IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED :: 07-04-2006

CORAM

THE HONOURABLE MR.JUSTICE M.KARPAGAVINAYAGAM

THE HONOURABLE MR.JUSTICE AR.RAMALINGAM

AND

THE HONOURABLE MS.JUSTICE K.SUGUNA

APPEAL SUIT No.200 OF 1988

C.Dhanam

...

Appellant/5th Defendant

-vs-

1.A.M.Srinivasan

2.C.Andiyappan

3.C.Lakshmanan

4.C.Pazhaniappan

5.C.Meenatchi

...

Respondents/Plaintiff/

Defendants 1 to 4

Appeal against the judgment and decree dated 18.09.1986

made in O.S.No.936 of 1985 on the file of V Additional Subordinate

Judge, Tiruchirapalli.

For appellant : Mr.P.K.Jamal Mohamed

For respondent 1 : Mr.R.Arunagirunathan

For respondent 2 : Mr.S.Abdul Samath

For respondents 3 to 5 : No appearance

J U D G M E N T

M.KARPAGAVINAYAGAM,J.

The question referred to this Full Bench is as follows :

Whether, in respect of a chit transaction,

the starting point of limitation for filing a

suit is from the date of default or from the

date of termination of chit period ?

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2. The short facts are as follows :

"(i) A.M.Srinivasan, plaintiff/first respondent herein,

carried on chit business. One Chinnakaruppan, being a subscriber

in respect of two chits, was the prized subscriber in those two

chits. The two chit transactions commenced on 01.02.1982 and

20.04.1982 respectively. In respect of the first chit, the said

Chinnakaruppan committed default from the date of sixth

instalment, namely, 01.06.1982. In regard to the second chit, he

committed default from the date of third instalment, namely,

20.06.1982. The period of 20 months for the first chit got

terminated on 30.09.1983 and the second chit on 19.12.1983.

(ii) Chinnakaruppan died, possessing of property and

leaving behind the legal representatives.

Therefore,

A.M.Srinivasan sent a notice to the legal representatives of

Chinnakaruppan on the termination of the chit period on

18.10.1984, claiming the chit amount. However, the amount was not

paid. Hence, the said A.M.Srinivasan, as plaintiff, filed

O.S.No.936 of 1985 on 04.11.1985 against the heirs of

Chinnakaruppan, as defendants, for recovery of the defaulted

subscriptions, in respect of the two chit transactions.

(iii) The trial Court decreed the suit against the

defendants to the extent of the assets of the deceased

Chinnakaruppan in the hands of the defendants.

(iv) Fifth defendant alone has challenged the said

decree and filed the present appeal in A.S.No.200 of 1988 before

this Court."

3. When the matter came up before a learned single Judge

of this Court for final disposal, learned counsel for the

appellant, assailing the decree of the trial Court, raised the

only point that the suit is not maintainable, as it is barred by

limitation.

4. The learned single Judge, after hearing the counsel

for the parties in this appeal, was pleased to refer the matter to

a Full Bench, to decide the issue, in view of the conflicting

judgments of the two Division Benches, reported in 1997 (1) CTC

471 (M.Gopal v. Sri Vetrivel Chit Funds Pvt. Ltd.) and 1999 (1)

CTC 238 (Shriram Chits and Investments (P) Ltd. v. M.Krishnan).

5. As per the judgment of the Division Bench in M.Gopal

v. Sri Vetrivel Chit Funds Pvt. Ltd. (1997 (1) CTC 471), Article

37 of the Limitation Act is applicable and the commencement of

limitation for filing a suit against the prized subscriber would

commence on the day when the last instalment was paid and the suit

should be filed within three years from the date of default.

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6. On the other hand, another Division Bench, in Shriram

Chits and Investments (P) Ltd. v. M.Krishnan (1999 (1) CTC 238),

held that where a chit agreement is for a period of 60 months, the

chit company has to wait till the end of the last instalment, as

the period of limitation would commence from the date of

termination of the chit period, thou