KUNJAMMA GEORGE Vs. KESAVA PILLAI

JUDGEMENT

(1.) These Civil Revision Petitions, arising out of chit fund transactions, are between the same parties. The petitioner, who was the stake holder, filed two suits against the respondents for recovery of defaulted future instalments in two chits. At the time of hearing of the suits, a question of limitation was raised for the first time, which was allowed to be argued by the lower court. The lower court has held that the suits were barred by limitation and in that view has dismissed the suits. The plaintiff petitioner seeks to reverse those decisions by these Civil Revision Petitions.

(2.) The suits were filed on 8th July 1959 after the termination of the chit funds on 8th December 1956. According to the respondents, the instalments payable on 8th June 1956 were defaulted and therefore the suits filed more than three years thereafter were barred by limitation. The learned advocate of the petitioner draws my attention to S.32(1) of the Travancore Chitties Act of 1120. The sub-section provides that a foreman shall not be entitled to claim consolidated payment of all the future subscriptions from a defaulting prized subscriber unless he shall have demanded the same in writing. In the present cases it is admitted that there was no such demand in writing more than three years prior to the institution of the suits. On this basis, the learned counsel of the petitioner contends that the view of the lower court that the suits were barred by limitation is wrong.

(3.) The learned advocate of the respondents, on the other hand, argues that the cases are governed by Art.75 of the Limitation Act, which provides a period of three years for suits on promissory notes or bonds payable by instalments, with recitals that if default be made in payment of one or more instalments, the whole shall be due. The Article provides further that the period of limitation commences when the default is made, unless where the payee or obligee waives the benefit of the provision, and then when fresh default is made in respect of which there is no such waiver. The learned counsel brings to my notice a decision of the Madras High Court on this point. The case is Ithikat Gopala Menon v. Kallingalakath ( AIR 1935 Mad. 303 ). In that case Madhavan Nair J. has applied Art.75 of the Limitation Act to a case arising out of a chit fund transaction. The decision appears to apply to the present cases. But the learned advocate of the petitioner argues that the view of Madhavan Nair J. is open to doubt, because the provision in the bond giving freedom to the creditor to demand payment of the entire amount is intended for his benefit and if he does not choose to exercise that right, limitation should not operate against him. This appears to have been the argument advanced before Madhavan Nair J. and the learned Judge has rejected that contention. As for me, I doubt the correctness of the view of Madhavan Nair J. In a chit fund transaction the prized subscriber has to pay the future instalments only as and when they fall due; but the forman is given a right to demand the entire future subscriptions in a lump under the bond, if the subscriber commits default in paying the instalments. That by itself does not mean that the future instalments automatically fall due on the date of default without even a demand by the stake holder. The bonder promissory note mentioned in Art.75 stands on a different footing, as the amount payable thereunder is immediately due, but for the instalment clause, and the debtor is only given the right to pay it in instalments. At any rate, I do not think I need pronounce any final opinion on that question in the present cases. In these cases S.32(1) of the Chitties Act makes it obligatory for the foreman to demand in writing the entire future subscriptions in a lump. Until such a demand in writing is made it must at least be presumed that the foreman has waived the benefit of that provision. Under the sub-section, even if the foreman decides to take advantage of the provision in the bond, even then he has to give notice in writing. In such a situation, unless the notice in writing is also given, his right does not become enforceable and therefore limitation cannot run against him regarding all the future instalments. The foreman will be entitled to get all the instalments which accrued due within three years prior to the date of suit.