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K.V. Bhagvanulu Vs. Hindupur Mutual Benefit Permanent Fund Ltd. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtAndhra Pradesh High Court
Decided On
Case NumberCivil Revision Petition No. 3409 of 1981
Judge
Reported in[1985]57CompCas602(AP)
ActsAndhra Pradesh Chit Funds Act, 1971; Limitation Act - Sections 20
AppellantK.V. Bhagvanulu
RespondentHindupur Mutual Benefit Permanent Fund Ltd.
Excerpt:
.....of last installment due but not paid - petitioner-highest bidder subsequently executed promissory note - paid all installments except the last installment - chit fund company filed suit on failure of payment of such amount - petitioner alleged suit beyond period of limitation as cause of action arose on the date when promissory note was executed - breach of agreement occurred on the date when last installment fell due - thus suit filed by company not barred by limitation - held, suit maintainable in law. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no..........act, payments made towards chit have to be taken into consideration was payments made towards chit promissory note being up to june 13, 1977. so the suit first point raised by the learned counsel is that the decree cannot be passed on the promissory note as there is no express mention that the amount due under the promissory note is towards the payment of subscriptions due in respect of the chit. before adjudication of the issue, the relevant provisions enacred i.e. s. 25(2) of the a.p. chit funds act, 1971, may be read which is as under : '25.(2) if in a suit by foreman for consolidated payment of future subscriptions from a defaulting prized subscriber, the defendant pays into court on or before the date to which the chit is posted for hearing the arrears of subscription till that.....
Judgment:

Seetharama Reddy, J.

1. Two points arose in this revision, the revisionist being the subscriber to the chit fund transaction - first is whether any decree could be passed on the promissory not executed by the subscriber if it is not mentioned therein that the loan was with reference to the chit amount, within the meaning of s 25(2) of the Andhra Pradesh Chit Funds Act, 1971. Second is : when the cause of action for the purpose of limitation arises in respect of the bid amount in which the subscriber successfully participated and failed to refund. Is it on the date when the auction was held by the chit fund company or on the date of the last instalment due, but not paid

2. The facts are : the petitioner herein, one of the subscribers to the respondent chit fund company, participated in the auction and became the highest bidder for an amount of Rs. 1,995. The purchase amount or Rs. 3,500 was paid on February 6, 1975. On the same day, a promissory not was executed. Pursuantly he paid 37 instalments, the 37th instalment being on June 13, 1977. Subsequent instalment was due 20 days thereafter. When there was a default, a suit was filed by the respondent herein on February 6, 1978. It is stated in the plaint that 'the cause of action for the suit arose at Hindupur on February 5, 1975, when Chit No. 8/74 was started, and on the same day when the first defendant became the highest started, and on the same day when the first defendant became the highest bidder in the auction held, on February 6, 1975, when the defendants executed the suit pronote in favour of the plaintiff, on all dates in between February 5, 1975, to June 13, 1977, when the defendants paid towards the instalments, and on all subsequent dates of demand.' The trial court, inter alia, framed an additional issue as under : 'Whether the suit is barred by limitation ?' It is held by the lower court that the first defendant participated in the auction of the chit and because the highest bidder. He was given a sum of Rs. 5,000 as per Ex 3-A on February 6, 1975. The suit is filed on February 6, 1978. The contention was that the cause of action arose of February 5, 1975, since the first defendant participated in the auction on that day and became the highest bidder. So the suit filed on February 6, 1978, is barred by limitation. But the suit is based on the promissory note, Ex. A-2, dated February 6, 1975, also. So the suit filed on February 6, 1978, is within time. Further, under s. 20 of the Limitation Act, payments made towards chit have to be taken into consideration was payments made towards chit promissory note being up to June 13, 1977. So the suit first point raised by the learned counsel is that the decree cannot be passed on the promissory note as there is no express mention that the amount due under the promissory note is towards the payment of subscriptions due in respect of the chit. Before adjudication of the issue, the relevant provisions enacred i.e. s. 25(2) of the A.P. Chit Funds Act, 1971, may be read which is as under :

'25.(2) If in a suit by foreman for consolidated payment of future subscriptions from a defaulting prized subscriber, the defendant pays into court on or before the date to which the chit is posted for hearing the arrears of subscription till that date together with interest thereon at the rate provided for in the chit agreement or at twelve per cent. per annum simple interest whichever is lower, and the costs of the suit for payment to the plaintiff, then, notwithstanding any contract to the contrary, the court shall pass a decree directing that the defendant shall deposit in court for payment to the plaintiff, the future subscriptions on or before the dates on which they fall due and that, in default of payment by the defendant of any future subscription on or before the due date, the plaintiff shall be at liberty to realize in execution all the future subscriptions and interest thereon less the amount, if any, already deposited by the defendant :

Provided that if any such suit is upon a promissory note, no decree shall be passed under this sub-section unless such promissory note expressly states that the amount due under the promissory note is towards payment of subscriptions to the chit.'

3. It is quite manifest from the promissory note, Ex. A-2, that there is absolutely no reference whatsoever towards payment of subscription towards chit, as postulated under s. 25(2) of the A.P. Chit Funds Act, 1971, and, therefore, I have no hesitation whatsoever to hold that no decree can be passed on the basis of Ex. A-2 (promissory note).

4. Regarding the second point, the contention is that the cause of action in this case arises only on February 5, 1975, and since the suit has been filed on February 6, 1978, it is beyond the period of limitation. The central contention is that as per the agreement and the bye-laws, the chit amount due has to be paid in instalments. In fact, 37 instalments have been paid the last of it being on June 13, 1977. Within 20 days thereafter, another instalment fell due which was not paid. Therefore, since there was a breach of the agreement, the cause of action arose on the day when the 38th instalment fell due and was defaulted. I see force in the contention of the learned counsel for the respondent. Though the chit amount covered by the agreement to be repaid in instalments is not to be reckoned as a debt, that does not come in the way of its being reckoned as the contractual term, which has been breached and that breach will give rise to a cause of action. By paying the instalments, the subscriber has held out a promise that he would comply with the conditions of agreement and thereby stopped the running of time against the cause of action being arisen and as and when the breach of it occurs, will give rise to a cause of action and it is that point from which the period of limitation start. Since July 3, 1977, was the date on which the 38th instalment was due and inasmuch as, admittedly, this instalment has been defaulted by the petitioner herein, within three years from that time, it will be competent for the respondent herein to file a suit. Therefore, the suit filed on February 6, 1978, is very much within time.

5. No doubt, the reasoning assigned by the lower court is wrong because it is not on the pronote that the decree could be passed as it has been already held that the proviso to s. 25(2) of the A.P. Chit Funds Act, 1971, forbids any such decree being passed, but the decree made in nevertheless valid and legal.

6. In the circumstances, I hold that the suit is not barred by limitation and, therefore, the same is maintainable. The decree of the lower court is confirmed. In the result, the C.R.P. is dismissed with costs.


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