GIOVANOLA BINNY LTD HAVING REGISTERED OFFICE AT PENSTOCK FACTORY ROAD PALLURUTHY Vs. INDIAN INSTITUTE OF TECHNOLOGY MADRAS

JUDGEMENT

(1.) THIS appeal on behalf of the appellant is directed against a preliminary decree in a sum of Rs. 1,84,500/- in C.S. No. 141 of 1976. The Indian Institute of Technology, a statutory body created by the Institute of Technology Act, 1961 invited tenders for the supply and installation of vaccum vessel spherical/cylindrical shape conforming to the specification given in the schedule to the tender on certain conditions as to the procurement of materials etc. The defendant/appellant responded to the tender and finally the Plaintiff placed a purchase order and paid as per the contract a sum of Rs. 1,84,500/- to the defendant representing 30% of the value of the purchase order in advance. Alleging, inter alia , however that the defendant failed to supply the goods and thus violated the terms and conditions of the contract, the plaintiff sued for the refund of the advance paid with interest thereon at 6% per annum under S. 61 of the Sale of Goods Act and the damages to the extent of the difference between the market price and the contract price of the goods valued at Rs. 4,23,000/- with interest at 6% per annum from the date of the plaint to the date of the decree and from the date of the decree to the date of realisation.

(2.) DEFENDANT filed its written statement controverting the allegations as to the breach of contract by it but acknowledging the payment of the advance afore-mentioned and alleging that cancellation was done mala fide only because the plaintiff wanted to wriggle out of the contract, gel back the advance paid and make wrongful gain styling it as damages. The defendant further alleged. ?The defendants are entitled to retain Rs. 77.522.25 being;

(3.) CHARGES for the design work including overhead charges Rs. 10.000. 00.? 3. Learned Judge, has however, granted an interim decree for the sum of advance paid to the defendant stating, inter alia. ?Admittedly, the plaintiff has paid an advance, of Rs. 1,84,500/- to the defendant. In the written statement the contention raised on behalf of the defendant is that the defendant did not commit breach of contract, that time was not of the essence and that the plaintiff was not justified in cancelling the contract. Assuming the stand taken by defendant is correct, even then, the defendant is bound to refund the advance paid-by the plaintiff. Regarding this aspect the contention raised in the written statement is that the defendant had spent a sum of Rs. 77,522.25 in the process of manufacturing the vacuum vessels and that, therefore, that amount should be deducted out of the advance of Rs. 1,84,500/-. But the defendant has not paid Court-fee on his claim for the sum of Rs. 77,522.25 mentioned above. Therefore, tha t cannot be pressed either as a counter-claim or as set off. Under such circumstances, the plaintiff would undoubtedly be entitled to refund of the entire advance of Rs. 1,84,500/-.? 3. Learned counsel for the appellant has contended that the learned Trial Judge has committed an error of law in saying that the adjustment claimed by the defendant/appellant will not be entertained unless Court-fee was paid. He placed reliance upon a Bench decision of the Madhya Pradesh High Court (Gwalior Bench) in State of M.P.v. Balbhadra Singh AIR 1964 M.P. 231 in which it is stated as follows: ?When two persons have certain accounts and monies are payable by each to the other, they are both entitled to mutual adjustments of the monies provided they are really due and recoverable. The distinction between payment and adjustment is that payment is made to the creditor while the adjustment is made by the debtor himself. Although it is not called ?payment? in common parlance yet it undoubtedly partakes the character of payment. At all events, it cannot be called a claim for set off, nor can it be said to be a counterclaim as the defendant does not seek enforcement of his claim, and therefore, court-fee is not due. We are supported in this view by the decisions reported in Ramanujdas v. Ram Samukh Das AIR 1940 All 393, Punjab Electric Power Co. Ltd. v. Suraj Kishran (A.I.R. 1937 Lah. 62), D. Konda v. Chenchu(S) AIR 1955 Hyd. 176 and Balchand v. Nandlal Madh. B.L.J. 1955 HCR 1442. 4. We, however, need not labour to find out the consensus of the jurisdical opinion on the subject as a Bench of this Court in Uthandarama Pillai v. M.A. Pillai AIR 1971 Mad. 215 has clarified, in a short but effective way, what is the essence of a counter-claim, of a set-off or adjustment claimed in a written statement. In the said decision it is stated as follows:? ?A counter-claim is one based on an independent cause of action which distinguished it from a set off, which will generally arise as a part of the transaction giving rise to the cause of action for the suit. As pointed out by Abdul Majid v. Abdul Rashid AIR 1950 All. 201, the essence of a counter-claim is that the defendant should have a cause of action against the plaintiff and not merely a defence to the plaintiff claim. Where in a suit for redemption of a mortgage and for possession of the hypotheca the mortgagee claims the value for the improvements which he had effected with the mortgagor's consent, the claim is dependent on the ground of the decree for a redemption and possession. In case, the claim for improvements is to be allowed, the payment thereof would be made a condition precedent for redemption and delivered of possession of the hypotheca. There can be no decree for the value of the improvements in such a case independent of redemption and delivery of possession. If the suit for redemption is dismissed automatically the claim for value of improvements also dropped. That would unmistakably show that the claim for improvement is not a counter-claim as is jurisdically understood.?