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Subbiah Pillai Vs. Shanmugam Pillai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1928Mad245; 108Ind.Cas.319
AppellantSubbiah Pillai
RespondentShanmugam Pillai and ors.
Cases ReferredRamalinga Adaviar v. Meenakshisundaram Pillai A.I.R.
Excerpt:
- .....to, to more than the actual amounts of the instalments that had fallen due before the date of the suit. the suit must always be regarded as having relation only to the legal obligations which had accrued previous to the institution of the suit and this suit should be so regarded. any decree passed by the court of appeal in modification of the decree by the court of first instance should only have been with regard to the liabilities on the date of the institution of the suit. anyhow the matter is not before me. mr. chandrasekara aiyar for the plaintiff-appellant, has asked that i might now similarly pass a decree in favour of the plaintiff for the instalments that have fallen due subsequent to the date of the decision by the lower appellate court. i must refuse to do so. it would lead to.....
Judgment:

Srinivasa Aiyangar, J.

1. The only point that arises in this second appeal bears on the construction of Ex. A in this ease, one of the usual documents that are executed by a subscriber to chit fund in favour of the stake-holder giving security for the amount of the instalment, engaging to pay the sums as and when they fall due regularly. The document mentions the total of all the instalments payable by the defendant subscriber and provides for the payment of the same according to the due dates on which the chits are payable by the subscribers. Provision is also made for the amount omitted to be paid carrying interest at a particular rate. The lower Court has allowed a certain rate of interest as being the reasonable rate and there is no question before me with regard to it. The following is the provision in the deed with regard to the further non-payment of any instalments:

If I fail to pay on the dates mentioned above, I shall pay the amount in default with interest thereon at the rate of 1/2 pie per rupee for each day of default within the succeeding one month. In default of even such payment, you can demand in a lump the amount due for the remaining instalments, after deducting the amount paid till then, without reference to subsequent instalments together with interest at the aforesaid rate on the entire amount payable till the termination of the chit and recover the same from out of the schedule properties from myself and from my other properties.

2. In view of the fact that provision is made for the payment of substantial interest on the amount of the chit or instalment omitted to be paid, it seems to me perfectly clear that the provision for the payment of the whole amount, if further default should be made for a period of one month, must be regarded as a penalty. Such a provision, it seems to me, cannot be regarded merely as a provision to compensate a person with reference to whom default is committed by the other party to the contract for any loss accruing to him in respect of such breach. Looking at the document it seems to me that the provision with regard to the whole amount becoming payable must be regarded as a provision to be held in terrorem over the party in order that thereby he may persuade himself to pay up the amount due on the due date. Further, in this case, it is clear from a careful reading of the document that the debt itself, according to the scheme of the document, arises only on the due dates. It is not a debt due at present to be discharged subsequently on the dates agreed to or by instalments prescribed. I am satisfied that on a proper construction of the document each instalment on the due date, and then alone, accrues as a debt due and in that view there can be no doubt whatever that the provision with regard to the whole amount becoming payable on default must be regarded as a penal clause and should be relieved against. This is the principle of my decision in Ramalinga Adaviar v. Meenakshisundaram Pillai A.I.R. 1925 Mad 177. It appears that the Court of first instance dismissed the suit entirely holding that the tender pleaded by the defendant was true in respect of the only instalment that had fallen due. This tender has been found against by the lower appellate Court, but for some curious reason the lower appellate Court has granted a decree in favour of the plaintiff for all the instalments that had become payable before the date of its judgment No appeal memo or memorandum of objections, however, has been filed with regard to it.

3. I fail to see how the plaintiff can at all be entitled to a decree, on the principles I have already adverted to, to more than the actual amounts of the instalments that had fallen due before the date of the suit. The suit must always be regarded as having relation only to the legal obligations which had accrued previous to the institution of the suit and this suit should be so regarded. Any decree passed by the Court of appeal in modification of the decree by the Court of first instance should only have been with regard to the liabilities on the date of the institution of the suit. Anyhow the matter is not before me. Mr. Chandrasekara Aiyar for the plaintiff-appellant, has asked that I might now similarly pass a decree in favour of the plaintiff for the instalments that have fallen due subsequent to the date of the decision by the lower appellate Court. I must refuse to do so. It would lead to very serious consequences if actions instituted by the plaintiffs should be regarded to be not on the date of the institution, but with reference to the date on which the Court of appeal or second appeal comes actually to decide the point. Many things might have been done by and between the parties in the meantime and many events might have happened, all of which might have a bearing on the determination of the question. I am satisfied that, on a proper construction of the document, the plaintiff is not entitled to insist upon the penal clause providing for the payment of the remaining instalments in addition to the payment of interest claimed by him. It follows that the plaintiff is not entitled to a decree for any instalment not already decreed in his favour.

4. The second appeal, therefore, fails and is dismissed with costs.


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