The liability of a subscriber to a chit fund continues even after providing sureties, and the Official Liquidator can recover the monies due from the subscriber despite the company's liquidation.

Gentle, J.

1. The applicant was the subscriber for one ticket in a chit fund conducted by the company of the nominal value of Rs. 1,000. Having been a successful bidder for the prize at the sum of Rs. 940, he withdrew the prize. Thereafter his liability to pay his subscriptions from month to month continued. He withdrew the prize money upon supplying to the company security for the amount, the security being the monies to which his two brothers would each be entitled in respect of their respective subscriptions to other chit funds conducted by the company, the two brothers being sureties. In the applicants affidavit, he states that the two brothers non-prized tickets were to be held as security for future instalments payable by him, and the company were empowered to appropriate the amounts due to them under the two tickets belonging to the two brothers towards any future instalments if default were committed in respect of such instalments. The learned Official Liquidator has taken the objection that any arrangement which had been made between the applicant and the company together with the two brothers is contained in letters written by the two brothers and that these required stamping and the absence of the stamp renders the documents inadmissible in evidence and also their contents cannot be included in an affidavit and the facts set out therein treated as proved facts. In the light of the conclusion to which I have arrived, it is not necessary to deal with this aspect of the application, and I propose to assume for the purpose of my decision that it has been established that the applicants two brothers were his sureties and the company is entitled to look to them if default were made by the applicant in respect of any future instalments. Under the rules of the Fund, failure by the applicant to pay any one instalment rendered the total amount outstanding immediately payable to the company.

2. The applicant contended (1) that his liability ceased at the date when his two brothers became surety inasmuch as it was to them the company agreed to look for payment and not to him. This contention is contrary to the facts which are set out by the applicant in his affidavit in which he says the company was entitled to look to the monies payable to the two brothers if default were committed by the applicant in respect of future instalments due from him. It follows that this contention fails.

3. Secondly, learned Counsel on behalf of the applicant contended that since the company has gone into liquidation and therefore has reached a position in which the securities which had been taken in respect of monies due from the applicant cannot be returned to him, the Official Liquidator is not entitled to recover from the applicant any monies due from him. In support of the contention now raised two cases were cited to me, Official Assignee v. M.C. Harikrishna A.I.R. 1935 R. 201 and Ellis & Co.s Trustee v. Dixon-Johnson (1925) A.C. 489. The latter case was referred to and discussed in the Rangoon case. The facts in the Ellis & Co.s case (1925) A.C. 489 were as follows:

4. The firm carried on business as stockbrokers and the defendant opened with them a speculative account and he deposited as security for any debit balances which might be owing, various bonds and shares. Ellis & Co. sold some of the shares without the knowledge, authority or consent of the defendant, and he was ignorant of such sales until after the firm had become bankrupt. The trustee in bankruptcy having given credit to the defendant in respect of monies received from the proceeds of sales, claimed the balance due upon the general account and sued for this amount. It was held by the House of Lords that the stockbrokers themselves could not have maintained an action for the balance against the defendant inasmuch as they would not be entitled to be paid unless they were able to restore the security which he had furnished, since payment by the defendant would entitle him to