The limitation period for a suit to recover dues from a chit transaction begins to run from the date of termination of the transaction, not from the date of default.

The second appeal arises out of the judgment of the learned District Judge, Tirunelveli in A. S. No. 21 of 1985 in confirming that of the learned Subordinate Judge, Tuticorin in O. S. No. 35 of 1982.

2. The plaintiff, the Tuticorin Trading and Credit Corporation Private Ltd. is the appellant in the present second appeal.

3. The suit was filed on a chit transaction claiming a sum of Rs. 21,737.06 as due from the chit. The defendant raised mainly two defences viz., that he did not subscribe to the chit transaction and that the suit was barred by limitation. While the trial Court upheld both the objections of the defendant, the lower appellate Court agreed with the plaintiff's claim and held that the defendant had subscribed to the chit transaction and that he has also committed default. However on the question of limitation, the lower appellate Court agreed with the objection of the defendant that the suit was barred by limitation and hence the present second appeal by the plaintiff.

4. The only question which arises for consideration is as regards the question of limitation. In the present case, there were two chits. The admitted facts are, with reference to the first chit the default was committed on 11-11-1978 and the chit was terminated on 26-5-1979 and in the second chit the default was committed on 22-12-1978 and the chit was terminated on 22-1-1979. Notice under Section 25 of the Chits Act was issued by the Foreman on 2-11-1981 and the suit was filed on 8-1-1982.

5. It is the contention of the learned counsel for the appellant that the limitation was calculable from the date of notice under Section 25 of the Chits Act which was issued on 2-11-1981 and therefore, the suit was within the period of limitation. However, even calculating the limitation from the date of termination, the suit was within the period of limitation.

6. In the present case, it is not necessary to consider the implications arising out of Section 25 of the Chits Act and the decisions referred to by both sides on the side issue need not be discussed. As stated earlier, even from the date of termination, the suit has been filed within the period of limitation and hence the question is whether the objection of the defendant that the limitation should be calculated from the date of default and not from the date of termination could be sustained. That is the only question which arises for consideration in the present Second Appeal.

7. The main contention of the learned counsel for the respondent is that the date of default will be relevant and the claim being based only on the promissory Note, Art. 37 of the Limitation Act would alone apply. Learned counsel for the respondent relies on the judgment of the learned single Judge of this Court in Sudarsan Chit Fund v. Mrs. Jagadambal, (1982) 2 Mad LJ 169. He relies on the observation of the learned Judge in paragraph 13 of the judgment which is to the effect that 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 the instalment and that under Art. 37 of the Limitation Act, the suit has to be filed for recovery of the whole of the future instalments as soon as the default was committed in payment of any one of the instalment. In that case the question which arose for consideration was as to whether due to the absence of a notice under S. 25 of the Tamil Nadu Chits Act, the suit would be barred. A stray observation of the learned Judge in the said judgment cannot stand in the way of deciding the facts of the present case. The nature of a chit transaction came up for consideration before the Supreme Court in M/s. Shriram Chits and Investment (P) Ltd. v. Union of India. The Supreme Court, after considering various judgments of the Kerala High Court, Andhra High Court and this Court, came to the conclusion that having regard to the nature of a chit agreement it did not create a debtor-creditor relationship. There was no pro