1. This is a reference under Section 69 of Act XV of 1882 and Rule 428 of the Rules of Procedure of the Small Cause Court on a case stated by the learned Chief Judge of that Court.

2. The suit is brought by the Liquidators of a Nidhi under voluntary liquidation to recover Rs. 1,653-4-10 the principal and interest on a loan made by the Nidhi to the defendant on the 14th December 1900 under Exhibit A.

3. The defendant had, at one time, been a shareholder in the Nidhi. After he had ceased to be a member on the 16th July 1900 he placed on deposit with the Nidhi the sum of Rs. 1,750 for 12 months. Before the termination of the 12 months he wanted his money back as he learnt that the affairs of the Nidhi were in an unsound condition but not being able to get it back he took a loan of Rs. 790 on the security of his deposit repayable on demand with interest at 12 per cent. under Exhibit A dated the 14th December 1900 which contained the following words: "If perchance I fail to pay the principal and interest due in respect of the amount borrowed by me I shall according to the rules of the fund receive out of the total amount of my deposit in your fund, the balance, if any, left after you