N SUBRAMANIA AIYAR Vs. VSRSRAMASUBBA AIYAR

JUDGEMENT

(1.) This is an appeal against the judgment of Butler, J., dismissing the suit brought by the appellant on the basis of a hypothecation bond executed to him by one Chellam Aiyar in respect of the subscriptions paid by the latter towards a chit fund.

(2.) Chellam Aiyar had taken a ticket in a chit fund, which was being managed by a firm known as S.K.S.N., of which the first defendant, the father of the defendants 2 and 3 and the grand-father of the fourth defendant were partners. As Chellam Aiyar was indebted to the plaintiff, he executed the hypothecation bond, Ex. B, in favour of the plaintiff on 15 August, 1919 in respect of the subscriptions he had paid for five instalments in the chit fund. On 5th October, 1921, Chellam Aiyar and his brother, Krishna Aiyar, executed another hypothecation bond Ex. II, in favour of the fifth defendant in respect of the amounts paid by them for six instalments in the chit fund, (including the amount paid for five instalments for which Ex. B, had already been executed). The fifth defendant gave notice, Ex. IV, to the first defendant on 6 October, 1921. The plaintiff also sent notices to the first and third defendants on 26th October, 1921 (vide Exs. E-2 and E). The amount of the subscriptions was, however, not payable by the stake holders, according to the terms of the chit fund, till 14 July, 1926. Plaintiff, therefore, sent notices again to the first defendant, demanding payment of money in July, 1926 (Ex. H). The fifth defendant also made a demand at about the same time (Ex. V). Ignoring the claims of the plaintiff, defendants 1 and 8 paid the amount to the fifth defendant and obtained the receipt Ex. VII. In the suit by the plaintiff for recovery of the amount from defendants 1 to 3 (the fourth defendant having been exonerated), the fifth defendant contended that the plaintiff was guilty of gross negligence inasmuch as he did not secure the chit fund receipt book and did not give notice to defendants 1 to 4, and that he (the fifth defendant) was entitled to priority over the plaintiff.

(3.) The trial Court accepted the contentions of the fifth defendant and dismissed the suit. The lower appellate Court found against the fifth defendant and decreed the suit. Butler, J., accepted the finding of the lower appellate Court that the plaintiff was not guilty of gross negligence, but held that as the plaintiff did not give notice of the transfer in his favour to defendants 1 to 3, he was not entitled to priority over the fifth defendant, applying the principle laid down in the case of Dearie V/s. Hall (1823) 3 Russ. 1 : 38 E.R. 475 and dismissed the suit. It will, therefore, be seen that the lower appellate Court and Butler, J., held, and we think, for very good reasons - that there was no negligence on the part of the plaintiff. We did not, therefore, allow the fifth defendant to argue it over again.