SET-OFF

Set-off  

Set-off means the aggregate or incomplete converging of a case of one individual against another in a counter claim by the last against the previous. It is as a result the joining of records between an indebted person and a loan boss to touch base at the net parity payable to one or the other. It is a privilege which collects to the investor as a financier's consequence client relationship.

Set-off emerges when a borrower or his leaser wishes to touch base at the net figure owing between them when separate records or obligation are included.

Essential Requirements of Set-off:

a) Mutual debts for sums certain.

b) Debts must be due immediately.

c) Debts must be in the same right.

d) No agreement to the contrary.

Notice of Set-off

As officially expressed the privilege of set-off gathers to the investor as an after effect of broker client relationship. At the point when a client opens two or more records it might be his goal to keep them isolate. So his diverse records can not be discretionary joined without legitimate notification to the client. Under such circumstance, it is prudent to take former letter of set-off so that a financier can consolidate them at its prudence without giving the client any notification. It likewise serves as a proof that the brokers right of set-off exists and the client has not waived it. Nonetheless, in real practice the bank sends a notification to the client when the privilege of set-off is worked out.

Automatic Right of Set-off

The following are the circumstances where the financier's privilege of set-off consequently gathers and no notification of set-off is important:

(1) On the death, insanity or insolvency of the customer.

(2) On the insolvency of a partner of a firm.

(3) On receipt of a garnishee order.

(4) On the winding up of a company.

(5) On receipt of notice of assignment of the credit balance of the customer.

Banker's Right of Set-off

The  decision and judgement in different cases reveal that the following  cases where the branches can exercise the right of set off.

(a) To join two or more records of the same client in the same branch of a bank.

(b) To join two or more a/c s of a client kept up in diverse branches of the same banks.

(c) To alter the surplus measure of the deal continues or acknowledgement of the securities held as spread for one specific obligation for liquidation of whatever other obligation after acknowledgement of that specific obligation.