The liability of a surety arises from the date of the notice of default given to him and not from the date of the first default made by the principal debtor.

( 1 ) THIS appeal is by the 2nd defendant in O. S. No. 240 of 1950 on the file of the Subordinate Judge, Nellore. That was a suit instituted by the 1st respondent for recovery of a sum of Rs. 10,234-10-8 from the appellant and two others. The suit was decreed both against the 1st and 2nd defendants and dismissed against the 3rd defendant. The 1st defendant has not filed any appeal nor is there any appeal filed by the plaintiff seeking relief against the 3rd defendant.

( 2 ) BEFORE we consider the arguments, it is necessary to state a few facts and give a resume of the pleadings. The plaintiff is a Bank with its Head Office at Madras and a branch office at Nellore. Apart from conducting other kinds of banking business, it runs what are known as chit fund transactions. Every person who subscribes to such a fund pays for a fixed number of months a monthly subscription whereof the amount varies according to what is fixed as the prize amount. Once every month there will be an auction at which the person who-offers to pay the largest discount is declared the successful bidder and he is awarded the prize amount. But even after receiving it, he will still be liable for the subscription for the period of the duration of the fund. The plaintiff started the suit chit fund which was called Chit Fund No. 120/m and the prize amount was Rs. 10,000. 00. It was to run for a period of 50 months and each subscriber was to pay a monthly subscription of Rs. 200. 00it was started on 10-12-1946 and at the auction on 10-3-1957 the 1st defendant became the successful bidder he having made a bid for Rs. 6,795. 00. By then he had paid five instalments of subscription find bad to pay 45 more, that is to say, he had still to pay Rs. 9,000. 00. Under the rules governing the fund, every successful bidder had to furnish security to the satisfaction of the plaintiff for the due payment of the future instalments. In the present case, according to the plaint allegations "the defendants executed a promissory note dated 6-5-1947 in favour of the plaintiff-Bank for Rs. 9,000. 00 being the amount of unpaid 45 instalments and also a letter of the same date undertaking to pay the said sum in monthly instalments with interest at 12 per cent per annum with quarterly rest from the date of default of any instalment". The plaint proceeds to state that the 1st defendant paid seven more instalments aggregating to Rs. 2,400. 00 and committed default on 10-12-1947, when the 13lh instalment fell due. The plaint further avers that notices were given to all the defendants informing them of the default committed and demanding payment of the amount. The defendants received notices but did not make any payment. It is further stated in the plaint that the plaintiff bases its claim "on the original chit fund contract as also on the suit promissory note and on the letter executed as security in respect of the unpaid instalments. "

( 3 ) THE three defendants filed three different written statements but we are only concerned with that of the appellant. The material paragraphs therein which are brief may he extracted. "3. The suit promissory note is not fully supported by consideration. Admittedly it was only a sum of Rs. 6,795. 00 that was paid to the 1st defendant. The 1st defendant appears to have paid in all Rs. 2,4007- towards the suit promissory note. Giving credit to this amount a sum of Rs. 4,395. 00alone would he due to the plaintiff,

( 4 ) THE chit-system conducted by the plaintiff is illegal and opposed to public policy. It amounts to lottery and the suit promissory note is therefore void and unenforceable.

( 5 ) THE plaintiffs suit is further barred by law of limitation. The pleas embodied in paragraphs 3 and 4 of the written statement have not been seriously pressed in the Lower Court nor have they been raised before us. 4. Mr. Venkata Subbarao for the appellant however endeavoured at first to raise a point not covered by any one of these picas viz. , that there was subsequent

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