Set-Off

Code of Civil Procedure, 1908 — Order VIII Rule 6

A defendant's counterclaim against the plaintiff for a debt or damages, which the court may allow to reduce or extinguish the plaintiff's claim. In DRT proceedings, borrowers sometimes plead set-off of claims (e.g., for overcharged interest, wrongful actions) against the bank's recovery claim. Unlike a counter-claim, a set-off must be an existing liquidated claim.

In practice, set-off is a defensive tool a borrower raises inside the recovery proceeding rather than a separate suit. When a bank files its Original Application before the DRT, a borrower who has its own ascertained money claim against the bank — say, interest charged in excess of the sanctioned rate, or wrongly debited charges — can plead that amount as a legal set-off under Order VIII Rule 6 CPC to shrink or wipe out the bank's claim. The discipline that trips most borrowers is that a true set-off must be liquidated, meaning a fixed, already-quantified sum; an unquantified grievance is not a set-off and at best becomes a counter-claim requiring its own court fee and proof. Counsel therefore quantify the figure precisely, attach the supporting statement of account, and raise it at the written-statement stage rather than belatedly. Get this wrong and the tribunal simply ignores the plea and decrees the full debt. Well-advised parties confirm the claim is liquidated before pleading it.