Amount due from auction purchaser of chit is not debt.

K.A. Swami, C.J.

These two second appeals are preferred against the common judgment and decree passed in A.S. Nos.148 and 188 of 1982, dated 18th January, 1983. Those appeals arose out of the judgment and decree dated 27th February, 1982 passed in O.S. No.770 of 1981 by the District Munsif, Vellore.

2. The plaintiff/ respondent in both the appeals filed the aforesaid suit for recovery of a sum of Rs.7,712.50 being the principal with interest at 12% per annum. The first defendant in the suit subscribed two chits in Group No.3C and Group No.16 payable in 20 monthly instalments of Rs.500 each. The payment of instalments commenced in April, 1975. He paid 10 instalments. He was declared as the successful bidder in the auction held on 1. 1976. He executed the pro-note on 21. 1976 for the remaining sum of Rs.5,000 and paid the first instalment in February, 1976. Thereafter, the instalment fell due on 13. 1976, but, he did not pay the second instalment nor did he pay the subsequent instalments.

3. He was also a subscriber to another chit in chit Group No.13 A and Group No.18 for a sum of Rs.5,000 payable in 20 monthly instalments at the rate of Rs.250 per month. The payment of instalment commenced in November, 1974. After payment of certain instalments, on 9. 1975, the chit was auctioned. The first defendant became the auction purchaser. For, the balance of the amount of Rs.2,250 defendants 1 and 2 executed a pronote on 29. 1975. The instalment under the pronote became payable on 4. 1976. However, the instalment amount was not paid. Hence, the whole amount became due on the default committed by the first defendant in payment of instalments recurring in both the chits. The trial court decreed the suit.

4. The trial court raised the following issues:

1. Whether the chit fund transaction as alleged in the plaint is true?

2. Whether the defendants are entitled to the benefits of Act 13 of 1990?

3. Whether the suit is barred by limitation?

4. Whether the cause of action alleged is true?

The trial court answered all the issues in favour of the plaintiff except in respect of one chit. Accordingly, it decreed the suit for a sum of Rs.1,423 with proportionate costs. Hence, the plaintiff and the defendants also preferred appeals. Therefore, both the appeals were heard together and decided by a common judgment.

5. It may be pointed out here that in respect of chit Group No.3C, the suit was held to be in time, whereas in respect of the other chit No. 13 A, it was held to be barred by time. Whereas, the learned appellate Judge has allowed the appeal preferred by the plaintiff and dismissed that of the defendants. Consequently, the learned appellate Judge has decreed the entire suit.

6. When these appeals came up before Raju, J. the learned Judge considered that the question of limitation is a recurring question, therefore, it has to be decided by a larger Bench. Accordingly, these appeals have been referred to a Division Bench by the order of reference dated 6. 1996. The learned single Judge has also expressed that it is not possible to agree with the view expressed in Sundarsan Chit Fund v. Mrs.Jagadambal, (1982)2 M.L.J. 169 and has further held that the suit cannot be filed for the entire consolidated payment and future subscription unless the notice is issued under Sec.25 (2) of the Tamil Nadu Chit Funds Act (for Short ‘the Act’); that under Sec.24 of the 1961 Act, limitation would commence only when the demand is made as per Sub-sec.(2) of Sec.25 of the Act.

7. Therefore, the following points arise for consideration:

(1) Whether the limitation under Art.37 of the Limitation Act for recovery of the amount due under the chit funds as per the provisions of the Tamil Nadu Chit Funds Act, 1961 would commence on the date when default is committed in payment of the instalments or on the date the notice demanding the entire sum is issued as per Sub-sec.(2) of Sec.25 of the Act?

.(2) Whether the chit amount can be considered to be a