This petition raises an interesting point of limitation law applicable to a defaulting member of a chit fund.

The plaintiff was a stakeholder who conducted in Madura what is called an auction chit of the usual type. There were 100 chit subscribers who contracted to pay Rs.20 a month for a period of 50 months from 5th December, 1941. The chit auction was to be held on the 20th day of each Tamil month, the bid commencing from Rs.1,000. At the eleventh call the defendant who had subscribed only to a half share in the chit bought it for Rs.343 and executed an instalment bond on 9th October, 1942, for Rs.390, undertaking to pay future subscriptions as they fell due. The bond contained a clause that if default was made in the case of one instalment the whole sum would become payable with 12 per cent. interest. The defendant paid up to the 15th call but defaulted at the 16th call due on 3rd March, 1943. The plaintiff’s case is that subsequent to this the defendant paid only a sum of Rs.8 on 6th September, 1943. After the expiry of the chit period in 1945 the plaintiff sued to recover on the bond he had executed. The defendant pleaded the bar of limitation. The Subordinate Judge held that the suit was barred by limitation under Article 75 of the Limitation Act and dismissed the suit with costs.

There are two articles of limitation applicable to instalment bonds. The first is Article 74 which applies to “a promissory note or bond payable by instalments.” It prescribes three years in respect of each instalment from the expiry of the respective terms of payment, in other words, three years from the date on which the instalment becomes payable under the bond. Article 75 provides specifically for an instalment bond:

“payable by instalments, which provides that if default be made in payment of one or more instalments, the whole shall be due.”

It prescribes three years from the date:

“when the default is made, unless where the payee or obligee waives the benefit of the provision, and then when fresh default is made in respect of which there is no such waiver.”

Had the matter been res Integra I should have had no difficulty or hesitation in construing these Articles as they stand. Different opinions have been however taken in decided case-law in which there is no Bench decision of our High Court or any other decision by which I appear to be bound. I shall refer to these decisions presently; but I should like to give my own reasons why the finding of the Subordinate Judge cannot be sustained, that the suit should be held to be governed solely by Article 75.

In an instalment bond with a default clause, as it appears to me, there are two covenants independent of each other, one by the debtor to pay monthly a particular sum and the other that if he defaulted and the creditor did not waive the provision of the default clause he was entitled to recover the whole amount due on the bond. It is only in cases where the creditor elects to enforce the default clause and sues to recover the whole sum, as may well happen long before the expiry of the whole instalment period, that Article 75 becomes operative. It prescribes three years from the date of the default provided that a plaintiff has not waived such default. The plea of waiver has, as it appears to me, obviously to be set up by the debtor who is entitled in defence of such a suit to enforce the default clause, to show that the plaintiff has by his conduct or other circumstances in the case condoned or waived the default committed by him. If the defendant succeeds in proving waiver of a particular default, another suit can be filed under Article 75 to enforce the default clause within three years of the next default provided again the defendant cannot establish that this default has been waived. This appears to me to be the ordinary meaning to be attached to Article 75. As I read the two articles together Article 75 is no bar to a suit on the instalment bond itself either after or before the expir