Chamber Notes
Set-Off and Counter-Claim: The Suit Filed Inside the Defence
16 September 2026 · 17 min read
A written statement is filed as one document, and it is usually drafted as one. The denials are taken paragraph by paragraph against the plaint, the additional pleadings follow, and where the defendant has a claim of his own it is added at the end — a few paragraphs under a heading, in the same register as everything above them, ending with a sentence asking that the amount be adjusted or awarded. The document goes in over a single signature and a single verification.
Order VIII does not treat that as one document. Rules 3, 4 and 5 govern an instrument of subtraction: what the defence denies, and what it fails to deny, decides which of the plaintiff's allegations survive into the trial as things that must be proved. Rules 6 and 6A govern something else entirely. They allow the defendant to put a claim of his own before the same Court in the same proceeding, and the Code says in terms what that claim is to be treated as. Rule 6(2) gives the set-off "the same effect as a plaint in a cross-suit". Rule 6A(4) is blunter: "The counter-claim shall be treated as a plaint and governed by the rules applicable to plaints."
Those two sentences are the whole subject. Everything that follows is a consequence of them.
What Rule 6 allows
Rule 6(1) is narrow, and every word of the narrowing does work:
"Where in a suit for the 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, 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, presents a written statement containing the particulars of the debt sought to be set-off."
Five conditions and a time. The suit must be one for the recovery of money. The sum claimed must be ascertained — not a claim for damages, and not a sum that requires an enquiry to fix. It must be legally recoverable, which imports limitation and enforceability. It must not exceed the pecuniary limits of the Court's jurisdiction. And both parties must fill the same character in the set-off as they fill in the suit.
The illustrations appended to the rule are almost entirely about that last condition, and they are worth reading as a set rather than one at a time. In illustration (a), C is sued by D for a legacy and cannot set off against it the sum C had paid as surety for D, because neither party fills the same character with respect to the legacy as with respect to that payment. In illustration (b), C, who has taken out administration to a dead debtor's estate and sold part of the effects to the creditor B, sues B for the purchase-money; B cannot set off the debt, because C sues as vendor and it was the estate C represents that owed it. Illustrations (f) and (g) make the point about joinder from both ends: where A and B sue C jointly, C cannot set off a debt due from A alone; and where A sues B and C jointly, B cannot set off a debt due to him alone from A.
Two of the illustrations are about the requirement that the sum be ascertained, and read together they show where the line falls. In illustration (c), a defendant sued on a bill of exchange cannot set off a claim that the plaintiff wrongfully neglected to insure his goods, because "the amount not being ascertained cannot be set-off" — it is the defendant's own claim that has to be a fixed sum. In illustration (e), the plaintiff's claim is itself unliquidated — compensation for trespass — and the set-off is nevertheless allowed, because the defendant holds a promissory note for a definite amount and, as soon as the plaintiff recovers, both sums are definite pecuniary demands. The condition attaches to what the defendant brings, not to what he is answering.
Rule 6(2) supplies the effect — the written statement has 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 set-off, saving a pleader's lien on the amount decreed for his costs. Rule 6(3) then provides that the rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off.
What Rule 6A permits
Rules 6A to 6G were inserted by the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976), with effect from 1 February 1977. Rule 6A(1) is drafted against Rule 6 rather than in place of it:
"A defendant in a suit may, in addition to his right of pleading a set-off under rule 6, set up, by way of counter-claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counter-claim is in the nature of a claim for damages or not."
A proviso adds that the counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.
Set the two rules beside each other and every restriction in Rule 6 has been dropped except the pecuniary one. The suit need not be for money. The claim need not be ascertained — the sub-rule says so expressly, "whether such counter-claim is in the nature of a claim for damages or not". Nothing is said about the parties filling the same character. What is put in place of all that is a single restriction of a different kind, and it is about time: the cause of action must have accrued before the defendant delivered his defence, or before the time limited for delivering it expired.
That restriction is on the accrual of the cause of action. It is not, on the face of the sub-rule, a restriction on when the counter-claim may be filed, and the distinction between the two readings was what a three-Judge Bench of the Supreme Court was asked to resolve in Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri, decided on 19 November 2019 and reported at (2020) 2 SCC 394. The reference came from a two-Judge Bench by an order of 10 September 2018, and the question was whether a counter-claim could be filed after the written statement had been filed and issues framed.
The leading opinion, delivered by Ramana J., summed up its findings in paragraph 20: Order VIII Rule 6A "does not put an embargo on filing the counter-claim after filing the written statement, rather the restriction is only with respect to the accrual of the cause of action". That is not a licence. The same paragraph holds that this "does not give absolute right to the defendant to file the counter-claim with substantive delay, even if the limitation period prescribed has not elapsed", and sets an outer limit — the Court's discretion is "pegged till the issues are framed" — with a list of factors expressly described as illustrative and not exhaustive: the period of delay, the prescribed limitation period for the cause of action pleaded, the reason for the delay, the defendant's assertion of his right, the similarity of cause of action between the suit and the counter-claim, the cost of fresh litigation, injustice and abuse of process, prejudice to the opposite party, the facts and circumstances of each case, and "in any case, not after framing of the issues".
Shantanagoudar J. wrote separately, agreeing that a Court may permit the filing of a counter-claim after the written statement and up to the framing of issues, but adding that in exceptional circumstances the filing may be permitted up to the commencement of recording of the evidence on behalf of the plaintiff. A defendant relying on that wider position is relying on a separate opinion, not on the proposition the reference was answered with, and the difference is worth stating on the application rather than leaving to be discovered at the hearing.
What Rule 6A(4) costs
The clause that changes the drafting is the shortest one. Rule 6A(4) provides that the counter-claim shall be treated as a plaint and governed by the rules applicable to plaints. Order VII Rule 1 then supplies what a plaint must contain, and the items on that list are not items that appear anywhere else in a written statement:
The facts constituting the cause of action and when it arose — clause (e). A defence is not required to plead a cause of action at all, and a set of paragraphs explaining why the plaintiff's version is wrong does not become one by being labelled a counter-claim.
The facts showing that the Court has jurisdiction — clause (f). The defendant has appeared in a Court chosen by someone else. Nothing in his defence has so far required him to assert that it is the right Court for his own claim, and the proviso to Rule 6A(1) has already made the pecuniary limit his problem.
The relief claimed — clause (g). Stated as a prayer, not as a submission.
And a statement of the value of the subject-matter for the purposes of jurisdiction and of court-fees, so far as the case admits — clause (i). That is where the fee consequence sits. It does not arise from any rule in Order VIII; it arises because Rule 6A(4) sends the document to the rules governing plaints, and those rules require it to be valued.
Rule 6B then adds a requirement of form that has no equivalent for a set-off: "Where any defendant seeks to rely upon any ground as supporting a right of counter-claim, he shall, in his written statement, state specifically that he does so by way of counter-claim." The claim has to be labelled as one, in the pleading, by the person making it.
The date of institution
The most consequential difference between the two instruments is not in the Code at all. Section 3(2)(b) of the Limitation Act, 1963 provides that any claim by way of a set off or a counter claim shall be treated as a separate suit and shall be deemed to have been instituted — "(i) in the case of a set off, on the same date as the suit in which the set off is pleaded; (ii) in the case of a counter claim, on the date on which the counter claim is made in court".
Both are separate suits for limitation. They are not instituted on the same day. A set-off relates back to the institution of the plaintiff's suit; a counter-claim does not, and is tested against the date it is actually made in court. A claim that was within time when the plaintiff sued may be out of time by the date the written statement is filed, and the fact that Rule 6A(1) permits a cause of action accruing after the filing of the suit says nothing about whether the claim is still alive when it is made.
This is also the point at which the Kalra findings have to be read carefully. The Court held that the restriction in Rule 6A(1) is on accrual rather than on filing, and that delay is a matter for discretion. Neither proposition extends limitation. Paragraph 20 says so directly — substantive delay is not cured "even if the limitation period prescribed has not elapsed" — which presupposes that the period runs on its own terms and has to be checked separately.
What the Code does for the counter-claim and does not say for the set-off
Four short rules follow, and the asymmetries in them are the clearest statement of how the Code understands the difference between the two documents.
Rule 6C gives the plaintiff a way out. Where a defendant sets up a counter-claim and the plaintiff contends that the claim ought not to be disposed of by way of counter-claim but in an independent suit, the plaintiff may apply for an order that it be excluded, and the Court may make such order as it thinks fit. The application has to be made "at any time before issues are settled in relation to the counter-claim". There is no corresponding provision for a set-off.
Rule 6D keeps the counter-claim alive: if the suit is stayed, discontinued or dismissed, the counter-claim may nevertheless be proceeded with. Again there is no equivalent sentence about a set-off. Rule 6(2) says the set-off has the effect of a plaint in a cross-suit, which is the premise from which such a conclusion would have to be argued; Rule 6D does not require the argument.
Rule 6E supplies a consequence for the plaintiff who ignores the counter-claim: where the plaintiff makes default in putting in a reply, the Court may pronounce judgment against him in relation to the counter-claim, or make such order in relation to it as it thinks fit. The verb is worth comparing with Rule 10, which provides that where a party from whom a written statement is required under Rule 1 or Rule 9 fails to present it within the time permitted or fixed, the Court "shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit". Rule 10 obliges the Court to do one of those two things; Rule 6E leaves it free to do neither. The difference is in what the Court must do, not in what the plaintiff is exposed to — in neither case is the pleading optional.
Rule 6F is the balance provision — where a set-off or counter-claim is established as a defence and any balance is found due to either party, the Court may give judgment to the party entitled to it. Rule 6G applies the rules relating to a written statement to a written statement filed in answer to a counter-claim.
Rule 9 completes the scheme from the other end. No pleading subsequent to the written statement of a defendant may be presented except by leave of the Court — "other than by way of defence to set-off or counter-claim". The reply to a counter-claim is the one subsequent pleading in the Code that needs no leave, which follows from the counter-claim being a plaint: what answers a plaint is a written statement, and the Code does not make a defendant ask permission to defend.
The decree
Order XX Rule 19(1) provides that where the defendant has been allowed a set-off or counter-claim, 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. Rule 19(2) provides that any decree passed in a suit in which a set-off or counter-claim is claimed shall be subject to the same provisions in respect of appeal to which it would have been subject if no set-off or counter-claim had been claimed.
Rule 19(3) is one line and is easy to pass over: "The provisions of this rule shall apply whether the set-off is admissible under rule 6 of Order VIII or otherwise." The Code thus acknowledges, in the rule about drawing up the decree, that there are set-offs which do not satisfy Rule 6 — the equitable set-off, which is not defined anywhere in the Code and rests on decisions rather than on text. Rule 19(3) does not create it and does not describe it. It provides only that if one is allowed, the decree is drawn up the same way. A defendant whose claim fails the Rule 6 conditions and who intends to rely on an equitable set-off is relying on case law, and ought to plead it as such rather than as though Rule 6 had been satisfied.
Section 2(2) supplies the reason all of this matters at the end of the case. A decree conclusively determines the rights of the parties "with regard to all or any of the matters in controversy in the suit". A counter-claim that was filed, valued and tried is one of those matters. A claim that was pleaded as an argument and never made into a plaint is not.
Two qualifications
The first concerns commercial suits. The Commercial Courts Act, 2015 (Act 4 of 2016) substituted, for suits of a specified value before a Commercial Division or Commercial Court, the proviso to Order VIII Rule 1 — extending the outer period for a written statement to one hundred and twenty days from the date of service of summons, and providing that on expiry of that period the defendant forfeits the right to file a written statement and the Court shall not allow it to be taken on record. Rules 6 to 6G were not amended. But Rule 6A(1) fixes its window by reference to the time limited for delivering the defence, so a provision that changes that time changes the counter-claim window with it, without saying so. The same Act inserted Rule 3A, which prescribes how denials are to be made in such suits, and a further proviso to Rule 5(1) attaching the deemed-admission consequence to a failure to deny in that manner.
The second is the ordinary one. Order VIII is in the First Schedule, and under Section 122 a High Court may by rules annul, alter or add to the rules in the First Schedule for the Courts subject to its superintendence. Court-fees are a separate statute and vary. What is set out above is the scheme of the Order; the rules and the fee legislation of the particular Court have to be read with it.
The drafting consequence
Three things follow, and all of them are settled before the written statement is filed.
The counter-claim is drafted as a plaint, not as a concluding section. It states the cause of action and when it arose, the facts showing jurisdiction, the relief claimed as a prayer, and the value for jurisdiction and court-fees. It says in terms, as Rule 6B requires, that it is made by way of counter-claim. Whether it is typed within the same document or filed alongside it is a matter of local practice; what it has to contain is not.
Limitation is computed twice. Once for the plaintiff's suit, which is his problem, and once for the defendant's claim as on the date the counter-claim is made in court, which is Section 3(2)(b)(ii) and nobody else's. A set-off under Rule 6 is the one claim that relates back, and it relates back only if it satisfies all five of the conditions in Rule 6(1).
And a claim that arrives late is presented as an application, not as an insertion. Kalra leaves the discretion open up to the framing of issues and sets out what the Court will weigh; it does not make delay irrelevant, and it does not make the claim any less a plaint. What is added quietly to a fresh print of the written statement has neither the leave nor the date, and the date is what Section 3(2)(b)(ii) asks for.
The written statement subtracts. Rules 6 and 6A add — and what they add is not a defence with a wider prayer, but a suit that happens to have been filed by the person who was served.
Authored by Eshan Kumar Gupta, Advocate, Hon'ble Allahabad High Court, Lucknow Bench.