JOHN Vs. ORIENTAL KURIES LTD

JUDGEMENT

(1.) These appeals are by the common defendants in O.S.323 of 1984 and O.S.548 of 1987 respectively on the file of. the Subordinate Judge's Court of Trichur. The respondent in both the appeals is the same company, a company registered under the Companies Act. The respondent company started a kuri and both the suits were for recovery of money due under a kuri security bond in respect of future instalments payable monthly of a prized chit. The first suit O.S.323 of 1984 was for recovery of 12 instalments due from 24-11-1981 to 24-11-1984. The second suit O.S.548 of 1987 was for recovery of the entire future subscriptions due under the transaction other than the period covered by the earlier suit. Though various contentions were raised by the defendants the Trial Court overruled the said contentions and granted the respondent plaintiff a decree for realisation of Rs. 40915/- with 12% interest on the sum of Rs.34800/- from the date of suit till date of decree and at the rate of 6% per annum from date of decree in O.S.323 of 1984 and a decree for realisation of Rs.83820.68 with 12% interest on the sum of Rs.63800 from the date of suit till date of decree and at 6% per annum thereafter in O.S.548 of 1987. Preliminary decrees for sale charged on the plaint schedule property was passed in both the suits. The defendants challenged these decrees before this court in these appeals.

(2.) The learned counsel for the appellants raised three questions before this court. Firstly he contended that the decree passed on an equitable mortgage as granted by the Trial Court is not sustainable since .there was no subsisting relationship of debtor and creditor between the defaulting subscriber and the foreman of the chit and hence the decree to that extent was bad. It is seen that this aspect was not raised before the Trial Court. The learned counsel for the appellants submitted that the decision of the Full Bench of this court reported in Janardhana Mallan v. Gangadharan ( 1983 KLT 197 = AIR 1983 Ker.178 ) shows that a subscriber to a chit does not incur a debt on entering into a chitty agreement and hence there was no relationship of debtor and creditor merely because the defendants executed the kuri security bond undertaking to pay the future instalments that would fall due. This Full Bench decision had actually overruled the earlier Full Bench decision of this court reported in Achuthan v. State Bank of Travancore ( 1974 KLT 806 = AIR 1975 Ker. 47 ). But the Supreme Court in a subsequent decision reported in Subbaramasastri v. K.S. Raghavan ( 1987 (1) KLT 753 , = AIR 1987 SC 1257 ) approved the decision in Achuthan's case to the effect that a subscriber on executing the bond really becomes a debtor for the prized amount paid to him and the facility of repayment in instalment is only a concessional facility which was capable of being withdrawn by the foreman of the chit. In Subbaramasastri's case no doubt the decision in Janardhana Mallan's case was not specifically referred to. But the effect of the decision of the Supreme Court is clearly that the decision in Janardhana Mallan's case cannot be considered be good law any more. In fact this very aspect came up for consideration before this court in Mar Aprem v. Narendranath ( 1990 (1) KLT 866 ). The argument was raised before the court that since the decision in Janardhana Mallan's case had not been specifically referred to and overruled by the Supreme Court the said decision continued to be good law and hence as far as this court was concerned the position was governed by the ratio of Janardhana Mallan's case. After referring to the three decisions referred to above and noticing that the Supreme Court in Subbaramasastri's case had specifically approved the law laid down in Achuthan's case, Shamsuddin, J. held that in view of the decision in Subbaramasastri's case Janardhana Mallan's case could not be taken to be laying down the correct law or could not be followed. I am in respectful agreement with the view expressed by Shamsuddin, J. in Mar Aprem's case. In my view the Supreme Court has clearly approved the principle of the decision in Achuthan's case by holding that what is incurred by a prized "subscriber when he is allowed to draw the kuri amount is a debt in praesenti although solvenia in future. If that be so the decision in Janardhana Mallan's case cannot be taken to lay down the correct law when it holds that the prized subscriber incurs no debt when he prizes the chit and receives the prized amount with an obligation to pay the debt in future instalments. The view that Janardhana Mallan's case cannot be taken to be laying down the correct law in the light of Subbaramasastri's case also finds support from the decision of the Madras High Court reported in Angammal v. Sankaranarayanan ( AIR 1989 Mad. 53 ). I therefore overrule the first contention raised on behalf of the appellants that the claim based on the equitable mortgage should have been rejected.

(3.) The second contention urged on behalf of the appellants is that the plaintiff has violated the Kerala Chitties Act, 1975 since the kuri conducted by the plaintiff violates S.3(1) of that Act. S.3(1) of the Kerala Chitties Act provides that no chitty shall, after the commencement of that Act be started and conducted unless the previous sanction of the Government or of any such officer as may be empowered by the Government in that behalf is obtained or the chitty is registered in accordance with the provisions of that Act. What is contended by the learned counsel for the appellants is that the chitty in question has not been registered. It is also pointed out that in the light of the penalty provided by S.60 for contravention of any of the provisions of the Act, the suit could not be maintained by the plaintiff company on the basis of the kuri transaction run by it in violation of S.3 of the Chitties Act.