Tamil Nadu

StateCommission

A/392/2014

MARGADARSI CHITS P. LTD., THE MANAGER - Complainant(s)

Versus

K. MURALI - Opp.Party(s)

D. SHIVAKUMARAN

25 Feb 2022

ORDER

 

IN THE TAMIL NADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present: Hon’ble Thiru Justice R.SUBBIAH       ... PRESIDENT

            Tmt. Dr. S.M.LATHA MAHESWARI  ... MEMBER

 

F.A. No.392 of 2014

 

(Against the Order, dt. 23.09.2014, in C.C. No.35/12,

on the file of the DCDRF, Salem)

                   

                                    

                                Orders pronounced on: 25.02.2022

            

Margadarsi Chits Private Limited,

7/54, 3^rd Floor, Ideal Garden Complex,

Five Road,

Salem 636 004                     … Appellant / Opposite Party

 

vs.

 

Mr.K.Murali,

S/o.Mr.S.Krishnan,

No.172/3, P.N.Sons Apartments,

1^st Floor, 6^th Cross,

Meyar Nagar,

Salem 636 007.                  … Respondent/ Complainant

 

             Counsel for Appellants      : M/s.D.Shivakumaran

             Counsel for Respondent     : Mr.P.Jagadeesan

 

 

          This First Appeal came up for final hearing on 31.01.2022 and, after hearing the arguments of both sides and perusing the materials on record and having stood over for consideration till this day, this Commission passes the following:-

 

O R D E R

 

R.Subbiah, J. - President.

             The present First Appeal has been directed against the order, dated 23.09.2014, passed by the District Consumer Forum, Salem, in C.C. No.35 of 2012, whereby, the complaint came to be allowed in part as against the Opposite Party/appellant herein.

 

             2. In brief, the case of the complainant before the District Forum is that the complainant had entered into two chit agreements, dated 17.02.2011, with the Opposite Party for two separate chit tickets, each for Rs.5 lakh, payable in 40 monthly instalments, and he paid  the first instalment of Rs.12,700/- for each chit, by way of cheques, for which, the opposite party had issued two receipts on 18.02.2011.  After a period of three months, on 31.05.2011, an individual came and collected Rs.25,000/- by way of two cheques, each for Rs.12,500/- in respect of the 2^nd installment for the two chits, however, no receipt was issued.  While so, after two months, one Mr.Manoharan met the complainant and informed that by paying a sum of Rs.25,000/-, he can become a Member in another group, which gave the presumption that he was dropped from the existing chit group.  When Section 28 of the Chit Funds Act, 1982, specifically provides that, before removing a subscriber from the list of subscribers, a written notice of removal should be given by the foreman within fourteen days of the date of removal, neither any such notice was ever given by the opposite party nor an opportunity was afforded to pay the due. However, through the Collection Agent, the complainant had sent a cheque, dated 30.09.2011, drawn on Punjab National Bank, Shevapet Branch, in favour of the Opposite Party, towards arrears due against the two chit tickets, however, the said cheque was returned back without even presenting the same for collection by the Opposite Party.  Consequent thereto, the complainant had sent a letter, dated 27.12.2011, calling upon the Opposite Party to refund the sum of Rs.50,000/- paid by him towards first two instalments, which plea was rejected by the Opposite Party vide reply, dated 09.01.2012.   The complaint made by him with the Chit Registrar did not yield any positive outcome. While so, the Opposite Parties, by alleging that two cheques for Rs.8,750/- each given on 25.06.2011 were dishonoured, unilaterally cancelled the membership without sending any prior notice as contemplated under Section 28 of the Chit Funds Act.   Hence, on the ground of deficiency in service, the complainant filed the complaint before the District Forum to direct the Opposite Party to re-pay the sum of Rs.50,400/- along with interest @ 24% p.a. from the date of respective payments and also to pay Rs.1,00,000/- towards compensation for deficiency in service, etc. and also to order payment of litigation expenses.

 

             3. The Opposite Parties resisted the claim of the complainant by filing a written version, wherein, among other things, it is stated thus:-

             It is true that the complainant had subscribed 2 chit tickets on 17.02.2011 with the Opposite Party, each for the value of Rs.5 lakhs payable in 40 monthly instalments @ Rs.12,500/- for each chit.  At the time of subscription, separate agreements were executed along with relevant documents and, as per the provisions of the Chit Funds Act, 1982, any dispute between the parties should be referred to the Deputy Registrar of Chits and hence, the complaint filed before the Consumer Forum is not maintainable.

             In respect of the 2^nd monthly instalment for both the chits, the complainant committed default, hence, the Opposite Party, by letters dated 28.05.2011, called upon him to make payments up to date, whereupon, the complainant issued two cheques, each for Rs.12,500/- which were honoured upon presentation.  While so, subsequently, the complainant had issued a cheque for Rs.17,500/- which was returned for ‘funds insufficient’ and the complainant was duly intimated of the same, however, he did not come forward to make payment, which prompted the Opposite Party to remove his name from the list of subscribers for both the chits and the said factum was duly conveyed to him through letters, dated 27.07.2011, sent by registered post which was also acknowledged by him.  Every month, upon completion of auctions, the Opposite Party is sending intimation letters about the subsequent instalment to the members of the chit group concerned; while so, the complainant having committed default by issuing cheques without sufficient funds in the account, invited the action to remove his name from the list of subscribers for both the chit tickets.   The claim of the complainant that he had issued a cheque for Rs.84,000/- and handed it over to the collection agent of the opposite party, however, the same was returned without even presenting it for collection, is totally false.  As per the provisions of the Chit Funds Act, any removed member can re-enroll by making up-to-date payment along with enrollment fee within 7 days from the date of cancellation by executing fresh enrollment forms and chit agreements to that extent.   Without doing so, to say vaguely that he had issued the cheque for Rs.84,000/- and it was never presented by the Opposite Party, is nothing but a false story.  The complainant is not entitled to get refund of the amount as per the provisions of the Chit Funds Act.   That is why, the Chit Registrar, after considering the complainant’s letter, dated 05.01.2012, ultimately declined to entertain his request.   In the above said letter, dated 05.01.2012, addressed to the Chit Registrar, nowhere, the complainant had mentioned about the cheque for Rs.88,400/-, which fact would go to show that the claim projected through the said cheque is nothing but a clear fabrication.  Accordingly, they pleaded the District Forum for dismissal of the complaint.

 

             4. To substantiate the claim and counter-claim, both sides filed their respective proof affidavits.  While on the side of the complainant, 9 documents were marked as Exs.A1 to A9, the Opposite Parties marked 13 documents as Exs.B1 to B13.   The District Forum, by the impugned order, dated 23.09.2014, came to the conclusion that there was no deficiency of service on the part of the Opposite Parties, however, by allowing the complaint in part on humanitarian grounds, directed the Opposite Parties to refund Rs.50,400/- that was paid by the complainant for the first two instalments.  Hence, the aggrieved Opposite Parties have come up with the present appeal before this Commission.

 

             5. Learned counsel for the appellant has drawn our attention to Section 21 (1) (a) to (c) of the Chit Funds Act, 1982, as well as Clause-IX of the Chit Agreement to submit that, for each chit, the Foreman is entitled to 5% of the Chit Amount, that is to say Rs.25,000/-, at every instalment of auction.   Therefore, it is clear that the chit subscription paid for the first two installments have to be paid in full and that the Foreman of the Opposite Party is entitled to receive the same.  That being so, the question of refunding the said sum cannot be raised at all, as it was the 5% commission receivable by the Foreman.  However, if the complainant had paid subscription for any subsequent month and discontinued the chit before completion of the chit period, in such an event, the balance amount paid between the 3^rd month till the defaulting month, can alone be refunded, but, in the instant case, the complainant had paid only the first two installments, therefore, he is not entitled for any refund.   While so, inasmuch as the direction issued by the District Forum for refund of the said sum on humanitarian basis runs contrary to its own conclusion reached and also contradicts the legal provisions as well as the chit agreement,  the impugned direction calls for absolute interference by this Commission.

 

             6. Per contra, learned counsel for the respondent would submit that, in the instant case, deficiency of service on the part of the appellant is clearly visible for the reason that  they never informed the respondent about the future instalments/details of balance subscription amounts.   Further, without even issuing a notice under Section 28 of the Act, the name of the respondent was removed from the list of subscribers over alleged non-payment of subscription in time.  At any rate, the District Forum, after properly considering all relevant aspects, rightly issued the direction to refund the amount of Rs.50,400/-, hence, the same does not call for any interference by this Commission.  Accordingly, he sought for dismissal of the appeal.

 

             7. We have carefully gone through the materials available on record having regard to the rival submissions advanced on either side.  The only issue that needs to be answered in this appeal is as to whether the District Forum is justified in issuing the impugned direction for refund on humanitarian basis, after reaching a definite conclusion that there was no deficiency of service on the part of the appellant herein/opposite party.

 

             8. In this regard, it would be apt to first look into the relevant legal provision viz., Section 21 (a) to (c) of the Chit Funds Act, 1982, which reads as follows:

        “21(1) -  The foreman shall be entitled,—

(a) in the absence of any provision in the chit agreement to the contrary, to obtain the chit amount at the first instalment without deduction of the discount specified in the chit agreement, subject to the condition that he shall subscribe to a ticket in the chit: Provided that in a case where the foreman has subscribed to more than one ticket, he shall not be eligible to obtain more than one chit amount in a chit without discount;

(b) to such amount not exceeding five per cent. of the chit amount as may be fixed in the chit agreement, by way of commission, remuneration or for meeting the expenses of running of the chit;

(c) to interest and penalty, if any, payable on any default in the payment of instalments and to such other amounts as may be payable to him under the provisions of the chit agreement;

Now, let us refer to the chit agreement, particularly Clause-IX thereof, which reads thus:

            “IX.FOREMAN’S COMMISSION AND THE INSTALMENT AT WHICH THE FOREMAN IS TO GET THE PRIZE AMOUNT:-

1. The Foreman shall subscribe to a ticket in the chit and hence he shall obtain the chit amount in the first instalment without any deduction of discount.  Therefore, the second instalment should be paid in full by all the subscribers.

2. The Foreman’s Commission shall be at five percent of the chit amount that is to say Rs.25,000/- at every instalment of auction.”

A conjoint reading of the above Clause and the Section would make it succinctly clear that the chit subscription paid for the first two instalments shall be paid in full and that the Foreman of the appellant, who shall subscribe to a ticket in the chit, is entitled to receive the same towards his commission at 5%.  In terms of Section 21 (b), such amount received by the foreman is meant for commission/remuneration/meeting the expenses towards conducting the chit and as such, it is non-refundable.  That being so, as rightly pointed out, only if the complainant had paid the subscription for any subsequent months and discontinued the chit before completion of the chit period, then only, he is entitled for refund of the balance amount paid between the 3^rd month till the defaulting month.  Since the complainant never paid any amount after the first two instalments, as per the agreement, he is not entitled for refund of any amount.  Proceeding in that line, although the District Forum rightly concluded that there was no deficiency in service on the part of the appellant herein, it has committed an error in directing the appellant/opposite party to refund the amount against the first two installments, when the chit agreement and Section 21 of the chit funds Act clearly say that the Foreman is entitled to such sum as commission and, as such, it is non-refundable.  In this regard, we reiterate that any concession on humanitarian basis that would ultimately divest the rights accrued to the other side can never be legally endorsed.  Inasmuch as the impugned direction would virtually deprive the appellant’s foreman of his commission to which he is legally entitled to for the purpose of meeting the expenses in the course of conducting the chit, we see no justification whatsoever to sustain the same.  Accordingly, we endorse the claim of the appellant.

 

             9. In the result, the appeal stands allowed by setting aside the impugned direction issued in the order, dated 23.09.2014, by the DCDRF, Salem, in C.C. No.35 of 2012.  No costs.

 

S.M.LATHA MAHESWARI                              R.SUBBIAH, J.

MEMBER                                                      PRESIDENT.

 

Index    :  Yes  / No.

 

ISM/TNSCDRC/Chennai/Orders/Feb/2022.