TaxTMI 
TaxTMI 
2014 (3) TMI 1210
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....f the water, soda and allied products manufactured by the said Defendants. 3. The Plaintiff inter alia with some other persons decided to enter into a partnership to carry out the business of distribution of packaged and processed drinking water, soda and allied products under the name and style of "M/s. Ozone Enterprises". M/s. Ozone Enterprises entered into a memorandum of understanding (MOU) with "M/s. Ikon Industries" for distributorship of packaged drinking water, soda and allied products under the name and style of Director Special (herein referred to as the material). As per the terms of the MOU the Plaintiff was to be the sole stockist/wholesale dealer of the said material. M/s. Ozone Enterprises was to make a Security Deposit of Rs. 15,00,000/-. 4. The case of the Plaintiff is that after the commencement of the MOU dated 16.07.2007 the 2 partners of M/s. Ozone Enterprises left the partnership concern and the Plaintiff decided to continue with the MOU as a sole proprietor of M/s. Swastik Enterprises. The MOU was modified by letter dated the 06.09.2007. The Plaintiff paid the amount of the Security Deposit, deposited with M/s. Ikon industries by the erstwhile partners of M....
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.... a notice on the Plaintiff cancelling the agreement and stating that the Security Deposit was being forfeited. It is only when the cancellation notice was served that the Plaintiff informed about the dissolution of the partnership firm. Despite the service of the notice the Plaintiff did not lift any stock and the Defendant had to throw soda and manufactured water. After the service of the cancellation notice the Plaintiff persuaded the Defendant to sign the letter dated 20.08.2007. As per the Defendants the Plaintiff never made any demand for the supply of material that was manufactured by the Defendant. The Plaintiff had set up the Defendant No. 3 to buy stocks from the Defendant in small quantities so that the ground for breach of the agreement could be set up. The Defendant denies having agreed to refund the Security Deposit that stood forfeited. The Defendant denies having authorized any person to give any cheque to the Plaintiff. As per the Defendant on account of the breach by the Plaintiff the Defendant's manufacturing unit had to be closed down and he had to pay huge loan liability amount to the bank for which the factory had to be sold. The Defendant had obtained a fr....
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....application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions. (2) Whenever a judgment is pronounced under sub-rule (1), a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced. 13. The object of Order XII Rule 6 is to enable a party to obtain a speedy judgment to the extent of the admissions of the Defendant to which relief the Plaintiff is entitled to. The rule permits the passing of the judgment at any stage without waiting for determination of any other question. It is a settled proposition of law that before a judgment can be passed under Order 12 Rule 6, the admission must be clear, unambiguous, unconditional and unequivocal. 14. In Uttam Singh Duggal & Co. Ltd. V. Union Bank of India & Ors. 2000 (7) SCC 120 the Supreme Court has laid down as under:- 12. As to the object of Order 12 Rule 6, we need not say anything more than what the legislature itself has said when the said provision came to be amended. In the Objects and Reasons set out....
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....endant, by way of an appeal on merits. The valuable right of a defendant to contest the claim should not be denied unless the admission is clear, unambiguous and unconditional. 17. The Defendant though has admitted the receipt of the Security Deposit but it has raised a dispute about the refund of the Security Deposit. As per the Defendants the Plaintiff is in breach of the agreement on account of which the Security Deposit has been forfeited. There is no admission by the Defendants in the written statement that they are liable to refund the Security Deposit. The forfeiture of the Security Deposit is alleged to have been done on account of the failure of the Plaintiff to comply with the terms of the agreement and to lift the material that was manufactured by the Defendants at the request of the Plaintiff. The Defendants have alleged that the breach of the Plaintiff resulted in a substantial loss to the Defendants. On account of the loss suffered by the Defendants due to breach of the Plaintiff the Defendants forfeited the Security Deposits. There is thus no clear admission that is unequivocal, unambiguous or unconditional. As the admission of receipt of Security Deposit is coupled....
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....e a final judgment in respect both of the original claim and of the set-off; but this shall not affect the lien, upon the amount decreed, of any pleader in respect of the costs payable to him under the decree. (3) The rules relating to a written statement by a defendant apply to a written statement in answer to a claim of set-off. 12. On a reading of the aforesaid Rule it is noticeable that certain conditions precedent are to be satisfied for application of the said Rule. Two primary conditions are that it must be a suit for recovery of money and the amount sought to be set-off must be a certain sum. Apart from the aforesaid parameters there are other parameters to sustain a plea of set-off under this Rule. As far as equitable set-off is concerned, it has been enunciated in the case of Clark v. Ratnavaloo Chetti[2 M.H.C.R. 296 (1865)] that the right of set-off exists not only in cases of mutual debits and credits, but also where cross-demands arise out of the same transaction. The said principle has been reiterated by the Calcutta High Court in Chisholm v. Gopal Chander [ILR 16 Cal 711 (1889)]. 13. In Raja Bhupendra Narain Singha Bahadur v. Maharaj Bahadur Singh and others[AI....
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....its or cross-demands, to be available for extinction by way of equitable set-off, must have arisen out of the same transaction or ought to be so connected in their nature and circumstances as to make it inequitable for the court to allow the claim before it and leave the defendant high and dry for the present unless he files a cross-suit of his own. When a plea in the nature of equitable set-off is raised it is not done as of right and the discretion lies with the court to entertain and allow such plea or not to do so. 16. From the aforesaid enunciation of law it is quite clear that equitable set-off is different than the legal set-off; that it is independent of the provisions of the Code of Civil Procedure; that the mutual debts and credits or cross-demands must have arisen out of the same transaction or to be connected in the nature and circumstances; that such a plea is raised not as a matter of right; and that it is the discretion of the court to entertain and allow such a plea or not. The concept of equitable set-off is founded on the fundamental principles of equity, justice and good conscience. The discretion rests with the court to adjudicate upon it and the said discreti....