AT HYDERABAD.

F.A. 869/2005 against C.D. 1471/2003, Dist. Forum-I, Visakapatnam  

Between:

Margadarsi Chit Fund Ltd.,

Satya Sai Commercial Complex

K.G.H. Down,

Rep by its Manager

Visakapatnam Branch

Visakapatnam.                                            ***                         Appellant/

Opposite Party     

                                                                    And

I. Satyanarayana

S/o. Achtyutha Rao

Age: 57 years,

Sadhana Textiles

Leelamahal Junction

Visakapatnam.                                             ***                        Respondent/

                                                                                                Complainant.

Counsel for the Appellant:                          Mr. M. Madhusudhan Rao

                                                                   Smt. Nanda Ramachander Rao

Counsel for the Resp:                                 Mr. T. Rajasekhar Rao

QUORUM:

                          HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT     

&

                                          SRI G. BHOOPATHI REDDY, MEMBER

FRIDAY, THIS THE TWELFTH  DAY OF SEPTEMBER TWO THOUSAND EIGHT

Oral Order: (Per Hon’ble Justice D. Appa Rao, President)

                                                          *****

          This is an appeal preferred by  the  Margadarshi Chit Fund Ltd., against the order of the  Dist. Forum-I, Visakapatnam  in directing it to refund Rs. 72,668.20  with interest @ 9% p.a.

          The case of the complainant in brief is that  he joined in the chit  conducted by the appellant for a total value of Rs. 2,50,000/-.  The subscription being Rs. 5,000/- per month for a period of 50 months.   It commenced in the month of October, 2000.   He paid the instalments up to July, 2001  and participated in the auction held  on 10.6.2001.   He became the  successful  bidder  by  foregoing an amount of  Rs. 99,500/-.  Despite furnishing two sureties the appellant did not pay the prize amount.   However,

it has deducted future instalments and deposited  the  amount without his consent against the rules of the chit.  He requested for  supply of chit agreement but the appellant did not supply.  It kept silent from 2001 to 2004 and made him to go round the offices.   Finally it sent registered notices Dt. 29.3.2002 and 6.4.2002 stating that the amount was adjusted towards the subscription.   The said act is arbitrary, illegal.  Therefore, he sought for  his subscription amount,  and damages of Rs. 50,000/- towards mental agony  and costs.

          The appellant resisted the case.  While admitting that the complainant has joined as a member in the chit for Rs. 2,50,000/-  alleged that he became a prized subscriber in the auction held on 10.6.2001.   He had to offer three sureties. However, he had offered only two  sureties.  On verification it was found that the said sureties had already offered sureties in another chit.  They became defaulters and suits were also pending in O.S. No. 302/2003 on the file of IV Additional Junior Civil Judge, Visakapatnam.  When he failed to offer acceptable sureties, invoking  Section 14(2) of  the  A.P. Chit Funds Act  it deposited the amount  and intimated the same by registered  notice Dt. 7.7.2001.  After adjusting  Rs. 77,831.80ps towards future monthly instalments, balance amount of Rs. 72,668.20ps was kept in deposit.   The complainant was not entitled to the prize amount of Rs. 1,50,500/-,equally future interest @ 36% p.a., As the complainant could not furnish acceptable sureties, the amount was not released.  Therefore, it prayed for dismissal of the complaint.  

          The complainant in proof of his case filed his affidavit evidence and Exs. A1 to A6, while the respondent/appellant filed the affidavit evidence of its officer and Exs. B1 to B6.   The Dist. Forum after considering the evidence place on record opined that the complainant was entitled to  Rs. 72,668.20ps and awarded the same to be paid with interest @ 9% p.a., from  1.2.2005 till the date of realization.  However, it declined to award any costs to the complainant.

          Aggrieved by the said decision, the chit fund company preferred this appeal contending that the Dist. Forum did not appreciate the facts in correct perspective.   It did not consider the rights of the parties  vis-à-vis the terms of the chit agreement and bye-laws.  It erred in not taking into consideration Exs. B1 to B6.  By the date of filing of the complaint, the chit was in subsistence.  The complainant was still liable to pay future instalments.  As per the agreement balance of Rs. 72,668.20 was adjusted towards future instalments from 31^st to 45^th instalments, as such no amount was lying with it.  Therefore, it prayed that the appeal be allowed, and consequently dismiss the complaint.

          It is an undisputed fact that the complainant subscribed to a chit for Rs. 2,50,000/- payable at Rs. 5,000/- per month for a period of 50 months.  The chit commenced from October, 2000.  It is also not in dispute that he participated in the auction held on 10.6.2001 became successful bidder by foregoing an amount of  Rs. 99,500/-.  Since he could not offer sufficient solvent sureties the amount was deposited,  and notice was equally given to the complainant vide acknowledgement Ex. B6.

          The appellant contends that  as he defaulted payment of instalments from 11^th to 30^th instalments, balance prize amount of  Rs. 72,668.20 from the prize amount of Rs. 1,50,500/- was adjusted towards future instalments from 31^st to 45^th instalments, and as such not amount was payable.   If a  calculation is made, the complainant himself was due to it,  an amount of Rs. 22,966.40ps.  Though the complainant admittedly participated in the bid,  he could not withdraw the amount,  in view of  the fact that he could not furnish sufficient acceptable sureties to the appellant.

          The appellant contends that  as the complainant  had committed default in payment of  11^th to 18^th instalments  an amount of Rs. 28,179.80ps  was withdrawn from the prize amount  and adjusted towards arrears of 11^th to 18^th instalments.   This amount was deducted from the prize amount  of Rs. 1,50,500/-.  Later an amount of Rs. 49,652/-  was withdrawn from the prize amount and adjusted towards 19^th to 30^th instalments.  Therefore, there remains balance of Rs. 72,668.20ps.  The appellant contends that after filing of the counter, an amount of Rs.  72,668.20 was withdrawn from the prize amount and adjusted towards arrears from 31^st to 45^th instalments.  Since the balance left over was Rs. 2,933.60 it could not adjust for subsequent instalments.  In fact he was due for 5 instalments i.e., from 46^th to 50^th instalments amounting to Rs. 25,000/-  and if this is adjusted the complainant himself  had to pay Rs. 22,066.40 ps.

          Evidently while appropriating the amount towards  future instalments,  it never gave dividend which  otherwise the complainant was entitled to as it has construed  that he was still a member of the chit.  Obviously, the chit fund company cannot deduct the amounts as it was deducting.   Section 31 of the  A.P. Chit Funds Act, 1982  stipulates that the prized subscriber  shall furnish sufficient security for due payment of future  subscriptions.   Since it is a case where  the complainant could not furnish  the security, it should be treated as non-prized subscriber.   It is not known whether the chit was terminated.   In view of the contention  that by the date of filing of the complaint, the chit was terminated, u/s 40 of the  A.P. Chit Funds Act, 1982  every non-prized subscriber is  entitled to get back his subscription  at the termination of the chit without any deduction for dividend, if any, earned by him.

          It is not known to whom the rights of  non-prized subscriber are transferred u/s  27 to 29 of the  A.P. Chits Funds Act, 1982   In fact, in such a case, in addition to his own contribution, he is entitled to get back the subscriptions paid by such non-prized subscriber.  Unless the entire chit fund transactions  showing complete accounts are filed, it cannot be said that the complainant was not entitled to the amount nor was liable to pay still some more amounts than one which he had deposited.  If the calculation mentioned by the chit fund company is accepted, the complainant is  not only losing the amount deposited by him but also the so called dividends that he would have been received.    While filing counter, there was a mention that after adjusting Rs. 77,831.80ps  towards future instalments still an amount of Rs. 72,668.20 was in deposit  and the same cannot be paid unless the complainant furnishes the acceptable sureties.  When the chit fund company could not show the dividends that could have been earned by him, the amount deposited by  several subscribers, the question of appropriating the entire amount, without paying the amount subscribed by him will not arise.  The appellant cannot appropriate the entire amount paid by the complainant.   We do not see any irregularity in the order of the Dist. Forum.  In fact, it did not award any compensation.   It has awarded only the amount that was due to the complainant  with interest from the date of deposit.  We do not see any illegality in the order.  Therefore, we do not see any merits in the appeal. 

          In the result the appeal is dismissed.  However, in the circumstances of the case no costs.

                             PRESIDENT                                     MALE MEMBER

                                                     Dt. 12. 09. 2008.