THE HONOURABLE SRI JUSTICE B.PRAKASH RAO AND THE HONOURABLE SRI JUSTICE B.N.RAO NALLA APPEAL SUIT No.644 of 2005 JUDGMENT: (per Hon’ble Sri Justice B.Prakash Rao) This appeal is at the instance of defendants 1 and 2, under Section 96 of Civil Procedure Code, inter alia, aggrieved by the judgment and decree, dated 08.04.2005, in O.S.No.14 of 2000 on the file of the District Judge, Anantapur, partly decreeing the said suit. Heard learned Government Pleader for Appeals on behalf of the learned Advocate General, appearing for the appellants- defendants, and Sri S.Sharat Kumar, learned counsel appearing for the respondent herein-plaintiff. The facts involved in this case which gave rise to the present proceedings are that in the said suit, the respondent- plaintiff sought for recovery of an amount of Rs.45,69,832/-; that an agreement, dated 04.07.1998, was entered into between the plaintiff and the defendants for the purpose of excavation and the lining of left main canal, bedding of canal bottom of Pedaballi Reservoir Project from K.M.0.000 to K.M.2.000 including C.M. and C.D. works, the value of which is Rs.45,26,226.70 paise. On the same day, the plaintiff had also entered into separate agreement for another work for Rs.32,67,796-30 paise in respect of excavation and the lining of left main canal, bedding of canal bottom of Pedaballi Reservoir Project from K.M.2.000 to 3.885 including C.M. and C.D. works. Accordingly, the parties entered into four agreements, which have been marked as Exs.A-1, A-2, A-3 and A-7. So far as Ex.A-1 is concerned, according to the appellants, the respondent quoted 20% extra and as regards Exs.A-2, A-3 and A-7, the respondent has quoted 20% less. Subsequently, there has been some dispute and ultimately, a notice was issued by the appellants and thereafter, the present suit is filed. There is no dispute with regard to the fact that in regard to certain other deviated works, the respondent pursued the same and for which also a claim is made. The suit is contested by the appellants-defendants, inter alia, on various grounds including as to the entitlement of the respondent-plaintiff for refund of Earnest Money Deposit (for short ‘E.M.D’) apart from the claim for damages. The defence is that under Clause 60 of the agreement, the appellants are entitled to forfeit the E.M.D. amount in case of breach of conditions of contract, and therefore, the said amount of E.M.D. etc., need not be refunded to the plaintiff nor the respondent-plaintiff is entitled to claim the same. Hence, the entire suit claim is not sustainable. After filing of the respective pleadings, the Court below framed the following issues: - “1.Whether the plaintiff is entitled for the suit claim? 2. Whether the plaintiff is entitled for any amount towards the damages for breach of contract? 3. Whether the defendants have not committed breach of contract with respect to suit agreements as contended by the defendants? 4. To what relief?” Thereafter, during the course of trial, the plaintiff has got himself examined as P.W-1 and marked Exs.A-1 to A-7, whereas on behalf of the defendants, D.Ws.1 and 2 were examined and Exs.B-1 to B-31 were marked. The Court below taking into consideration the evidence and the material available on record, decreed the suit partly to the extent of refund of the E.M.D. of Rs.25,00,000/- and an amount of Rs.8,65,547/- towards supplement work done by the plaintiff along with interest at the rate of 12% per annum from the date of the suit till the date of the decree on Rs.8,65,547/- only, with costs. The plaintiff was also held to be entitled to future interest at the rate of 6% per annum from the date of the decree till the date of realization on the entire decretal amount i.e., Rs.25,00,000/- and Rs.8,65,547/-. Hence, the present appeal by the defendants. The main submission advanced by the learned Government Pleader for Appeals appearing for the appellants-defendants is to the effect that having regard to Clause 60 of the agreement, the appellants are entitled to forfeit the amount in view of breach of the contract and also for the failure on the part of the respondent therein in performing his obligation and therefore, necessarily the E.M.D. amount cannot be and need not be refunded to the respondent-plaintiff nor any suit claim is sustainable. This submission was sought to be repelled by learned counsel appearing for the respondent-plaintiff. On an appraisal of the entire evidence and the detailed submissions made by the learned counsel appearing on either side, the point that arises for consideration in this appeal is as to whether in the facts and circumstances, the appellants are entitled to withhold the amount as claimed? There is no dispute as to the aforesaid chequered history which has led to filing of the present claim by the plaintiff. The suit claim includes substantial amounts towards damages and also for refund of E.M.D. amount. There is no serious dispute as regards the damages and also for the supplemental work done by the plaintiff and accordingly, as far as Rs.8,65,547/- is concerned, there is no disputable lis. However, coming to the entitlement of E.M.D, even though if it is to be held that the appellants are entitled to withhold the same as per Clause 60 of the agreement, however, admittedly, neither before the Court below nor in this appeal the appellants raised the plea of set off. It is well settled principle of law that the plea of set off has to be pleaded and has to be established necessarily for making any claim. In this connection, it requires to refer to the provisions under Order 8 Rule 3 read with Rules 6, 6-A and 6-B of C.P.C., which read as follows: - Order VIII: (written statement, set-off and counter- claim) Written statement The defendant shall at or before the first hearing or within such time as the court may permit, which shall not be beyond thirty days from the date of service of summons on the defendant, present a written statement of his defence. 3. Denial to be specific. It shall not be sufficient for a defendant in his written statement to deny generally the grounds alleged by the plaintiff, but the defendant must deal specifically with each allegation of fact of which he does not admit the truth, except damages. 6. Particulars of set-off to be given in written statement. 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, present a written statement containing the particulars of the debt sought to be set-off. Effect of set-off – (2) The written statement shall have the same effect as a plaint in a cross-suit so as to enable the Court to pronounce a final judgment in respect of 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. 6-A. Counter-claim by defendant 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, and 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: Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court. (2) Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim. (3) The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court. (4) The counter-claim shall be treated as a plaint and governed by the rules applicable to the plaints. 6-B.Counter-claim to be stated 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. On a bare reading of the aforesaid provisions, it does not detain us further to reiterate the mandatory requirement under the procedural law for a specific plea to be raised in the pleading namely written statement, without which the party cannot avail either the set off or be entitled to a counter-claim. Further, the evidence establishing the same along with rebuttal evidence, if any, has to be let in by the appellants-defendants. Either way there is total silence on the part of the appellants. Even in the memorandum of grounds of appeal, which we have perused very carefully, we do not find any plea on the grounds of set off raised by the appellants. Accordingly, we hold that in spite of the fact that the appellants are entitled to withhold the amount under Clause 60 of the agreement or not, in the absence of any such specific averment or plea and a case being made out as such, as required under well established procedural law, the appellants are not entitled to raise the same for the first time in the appeal before this Court. In view of the same, we hold that the appellants have not made out any case to warrant interference of this Court in the impugned judgment and decree passed by the Court below and also as regards the findings arrived at in favour of the respondent-plaintiff as to the entitlement of the E.M.D. amount. The appeal is devoid of any merits and the same is liable to be dismissed. In the result, the Appeal is dismissed. However, there shall be no order as to costs. _________________________ JUSTICE B.PRAKASH RAO ________________________ JUSTICE B.N.RAO NALLA 08th November 2010 dr