Written Statement, Set-off and Counterclaim (Order VIII)

Order VIII of the Code of Civil Procedure, 1908 governs the defendant's response to the plaint. It prescribes the contents of the written statement, the time-line within which it must be filed, the rules on denial and admission, and the two devices through which a defendant may go beyond denial — set-off (Rule 6) and counterclaim (Rule 6A). The Order is the mirror image of Order VII on the plaint; the discipline of Order VI on the rules of pleading applies equally, and the consequences of failing to comply are sharper than they are for the plaintiff.

The architecture of the Order has four layers. Rule 1 fixes the time-line. Rules 2 to 5 govern what the defendant must plead and how denials are to be made. Rule 6 governs set-off; Rules 6A to 6G govern counterclaim. Rules 7 to 10 close out the residual procedural questions. The most heavily-tested rules are Rule 1 (the time-line, with the doctrinal split between directory and mandatory readings) and Rules 6 and 6A (the distinction between set-off and counterclaim).

Rule 1 — time-line for filing the written statement

Rule 1, as substituted by the Civil Procedure Code (Amendment) Act, 2002, provides that the defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence. The proviso permits the court to extend the time, on recording reasons in writing, to a maximum of ninety days from the date of service. The 1999 and 2002 Amendments thus tightened a regime that had previously left the time-line entirely to the court's discretion.

The Supreme Court in Kailash v Nanhku, (2005) 4 SCC 480, considered whether the ninety-day cap in the proviso is mandatory or directory. The Court held that, in non-commercial suits, the time-line is directory, not mandatory: although the court is to record reasons in writing for any extension beyond thirty days, the court retains the power to extend even beyond ninety days in exceptional cases on terms that compensate the plaintiff. The discretion, however, is to be exercised sparingly. The position is different in commercial suits — under the Commercial Courts Act, 2015 (which inserts Order VIII Rule 1 with a stricter cap), the 120-day outer limit is mandatory, and the defence shall stand forfeited beyond that period (SCG Contracts (India) Pvt Ltd v K S Chamankar Infrastructure Pvt Ltd, (2019) 12 SCC 210). The two regimes therefore run in parallel: a relaxed Rule 1 in ordinary civil suits and a strict Rule 1 in Commercial Courts Act suits.

Rule 1A — documents to be filed with the written statement

Rule 1A, inserted in 1999, requires the defendant to enter in a list, and produce in court at the time of filing the written statement, every document on which he intends to rely. Where any such document is not in the defendant's possession, the list must state in whose possession it is. A document that is not so produced or entered, without the leave of the court, cannot be received in evidence on the defendant's behalf at the hearing of the suit. The discipline is the mirror of Order VII Rule 14 — the defendant must lay his cards on the table at the pleading stage.

Rule 2 — new facts must be specially pleaded

Rule 2 lays down the most important pleading-discipline rule for the defendant. The defendant must raise by his pleading all matters which show the suit not to be maintainable, or the transaction to be either void or voidable in point of law, and all such grounds of defence as, if not raised, would be likely to take the opposite party by surprise, or would raise issues of fact not arising out of the plaint — for example, fraud, limitation, release, payment, performance or facts showing illegality. The rule is the procedural application of the chapter on rules of pleading under Order VI: a defence not pleaded is, generally, a defence not available.

The Supreme Court in Bharat Singh v State of Haryana, (1988) 4 SCC 534, held that a defence raised for the first time in the appellate court is not to be entertained where the underlying facts have not been pleaded in the written statement. The defendant who wishes to set up res judicata, limitation, want of jurisdiction or any of the matters that Section 11 and the related conclusiveness rules would let him plead, must do so in the written statement, with full particulars.

Rules 3, 4 and 5 — denials and admissions

Rule 3 requires every allegation of fact in the plaint, if not denied specifically or by necessary implication or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted, except as against a person under disability. Rule 4 requires the defendant to deal specifically with each allegation; an evasive denial that does not deal with the substance is treated as no denial. Rule 5 elaborates: every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading, shall be taken to be admitted; the court may, however, in its discretion, require any fact so admitted to be proved otherwise than by such admission.

The combined effect of Rules 3 to 5 is that the defendant's silence is taken as an admission. The discipline is sharper than it appears at first reading: a written statement that fails to traverse paragraph by paragraph and content by content, and that relies on a general denial, will produce a body of admitted facts on which the plaintiff may obtain a judgment under Order XII Rule 6 or under Order VIII Rule 10. The connection runs to the chapter on admissions under Order XII, which the chapter covers in full.

Rule 6 — set-off

Set-off is the device by which a defendant pleads that an ascertained sum of money legally recoverable by him from the plaintiff, not exceeding the pecuniary limits of the jurisdiction of the court, should be set off against the plaintiff's claim. The conditions of Rule 6 are:

1. The suit must be for the recovery of money.
2. The sum sought to be set off must be an ascertained sum of money.
3. The sum must be legally recoverable by the defendant from the plaintiff.
4. The sum must not exceed the pecuniary jurisdiction of the court.
5. Both parties must fill, in the defendant's claim to set-off, the same character as they fill in the plaintiff's suit.
6. The set-off claim must be presented in the written statement.

Where the conditions are satisfied, the court treats the set-off as a cross-suit. The plaintiff is taken to be the defendant on the set-off, and the defendant is taken to be the plaintiff. The court may give judgment on the original claim and on the set-off in the same proceeding. If the set-off claim exceeds the original claim, the defendant is entitled to a decree for the excess. This is the doctrine of legal set-off.

Equitable set-off

The Code does not, in terms, recognise equitable set-off; but the courts have, by application of the principles of equity preserved by Section 151, allowed an unascertained or unliquidated cross-claim arising out of the same transaction to be set off against the plaintiff's claim. The doctrine is older than the Code and is preserved as an exercise of the court's inherent powers under Section 151. The leading exposition is Union of India v Karam Chand Thapar & Bros (Coal Sales) Ltd, (2004) 3 SCC 504, where the Supreme Court held that equitable set-off, unlike legal set-off, is available only where the cross-claim arises out of the same transaction; an unrelated unliquidated cross-claim cannot be set off in equity.

Rules 6A to 6G — counterclaim

Rule 6A, inserted by the 1976 Amendment, lets the defendant, in addition to his right to plead a set-off, set up by way of counterclaim 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 counterclaim is in the nature of a claim for damages or not. The counterclaim is, in the terms of sub-rule (1), to be treated as a cross-suit; the plaintiff is to file a written statement to the counterclaim within the time fixed by the court.

Conditions for counterclaim

1. The defendant must have a right or claim against the plaintiff that constitutes a cause of action.
2. The cause of action must have accrued either before or after the filing of the suit but before the time-limited for delivering the defence has expired.
3. The counterclaim may be in the nature of a claim for damages or for any other relief.
4. The counterclaim must be properly valued and the requisite court-fee paid.
5. The counterclaim must be within the pecuniary jurisdiction of the court trying the suit.

The court is required to treat the counterclaim as a plaint and to dispose of the original claim and the counterclaim by the same judgment, save where the court is of opinion that the counterclaim raises matters that ought, in the interest of justice, to be tried separately. The counterclaim becomes the subject-matter of the same proceeding; the plaintiff's failure to file a written statement to the counterclaim entitles the defendant to obtain a default decree on the counterclaim under Rule 6G.

Counterclaim and limitation

The Supreme Court in Ramesh Chand Ardawatiya v Anil Panjwani, (2003) 7 SCC 350, settled the limitation question. The cause of action for the counterclaim must be subsisting on the date the counterclaim is filed; the date of filing of the original suit is irrelevant for limitation on the counterclaim. If, on the date of filing of the counterclaim, the cause of action would have been time-barred for institution of an independent suit, the counterclaim must be dismissed. The discipline aligns with the chapter on limitation interfaces in CPC, which takes up the limitation question on counterclaims and set-offs in detail.

Set-off versus counterclaim

The two devices look similar but operate differently. Set-off is a defence; it seeks to extinguish the plaintiff's claim to the extent of the cross-claim. Counterclaim is a cross-suit; it seeks affirmative relief against the plaintiff. Set-off is confined to a money claim that is ascertained and legally recoverable; counterclaim may be for any kind of relief — damages, declaration, injunction. Set-off must arise from a money claim within the pecuniary jurisdiction; counterclaim must be within the pecuniary jurisdiction of the court trying the suit. Set-off cannot exceed the plaintiff's claim by more than the pecuniary jurisdiction; counterclaim may seek any relief that the court has the power to grant.

Rule 9 — subsequent pleadings

No pleading subsequent to the written statement of the defendant other than by way of defence to a counterclaim shall be presented except by leave of the court and upon such terms as the court thinks fit. The rule operates as a brake against repeated rejoinders. A reply to the written statement is not a matter of right; the plaintiff who wishes to reply must seek leave, and the leave will be granted only where the reply is genuinely necessary to address a new fact or a new ground.

Rule 10 — procedure on default

Where any party from whom a written statement is required under Rule 1 or Rule 9 fails to present the same within the time-permitted or fixed by the court, as the case may be, the court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on the pronouncement of such judgment a decree shall be drawn up. The Supreme Court in Balraj Taneja v Sunil Madan, (1999) 8 SCC 396, held that the court must apply its mind to the question whether the plaint, on its averments, makes out a case for the relief claimed; the court should not pronounce judgment mechanically merely because the defendant has not filed a written statement. The court must record reasons even in cases that proceed under Rule 10, in conformity with the discipline of Section 33 of the Code on the form of judgments — the chapter on the judgment and decree under Order XX develops this further.

Order VIII Rule 5 — the operative principle of admission by silence

Rule 5(1) deserves special mention. It provides that every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted by the defendant, except as against a person under disability. Sub-rule (2) lets the court, in its discretion, require any fact so admitted to be proved otherwise than by such admission. Sub-rules (3) and (4) deal with the case where the defendant has not filed a written statement at all — the court may, in its discretion, require any fact alleged in the plaint to be proved before pronouncing judgment, or may pronounce judgment on the basis of such facts contained in the plaint as it considers admitted. The rule disciplines the defendant to traverse the plaint specifically and tells the court how to deal with admissions and silences.

Order VIII Rule 1 — the special-statute overlay

The 2002 Amendment regime that Kailash v Nanhku read as directory has been overlaid by the Commercial Courts Act, 2015 for commercial suits of "specified value". Section 12A of that Act introduces a mandatory pre-institution mediation requirement (subject to exceptions for urgent interim relief) and a stricter time-line for the written statement. The Supreme Court in SCG Contracts held that the 120-day outer cap in commercial suits is mandatory and that the right to file the written statement stands forfeited on its lapse. The discipline of the chapter on disposal of the suit at first hearing under Order XV is therefore especially relevant to commercial suits, where the question of admitted facts and the timing of disposal is treated more strictly.

Procedure on counterclaim — Rules 6B to 6G

Once the counterclaim is filed under Rule 6A, Rules 6B to 6G map the procedural consequences. Rule 6B requires the defendant to specifically state in the counterclaim the relief he claims, expressly or in the alternative. Rule 6C says that the plaintiff is not to apply, before issues are settled, to exclude the counterclaim by reference to the relief claimed; the question of separate trial is for the court to decide on principles of justice. Rule 6D provides that if, in any case, an order is made under Rule 6C or any other order excluding the counterclaim, the counterclaim may, nevertheless, be proceeded with as a separate suit. Rule 6E gives the plaintiff the right to file a written statement to the counterclaim within the time fixed by the court. Rule 6F empowers the court to limit the relief to that flowing from the cause of action set up in the counterclaim. Rule 6G applies the rules of Order VIII generally to written statements filed in answer to a counterclaim.

The procedural symmetry is deliberate. The defendant who files a counterclaim becomes, in substance, the plaintiff on the counterclaim; the original plaintiff, becomes, on the counterclaim, the defendant. The same discipline of Order VIII Rule 5 — that allegations not specifically denied are taken to be admitted — operates against the original plaintiff in respect of the counterclaim averments. The chapter on the frame of suit and cause of action under Order II takes up the connected question of when a counterclaim may be a separate suit and when it must be tried with the original claim.

The MCQ angle

Three propositions surface again and again. First, the time-line under Order VIII Rule 1 — thirty days extendable to ninety days — is directory in ordinary civil suits (Kailash v Nanhku, (2005) 4 SCC 480) but mandatory in commercial suits under the Commercial Courts Act, 2015 (SCG Contracts, (2019) 12 SCC 210). Second, set-off under Rule 6 is a defence confined to an ascertained money claim within the pecuniary jurisdiction; counterclaim under Rule 6A is a cross-suit for any relief, treated as a plaint in the same proceeding, and must satisfy the law of limitation as on the date the counterclaim is filed. Third, every allegation of fact in the plaint not specifically denied or stated to be not admitted in the written statement is taken to be admitted under Rule 5; the court may pronounce judgment on the admitted facts under Rule 10 or under Order XII Rule 6. A reader of the Code of Civil Procedure who has internalised these three propositions has the framework into which every later question on the defendant's pleading will fit. The companion chapter on parties to suit under Order I closes out the pleading-stage discipline by ensuring that the right defendants are on the record before the written statement is filed.

Two further drafting refinements are worth flagging for the aspirant. First, where a defendant pleads multiple grounds of defence — denial of the contract, the alternative defence of payment, the further alternative of limitation — the grounds must be stated separately and not in a single embarrassing paragraph; the discipline of Rule 7 (which lets a defendant raise as many distinct defences as he thinks proper, but each separately) and Rule 16 of Order VI on rules of pleading (which lets the court strike out an embarrassing pleading) work together. Second, where the defendant pleads a fact that he is not bound to plead but elects to plead — for example, a custom on which his defence does not turn — the fact, once pleaded, becomes a material fact on which evidence may be led; the defendant cannot later disown it as surplusage. The two refinements protect the discipline of pleadings without burdening it.

Frequently asked questions

Is the 90-day cap on filing of written statement under Order VIII Rule 1 mandatory or directory?

It depends on whether the suit is commercial. In ordinary civil suits, the Supreme Court in Kailash v Nanhku, (2005) 4 SCC 480 held that the cap is directory, not mandatory. The court retains the power to extend even beyond 90 days in exceptional cases on terms that compensate the plaintiff, although the discretion is to be exercised sparingly and reasons must be recorded. In commercial suits under the Commercial Courts Act, 2015, the cap of 120 days is mandatory; on its lapse, the defendant's right to file a written statement stands forfeited (SCG Contracts (India) Pvt Ltd v K S Chamankar Infrastructure Pvt Ltd, (2019) 12 SCC 210).

What is the difference between set-off and counterclaim?

Set-off (Rule 6) is a defence: the defendant pleads that an ascertained sum legally recoverable by him from the plaintiff should be set off against the plaintiff's claim. It is confined to a money claim, must not exceed the pecuniary jurisdiction of the court, and operates as a defence to the original suit. Counterclaim (Rule 6A) is a cross-suit: the defendant sets up his own claim against the plaintiff for any kind of relief — damages, declaration, injunction — and the court treats the counterclaim as a plaint, disposing of the original claim and the counterclaim by the same judgment. A counterclaim may exceed the plaintiff's claim and may seek relief that a set-off cannot.

Does limitation apply to a counterclaim under Order VIII Rule 6A?

Yes. The Supreme Court in Ramesh Chand Ardawatiya v Anil Panjwani, (2003) 7 SCC 350 settled that the cause of action for the counterclaim must be subsisting on the date the counterclaim is filed; the date of filing of the original suit is irrelevant. If, on the date of filing of the counterclaim, the cause of action would have been time-barred for an independent suit, the counterclaim must be dismissed. The defendant cannot use the cross-suit device to revive a time-barred claim. The principle aligns with the general discipline of Section 3 of the Limitation Act, 1963, which directs the court to dismiss every proceeding that is time-barred, whether or not the limitation defence has been raised.

What is the effect of the defendant's failure to deny an allegation specifically?

Order VIII Rule 5(1) provides that every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted, except as against a person under disability. The defendant's silence or evasive denial is therefore an admission. The court may, in its discretion, require any fact so admitted to be proved otherwise than by such admission (sub-rule (2)). The combined effect is that the plaintiff may obtain a judgment on the admitted facts under Order XII Rule 6 or under Order VIII Rule 10. The discipline forces the defendant to traverse the plaint paragraph by paragraph, content by content.

Can the court pronounce judgment merely because the defendant has not filed a written statement?

Not mechanically. Order VIII Rule 10 lets the court pronounce judgment against a defendant who fails to present a written statement within the time-permitted, or make such order in relation to the suit as it thinks fit. But the Supreme Court in Balraj Taneja v Sunil Madan, (1999) 8 SCC 396 held that the court must apply its mind to whether the plaint, on its averments, makes out a case for the relief claimed. The court should not pronounce judgment merely because of the defendant's default — it must record reasons in conformity with Section 33 and Order XX. The judgment must reflect the court's satisfaction that the plaint discloses a triable cause and that the relief claimed is justified on the admitted facts.