1. Two points are taken before me in this second appeal. The first point is the one dealt with, by the Subordinate Judge in paragraph 3 of his judgment. It is contended that because the security bond, on which the suit has been brought;, was given to the Secretary of the company before it was registered in 1907, and because the company was subsequently registered under the Companies Act, the assignment of the bond made by the Secretary subsequent to the registration is not a valid assignment. This contention is untenable. The company at the time the then secretary took the bond was validly formed company and no registration was necessary to constitute it into a proper company, the number of shareholders being only 9. The decision in Neelamega Sastri v. Appiah Sastri (1906) 29 Mad. 471 referred to by the Subordinate Judge is clearly authority for it. The fact that the company was subsequently registered cannot invalidate the previous dealings of the company. The bond was therefore properly taken and the assignment by the Secretary was quite legal.
2. The second point is one of limitation. Under the bond, if default is made in the payment of instalments more than once, provision is made in the bond for enabling The company to call up the whole of the amount due with interest if they so choose. Default was made more than once in this case prior to 6 years, the period of limitation applicable to this case, and therefore it is said that the suit for the whole amount due under the bond is barred by limitation. The Subordinate Judge has met this objection by pointing out that the bond merely gave an option to the obligee to take advantage of the default and to recover the whole of the amount due under the bond, if he so chose; but it did not compel him to do so and that in the absence of a demand, the right to sue for the amount will not accrue. In fact the plaintiff's assignor did not exercise his option and did not seek to recover the full amount from the defendant on the defaults being made. It seems to me that the Subordinate Judge is right in the view that he has taken of this case. It was open to the obligee to waive any default and that is what he has done in this case as shown by his action. His claim for the whole amount cannot therefore be treated as barred, though his claim for she instalments payable, beyond the period of limitation is barred; and it has been disallowed by the lower Court. My attention was drawn to the decision of the Privy Council in Muhammad Hafiz v. Muhammad Zakriya A.I.R. 1922 P.C. 23; in that case the simple mortgage deed provided that interest should be paid monthly and that if it was not paid for 6 months, the mortgagee could realise either The unpaid interest only, or both the principal and interest, and after three years, if the principal and interest were not paid, the mortgagee could sue for principal and interest. That was a case which arose under Order 2, Rule 2, Civil Procedure Code, and no question of limitation arose. The mortgagee first brought a suit, after the expiry of three years, to recover only the interest duo under the document. At that time, the three years had already expired and he was entitled to sue for the principal and interest, as the date fixed for the payment of the mortgage amount itself had passed. Even under the first clause, it was open to the mortgagee to sue for the principal and interest, but he brought a suit only for interest. Their Lordships held that under Order 2, Rule 2, Civil Procedure Code, he could not maintain a second suit for the principal and the balance of interest. The point; to be noticed is that the suit was brought, after the three years had expired, when the plaintiff was entitled to sue for the whole of the principal and interest, without any exorcise of an option. That ruling was not in point here at all. Here there was an option for the obligee to take advantage of the default, if he so chose, or to waive it if he liked. It is clear on the facts of this case that he had waived the default. It is conceded that the view taken in this High Court is that whore there is an option open to a person to call up the whole debt, or not as he chooses, if he does not exercise that option, it will not be held against him that his cause of action has arisen on the default itself.
3. Both the points taken in the second appeal failing, the second appeal fails and is dismissed with costs.