N SUBRAMANIA AYYAR Vs. VSRSRAMASUBBA AYYAR

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 Ayyar, in respect of the subscriptions paid by the latter towards a chit fund.

(2.) Chellam Ayyar 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 defendants Nos. 2 and 3 and the grandfather of the fourth defendant were partners. As Chellam Ayyar was indebted to the plaintiff, he executed the hypothecation bond Ex. B, in favour of the plaintiff on August 15, 1919, in respect of the subscriptions he had paid for five instalments in the chit fund. On October 5, 1921, Chellam Ayyar, and his brother, Krishna Ayyar, 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 October 6, 1921. The plaintiff also sent notices to the first and third defendants on October 26, 1921 (Vide Exs. E-2 and E). The amount of the subscriptions was, however, not payable by the stoke-holders, according to the terms of the chit fund, till the July 14, 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 Nos. 1 and 8, paid the amount to the fifth defendant and obtained the receipt Ex. VII. In this suit by the plaintiff for recovery of the amount from defendants Nos. 1 to 3 (the fourth defendant having been exonerated), the fifth defendant contended that the plaintiff was guilty of gross negligence inasmuch he did not secure the chit fund receipt book and did not give notice to defendants Nos. 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 Nos. 1 to 3 he was not entitled to priority-over the fifth defendant, applying the principle laid down in the case of Dearle V/s. Hall (sic), 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 negligence, on the part of the plaintiff. We did not, therefore, allow the fifth defendant argue it over again.