The main legal point established in the judgment is the application of Art.37 of the Limitation Act of 1963 to chitty transactions, the relevance of Art.36 and Art.113, and the implication of waiver in the context of default in payment of instalments and the option to enforce the default clause.

1. A question of limitation, of general application arising for frequent consideration is the substantial question of law involved in this second appeal. In particular, the scope of Art.37 of the Limitation Act of 1963 arises for decision on the facts, hereinafter stated.

2. The appellant is the 1st defendant. He joined a kuri, a chitty transaction conducted by the plaintiff. He received the amount from the plaintiff on 25-1-1971 on executing an agreement assuring the payment of future instalments. He continued to pay the future instalments till 15-11-1974. He then defaulted. He did not pay any further instalment. The plaintiff filed the suit for the balance amount due from the date of default. The suit was filed on 17-6-1978.

3. The agreement, Ext. Al, executed by the 1st defendant, when he was anxious to receive the prize amount on 25-1-1971 provided thus:-

"In case of default of any one of the installments, the foreman firm is entitled to sue for the entire balance defaulted and future instalments at the rate of Rs. 100/- (one hundred) per instalment, and the parties agree that the foreman firm shall have the right to proceed against the persons and properties movable and immovable of the parties simultaneously".'

4. The trial court decreed the suit for the amounts which fell due within three years of the filing of the suit on 17-6-1978. In appeal, the District Court confirmed this decision. The Second Appeal is filed against these two concurrent decisions.

5. Notice was issued in the Second Appeal on the following questions: "as to whether in view of Ext. B1 notice, is it not Art.37, of the Limitation Act, 1963 that governs this case, and as to whether the obligee under Ext. Al has or has not waived the benefit of the provision as regards default-clause".

6. On these facts, will Art.37 (corresponding to Art.75 of the Limitation Act of 1908) apply or is it Art.36 or the residuary Art.113?

7. Art.37 reads thus:

Table:#1

And Art.36 which is also relevant, says thus:-

And the residuary Art.113, also relevant, state thus:-

8. The questions raised are not res integra. Art.36 applies to promissory notes and bonds payable by instalments. Art.37 also applies to those promissory notes and bonds payable by instalments but which provide that if default is made in payment of one or more instalments, the whole shall be due. The period of limitation, even in that case is three years which runs "when the default is made". If, however, the payee or obligee waives the benefit of the default clause and fresh default is made subsequently, time will run from the date of that fresh default in respect of which there is no waiver. This is the plain content of Art.37. In its application, however, it raises several problems and has given rise to a conflict of decisions of various High Courts. I shall try to simplify the issue so far as this case is concerned.

9. Art.36 applies to all promissory notes and bonds, payable by instalments. If, however, there is a default clause Art.37 is attracted and Art.36 is excluded. But Art.37 can apply only when there is default. If there is no default in the payment of the instalments, in a case where penalty for default is provided, Art.37 also does not apply. In such cases, the residuary provision Art.113 is attracted and time will run when the right to sue for the balance amount arises. The amounts due within 3 years of the institution of the suit are not barred.

10. Where there is a default provision in an instalment bond and the default clause is not enforced, can the payee still plead that the claim is barred? In other words, if there is option to enforce or not to enforce the default clause, will Art.37 apply? In such cases, cannot Art.113 be invoked?

11. Some decisions state that the default clause is inserted for the benefit of the creditor. He has the option to enforce the default clause or not. If he does not choose to exercise the option, this bond, becomes an ordinary instalment bond to which Art.36 a