T.V. Seetharama Aiyar vs Muniswami Mudaliar and Others

Seshagiri Aiyar, J.—The case has been very fully argued by the learned vakils who appeared for the petitioner and the counter petitioners. I

shall therefore proceed to give judgment at once.

The suit is for instalments due in respect of a chit fund. The plaintiff calls himself the agent and proprietor of the fund. The 1st defendant was a

subscriber in it. He obtained the price in the raffle and received the full amount. Thereupon Exhibit A was executed by him and his surety to the

plaintiff. One sentence in it which has given rise to much comment is this: ""We shall severally or jointly without setting up proportionate liability pay

in lump on demand the balance due with interest at one per cent per mensem from the date of default."" After the execution of the bond, the 1st

defendant paid sums of money although he did not pay them on the due dates according to the rules of the fund. The present suit was brought for

the balance. It is admitted that if the claim is made for the subscription and not based on the bond, subject to other defences if any, the suit will be

in time. The District Munsif has held that the suit was barred by limitation.

The first question argued before us by Mr. T.M. Krishnaswami Aiyar was that the suit must de deemed to have been based on the original

cause of, action and not on the bond and as the plaintiff is only claiming whatever is due to him within the period of limitation, no question of

limitation can arise. I was at first inclined to agree with him, but on considering the matter more fully, I think that Mr. C.A. Seshagiri Sastriar''s

contention is well founded in regard to this matter. In paragraph 13 of the plaint, it is stated he "" (the plaintiff) has not therefore enforced the penal

clause of the bond and has waived his right. "" There can be no question of waiver unless it be a suit on the bond itself. Nowhere is it stated that the

suit is based upon the liability under the rules of the fund. Mr. T.M. Krishnaswami Aiyar suggested that there can be no question of instalment

under the bond, Exhibit A because there are no instalments provided in it expressly. I do not think that this contention is well founded, because the

bond refers back to the receipt containing the bye-laws and the receipt containing the bye-laws would undoubtedly have given the various dates on

which instalments are due. Therefore if the question turns solely upon the contention of the plaint, whether it is based upon the original cause of

action or on the bond, I would have agreed with the lower Court that the suit is based upon the bond; and as there has been a default in the

payment of the instalments, it would be barred by limitation.

The next question is whether under the bond the right to the whole amount accrued on default of paying any one of the instalments. Before

dealing with the cases which have been quoted, I may refer to the language of the document itself. The vernacular expression is and when that

expression occurs in reference to the payment of the whole amount and not in regard to the payment of the instalments, it seems to me that it was

the intention of the parties that, if the promisee wanted to enforce his rights under the penal clause, to require the promisor to pay the whole of the

amount he must make a demand. The context and the language employed are prima facie in favour of the view that there should be an antcedent

demand before a suit is brought. As regards the cases cited, the learned vakil for the counter-petitioners invoked the Very high authority of

Blackburn, j., for the proposition that whenever the words ""on demand"" occur in any instrument whether it be a mercentile instrument or any other

deed, they should be regarded as technical words indicating that the cause of action arises at once. On examining the cases quoted, namely Brighty

v. Norton 32 L.J. (Q.B.) 38. I do not find that the learned Judge drew any distinction between mercantile transactions and other transactions. The

other English cases quoted do not take the matter any further. Before dealing with the Indian cases, I may refer to the decision in In re J. Brown''s

Estate : Brown v. Brown (1893) 2 Ch. 300 which seems to indicate that where a provision is made for the happening of a contingency, that

contingency must be proved to have happened. That case has since been accepted as good law in Bradford Old Bank Ltd. v. Sutcliff (1918)

W.N. 295. Coming to the Indian cases, I shall confine my attention, as the learned Vakil did, to the decisions of this court. In Perumal Aiyan v.

Alagiriswami Bagavathar ILR (1898) Mad. 245 and in Perianna Goundan v. Muthuveera Goundan ILR (1899) Mad. 139 where the words "" on

demand "" occurred in a mortgage document, this court held that they were technical words which meant that the money was payable at once.

Having regard to the later authorities, Mr. C.A. Seshagiri Sastriar conceded that these cases can no longer be regarded as good law. If we turn to

Nellakaruppa Goundan v. Kumarasami Goundan ILR (1900) Mad. 20. I find that on a similar expression used there, the Court held that there

must be a demand before the suit is brought. Since then, except for one authority, to which I shall refer presently, the decisions in this Court have

been practically uniform. In A. S. No. 27 of 1916 in which I took part sitting with Ayling, J., we pointed out that except in transactions connected

with law merchant, the words ""on demand"" have meaning and that there should be a demand before the cause of action arises. In that case we

accepted the proposition laid down in Karunakaran Nair v. Krishna Menon ILR 36 Mad. 66 and in Karindan Kuttiassan and Another Vs.

Kariadan Suppi and Others, . Subsequent to that decision, two learned Judges of this Court in S.A. No. 121 of 1916 have taken the same view.

As against these decisions there is a judgment of Sadasiva Aiyar, J., in Surayya v. Bapiraju 18 M.L.T. 459. As was pointed put in A.S. No. 27 of

1916 on the file of the High Court, the attention of the learned Judge does not seem to have been drawn to the judgment of Mr. Abdur Rahim, J.,

in Karunakaran Nair v. Krishna Menon 18 M.L.T. 459. I may say that if Surayya v. Bapiraju ILR 36 Mad. 66 was rightly decided, this case

would be covered by that authority. But as that decision was given without reference to the other decisions of this Court, I am unable to follow it

sitting as a single Judge. In my opinion, it is not right to hold except in the case of instruments coming under the Negotiable Instruments Act, that

words of the parties which have been deliberately inserted in a document have no meaning. In the present case, I think that the parties deliberately

used the expression, because, although there was a liability to pay each of the instruments separately, they intended to make it a condition

precedent that a demand should be made if the whole amount is to be asked to be paid at once.

For these reasons in my opinion the judgment of the District Munsif holding that the suit is barred by limitation is wrong and must be reversed. I

reverse his judgment and remand the case to him for disposal according to law. Costs will abide the result.