JAWAHAR LAL Vs. MATHURA PRASAD

JUDGEMENT

(1.) This case came up for disposal before a Single Judge of this Court who referred it to a Division Bench which baa referred it to a larger Bench on account of some apparent conflict of opinion on the interpretation of Articles 75 and 80, Lim. Act.

(2.) On 5 September 1927 the defendants executed an unregistered instalment bond for Rs. 540 stipulating to pay the amount with interest at the rate of 1 per cent, per mensem by instalments of Rs. 25 a month within one year and nine months. It was further provided that in case the fixed instalments or the interest thereon were not paid for any two successive months then in either case the creditor would be authorized to realize the entire amount of principal and interest together with costs in a lump sum either within the stipulated period or after it from the person and property of the debtors. The 20 instalments of Rs. 25 together with the last instalment of Rs. 40, would, if paid, have sufficed to discharge the entire amount due on the bond. The period of 21 months would have expired on 5 June 1929. Before the expiry of that date the creditor served a registered notice on the defendants dated 21 May 1928 claiming that on account of more than two successive defaults the whole amount of principal and interest had become due and was payable (wajibulada) and should be paid within a week of the receipt of the notice. Later on, after 5 June 1929, when the period of 21 months had expired a fresh notice was served by the creditor on the defendants on 11 April 1930 demanding payment of the whole amount with interest. This was a brief notice in which there was no further reference to the defaults made by them. On 25 July 1931 the present suit was institutedfor recovery of the entire amount of principal and interest due on the bond. In the body of the plaint there was a reference to the previous notice sent tothe defendants after repeated demands and to the plaintiff having "waived" the condition of payment in a lump sum in the deed, and there was allegation that the defendants contracted subsequently that they would not make payments by instalments but would pay the entire amount within the stipulated period. The cause of action was alleged to have arisen on 5 June 1929 which would be both the date of the expiry of the 21 months originally fixed as also the date within which the defendants were said to have orally agreed to make the payment in a lump sum. The actual relief claimed by the plaintiff was a decree for Rs. 737-13-0 with costs and interest pendents lite and future against the defendants.

(3.) The Court below has come to the conclusion that the alleged oral agreement between the parties was not proved. It has further held that there was no waiver of the benefit of the default clause by the plaintiff so as to give him a fresh start for the purposes of limitation, and has accordingly held that the claim was barred by time, having been brought more than three years after two successive defaults. The question for consideration before the Full Bench is whether the whole or any part of the claim of the plaintiff is barred by time. It seems to me that prior to 1932 there would have been hardly any question that time began to run against the plaintiff from the date of the second default within the meaning of, Art. 75, Lim. Act, unless he proved a waiver which would give him a fresh start. There are numerous cases of this Court to some of which reference will be made shortly in which Art. 75 has been applied to instalment bonds containing such default clauses. Even in the case of mortgage-deeds which contained such default clauses there were two Full Bench cases of this Court in which it was held that when under the terms of the agreement the whole amount becomes payable by the defendant on account of default, then even though the plaintiff may have an option to wait and not sue or to sue immediately for the whole amount, time begins to run against the plaintiff under Art. 132, Lim. Act. See : Gaya Din V/s. Jhaman Lal A.I.R. 1915 All. 189 and Shib Dayal V/s. Meharban A.I.R. 1923 All. 1. In the case of Pancham V/s. Ansar Husain A.I.R. 1926 P.C. 85, Lord Blanesburgh in delivering the judgment of their Lordships of the Privy Council first threw considerable doubt on the soundness of the decision in Gaya Din's case A.I.R. 1915 All. 189 which had been followed in Shib Dayal's case A.I.R. 1915 All. 189. His Lordship remarked at p. 463 (of 48 All) that the Full Bench had held that: Under a default clause a single default on the part of the mortgagors, without any act of election, cancellation or other form of response or acceptance on the part of the mortgagees, and even it would appear against their desire operates eo instanti to make the money secured by the mortgage become due so that all right of action in respect of the security is a final bar 12 years later.