for presentation before the proper forum.
4. Arguments heard and record perused.
5. The key question that arises for determination in the instant petition is: whether the plea of set- off as raised by the respondent in his written statement, where the claimed amount exceeds the pecuniary jurisdiction of the trial court, would warrant the return of the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908?
6. To fully comprehend the legal position, it is essential to examine the true scope of the concept of "set-off" as provided under Order VIII Rule 6 of the Code of Civil Procedure, 1908 ("CPC"). It is also necessary to consider the legislative intent and purpose behind the introduction of set-off within the scheme of the CPC, with reference to its legislative history. Equally important is the need to distinguish between the concepts of "set-off" and "counter-claim" in light of the settled jurisprudence. Finally, for a proper adjudication of the present case, it is imperative to evaluate the plea of set-off in relation to the pecuniary limits of the trial court and its potential impact on the maintainability of the plaint.
7. For the first time, the concept of "set-off" appeared in sections 121 and 195 of the Code of Civil Procedure, 1859 (Act No. VIII of 1859) also known as the First Code. The relevant provisions of section 121 and 195 are reproduced below for reference: Section 121: If in a suit for debt the defendant desires to set-off against the claim of the plaintiff the amount of any debt due to him from the plaintiff, he shall tender a written statement containing the particulars of his demand, and the Court shall thereupon enquire into the same. Provided that if the sum claimed exceed the amount cognizable by the Court, the defendant shall not be allowed to set-off the same unless he abandon the same.
Section 195: If the defendant shall have been allowed the set-off any demand against the claim of the plaintiff, the decree shall state what amount is due to the plaintiff what amount (if any) is due to the defendant, and shall be for the recovery of any sum which shall appear to be due to either party.
The decree of the Court with respect to any sum awarded to the defendant shall have the same effect and be subject to the same rules as if such sum had been claimed by the defendant in a separate suit against the plaintiff.
Due to various shortcomings in the existing law, coupled with changing circumstances and evolving needs, the Second Code was introduced in the year 1877, known as the Code of Civil Procedure, 1877 (Act N. X of 1877). The provisions relating to set-off and the effect of decree where set-off was claimed were re-introduced with modifications of substantial nature in Sections 111 and 216 of the Code, which read as follow: Section 111: Particulars of set-off to be given in written statement. If in a suit for the recovery of money the defendant claims to set-off against the of money legally recoverable by him from the plaintiff, and if in such claim of the defendant against the plaintiff both parties fill the same character as they fill in the plaintiff's suit, the defendant may, at the first hearing of the suit, but not afterwards, unless permitted by the Court, tender a written statement containing the particulars of the debt sought to be set-off.
Inquiry. The Court shall thereupon inquire into the same, and if it find that the case fulfils the requirements of the former part of this section, and that the amount claimed to be set-off does not exceed the pecuniary limits of its jurisdiction, the Court shall set off the one debt against the other.
Effect of set-off. Such set-off shall have the same effect as a plaint in a cross-suit, so as to enable the Court to pronounce a final judgment in the same suit, both on the original and on the cross- claim; but it shall not affect the lien upon the amount decreed of any pleader in respect of the costs payable to him under the decree.
Section 216: If the defendant has set-off the amount of a debt against the claim of the plaintiff, and such claim has been allowed, the decree shall state what amount is due to the plaintiff what amount (if any) is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party.
The decree of the Court with respect to any sum awarded to the defendant shall have the same effect and be subject to the same rules in respect of appeal or otherwise, as if such sum had been claimed by the defendant in a separate suit against the plaintiff.
The transition from the Code of Civil Procedure, 1859 to that of 1877 marked more than a mere textual revision, it reflected a maturing legal process. While the 1859 Code provided a basic procedural framework for set-off, it lacked clarity on its legal effect and scope. The 1877 Code, on the other hand, brought a structural refinement: it expressly recognized set-off as having the effect of a cross-suit, allowing courts to decide both claims together in a single judgment. Most notably, it introduced that any amount awarded to the defendant through set-off would be treated "as if claimed in a separate suit", and would attract the same consequences "in respect of appeal or otherwise". This meant that any amount awarded to the defendant through set-off could be appealed, enforced, or challenged as if it had been granted in a standalone action. This addition gave the set-off decree a fuller legal life opening the door to appeals, enforcement, and all other procedural remedies, much like an original claim. In essence, the 1877 Code elevated set-off from a procedural convenience to a substantive right with independent procedural consequences.
Afterwards, in the year 1982, once again the Code was revised and third Code known as the Code of Civil Procedure, 1882 (Act No. XIV of 1882), i.e., the enactment that preceeded the current Code of 1908, was enacted. The provisions relating to the filing of written statements and claims for set-off were incorporated under Part I, Chapters VIII and XVII of the said Code. The relevant provision concerning the claim of set-off and effect of a decree where a set-off was claimed read as follows: S. 111: If in a suit for recovery of money the defendant claims to set-off against the plaintiff's demand any ascertained sum of money legally recoverable by him from the plaintiff, and if in such claim of the defendant against the plaintiff both parties fill the same character as they fill in the plaintiff's suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, tender a written statement containing the particulars of the debt sought to be set-off.
The Court shall thereupon inquire into the same, and if it finds that the case fulfills the requirements of the former part of this section, and that the amount claimed to be set-off does not exceed the pecuniary limits of its jurisdiction, the Court shall set off the one debt against the other.
Such set-off shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original and on the cross claim; but it shall not effect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.
S. 216: If the defendant has set-off the amount of a debt against the claim of the plaintiff, and such set off has been allowed, the decree shall state what amount is due to the plaintiff and what amount (if any) is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party.
The decree of the Court, with respect to any sum awarded to the defendant, shall have the same effect, and be subject, to the same rules in respect of appeal or otherwise, as if such sum had been claimed by the defendant in a separate suit against the plaintiff.
8. A special committee was appointed by the Council of the Governor General of India to consider amendments to the Civil Procedure Code. The committee submitted its report, which was subsequently accepted and published in the Gazette of India (Part V) in September 1907 ("Gazette"). As a result, the Code of Civil Procedure, 1908 (Act V of 1908), commonly referred to as the "CPC," was enacted to consolidate and amend the laws relating to the procedure of civil courts.
The New Code received the assent of the Governor General of India on 21st March, 1908. With the enactment of the New Code, amended provisions, namely Order VIII Rule 6 and Order XX Rule 19, relating to claims of set-off and the formulation of decrees where set-off is allowed, were introduced in substitution of Sections 111 and 216 of the third Code, respectively. The Statement of Objects and Reasons, published on page 184 of the Gazette, outlines the rationale for enacting these provisions and other related matters in their present form: We have given power to provide by Rules for Counter-claims, Third Party Procedure, Summary Procedure, in suits for debt or liquidated demands, as, for instance, rent, or any other definite sum payable under a contract or Originating summons. We are of the opinions that these forums of proceedings may usefully be adopted in some, areas but that this is a matter which should be left for each High Court to decide.
Similarly, as regard enacting Order XX Rule 19, the statement of Object and Reason at page 195 of the Gazette states: The Committee have introduced an amendment to give effect to the view that appeals from decrees relating to set off should lie to the Courts to which appeal in respect of the original claim would lie.
After the enactment of the new Code in 1908, the provisions governing the claim of set-off were introduced under Order VIII Rule 6, which reads as follows: "6. Particulars of set-off to be given in written statement.-(1) Where in a suit for the recovery of money the defendant claims to set-off the plaintiff's demand, any ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the Court, and both parties fill the same character as they fill in the plaintiff's suit, the defendant may, at the first hearing of the suit, but not afterwards unless permitted by the Court, present a written statement containing the particulars of the debt sought to be et-off.
(2) Effect of set-off. The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect both of the original claim and of the setoff, but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree.
(3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off.
Likewise, the provisions relating to the decree when a set-off is allowed were enacted under Order XX Rule 19, which are reproduced below for ready reference: 19, (1) Where the defendant has been allowed a setoff against the claim of the plaintiff, the decree shall state what amount is due to the plaintiff and what amount is due to the defendant, and shall be for the recovery of any sum which appears to be due to either party.
(2) Any decree passed in a suit in which a set-off is claimed shall be subject to the same provisions in respect of appeal to which it would have been subject if no set-off had been claimed.
(3) The provisions of this rule shall apply whether the set-off is admissible under rule 6 of Order VIII or otherwise.
9. These new provisions, while retaining the foundational principle from the second and third Codes that a set-off would operate as a cross-suit, introduced greater procedural clarity and structural refinement. A notable distinction lay in the codification of the effect of set-off and its procedural handling through separate and specific rules under Order VIII Rule 6 and Order XX Rule 19, which were missing in the earlier scheme. The legislature's intent in the 1908 Code was not merely to carry forward the concept but to formalize its application within a uniform procedural framework, clarifying when and how set-off could be claimed, how it would impact the decree, and ensuring consistency in appellate treatment. This transition from a broad declarative provision to a rule- based structure reflects the legislature's objective of procedural economy, avoidance of fragmented litigation, and uniformity in adjudication.
10. Besides Rule 6, other relevant provisions governing the plea of set-off are Rules 7 and 9 of Order VIII of the Code of Civil Procedure. Rule 7 mandates that where the defendant relies upon several distinct grounds of defence or set-off founded upon separate and distinct facts, each must be stated separately and distinctly. On the other hand, Rule 9 regulates the stage and mariner in which additional pleadings, including a delayed claim of set-off, may be introduced. It expressly bars the presentation of any pleading subsequent to the written statement, other than by way of defence to a set-off, without the leave of the Court. However, it allows the Court, at any stage, to direct a party to file a written or additional written statement, thereby vesting the Court with discretion to permit belated claims, including set-off, on such terms as it may deem appropriate.
11. A threadbare reading of the above provisions, when read conjointly, outline what is legally recognized as a "legal set-off." This position has been amply elaborated by the Honorable Supreme Court in the case of Syed Niamat Ali and 4 others v. Dewan Jairamdass and another (PLD 1983 SC 5) as below: "The above provisions of law permit a defendant to raise in his defence what is called a legal set- off. The essential conditions of legal set-off are as follows:
(i) The suit must be one for the recovery of money.
(ii) As regards the amount claimed to be set-off--
(a) it must be an ascertained sum of money;
(b) such sum must be legally recoverable;
(c) it must be recoverable by defendant or by all the defendants if more than one;
(d) it must be recoverable by the defendant from the plaintiff or all the plaintiffs if more than one;
(e) it must not exceed the pecuniary limits of the jurisdiction of the court in which the suit is brought; and
(f) both parties must fill, in the defendants claim to set-off, the same character as they fill in the plaintiffs' suit."
12. The essential conditions of a legal set-off, as formulated by the Apex Court in the above referred case, require that the suit must be for recovery of money, and the amount sought to be set off must be an ascertained, legally recoverable sum, falling within the court's pecuniary jurisdiction.
Moreover, both parties must occupy the same legal character in both the original suit and the set- off claim. This position was subsequently re-affirmed by the Apex Court in Civil Aviation Authority, Quaid-E-Azam, International Airport, Karachi v. japak International (Pvt.) Limited, Lahore (2009 SCMR 666).
13. It would not be inappropriate to mention here that beside legal set-off, the superior courts have also recognized the doctrine of "equitable set-off" within the contemplation of sub-rule (3) of Rule 19, Order XX, CPC, which states: "The provisions of this rule shall apply whether the set-off is admissible under rule 6 of Order VIII or otherwise." In Syed Naimat Ali (supra), the Supreme Court explained that while legal set-off is a statutory defense restricted to specific and ascertained sums under Order VIII Rule 6 of the CPC, the doctrine of equitable set-off extends beyond those limits. It allows a defendant to raise a plea of set-off even for un-ascertained sums, provided there is a close and direct connection between the plaintiff's claim and the defendant's counterclaim. This typically arises when both claims stem from the same transaction or are so interlinked in their nature and circumstances that it would be unjust to require the defendant to file a separate suit.
Although equitable set-off does not strictly fall under Order VIII Rule 6, courts have recognized its validity, emphasizing that the procedural provisions of the Code do not extinguish substantive rights. Order XX Rule 19 serves as a statutory acknowledgment of this equitable remedy by permitting relief on such pleas.
14. Equitable set-off has remained a focal point of judicial reasoning since the inception of the first Code. Rooted in English Common Law, it has consistently been treated as distinct from legal set- off, being primarily founded on the principles of equity, justice, and good conscience. When the first Code of 1859 was introduced, the statutory backing for equitable set-off was missing. However, the doctrine attained judicial recognition for the first time in a case titled Clark v. Ruthnavaloo Chetti [2 Mad. H.C. 296 (1865)], wherein it was held that "the right of set-off will be found to exist not only in cases of mutual debts and credits, but also where the cross-demands arise out of one and the same transaction, or are so connected in their nature and circumstances as to make it inequitable that the plaintiff should recover and the defendant be driven to a cross-suit". Against this backdrop, the Second Code of 1877 expanded the language of the First Code of 1859 by replacing the phrase "be subject to the same rules" with a more comprehensive expression "be subject to the same rules in respect of appeal or otherwise." The phrase was retained in the Third Code of 1882, but was eventually substituted in Order XX, Rule 19(3) of the Code of 1908 with the expression, "The provisions of this rule shall apply whether the set-off is admissible under rule 6 of Order VIII or otherwise." The expression "otherwise", as introduced in the Code of 1908, serves to expand the ambit of set-off beyond the strict contours of legal set-off, thereby encompassing claims falling within the domain of equitable set-off as well. In one of the case before the High Court of Calcutta titled as Gopal Chunder Surma v. G. Chisholm [(1889) ILR 16 Cal 711], the Court while referring to earlier authorities Clark (supra) and Bhagbat Panda v Bamdeb Panda (I.L.R. 11 Cal 557), observed that even where certain claims do not fall within the strict scope of Section 111 [Third Code], they may still be entertained if they are so closely connected with the plaintiff's claim that it would be unjust to force the defendant to pursue them through a separate suit. The Court recognized such cross-demands as equitable set-off, especially where both claims arise from the same or interrelated transactions and involve ongoing obligations, such as between a servant and his master.
15. The Supreme Court of India has comprehensively dealt with the doctrine of equitable set-off, especially in delineating its distinction from legal set-off. In Raja Bhupendra Narain Singha Bahadur v. Maharaj Bahadur Singh and Ors (AIR 1952 SC 782), the Court held that 'a plea in the nature of equitable set-off is not available when the cross-demands do not arise out of the same transaction and not connected in its nature and circumstances'. Similarly, in Lakshmichand and Bakhand v. State of Andhra Pradesh [(1987) 1 SCC 19], the Court observed that 'when a claim is founded on the doctrine of equitable set-off all cross-demands are to arise out of the same transaction or the demands are so connected in the nature and circumstances that they can be looked upon as a part of one transaction'. The above findings have been subsequently affirmed in Union of India v. Karam Chand Thapar and Bros. (Coal Sales) Ltd. and Ors. [(2004) 3 SCC 504] & Iitendra Kumar Khan and Ors. v. The Peerless General Finance and Investment Company Limited and Ors. [(2013) 8 SCC 769].
16. A survey of the above case law, both from our own and the Indian jurisdiction, reveals that the key distinction between legal and equitable set-off lies in their scope and statutory foundation.
Legal set-off, governed by Order VIII Rule 6 CPC, applies only to ascertained sums that are legally recoverable and fall squarely within the jurisdictional limits of the court. Equitable set-off, on the other hand, is a judicially recognized remedy grounded in fairness and is not confined to fixed or ascertained amounts; it is allowed where there exists a close connection between the plaintiff's claim and the defendant's cross-demand. Despite these differences, a common requirement for both forms of set-off is that the claim must fall within the pecuniary jurisdiction of the court seized of the matter.
17. As regards counter-claim, a concept that has not yet attained statutory or consistent judicial recognition in our jurisprudence, the Apex Court in both Syed Naimat Ali (supra) and Civil Aviation Authority (supra) drew a clear distinction between set-off and counter-claim. It was held that a set-off is essentially a defensive mechanism, intended to reduce or neutralize the plaintiff's demand by balancing it against a debt owed to the defendant. In contrast, a counterclaim is offensive in nature, treated like a cross-suit brought through the written statement, allowing the defendant to assert an independent cause of action. However, the right to make a counterclaim is not inherent and must fall within the ambit of Order VIII Rule 6 or qualify as an equitable set-off, as the Code does not otherwise confer an unrestricted right to plead counterclaims.
18. Having said the. above, it is evident that set-off is a statutory remedy provided under Order VIII Rule 6 CPC, which must relate to an ascertained, legally recoverable sum in a suit for recovery of money, and must fall within the pecuniary jurisdiction of the court, with both parties filling the same legal character. Equitable set-off, by contrast, is a judicially recognized exception rooted in principles of fairness and is permissible where the cross-demands arise from the same transaction or are so interrelated that it would be unjust to compel the defendant to file a separate suit. Any counter-claim, other than those permitted under Order VIII Rule 6 or qualifying as an equitable set- off, is not a recognized form of defence under the current procedural framework.
19. Now turning to the most critical issue in the present case, where a defendant raises a plea of set-off that exceeds the pecuniary jurisdiction of the trial court, and such plea does not qualify either as a legal set-off under Order VIII Rule 6 CPC or as an equitable set-off, the question arises qua adoption of the appropriate judicial course in such a situation. Should the plaint be returned under Order VII Rule 10 CPC solely because of the defendant's excessive setoff claim, thereby depriving the plaintiff of his chosen forum and potentially foreclosing his right to appeal before the appropriate appellate forum? Or, conversely, would it be more just and legally sound to relegate the defendant to pursue his claim through a separate, independent suit, without disturbing the maintainability of the plaintiff's suit? This issue strikes at the heart of procedural fairness, and its resolution must be guided by settled legal principles rather than the magnitude of a defensive plea raised without a statutory or equitable basis.
20. To settle the controversy, it is pertinent to mention that the pecuniary jurisdiction of civil courts across the Province of Khyber Pakhtunkhwa was re-introduced through the Khyber Pakhtunkhwa Code of Civil Procedure (Amendment) Act, 2020 (Act No. XLIX of 2020). Section 6 of CPC provides: "6. Pecuniary jurisdiction.---Save in so far as is otherwise expressly provided, all civil suits shall be filed in the following manner, namely:
(a) where the amount or value of the subject matter of the suit is below rupees fifty million, the suit shall be filed in the Court of Civil Judge, as may be prescribed by the High Court; and
(b) where the amount or value of the subject matter of the suit is rupees fifty million or above, the suit shall be filed in the Court of District Judge, as may be prescribed by the High Court."
(17).....
The above provisions restrict the pecuniary jurisdiction of the Court of Civil Judge to claims not exceeding fifty million rupees (Rs. 50 million). Where the amount or value of the subject matter exceeds this threshold, the suit is to be instituted before the Court of District Judge. There exists no third tier of original civil jurisdiction beyond these two forums.
21. Upon examining the merits of the present case, it appears that the petitioner/plaintiff instituted a suit for declaration and recovery of Rs. 24,000,000/- (Rupees Twenty-Four Million Only), along with an additional claim of Rs. 1,000,000/- (Rupees One Million Only) as damages, before the Court of Civil Judge. The suit, in terms of its pecuniary value, was well within the jurisdiction of the trial court. However, the situation took a significant turn when the respondent/defendant, in his written statement, raised a plea of set-off amounting to Rs. 95,905,889/-, which clearly exceeded the pecuniary jurisdiction of the Court of Civil Judge. At this stage, the circumstances required that the suit should have been treated within the parameters of Order VIII, Rule 6 CPC, however, the learned trial court, misperceived the correct law and declared the suit to be maintainable on the ground that pecuniary jurisdiction is to be determined upon the valuation of the plaint.
22. As a general rule, the pecuniary jurisdiction of a civil court is determined based upon the value of the suit as stated in the plaint. However, a plea of set-off under Order VIII, Rule 6 CPC constitutes an exception to this rule. This is because Rule 6 employs the phrase "not exceeding the pecuniary limits of the jurisdiction of the Court," thereby leaving no room for assuming jurisdiction beyond the prescribed limits. A plain reading of this phrase reveals that any jurisdiction exceeding the pecuniary limits of the Court is clearly ousted. It is trite law that a provision ousting the jurisdiction of a civil court is to be construed strictly. Reliance is placed on Shah Zaman Khan v. Government Of Khyber Pakhtunkhwa through Chief Secretary. Peshawar (PLD 2023 SC 340). Secondly, sub- Rule (2) of Rule 6 uses the phrase "written statement shall have the same effect as a plaint in a cross-suit," while sub-Rule (3) employs the phrase "rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off." Both these provisions, for all legal and practical purposes, treat the written statement as a plaint in a cross-suit and the replication or answer to the set-off as a written statement. Therefore, the reasoning that the valuation mentioned in the plaint alone determines pecuniary jurisdiction does not hold much ground. Since a claim of set-off constitutes an exception to the general rule, the court, while entertaining such a plea, must ensure that it does not exceed its pecuniary limits. Based on the above observations, where there is an express ouster clause couched in the language of Rule 6 limiting the jurisdiction of a court to certain pecuniary limits, the findings recorded by the learned trial court are against the spirit of the provisions of Order VIII, Rule 6 CPC, as it lacked jurisdiction to entertain a plea of set-off exceeding its pecuniary limits.
23. Notably, the situation took a further turn when the respondent/defendant, feeling aggrieved by the findings of the learned trial court, filed a Civil Revision before the learned revisional court. This presented yet another opportunity for the error to be rectified. However, the revisional court, through oversight in determining the true scope and extent of Order VIII Rule 6, reversed the findings of the trial court and directed the plaint to be returned under Order VII Rule 10 of CPC. This course of action effectively penalized the petitioner/plaintiff despite instituting the suit before a forum explicitly provided by law, who cannot be expected to anticipate the defendant's plea of set- off which exceeded the pecuniary jurisdiction of the trial court before filing his claim.
24. Thus, both the lower fora incorrectly applied the law to the facts of the case: one by entertaining a plea of set-off that exceeded its pecuniary jurisdiction; and the other by returning the plaint to the petitioner, despite having no fault on his part. As discussed earlier, a plea of set-off, whether legal or equitable cannot exceed the pecuniary limits of the court's jurisdiction, but in the same vein, neither could a plaint be returned for the reason that a written statement filed thereto carry excessive plea of setoff. Admittedly, the respondent's plea of set-off falls under neither category, as it fails to satisfy a fundamental condition laid down in Order VIII, Rule 6 CPC, namely, that the amount claimed must fall within the court's pecuniary jurisdiction. In these peculiar circumstances, the most appropriate course of action for the revisional court was to relegate the respondent/defendant to file a separate suit in respect of his claim for set-off. To this end, reference may be made to a judgment of the pre-partition era rendered by the High Court of Nagpur in Girdharilal Chaturbhuj Surajmal Chauthmal Agarwal (AIR 1940 Nag 177), wherein it was held:
5. [...1 The applicant, as has been said, now claims a legal, not an equitable, set-off, but assuming he did claim the latter or that the claim is really of an equitable nature then it cannot be claimed as a matter of right, and the Court has discretion to say, as it did in this case, that it should not be allowed where a protracted enquiry is needed for the determination of the sum due: see Dobson & Barlow v. Bengal Spinning & Weaving Co. (1897) 21 Born 126.
6. I therefore conclude that the lower Court was perfectly right in relegating the defendant to another suit on these pleas of set-off. It is to be remarked that so far as the written statement pleads an agreement to hold the pro-note satisfied by reason of these transactions, which agreement is said to have been entered into before Kalyanji Bhai, arbitrator, to that extent it can be put into issue in the present suit whether or not the claim on the pro-note has been so satisfied.
This is conceded by learned Counsel for the non-applicant. The application as it stands fails and is dismissed with costs. Counsel's fees Rs. 30.
25. In view of the foregoing, by allowing this petition, the order and judgment of the learned revisional court is set aside. So far as the order of the trial court is concerned, the same is also set aside to the extent that the claim of set-off made by the respondent in his written statement, beyond the pecuniary limits of the Civil Court, is not maintainable. The learned Civil Judge is directed to resume proceedings of the case from the stage at which they were discontinued.
Needless to mention that the respondent/defendant shall be at liberty to pursue his claim, so set up in his written statement, by filing a separate suit before the court having pecuniary jurisdiction in the matter, whereafter he may also seek consolidation of both the suits by making an application before the proper forum, if so advised. Parties are left to bear their own costs.