Vaithinatha Iyer (Dead) And Ors. vs Govindaswami Odayar And Ors. on 11 August, 1921
14. Assuming that clauses 6 and 7 are stipulations for forfeiture, I cannot hold that they are stipulations in the nature of penalties against which relief ought to be granted. What may be construed as a penalty in the case of an ordinary loan, is not necessarily a penalty in the case of a Chit Fund transaction. That is the effect of Vaithinatha v. Govindaswami (1921) 42 M.L.J. 551. It is there pointed out that in a case of a stake-holder of a chit, his relation to the subscribers being of a special nature, special necessity exists justifying stringent provisions to protect his interest. The learned Judges observe: