M. Thirumalachariar vs S.P. Varadappa Chettiar

(1) This is a defendant''s second appeal arising out of a suit for recovery of a sum of Rs. 600 alleged to be due form him to the commercial Funds

Ltd. Kancheepuram. The defendant was a subscriber to a chit conducted by the funds. He took in auction a chit for Rs. 5000 payable in 100

monthly installments of Rs.50 each. The first instalment was due on March 14, 1947, and the last was payable on May 14, 1951. Admittedly, the

defendant paid all the installments due upto September 14, 1949, but he failed to due pay the subsequent installments. The funds were directed by

this court in O. P. No. 309 of 1949 to be wound up.

The official Receiver who was appointed as the Officials liquidator for realising the outstandings of the funds sold the outstanding, due to funds, to

the plaintiff, the respondent in the present second appeal by means of a sale deed dated May 17, 1954. The plaintiff, a s such assignee, claimed to

be entitled to realise the amount chimed in the suit. According to him although he was entitled to a larger amount, he confined his claim to the sum

of Rs, 600 being the installment payable for the period from December 14, 1950 to May 14, 1951. The suit was actually instituted on July, 1955,

The plaintiff pleaded that the suit was in time by virtue of Madras Ordinance V of 1953 and Madras Act V of 1954 and I of 1955.

(2) The main defence to the suit was on of limitation. The contention on behalf of the defendant was that the sit was governed by Art. 75 of the

First Schedule to the Limitation Act. This defence found favour with the trial court, with the result that the suit was dismissed. The argument on

behalf of the defendant in this court trial court found that under rule 6 of the Fund''s bye-laws the consequence of default in payment of any of the

installments was that the entire debt would become due from the date of the default; and that no waiver of the benefit of this rule having been

established by the plaintiff, t he suit would be out of time under Art. 75. A further argument was advanced before threat trial court that the suit

would be within time by reason of an admission of liability on the part of the defendant in an earlier written statement filed by him in O.S. No. 186

of 1952 on the file of the District Muncie of Conjeevaram.

That was a suit in which one swaminatha Mudaliar, claiming to be an assignee of the debt, sought to recover the sought to reviver the sum form the

present defendant; an in defence the defendant''s plea was, inter alia. That the assignment itself was void and that he was, therefore, not liable for

the debt. There was an alternative plea in the written statement that if the assignment were to be held to be good and valid his liability would extend

to sum of Rs. 600 and not to any larger sum. Actually this written statement was not filed at the trail court, but a reference to the alleged admission

was found in the judgment, Ex. B-3, in that suit. There was also a reference to the alleged admission in Ex. A-5 another written statement, said to

have been filed by the defendant before the Official Receiver. Chingleput. The trial court on a consideration of Ex. B-3 and A-5, was of the view

that the acknowledgment pleaded by the plaintiff to save the bar of limitation was not established.

(3) On appeal by the plaintiff, the lower appellate court took a different view on the question of limitation. In effect, it considered that waiver on the

part of the plaintiff would, in such circumstances be presumed, and that the suit would, therefore be in time under Art. 75 of the Limitation Act. In

support of this view, the lower appellate court relied on the decision of Mack J. In S.K.S. Ayyathurai Mudaliar Vs. Ibramsa Rowther and

Another, allowed the appeal and decreed the suit. The aggrieved defendant has therefore, come up to this court in second appeal.

(4) The main point urged by Sri K. S. Champakesa Aiyangar, the learned counsel for the appellant, is that the lower appellate Court was in error

in supposing that waiver for purposes of the third column of Art, 75 could be presumed in favor of the plaintiff. His contention is that the plaintiff if

he wanted to rely on it, UST already plead waiver, for purposes of the third column of that Article and prove the same just like any other fact by

cogent evidence. His contention further is that the mere fact, that waiver might be to the benefit of the plaintiff, is not sufficient justification for the

view that waiver can be presumed in favour of the plaintiffs and that the defendant should prove that there is no waiver. I think the learned counsel

is right in his contention. Art. 75 of the Limitation Act governs a suit inter alia, on a bond payable by installments, which provides that if default be

made in payment of one or more installments, the whole shall be due. The period prescribed for such a suit is three years. The starting point as

provided in column 3 is stated thus;

When the default is made unless where the payee or the obligee waives the benefit of the provision and then when a fresh default is made in

respect of which there is no such waiver.

It is clear from this hat the period of limitation commences the moment there is a default made in payment o of the installment due. A suit beyond

three years form the date of such default would prima facie be out of time. It would be within time only if the plaintiff has waived the benefit of the

default provision, Whether there is a waiver.or not is a question of fact. Obviously it will have to be pleaded and established, if it is to be relied

upon as a ground for the exemption form the bar of limitation provided by Art. 75 The mere fact that a waiver will be to the advantage of the

plaintiff inasmuch as that will save him from the bar of limitation, will not ipso facto be a proper basis for the view that he sold be assumed to have

waived the benefit and that on that basis the defendant who pleads to the contrary, should be called upon to establish the negative, should be called

upon to establish the negative namely, that the plaintiff has not waived.

(5) Sri T.V. Balakrishnan, the learned counsel for the respondent however, relies on the decision in AIR 1949 Mad 592 and contends that only in

cases where the plaintiff wanted to elect to enforce the default clause in the bond, Art. 75 would be attracted. Mack J. Held on the facts in that

case that in a suit on a installment bond with a default clause, Art. 75 will only operate if the plaintiff elects to enforce the default clause which it is

always open to him to waive or forgo; and that in such cases his right to recover the installments as on an ordinary installment bond within three

years prescribed by Art. 74 of the Limitation Act remains unaffected. In that case the stake-holder kept an account of the moneys owed by the

subscribers; it was found in the account that he had credited the commission due to the defendant on the basis that he had committed no default.

That clearly showed that the case for the plaintiff in that case was that the installments had been paid and there was no default. In view of the fact

the actually the commission was credited to the defendant on the basis that there was no default, it was apparent there was a waiver on the part of

the plaintiff.

On that basis the actual decision of Mack J. In that case if I may say so with due respect, was correct. But there are no doubt observations in his

judgment which possibly lend some support to the view that waiver may be assumed in favour of the plaintiff as it would be to his benefit in such a

case as this. But with great respect to the learned Judge, I can find no justification for that view in the language of Art. 75 particularly that of

column 3 thereof On the other hand, my attention has been invited by the learned counsel for the appellant to the decision in Gopala Menon v.

Kallingalakath, 68 Mad LJ 244: AIR 1935 Mad 303, in which Madhavan Nair J. Was evidently of the view that waiver should be proved by the

plaintiff by proper evidence. It is true that the learned Judge has not laid down such a proposition in so many terms, but the approach of the

learned Judge to the question was obviously on that basis. On the language of Art. 75 I am clearly of the view that if the plaintiff wants to get the

benefit of waivers in order to save time. He must specifically plead and establish the same by evidence. I can see no support in the language of the

Article for the assumption that waiver will be presumed in favour of the plaintiff and that it is for the defendant to plead the negative and prove the

same for purposes of column 3 of Art. 75.

(6) On that view, there is no difficulty in holding in this case that the plaintiff has not established waiver. There is not even a plea of waiver in the

pliant; much less has there been any evidence directed on the plaint. It follows, therefore, that the suit was out of time and was rightly dismissed by

the trial court.

(7) Sri T. V. Balkakrishnan urges that the suit should be held to be in time on the ground that the defendant had acknowledged his liability to the

extend of Rs. 600 in the written statement filled by him in O. S. No. 186 of 1952 But this ground of exemption form the bar of limitation was not

specifically taken in the Plaint. It is true that in the plaint it was pleaded that the suit was within time but that was on a different ground namely that

Ordinance V of 1953 and the subsequent Acts already referred to saved the bar. O. VII R. 6 of the CPC requires that where a suit is instituted

after the expiration of the period prescribed by the law of limitation the plaint shall show the ground upon which the exemption from such law is

claimed. The rule appears to be mandatory. It is not sufficient that a plea of exemption is made on a certain ground in order to permit the plaintiff to

support the exemption on another ground not pleaded. So much appears to have been held by Cornish J. In Palani Chetty Vs. A.R.S.V. Sevugan

Chetty, , and by Walt J., in (Baghvatham) Mahadeva Sastrigal Vs. Kariyakara Marulai Reddiar and Others, . These two decisions have been

followed by Venkataramana Rao J. In Ramaswami Chetti Vs. Anaiya Padayachi and Others, . In view of these decisions Sri Balakrishnan made

an oral application to this court for leave to amend the plaint. Obviously this request is too belated and cannot be allowed.

(8) The result is the second appeal is allowed. The judgment and decree of the lower appellate court are set aside and the suit will stand dismissed.

The defendant will be entitled to his costs throughout.

(9) Appeal allowed.