Written statement, defences, set-off and counter-claim (Order VIII)

1. Written statement

The Code does not define it. A written statement is the defendant’s pleading in answer to the plaint, in which he admits or denies the allegations of fact and sets out any new facts and defences on which he relies. It is a “pleading” under Order VI rule 1, and Order VI applies to it.

2. Time for filing: Order VIII rule 1

• Ordinary suits. Within thirty days from service of summons. If not filed, the court may allow it on another day, for reasons recorded, but not later than ninety days from service.
• Directory, not mandatory. In Kailash v. Nanhku, 2005 INSC 186, (2005) 4 SCC 480, the Court held that the ninety-day limit is directory: it is a rule of procedure, carries no penal consequence, and the court may in exceptional cases, for reasons recorded, extend the time. Extension is the exception, not the rule. This was followed in Salem Advocate Bar Association v. Union of India, 2005 INSC 324, (2005) 6 SCC 344.
• Commercial suits. The Commercial Courts Act substitutes the proviso: the written statement may be filed with leave, on costs, but not later than one hundred and twenty days from service, after which the defendant forfeits the right and the court shall not take it on record. Order VIII rule 10 adds that no court shall extend this time. In SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd., 2019 INSC 187, (2019) 12 SCC 210, the Court held the 120-day limit mandatory and distinguished Kailash on that ground.
• Consequence of not filing. Under rule 10 the court shall pronounce judgment against the party, or make such order as it thinks fit. Under rule 5(2) the court may pronounce judgment on the facts in the plaint, though it may require them to be proved.

3. Rules of the written statement

• Documents relied on are listed and produced with the written statement; a document not produced cannot be received in evidence without leave (rule 1A).
• New facts must be specially pleaded (rule 2): all matters showing that the suit is not maintainable, or that the transaction is void or voidable, and all grounds which would take the plaintiff by surprise or raise issues not arising from the plaint, for example fraud, limitation, release, payment, performance or illegality.
• Denial must be specific (rule 3): a general denial is not enough; each allegation of fact not admitted must be dealt with, except damages. In commercial suits rule 3A requires the defendant to say which allegations he denies, which he cannot admit or deny, and which he admits, with reasons and his own version.
• No evasive denial (rule 4): if the plaint says the defendant received ₹1,000, it is not enough to deny receiving “that particular amount”; he must deny receiving it or any part of it, or say how much he received.
• Effect of not denying (rule 5(1)): every allegation of fact not denied specifically or by necessary implication, or stated to be not admitted, is taken to be admitted, except against a person under disability. The court may still require proof.
• Separate grounds of defence or set-off are stated separately (rule 7); a ground arising after institution may be raised later (rule 8).
• Subsequent pleadings: no pleading after the written statement other than by way of defence to a set-off or counter-claim, except with leave (rule 9).

4. Set-off: rule 6

Set-off is a cross-claim for money which the defendant sets against the plaintiff’s claim, so that the two are extinguished to the extent of the smaller. Rule 6(1) allows it where:

• the suit is for recovery of money;
• the sum claimed is an ascertained sum, legally recoverable by the defendant from the plaintiff (not time-barred);
• it does not exceed the pecuniary limits of the court;
• both parties fill the same character as they fill in the plaintiff’s suit; and
• it is presented at the first hearing, not afterwards unless permitted.

The written statement then has the same effect as a plaint in a cross-suit, and the court pronounces a final judgment on both (rule 6(2)). The illustrations are worth memorising: illustration (c) (an unascertained claim for damages cannot be set off), (d) (a definite judgment-debt of ₹1,000 may be set off against a bill for ₹500), and (f) and (g) (a debt due from or to one of several co-plaintiffs or co-defendants alone cannot be set off).

Equitable set-off. Outside rule 6, the court may allow an unascertained sum to be set off where the cross-demands arise out of the same transaction or are so connected that it would be inequitable to make the defendant pay first and sue later. In Laxmidas Dahyabhai Kabarwala v. Nanabhai Chunilal Kabarwala, 1963 INSC 74, AIR 1964 SC 11, the Court recognised both legal and equitable set-off. Equitable set-off is a matter of discretion and is not available as of right.

5. Counter-claim: rules 6A to 6G

Inserted in 1976. A defendant may, in addition to set-off, set up by way of counter-claim any right or claim in respect of a cause of action accruing to him against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time for delivering it has expired, whether in the nature of damages or not, within the pecuniary limits of the court (rule 6A(1)).

• It has the effect of a cross-suit, and the court pronounces final judgment on both claims in the same suit (rule 6A(2)).
• The plaintiff may file a written statement in answer (rule 6A(3)).
• It is treated as a plaint and governed by the rules for plaints, including court-fee (rule 6A(4)).
• It must be stated specifically as a counter-claim (rule 6B).
• The plaintiff may apply before issues are settled on it to have it excluded and tried as an independent suit (rule 6C).
• If the plaintiff’s suit is stayed, discontinued or dismissed, the counter-claim may still proceed (rule 6D).
• If the plaintiff fails to reply, the court may pronounce judgment against him on it (rule 6E); where a balance is found due, judgment may be given to either party (rule 6F); the rules on written statements apply to the reply (rule 6G).

Scope and timing from the cases.

• A counter-claim need not be for money. In Jag Mohan Chawla v. Dera Radha Swami Satsang, 1996 INSC 641, (1996) 4 SCC 699, the Court held that in a suit for injunction the defendant may counter-claim for an injunction; rule 6A extends to any claim, not merely money claims.
• In Mahendra Kumar v. State of Madhya Pradesh, 1987 INSC 146, (1987) 3 SCC 265, the Court held that rule 6A does not bar a counter-claim filed after the written statement, provided the cause of action arose before the written statement was filed; the only other limit is limitation.
• In Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri, 2019 INSC 1266, (2020) 2 SCC 394, a three-Judge Bench held that a counter-claim may be filed after the written statement, but this is not an absolute right; the court has discretion, and ordinarily it should not be allowed after issues are framed and evidence has commenced.

6. Set-off and counter-claim distinguished

• Set-off is a shield, a defence that reduces or extinguishes the claim; a counter-claim is a sword, an independent cross-action.
• Set-off applies only in a suit for money and only for an ascertained sum (legal set-off); a counter-claim may be for any relief, including damages, injunction or possession.
• Legal set-off needs the parties to fill the same character; a counter-claim needs a cause of action against the plaintiff.
• The claim in set-off must be legally recoverable when the suit is filed; a counter-claim may rest on a cause of action arising after the suit, up to the time for the defence.
• If the suit is dismissed or withdrawn, a set-off falls with it; a counter-claim survives (rule 6D).
• The defendant may get a decree for the excess in both, but a counter-claim is treated as a plaint for all purposes, including court-fee.

7. Problem

A sues B for ₹5 lakh, the price of goods supplied. B says (i) A owes him ₹1 lakh under a decree of 2024, and (ii) the goods were defective and he has lost ₹3 lakh in business. How should B plead?

Issue. Which of B’s claims is a set-off and which a counter-claim.

Law. Order VIII rule 6 (legal set-off: ascertained, legally recoverable, same character, money suit); equitable set-off (Laxmidas) for unascertained cross-claims from the same transaction; rules 6A to 6G for counter-claims.

Application. Claim (i) is an ascertained sum under a decree, legally recoverable, between the same parties in the same character, and within the court’s limits: a legal set-off, as illustration (d) shows. Claim (ii) is unascertained damages, so it cannot be a legal set-off (illustration (c)). Since it arises from the very contract sued on, B may plead it as an equitable set-off in reduction of the price, or, to recover any excess, as a counter-claim under rule 6A, paying court-fee on it.

Conclusion. B should plead the decree debt as a set-off and the damages as a counter-claim, stated specifically as such (rule 6B), in his written statement filed within thirty days of service. If A later withdraws his suit, the counter-claim survives under rule 6D; the set-off does not.

How this is examined

As essays: “What is counter claim? Distinguish between counter claim and set-off” (January 2026); “What is written statement? When set-off and counter claim be pleaded?” (June 2025). As a short note: “Set-off and counter claim” (January 2025). The comparison list in section 6 is what earns the last four marks of the essay.