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Muthukumaraswami Pillai Vs. Subramania Chettiar and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in102Ind.Cas.14
AppellantMuthukumaraswami Pillai
RespondentSubramania Chettiar and ors.
Cases ReferredRamalinga Adaviar v. Meenakshisundaram Pillai
Excerpt:
contract act (ix of 1872), section 74 - contract--chit fund--penal clause--relief. - .....the payment of instalments nos. 6 to 21. the suit was filed on the 8th september, 1920. by that date, instalments nos. 6 to 13 had fallen overdue and nos. 14 to 21 had not. even assuming that the stipulation about the payment of all the instalments on the defaults is penal, there is nothing to prevent defendants from paying and the plaintiff from accepting the amount of instalments nos. 14 to 21 before their time. the only question is whether the amount of interest which he has paid for these instalments, namely, rs. 546, was too much if it is regarded as the amount of interest only en instalments nos. 6 to 13. one thing is clear that he was quite content to get rid of the obligation to pay instalments nos. 6 to 21 by paying an interest of rs. 546 for them whichever was the figure may.....
Judgment:

Ramesam, J.

1. This second appeal arises out of a suit filed on the basis of a hypothecation bond executed by defendants Nos. 1 and 2 who were the subscribers to a chit-fund as security for the payment of future instalments of the chit, they having drawn a prize in connection with a half share they were holding. The 4th defendant who is the appellant before me is the purchaser of their properties subject to the hypothecation bond.

2. Only two points have been argued before me

(1) that the 3rd, 4th and 5th instalments have been paid by the 1st and 2nd defendants. In support of this an account book Ex. V of defendants Nos. 1 and 2 has been filed. The District Munsif relying on Ex. V finds the point in favour of the defendants. He thinks that the entries in Ex. V exactly correspond both in respect of the dates and the amounts to the instalments which were due. The Subordinate Judge points out that this was incorrect and no argument has been addressed before me to show that the Subordinate Judge's view is erroneous and that the District Munsif's view is correct. The Subordinate Judge finds that all the other accounts of defendants Nos. 1 and 2 were not genuine. He finds no reason to discredit the evidence of the 3rd defendant who was the original stake-holder and who was the obligee of the bond Ex. A, and who assigned it to the plaintiffs. He finds the point in favour of the plaintiffs. I must accept the finding of the Subordinate Judge and can see no reason to reopen it. The second point argued is that the conditions of the bond are penal. Under this point he raises two questions, first, that the rate of interest payable in default is penal and secondly, the stipulation relating to payment of all the future instalments on two defaults is also penal. Mr. Patanjali Sastri appearing for the respondents argues that the second point was really not raised either in the written statement or in the issues. It was raised very vaguely in the written statement. It is true it, is not raised in the issues. The 4th defendant's conduct in depositing the amount of instalments Nos. 6 to 21 with interest at 12 per cent from that date of the 6th call up to 17th August, 1920, namely, Rs. 1,746 seems to suggest that he intended to raise no question about the advancing for the payment of instalments Nos. 6 to 21. The suit was filed on the 8th September, 1920. By that date, instalments Nos. 6 to 13 had fallen overdue and Nos. 14 to 21 had not. Even assuming that the stipulation about the payment of all the instalments on the defaults is penal, there is nothing to prevent defendants from paying and the plaintiff from accepting the amount of instalments Nos. 14 to 21 before their time. The only question is whether the amount of interest which he has paid for these instalments, namely, Rs. 546, was too much if it is regarded as the amount of interest only en instalments Nos. 6 to 13. One thing is clear that he was quite content to get rid of the obligation to pay instalments Nos. 6 to 21 by paying an interest of Rs. 546 for them whichever was the figure may be arrived at. That sum represents merely an interest of 45 per cent, if interest is calculated on instalments Nos. 11 to 13 from the respective dates they fall due. If interest is calculated at the rate of 30 per cent, (the rate finally adopted by the Subordinate Judge from the respective dates it represents an excess of about Rs. 179-8-0. It is unnecessary for me to consider whether any relief in respect of instalments Nos. 6 to 21 so as to reduce the amount payable from Rs. 1,746, should be given, as the amount has been willingly paid. The only question I have got to consider in respect of instalments Nos. 6 to 21 is whether the plaintiffs are entitled to any larger amount than Rs. 1,746 the sum deposited. The Subordinate Judge has given a decree for Rs. 1,963 -12-0 which was the amount claimed by the plaintiff and which consists of the amount of 19 instalments, namely, Rs. 1,425, and interest at the rate of 30 percent per annum from the date of the third instalment up to the date of the plaint minus a sum of Rs. 1,746 deposited in August, 1920, with further Interest from the date of the plaint at the same rate to the 27th December, 1924, the date fixed for payment. What the Subordinate Judge has done amounts to this, he has given a decree for Rs. 1,425 with further interest at 30 per cent, from the date of the third instalment. Now if we are to regard the deposit of Rs. 1,746 and the drawing of that amount by the plaintiff in respect of instalments Nos. 6 to 21 as putting an end to all questions relating to instalment Nos. 6 to 21, the only point remaining in the case is merely the interest which the Court may think fit to allow in respect of the third to fifth instalments. But the Subordinate Judge's judgment does not proceed on this footing. He actually awards a decree on the basis that the instalments Nos. 6 to 21 have fallen due on the date of the third instalment and allows 30 per cent, on them upto the date of suit, i.e., the question relating to these instalments also was considered in the case. Now we cannot regard the question relating to instalments Nos. 6 to 21 as closed for one purpose but open for another purpose. Apparently what the Subordinate Judge has done and what the respondent's Vakil wants is that it is closed for the purpose of the question of making all instalments payable in 1915 but open for the purpose of determining only what interest should be given on them. I am willing to accept this position, i.e., I will not consider the point whether the stipulation making all the instalments payable in '1915 is penal. The defendants have accepted it and paid money on that footing, I will consider only the question as to what interest should be allowed in the discretion of the Court. Only in determining the second point I will remember the fact that the whole amount has been made payable in 1915 and not only has been made payable but has been paid by the defendants on that footing in August, 1920 with interest at 12 per cent. I think that an interest of 12 per cent, per annum from 29th October, 1915, instead of 27th April, 1915 is an adequate compensation in respect of these installments. I do not mean to say that 12 per cent, is really the proper rate of compensation. I have already pointed out that the amount of Rs. 1,746 really amounts to an interest of 45 per cent, on the several instalments from their respective dates. I am really giving a very high rate of interest, that is, 1 am of opinion that instalments from Nos. 6 to 21 should be considered as having been discharged by the deposit of the defendants There remain only the third to fifth instalments. I think the rate adopted by the Subordinate Judge, namely, 30 per cent on these three instalments from their respective dates is enough compensation for the breach by the defendants. Mr. Patanjali Sastri argued that there can be no question of applying Section 74 of the Contract Act to a contract relating to a chit-fund. He relied on Vaithinatha Iyer v. Govindasami Odayar : AIR1921Mad650 . I do not understand that case to lay down that the terms of a chit-fund contract can never be penal. It only says that, in such a contract, the stake-holder undertakes extra risks and is entitled to heavier compensation than ordinary cases and such contracts should be scrutinized with less stringency and jealousy than ordinary contracts. In that case, on the terms of the particular transaction, it was held that the contract was not unreasonable. This case has been considered by Srinivasa Iyengar, J., in Ramalinga Adaviar v. Meenakshisundaram Pillai 85 Ind. Cas. 261 : 1925 47 M.L.J. 833 : 21 L.W. 54; A.I.R. 1925 Mad. 177. I agree with him that the terms of a chit-fund contract may be penal. In this case I am not reducing the interest awarded by the lower Appellate Court on the third, fourth and fifth instalments. I am only reducing the interest on instalments Nos. 6 to 21 conceded -as having fallen due on 29th October, 1915. There will, therefore, be a decree for (1) Rs. 75 of the third call with interest from the date of call up to the date of plaint at 30 per cent per annum.

(2) Rs. 75 of the fourth call with interest at the same rate from the date of that call upto the date of plaint.

(3) Rs. 75 of the fifth call with interest at the same rate from the date of that call up to the date of plaint, with further interest on the principal sum of Rs. 225 at the same rate of 30 per cent. from the date of plaint upto the date fixed by the lower Court, namely, 27th December, 1924, and at 6 per cent on the aggregate amount after that date.

3. The plaintiff and defendant will give and take proportionate costs throughout.


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