Plea Of Adjustment Should Be Raised Before Institution Of Suit: Kerala High Court Reiterates

The Kerala High Court has reiterated that a plea of adjustment can be pressed into service only if raised before the institution of the suit and not afterwards, unlike a plea for set-off.

Justice A. Badharudeen also noted that leave for filing additional written statements is usually not granted by courts if they are filed after a long delay.

"The legal position regarding adjustment is no more res integra on the point that a plea of adjustment by payment is definitely and essentially a different plea and can be pressed into service only if the same was raised before the institution of the suit and not afterwards."

The Judge added that to determine whether a plea raised in defence is a plea of set-off or of payment by adjustment it has to be ascertained as to whether a separate action could be maintained by the defendant on the basis of his claim.

"If he could institute a separate suit for realisation of the amount due to him, it is a case of set-off. If the adjustment was made prior to the filing of the suit by the plaintiff and a plea is taken to that effect, it would be a plea of adjustment by payment."

The respondent herein had approached an Additional Sub Court claiming an amount from the petitioner herein in 2011. The petitioner initially filed a written statement in the suit and then filed an additional written statement ten years later, putting up a plea of `adjustment' of the suit amount towards the damages sustained by him. 

The trial court, however, dismissed the application. Challenging this decision, the petitioner moved the High Court through Advocate Millu Dandapani.

Advocate K.V. Pavithran appearing for the respondent argued that there is no pleading in the original written statement regarding the adjustment and the amount which he wanted to adjust is yet to be decided by the trial court. Further, unilateral adjustment is not permitted in law and he could not raise a totally new case by way of adjustment through an additional written statement.

The Court noted that to raise a plea of adjustment, the permission of the Court contemplated under Order 8 Rule 9 is mandatory. After examining precedents on this issue, it was noted that ordinarily at a much-belated stage, leave for filing additional written statements is usually not granted.

It was also highlighted that when set-off is raised in the written statement, the defendant has to pay a court fee but no court fee is to be paid for a plea of `adjustment'. That apart, the Judge observed that no pecuniary liability arises till the Court determines that the party complaining of the breach is entitled to damages.

"The Court in the first place must decide that the other side is liable and then, it should proceed to assess and quantify the liability. Till the said determination, there is no liability at all upon the other side and no `adjustment' in regard to the damages which is not quantified is liable to sustain"

Therefore, it was found that the plea of `adjustment' canvassed by filing an additional written statement in this case appears to be untenable. The petition was accordingly dismissed. 

Case Title: Southern Dredging Co (P) Ltd v. K. Muhammed Haji 

Citation: 2022 LiveLaw (Ker) 303

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