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Sudarsan Chit Fund, Represented by Its President, Branch Manager, Pollachi Branch Vs. Mrs. Jagadambal and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai High Court
Decided On
Reported in(1982)2MLJ169
AppellantSudarsan Chit Fund, Represented by Its President, Branch Manager, Pollachi Branch
RespondentMrs. Jagadambal and ors.
Cases ReferredThirumalachaiar v. Varadappa Chettiar
Excerpt:
- - in the above case, the foreman had given a notice in writing on 30th september, 1970, and therefore it was held that the suit filed within three years from the date of notice was well within time. article 36 of the new limitation act read with article 37 will clearly rule out the possibility of the argument that the period of limitation will begin to run only from the date when the notice of demand was sent by the foreman......after the expiry of three years of the first default is not barred by limitation so far as all the future instalments are concerned and that only the instalments falling within a period of three years before the institution of the suit are recoverable and the instalments, which became due three years before the institution of the suit alone were barred by limitation under article 113 of the limitation act and article 37 of the limitation act is not applicable.6. section 32(1) of the travancore chitties act reads as follows as reproduced in the above case:a foreman shall not be entitled to claim consolidated payment of all the future subscription from a defaulting prized subscriber unless he shall have demanded the same in writing.in paragraph 4 at page 29 the following observations have.....
Judgment:
ORDER

M. Fakkir Mohammed, J.

1. The plaintiff-Sudarsan Chit Funds i& the petitioner and the petition has been filed against the judgment of the appellate Court (Subordinate Judge, Udumalpet), dated 12th December, 1977, by which the decree and' judgment of the trial Court dated 31st January, 1977, in O.S. No. 19 of 1976, dismissing the suit as barred by limitation, has been confirmed.

2. The plaintiffs filed the suit for recovery of the arrears of chit instalments under the promissory note executed by the defendants. The defendants pleaded, inter alia, that the suit is barred by limitation and that the suit cannot be enforced against some of the defendants as they are entitled to the benefits of the Debt Relief Act. Separate issues were framed by the learned District Munsif and issue No. 3 reads whether the defendants are entitled to any Debt Relief Act benefits and additional issue was framed as to whether the suit is barred by time. On issue No. 3, the learned District Munsif gave a finding that the defendants are not entitled to any benefit under the Debt Relief Act. Only on additional issue he has given a finding that the suit is barred by limitation. On appeal by the plaintiffs in the Sub-Court at Udumalpet, the learned Subordinate Judge concurred with the above finding of the District Munsif on the question of limitation and dismissed the appeal with costs. Hence the present revision.

3. Learned Counsel for the petitioner has argued that under Section 25 of the Tamil Nadu Chit Funds Act, 1961, the foreman of the chit shall not be entitled to claim consolidated payment of all the future subscriptions from a defaulting prized subscriber, unless he shall have demanded the same in writing, that in the present suit the foreman had issued lawyer notice under the original of Exhibit A-5 on 29th June, 1973, to the defendants, which were acknowledged by the defendants under Exhibits A-6 to A-8, though one notice under Exhibit A-9 was returned and that therefore the period of limitation will have to run from 29th June, 1973, and the suit which has been filed within three years thereafter is not barred by limitation. In support of the said argument, learned Counsel has relied upon the case reported in Laser v. P. Selvamony and Ors. (1978) T.L.N.J. 60, and in Kunjamma George v. Kesava Pillai 1963 K.L.T. 68. The decision in Laser's case (1978) T.L.N.J. 60, was rendered after the judgments of both the Courts below. The judgment in A.S. No. 46 of 1977 was rendered on 12th December, 1977, and the judgment in O.S. No. 19 of 1976 was rendered on 31st January, 1977. But the learned Counsel for the plaintiff in the lower Courts appears to have cited the decision in Kunjamma's case 1963 K.L.T. 68. Both the Courts below have applied the decision rendered by the Madras High Court in Thirurmalachariar v. S.P. Varadappa Chettiar : AIR1962Mad210 , in preference to the decision of the Kerala High Court.

4. In Laser's case (1978) T.L.N.J. 60, it has been held that under Section 25 of the Chit Funds Act, the foreman would not be entitled to claim a consolidated payment of all the future subscriptions from a defaulted prized subscriber, unless he shall have demanded the same in writing. In the above case, the foreman had given a notice in writing on 30th September, 1970, and therefore it was held that the suit filed within three years from the date of notice was well within time. In support of the above decision, the decision of the Kerala High Court in Kunjamma's case 1963 K.L.T. 68, was referred to.

5. In Nanoo Sukumaran v. P. Sankaran A.I.R. 178 Ker. 28, it was held, that under Section 32(1) of the Travancore Chitties Act (which is in pari materia with Section 25 of the Tamil Nadu Chit Funds Act, 1961, in a case, where the defendants make any default in payment of future subscriptions, which default made the whole amount payable under Section 32(1) of the Travancore Chitties Act from the date when the foreman made a demand for the amount if no such demand was made by the foreman, the suit instituted after the expiry of three years of the first default is not barred by limitation so far as all the future instalments are concerned and that only the instalments falling within a period of three years before the institution of the suit are recoverable and the instalments, which became due three years before the institution of the suit alone were barred by limitation under Article 113 of the Limitation Act and Article 37 of the Limitation Act is not applicable.

6. Section 32(1) of the Travancore Chitties Act reads as follows as reproduced in the above case:

A foreman shall not be entitled to claim consolidated payment of all the future subscription from a defaulting prized subscriber unless he shall have demanded the same in writing.

In paragraph 4 at page 29 the following observations have teen made:

In order that a case should be governed by Article 37 of the Limitation Act, the cause of action for recovery of the entire balance amount should accrue to the creditor on the date of default of payment of the instalment. Such is not the position in cases governed by Section 32(1) of the Travancore Chitties Act, where the cause of action will accrue to the foreman only when a demand in writing is made on the subscriber for consolidated payment of all the future subscriptions. We are in respectful agreement with the view expressed by Raghavan, J., in Kunjamma's case 1963 K. L.T. 68, that Article 75 of the Limitation Act, 1908, which corresponds to Article 37 of the present Act cannot have any application to suits filed by foreman of Chitties governed by the Travancore Chitties Act for recovery of the defaulted instalments from a prized subscriber and that in such cases unless a demand in writing is made by the foreman for consolidated payment of future instalments his right under the contract does not become enforceable and limitation cannot run against him regarding all the future instalments.

Nanoo Sukumaran v. P. Sankaran A.I.R. 1978 Ker. 28, is a Bench decision. It is the above decision and Kunjamma's case 1963 K. L.T. 68, that have been referred to by Justice Padmanabhan and gave the above decision.

Article 37 of the Limitation Act reads as follows:

On a promissory note or bond payable by instalments, which provides that, if default be made in payment, of one or more instalments, the whole shall be due.

And the period prescribed is three years from the date when the default is made.

'On a promissory note or bond payable by instalments' the period of limitation is three years from the date of the expiration of the first term of payment as to the part then payable and for the other parts, the expiration of the respective terms of payment'. Thus Article 37 of the Limitation Act, postulates that in a case of a promissory note or bond, which provides that the whole amount covered by the promissory note shall be due, if default be made in the payment of one instalment the whole claim will be barred by limitation, if an action is brought beyond three years of the date of the default committed in the particular instalment.

7. In M. Thirumalackariar v. S.P. Varadappa Chettiar : AIR1962Mad210 , the identical question arose and Article 75 of the old Limitation Act, which is in pari materia with the present Article 37 of the Limitation Act has been applied. Justice Veeraswamy, as he then was has held, after considering the starting point of limitation as provided in Column 3 to Article 75 (present Article 37), namely, when the default is made, unless where the payee or obligee waives the benefit of the provisions and then when fresh default is made in respect of which there is no such waiver, that the period of limitation commences the moment there is a default made in payment of the instalment due and a suit beyond three years from the date of such default would prima facie be out of time. In that case, the waiver was presumed by the lower Courts in favour of the plaintiff and while dealing with that aspect, it was held 'that the mere fact that waiver will be to the advtantage of the plaintiff inasmuch as that will save him from the bar of limitation, will not ipso facto be a proper basis for the view that he should be assumed to have waived the benefit and that' it will have to be pleaded and established, if it is to be relied upon as a ground for the exemption from the bar of limitation provided by Article 75. In this case there is no plea of evidence of waiver by the plaintiff.

8. The question of waiver found in the third column as against Article 75 of the old Limitation Act, has been repeated in the present Article 37 of the Limitation Act. Thus, the conditional benefit that had been granted to a plaintiff under Article 75 of the old Limitation Act has been affirmed in the present Article 37 of the new Limitation Act. The effect of the present Article 37 of the Limitation Act is that once a default is made by the debtor in the payment of any instalment payable under the promissory note or bond, which provides that the whole amount shall be payable if default is made in the payment of one instalment, the period of limitation begins to run from the date of such default and a suit brought beyond three years from the date of such default shall be barred by limitation.

9. Section 25(1) of the Tamil Nadu Chit Funds Act, 1961, hereinafter referred to as the Act, reads as follows:

A foreman shall not be entitled to claim consolidated payment of all the future subscriptions from a defaulting prized subscriber unless he shall have demanded the same in writing.

The plaintiff, namely, revision petitioner Company issued Exhibit A-5, lawyer notice to the defendants on 29th June, 1973. The first defendant, who was a subscriber to the chit took the chit in auction held on 20th November, 1970, for Rs. 1,000 payable in forty instalments of Rs. 25 each at a discount of Rs. 250 and received Rs. 750 on 21st December, 1970, after executing the suit promissory note alongwith the sureties, namely, defendants 2 to 4 by way of security for the due repayment of the consolidated future instalments. The first defendant, according to the plaint averments, had repaid only a sum Rs. 130 towards the future subscriptions upto 22nd July, 1971, and thereafter defaulted to pay the future subscriptions. It is not disputed that as per Section 24 of the Chit Funds Act and according to the terms and conditions of the chit promissory note, the entire future subscriptions shall become payable when default is committed by the debtor in the payment of any one instalment. Both parties have proceeded on the basis that the j default was committed in the payment of future subscriptions with effect from 23rd July, 1971. Therefore, Article 37 of the limitation Act is attracted and the suit filed i beyond three years from 22nd July, 1971, namely, 20th July, 1975, shall be barred by limitation.

10. What Section 25 of the Act provides is j that a foreman shall not be entitled to claim consolidated payment of all the future subscriptions from a defaulting prized subscriber, unless he shall have demanded the same in writing. Section 25(1) of the Act docs not prescribe any time limit for the plaintiff in sending the notice of demand immediately after the default is committed by the subscriber. The section does not provide that the period of limitation will begin to run from the date of such notice of demand for the whole amount. The presumption is that as in any other case, notice of demand must be made within three years after the default and file the suit within three years as per Article 37 of the Limitation Act for the whole amount of the future subscriptions. In Section 25 there is no postponement of the right to file the suit against a defaulting subscriber.

11. In the present case the payment of Rs. 130 upto 22nd July, 1971, has to be adjusted at the rate of Rs. 25 per monthly instalment. If adjustment is made at the rate of Rs. 25 per instalment, Rs. 130 could be adjusted for five instalments upto May, 1971, and the balance of Rs. 5 can be adjusted towards a portion of the 6th instalment, which would have become due on 21st June, 1971. But the foreman has kept quiet and received only Rs. 130 upto 22nd July, 1971, and the whole amount had become due on the 21st June, 1971. He has not sent any notice of demand as contemplated under Section 25 of the Act within 3 years after the default. Thus, the foreman cannot take advantage of his own faull in not having sent a notice of demand under Section 25(1) for the purpose of excluding the period beyond three years from the date of first default to his aid as there is no provision in the Chit Funds Act to that effect.

12. In the present case, the notice of demand was sent about 2 years after the default under the original of Exhibit A-5, dated 29th June, 1973. Let us assume for argument's sake that the foreman fails to give a notice of demand for three years after the default is committed in the payment of the first instalment. If the above argument for which there is no provision in the Chit Funds Act or Limitation Act, no suit brought by the Chit foreman even after three years from the date of default will be barred by limitation, as the same argument can be advanced to say that because there was no notice of demand by the plaintiff as contemplated under Section 25 and the notice of demand was sent three years after the date of default, the suit is in time. Such an interpretation will amount to legislating by the Court into the Act and will lead to anomalous results and far-reaching consequences, which are not at all contemplated by Section 25 of the Chit Funds Act. Article 36 of the New Limitation Act read with Article 37 will clearly rule out the possibility of the argument that the period of limitation will begin to run only from the date when the notice of demand was sent by the foreman.

13. Under Article 36, in the case of a promissory note or bond payable by instalments, the suit can be filed beyond three years for the remaining instalments, which are within the period of three years and no suit can be filed for recovery of the whole of the instalments within three years when a default is committed in the payment of any one instalment. But under Article 37 it is not so. The suit has to be filed for recovery of the whole of the future instalments as soon as the default is committed in the payment of any one instalment. The only condition for filing the suit under Section 25 of the Chit Funds Act read with Article 37 of the New Limitation Act, is that the creditor should send a notice of demand before claiming the whole of the future instalments in the present case, the plaintiffs have not sent any notice demanding the whole amount as contemplated under Section 25 of the Act as soon as the first default was committed by the debtor. The rulings relied on by the learned Counsel for the petitioners are not applicable to this case and it is the decision of the Madras High Court in Thirumalachaiar v. Varadappa Chettiar : AIR1962Mad210 , that is applicable. Therefore, the concurrent findings of both the Courts below are correct and there is absolutely no irregularity or illegality in them for being interfered with under the revisional jurisdiction of the High Court.

14. In the result, therefore, the petition is dismissed with costs. Cost had been awarded by over-sight and since the respondents have not entered appearance no cost is awarded.


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