BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION :HYDERABAD
F.A.No.1690/2007 against C.C.No.759/2006, Dist. Forum-1,Hyderabad.
Between:
Sri V.Jagan Mohan Reddy,
S/o.V.Narayana Reddy, aged about 57 years,
Manager, Milk Chilling Centre, Alair,
Nalgonda District. …Appellant/
Complainant
And
1.Kautilya Chit Funds Pvt. Ltd. ,
Rep.by its Managing Director,
Registered Office at 2-1-555/1, First Floor,
Nallakunta, Hyderabad.
2. B.Jagan Mohan Reddy,
Managing Director,
Kautilya Chit Funds Pvt. Ltd.,
Registered Office at 2-1-555/1,First Floor,
Nallakunta , Hyderabad. …Respondents/
Opp.parties
Counsel for the Appellant : M/s. A.Venkatesh
Counsel for the Respondents : Mr.B.N.R.Sheshu.
CORAM: THE HON’BLE JUSTICE SRI D.APPA RAO, PRESIDENT,
AND
SMT. M.SHREESHA, HON’BLE MEMBER
MONDAY, THE THIRTY FIRST DAY OF MAY
TWO THOUSAND TEN.
Oral Order :(Per Smt. M.Shreesha, Hon’ble Member)
****
Aggrieved by the order in C.C.No.759/2006 on the file of District Forum-I, Hyderabad, the complainant preferred this appeal.
The brief facts as set out in the complaint are that the complainant joined as a subscriber in the Chit bearing no.KST 17 D-II for Rs.1 lakh being run by the opposite parties with monthly subscription of Rs.4000/- per month for a period of 25 months. On 23.11.2003 the complainant participated in a chit auction and became the highest bidder for Rs.10,550/- and the opposite parties have to pay the prize amount of Rs.89,450/- (i.e. Rs.1,00,000/- - 10,550/-=89,450) but the opposite parties have not paid the prize amount though the complainant has paid the entire subscription amount of chit as required. Inspite of several requests of the complainant the prize amount was not paid by the opposite parties. The complainant addressed a registered letter to the opposite party dt.19.3.2004 calling upon them to pay the prize amount, but the opposite parties stated that the complainant stood as security to one T.Sreenivasa Reddy who had defaulted in another chit and as such they have exercised the lien over the prize amount. According to the Chit Fund Act,1991, the Chit agency conducting the chits shall pay the prize amount to the prize winner immediately after completion of the formalities. The complainant submits that the Foreman has got no power or authority to exercise the right of lien in respect of another chit more particularly a general lien and as such the action of the opposite parties in withholding the prize amount is highly arbitrary, illegal and amounts to deficiency in service. Hence the complaint seeking direction to the opposite parties to pay an amount of Rs.89,450/- towards prize amount with interest at 12% from the date of auction till the date of realization and to pay Rs.1 lakh towards damages and to pay Rs.20,000/- towards compensation.
Opposite parties filed counter stating that the complaint is not maintainable under law. Opposite parties submit that the complainant stood as guarantor to two chit subscribers who were successful bidders namely 1.T.Srinivasa Reddy, 2. M/s.Marythi Borewells. Opposite party no.1 filed suits against the said both subscribers as they have defaulted in payment of chit subscriptions. In the said suits it is made clear that the opposite party no.1 can exercise lien on the amount stood to the credit of the complainant vide chit ticket no. KST 17D-11 and the complainant has not disputed nor denied the same before the Civil Court . Opposite parties submit that the complainant while standing as guarantor to the above two successful bidders executed Guarantee Agreements separately and so long as any money remains owning under the Guarantee
Agreement, the opposite party no.1 shall have lien in all amounts standing to the credit of the complainant. Opposite party submits that the complaint is not maintainable as it is barred by limitation. Opposite party submits that the complainant has not only stood as guarantor to only Sri.T.Srinivasa Reddy but also to M/s.Maruthy Bore Wells and as both have committed default in repaying the amount to opposite party no.1 it has exercised lien over the amount stood to the credit of the complainant under chit ticket No.KST 17 D-11. The complainant had given a complaint before the Registrar of Chits against the opposite parties and having satisfied with the explanation of the opposite parties, the Registrar of Chits dropped the proceedings. The complainant having failed even before the Registrar of Chits has came before the Forum seeking relief. Opposite parties have the right to exercise the lien and the opposite party has exercised lien over the amount stood to the credit of the complainant under Chit Ticket No.KST 17 D-11 and they have the right not only under law and also under the contract between them and the complainant. Opposite parties submit that there is no deficiency in service on their behalf and seek dismissal of the compliant with costs.
Based on the evidence adduced i.e. Exs.A1 to A7 and B1 to B4 documents , the District Forum dismissed the complaint without costs.
Aggrieved by the said order, the complainant filed this appeal.
The learned counsel for the appellant/complainant submitted that the complainant joined as a subscriber of chit bearing KST 17 D-II for Rs.1 lakh being run by the opposite parties and the subscription amount is Rs.4000/- per month to be paid for a period of 25 months. It is the complainant’s case that on 23.11.2003 he participated in chit auction and became highest bidder for Rs.10,550/- and when the bid amount is deducted from the chit amount of Rs.1 lakh the prize amount is Rs.89,450/-. It is the complainant’s case that inspite of being a winner of the prize amount he was not paid the amount on the ground that he stood as guarantor to two chits successful bidders namely T.Srinivas Reddy and M/s.Maruthy Borewells for KST-1E-7 and KST-1E-8. Both these chit subscribers committed default and opposite party no.1 filed suits vide O.S.No.2618/04 and O.S.No.2363/04 and opposite party no.1 exercised lien on the amount payable to the complainant. The complainant gave a representation to the Registrar of Chits who called for an explanation from opposite party no.1 and the Registrar of Chits dropped the proceedings. It is the case of the complainant that the suits filed by the opposite parties were dismissed and there is no lien. It is an admitted fact that the complainant stood as guarantor for one Mr.Srinivas Reddy and for M/s.Maruthy Borewells and there is an agreement of guarantee executed on 1.10.99 by way of Ex.B2. The learned counsel for the respondent drew our attention to clause 3(i) of bye-laws in Ex.B4 which states as follows:
“(i)Lien over amounts : if the Chit subscribers are indebted to the Foreman for any amount either personally or as surety, the Foreman will have in respect of such liabilities a first charge over any amount that they may be due to them from the Foreman and other assets lying with the Foreman. The Foreman has the right to set off such credits towards their liabilities to the Foreman when the Chit prize amount is drawn . Only the balance, if any, will be paid to subscriber.”
Section 171 of Indian Contract Act,1872 explains the general lien :
“General lien of bankers, factors, Wharlingers, attorneys and policy brokers .- Bankers, factors, Wharlingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods hailed to them ;but no other persons have a right to retain , as a security for such balance, goods hailed to them, unless there is an express contract to that effect.”
This Section 171 of the Indian Contract Act does not any where state about lien of chit funds. We also observe from the record that in O.S.No.2618/2004 and O.S.No.2363/04 filed by the opposite party against T.Srinivasa Reddy and M/s. Maruthi Borewells respectively the complainant herein is arrayed as third defendant in both suits and both suits have been dismissed by Vth Senior Civil Judge, City Civil Court on 20.2.2006 on the ground that the suits are clearly barred by limitation. When the claim itself is barred by limitation the respondent Chit Fund Company cannot rely on the clauses of the contract exercising lien over the complainant’s chit fund account. To reiterate, we are also of the considered view that when both the suits filed by the respondent/opposite party have been dismissed on the ground of limitation, they cannot equally collect these amounts from the complainant herein who stood as guarantor for the very same chits against whom the opposite party preferred the two suits and in which the complainant has also been made a party. For the reasons afore mentioned we are of the considered opinion that the complainant is entitled for the prize amount of Rs.89,450/- with interest at 9% from the date of filing of the complaint till the date of realization and costs of Rs.5000/- .
In the result this appeal is allowed in part and the order of the District Forum is set aside and consequently the complaint is allowed directing the opposite parties to pay to the complainant an amount of Rs.89,450/- with interest at 9% p.a. from the date of filing of the complaint till the date of realization together with costs of Rs.5000/-.
PRESIDENT
MEMBER
Pm* Dt.31.5.2010
