- (1.) The plaintiff-appellant has filed this appeal against the judgment and decree of the Additional District Judge, Ludhiana, dated 19th October, 1968, whereby the judgment and decree of the trial Court dismissing the suit, have been maintained.
(2.) The plaintiff-appellant, a private limited company with its registered office at Ludhiana, filed a suit for the realization of Rs. 700/- on the basis of instalment bond dated 28th August, 1961. It was executed by Harbans Kaur, principal debtor and Tara Singh and Dalip Singh, the two sureties. By this bond they agreed to pay Rs. 5,000/- to the plaintiff in monthly instalments of Rs. 100/- each payable on 15th of each month. It also provided that in case of default in the payment of any instalment the whole amount then remaining due to the plaintiff shall be payable at once and the sureties will be liable jointly and severally to pay the same. Harbans Kaur paid upto November, 1963 by making the last payment on 7th December, 1963. In this way the default occurred on 1st January, 1964, but instead of filing suit for recovery of the remaining amount, the appellant instituted suit for realization of the amount of seven instalments which had fallen due from 15th November, 1964 to 15th May, 1965. Later on, the plaintiff withdrew the suit against Harbans Kaur and Harchand Singh and it was processed only against the sureties, who filed the written statement, which gave rise to 9 issues, including the two which were treated as preliminary by the trial Court. The said issues read thus :- (1) Whether the suit is within time ? (2) Whether the suit can proceed against defendants 3 and 4 alone ? Issue No. 2 was decided in favour of the plaintiff by the trial Court and the same has been maintained by the lower appellate Court as well. On issue No. 1, the trial Court as well as the lower appellate Court have come to the conclusion that the suit is beyond limitation, and, consequently, dismissed the suit. Feeling aggrieved against this judgment, the plaintiff has come up in appeal to this Court.
(3.) The only question to be decided in this appeal, is the interpretation of Article 37 of the Limitation Act, 1963, which is to the following effect :- "On a promissory note or bond payable by the instalments, which provides that if default be made in payment of one or more instalments, the whole shall be due. Three years. When the default is made unless where the payee or obligee waives the benefit of the provision and then when fresh default is made in respect of which there is no such waiver." The learned Additional District Judge has placed reliance on Vishwanath v. Sadashiva, 1932 AIR(Nag) 1, in which it has been held that it is for the creditor to establish that he had waived the benefit of the default clause during the period allowed by the Act for a suit for the whole amount. In this view of the statement of law, according to the learned Additional District Judge, there exists a default clause in the bond, Exhibit P.3. The default in the payment of the instalment took place on 1st January, 1964. The plaintiff, in order to succeed, has to establish, that he has pleaded and proved that he waived the benefit of the default clause within the period of limitation for suit for the whole amount. In my opinion, this is not the correct statement of law. The wording of the article, as reproduced above, is quite clear and it does not acquire any overt act on the part of the payee in order to show the waiver. The law on this point has been correctly laid down in Wasu Ram v. Mohammad Baksh and another, 1930 AIR(Lah) 124, wherein it has been observed, that "It is well established principle of law that a person cannot be compelled to take advantage of a forfeiture clause and Article 75 itself provides that an obliged can waive benefit of the provision giving him the right to recover the whole of the money in the event of default." Thus it was held that the cause of action arises in such cases on the expiration of each of the periods fixed for the payment of instalments. Again, in Chhajju and another v. Nanak Bakhsh, 1933 AIR(Lah) 849(1), it has been held that the bond gave the plaintiff the option of taking advantage of the forfeiture clause, and his right to realize the amount by instalments as originally agreed upon could not be lost by his failure to exercise his option and that the suit was not time-barred. In that case, a bond was payable in six annual instalments. In default of any one instalment, promisee had the option to realize the entire amount at once. The first two instalments were paid; but the third was not paid. The promisee filed a suit when all the instalments were due for the fourth, fifth and sixth and no suit was filed in respect of third instalment. The ratio of this case is fully applicable to the facts of the present case and I am in respectful agreement with the law laid down by Tek Chand, J., in that case. No authority taking the contrary view either by the Lahore High Court or by this Court has been cited. Under the circumstances, this appeal succeeds, the judgment and decree of the lower appellate Court is set aside and the case is sent back to the trial Court for deciding on merits in accordance with law. The parties through their counsel have been directed to appear in the trial Court on 20th March, 1980. Appeal accepted. Case remanded.;