S K S AYYATHURAI MUDALIAR Vs. IBRAMSA ROWTHER

JUDGEMENT

(1.) This petition raises an interesting point of limitation law applicable to a defaulting member of a chit fund.

(2.) The plaintiff was a stakeholder who conducted in Madura what is called an auction chit of the usual type. There were 100 chit subscribers who contracted to pay Rs. 20 a month for a period of 50 months from 5 December, 1941. The chit auction was to be held on the 20th day of each Tamil month, the bid commencing from Rs. 1,000. At the eleventh call the defendant who had subscribed only to a half share in the chit bought it for Rs. 343 and executed an instalment bond on 9 October, 1942, for Rs. 390, undertaking to pay future subscriptions as they fell due. The bond contained a clause that if default was made in the case of one instalment the whole sum would become payable with 12 per cent, interest. The defendant paid up to the 15 call but defaulted at the 16 call due on 3 March, 1943. The plaintiff's case is that subsequent to this the defendant paid only a sum of Rs. 8 on 6th September, 1943. After the expiry of the chit period in 1945 the plaintiff sued to recover on the bond he had executed. The defendant pleaded the bar of limitation. The Subordinate Judge held that the suit was barred by limitation under Art. 75 of the Limitation Act and dismissed the suit with costs.

(3.) There are two articles of limitation applicable to instalment bonds. The first is Art. 74 which applies to " a promissory note or bond payable by instalments." It prescribes three years in respect of each instalment from the expiry of the respective terms of payment, in other words, three years from the date on which the instalment becomes payable under the bond. Art. 75 provides specifically for an instalment bond: payable by instalments, which provides that if default be made in payment of one or more instalments, the whole shall be due.