1. The question that arises in this case is whether the learned Subordinate Judge of Hazaribagh was right in asking the petitioners to pay court-fee on the amount of Rs. 70,000 which the petitioners claim as a set-off in the written statement.

2. The opposite party instituted Money Suit No. 13 of 1950 in the Court of the Subordinate Judge claiming a sum of Rs. 1,00,000 as principal and a sum of RS. 15,000/- as interest from the petitioners, alleging that there was a breach of contract and they were, therefore, entitled to the amount claimed by way of damages for the breach of the contract. The case of the opposite party was that they had advanced a sum of Rs. 6,50,000 to the petitioners for the purpose of floating a company on certain terms and conditions. The contract was not performed as the company was not floated and no action was taken to implement the terms and conditions on which the company was to be floated. The opposite party admitted that a sum of Rs. 5,50,000 was returned by the petitioners. The suit was, therefore, instituted for the balance of Rs. 1,00,000 which was still in deposit with the petitioners and for the interest due thereon.

3. The defence of the petitioners was that the opposite party was not entitled to refund of any money. The petitioners said that they had committed no breach of contract but there was a breach of contract on the part of the opposite party and, on account of this breach, the petitioners had suffered damages to the extent of Rs. 70,000. The petitioners also claimed that the opposite party had maliciously lodged a false criminal case against the petitioners and, on account of these criminal proceedings, the petitioners claim damages to the extent of Rs. 1,00,000.

4. The learned Subordinate Judge held that the claim for damages on account of malicious prosecution cannot be legally entertained by way of set-off. The petitioners claim on this point was, therefore, disallowed. As regards the claim for set off to the extent of Rs. 70,000 on account of damages for breach of contract, the Subordinate Judge was of the opinion that the defendants must pay court-fee on this amount, failing which the claim for set off would be rejected.

5. Against this order, the petitioners have obtained a rule from this Court.

6. The first submission of Mr. Kameshwar Dayal is that the amount of Rs. 70,000 which the petitioners claim was a claim by way of an equitable set-off and the Subordinate Judge was not justified in requiring the petitioners to pay court-fee on this amount. Counsel pointed to the fact that the Subordinate Judge said that the claim "cannot be treated as equitable set off and the defendants cannot claim exemption in the matter of court-fee." Mr. Kameshwar Dayal was right in contending that the claim which the petitioners set up was not in the nature of a legal set-off but in the nature of an equitable set-off. The reason is that the claim which the petitioners made was a claim in respect of an unascertained sum by way of damages for a breach of contract. It is true that the petitioners roughly estimated the damages to be a sum of Rs. 70,000. But the nature of the claim made is by way of damages for a breach of contract and, therefore, it is wrong to say that the set off which the petitioners claimed is in the nature of a legal set-off.

The question, however, in the present case is not whether the claim set up by the petitioners is a claim in the nature of a legal set-off or whether it is a claim in the nature of an equitable set-off. The question on the other hand is whether the petitioners are liable to pay court-fee on the amount which they claim as set oil. On this point, Mr. Kameshwar Dayal argued that court-fee is payable only on a claim made by the defendant which is in the nature of a legal set-oft coming within the ambit of Order 8, Rule 6, Civil P. C. The argument of learned counsel is that the matter is not governed by the Court-lees Act and the defendant in such a case Should not be required to pay any court-fee on the amount of set off which is claimed. We are unable to accept this argument. Article 1 of Schedule I, Court-fees Act states that court-fee is payable on written statements pleading a set-off which should be assessed in the same way as a claim in a suit. The Article makes no distinction between a legal and an equitable set-oil. There is also no reason why a written statement pleading a legal set-off should have to bear court-fee and one pleading an equitable set off should not be liable to do so. It is conceivable that in the former case there is a very small amount involved and in the latter case it is a large amount. We see, there-fore, no warrant for construing the provisions of Article 1, Schedule I, Court-fees Act in a restricted manner. There is no reason why the expression "Set-off" should not be construed in its plain meaning and there is nothing in the context of the section to suggest that the expression should be construed in a qualified sense, In our opinion, therefore, the expression used in Article I, Schedule I, applies both to the case of an equitable set-off and the case of a legal set-off and that Court-fee is payable by the defendant in a case of either description.

This construction of Article 1, Schedule I, Court-fees Act is supported by the decision of a Full Bench of the East Punjab High Court in --Jessie George v. Mrs. Shakuntla AIR 1950 EP 225 (A). On this point, Mr. Kameshwar Dayal referred to -- Ram Das v. Dwarka Das : AIR 1930 All 875 [LQ/AllHC/1930/84] (B), in which Sulai-man J. observed that an equitable set-off can be claimed independently of the specific provisions of the Civil Procedure Code and it was not necessary to demand court-fees on this account. But the authority of this case is doubtful because Sulaiman J. placed reliance upon an earlier case of the Allahabad High Court reported in -- Nand Ram v. Ram Prasad 27 All 145 (C). The learned Judge made no reference to the amendment in the Court-fees Act, Schedule I, introduced by Schedule 4, Civil P. C. of 1908. Mr. Kameshwar Dayal also referred to -- Bashessarnath Khanna & Sons (Firm) v. Grindlay & Co. Ltd., Lahore AIR 1937 Lah 73 (D), but the authority of this case also is much shaken by the decision of the Full Bench in -- Jessie Georges case (A), to which we have already referred. In -- Wilrow v. Maha-deo Gobind : AIR 1943 Bom 227 [LQ/BomHC/1942/169] (E), the Bombay High Court has taken the view that the expression "set off" used in Article I of Schedule 1, Court-fees Act, as amended, includes an equitable set-off and the necessary court-fee must be paid thereon. The same view was adopted by Bose J. in -- Sadasheo Krishnarao v. Nathu Bala : AIR 1943 Nag 314 (F). In -- Reazai Karim v. Mohammad Israil Ostagar : AIR 1939 Cal 415 [LQ/CalHC/1939/67] (G), a Division Bench of the Calcutta High Court consisting of Derbyshire C. J. and Nazim AH J. expressed the view that the word "Set-off" in Schedule I, Article 1, not having been qualified in any way must include not only a legal set-off but also an equitable set-off.

7. We are therefore, of the opinion that the argument of the petitioners must fail, and that the court-fee on the amount of Rs. 70,000/- which they claim as an equitable set-off in the written statement must be paid.

8. We accordingly discharge the rule and dismiss the application with costs to the contesting respondent, namely, the State of Bihar. Hearing fee one gold mohur.