The central legal point established in the judgment is that chit fund transactions, if not unlawful, can be enforced in courts and may require regulation through legislation.

Waller, J.

1. Petitioners were subscribers to a chit fund. They sued to recover from the stakeholder Rs. 36, being the amount paid by them for 18 installments at Rs. 2 a month. The defendants set up the usual dishonest plea that the fund was a lottery and their plea was accepted by the lower Court.

2. Two questions arise:

(1) Whether the fund is a lottery;

(2) If it is, whether the subscriptions are recoverable.

3. On both of these questions there is a great conflict of authority. The cardinal feature of this fund and of all the other funds dealt with in the decisions cited before me is this that lots are drawn for prizes monthly and that the winners get Rs. 50, the full amount of the chit without any liability for further subscriptions. After the 50th drawing, the unsuccessful subscribers get back the full amount of their subscriptions, but without interest.

4. On the first question, Phillips, J., held in Sankunni v. Ikkora Kirtti [1919] 37 M. L. J. 209 that a chit fund of this description was a lottery. The question arose again before Krishnan and Odgers, JJ. They agreed with Phillips, J., on the first question, but disagreed on the second. Krishnan, J., thought that the arrangement to give prizes was separable from the main contract, which was to return the subscriptions. Odgers, J., held that a subscriber was not entitled to recover. In Shanmuga Mudali v. Kumaraswami Mudali A. I. R. 1925 Mad. 870 Ramesam and Venkatasubba Rao, JJ., dissented from these two decisions on the first question and held that a fund of this kind was not a lottery at all. In Veeranan Ambalam v. Ayyachi Ambalam A. I. R. 1926 Mad. 168 Spencer and Madhavan Nair, JJ. declined to follow this decision and held that such a fund was a lottery. On the second question they disagreed with Krishnan, J., and agreed with Odgers, J. I am informed that there are several unreported decisions on these questions. It is evident that funds of this sort are numerous. The promoters do not seem to have been proceeded against under the Criminal Law and the public must be in a state of complete uncertainty as to the legal position. The judiciary in the mofussil are in the same difficulty. It seems to me essential that the controversy should be set at rest as soon as possible. I therefore order that this petition be placed before the Honourable the Chief Justice with a view to its being referred to a Full Bench.

Order.

Spencer, J.

5. This suit was brought to recover Rs. 55-15-6 alleged to be due from the first defendant who promoted a chit fund to which the plaintiffs and others subscribed for 15 months till it was stopped.

6. The Principal District Munsil of Manamadura dismissed the suit upon the preliminary point that this chit fund constituted a lottery and that a suit to recover money contributed to a lottery would not lie. The first defendant raised this defence among others in his written statement; but no evidence was taken to establish whether this particular chit fund was a lottery. It is essential to know how it was organized and advertised and whether anyone who liked could join by merely paying subscriptions. The rules of the fund as given in the printed book filed with the plaint are not sufficient to make this clear. The learned District Munsif from his observation in Para. 7 of his judgment appears to have held the opinion that the existence of a wager was the only test whether there was or was not a lottery. But this is not a necessary consequence. If the only defence to this suit had been that the contracts between the individual subscribers and the promoter of the chit fund amounted to wagering contracts, then other considerations would arise for determination in respect of the plaintiffs right to recover sums paid by them upon a consideration that failed.

7. Before the dismissal of the suit upon this preliminary point can be upheld, we must call for a finding to be returned within one month of the re-opening of this Court after the ensuing summer vacation, whethe