MYLAPORE PERMANENT BENEFIT FUND LIMITED IN LIQUIDATION BY ITS LIQUIDATORS A V ENKATARAYALIAH Vs. TAROGIASWAMI PILLAY

JUDGEMENT

(1.) The vendor of the plaintiff took five stares in the defendants Fund (The Mylapore Permanent Benefit Fund) in July 1910. In August following, he borrowed from the Fund Rs. 500 and executed a deed of mortgage in respect of the suit property in his own behalf and on behalf of his minor sons, as their guardian. Under the rules of the Fund, he had to pay Rs. 5 a month as shareholder, and was entitled to Rs. 500 at the end of eighty-four months. There are provisions in the rules for payment of penal interest in case the subscription was not regularly paid. Under the deed of mortgage, he and his sons were liable to pay interest at a particular rate every month The document contains provisions for the payment of a higher rate in case interest was not regularly paid. The plaintiff s vendor paid the subscription on his shares, and the interest on the mortgage till August 1913. The plaintiff purchased the equity of redemption of the property mortgaged to the Fund in April 1914. The Fund went into liquidation in May 1914.

(2.) The case for the plaintiff was that the calls paid by his vendor must be deducted from, the amount of the loan originally advanced, and that he should be entitled to redeem the property on payment of the balance. The Fund contended that the paid up calls should not go in reduction of the debt due and that the entire amount of the mortgage-debt should be paid before redemption. The learned City Civil Judge holding that the subscriptions paid should be given credit to the plaintiff, has decreed redemption on payment of the balance. The Fund has appealed.

(3.) The learned Judge has mainly relied upon Brownlie v. Russell (1883) 8 A.C. 235 for his conclusion. That is a case of a Building Society. Lord Selborne points out that building societies are different from joint stock companies and friendly societies and that the liability of contributories in such cases is wholly regulated by the contract and by the special rules of the society. Rule 12 which is printed at page 237 makes it clear that the loans advanced to members should be liquidated by monthly payments. That is a distinct provision that such payments ought to be applied towards the debt advanced to the member. There was a similar provision in the case of the society referred to in the judgment of the House of Lords in Josh v. North British Building Society (1886) 11 A.C. 489.