P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD
FA 250/2008 against CD NO. 760/2004 on the file of the
District Forum II, Visakhapatnam
Between :
- M. R. S. Chits and Financiers, rep. by its
Managing Partner, R. Raju, Gajuwaka, Visakhapatnam.
- R. Raju, Managing partner of M.R. S. Chits and Financiers,
Gajuwaka, Visakhapatnam … Appellants/Opposite parties
And
Kisan Patel, S/o Devjibhai Patel, age : years
R/o D. No. 10-3-14, Kanithi Road, Kailashnagar,
Gajuwaka, Visakhapatnam … Respondent/complainant
Counsel for the appellants : M/s. K. Sarvabhouma Rao
Counsel for the Respondent : Mr. V. Gourisanka Rao
CORAM :
SRI SYED ABDULLAH .. HON’BLE MEMBER
AND
SRI R. LAKSHMINARASIMHA RAO .. HON’BLE MEMBER
Wednesday, the Fourth Day of August, Two Thousand Ten
Oral order : ( as per Sri Syed Abdullah, Hon’ble Member )
********
The unsuccessful opposite parties preferred this appeal against the order directing payment of Rs.2,63,500/- with interest at 12% pa from 28.06.2004 with compensation of Rs.15,000/-and costs of Rs.3000/- pertaining to the chit fund transaction. The order is assailed as erroneous since the chit transaction in between the parties is unauthorized and that it is an illegal contract which cannot be enforced.
The facts of the case are that the opposite party approached the complainant’s father and lured him to join in the chit. So his father took membership in the chit Group No. STM -2M-17 for a value of Rs.2,10,000/- for a period of 30 months and for each month Rs.7000/- to be paid and the chit commenced in the month of December, 99 and it was completed by 29.06.2002. The opposite party again induced that they are conducting unauthorized chit and in case he becomes a member he will get more profits for a value of Rs.2,50,000/- for a period of 25 months and that for each month Rs.10,000/- is to be paid. The said chit commenced from march, 2001. Regular chit instalments were paid in the first chit STM-2M-17 by 29.06.2002. The complainant’s father requested the second opposite party for repayment of chit amount. At last he gave two cheques one for Rs.one lakh in the name of the complainant’s father and for Rs.2,50,000/- in the name of the complainant as a bearer cheque. The complainant’s father presented his cheque which was honoured but the second cheque which was bearer cheque was dis-honoured for want of funds. The complainant’s father insisted the opposite parties’ company to pay the amount covered by the second cheque. He has promised to adjust within 10 or 15 days. Again the cheque was presented but it was once again dishonoured. The complainant’s father stopped paying the remaining instalments to the opposite party pertaining to the second chit. About 18 instalments @ Rs.10,000/- were paid in the second chit. So also, demanded for payment of Rs.92,500/- given under the second cheque. But the opposite parties postponed payment of the total amount of Rs.2,72,500/- on some pretext or the other. Non-payment of the amount by the opposite parties amounts to deficiency in service.
The first opposite party filed its counter which was adopted by the second opposite party denying the allegations made in the complaint. With regard to payments covered by unauthorized chit was denied totally.
During enquiry, the complainant filed Ex. A-1 to A4 along with the evidence affidavit and the opposite parties did not file any documents on it side.
After going through the factual aspects and evidence on record, the District Forum held that the complainant is entitled for a sum of Rs.92,500 + Rs.1,71,000/- , in total a sum of Rs.2,67,000/- with interest @ 12% pa from the date of filing of the complaint till the date of realization and also awarded compensation of Rs.15,000/- and costs of Rs.3000/-.
The strong hold contention raised by the appellant is that when it is admitted in the pleadings that the chit is an unauthorized one, it is an illegal contract and the claim cannot be entertained for enforcing the illegal contract. Reliance is placed on a decision reported in Peddi Veerayya Vs. Subba Rao AIR 1959 AP page 647.
Point for consideration is, whether the claim to recover the amount covered by an unauthorized chit is enforceable and the award passed by the District Forum is sustainable under law ?
in para 3D of the complaint it is unequivocally admitted by the complainant that the OP had approached his father to join him in an authorized chit assuring that there are more profits than the profits in authorized chits so on that inducement his father joined in the unauthorized chit of Rs.2,50,000/- at the rate of Rs.10,000/- per month to be paid for 25 months.
In Sec. 3 of A. P. Chits Funds Act, 1971 it is made clear about the constitution and registration of the chits that no person shall start or conduct any chit if he has not registered with the Registrar the proposed bye-laws of the chit. Further Sec. 4 is very clear that prohibition of invitation for subscription to chit of which bye-laws have not been registered and that no person shall issue or publish any notice, circular prospectus with regard to the unregistered chit. Thus, it is very clear that in case of unauthorized chit there cannot be any protection under law as it is void and illegal contract. Apart from it, it is opposed to the public policy U/s. 23 of Indian contract Act. By means of an illegal and void agreement the parties cannot make any claim. Ex. A-1 is the original pass book issued by the opposite party and it is pertaining to the earlier chit which is an authorized one and the present complaint is not covered by the Ex. A-1 pass book . The claim is in respect of the second chit under which 18 installments @ Rs.10,000/- per month was paid which comes to Rs.2,72,500/- for which Ex. A-2 receipts are filed. But when the chit is unauthorized, the claim is not sustainable. Ex. A-1 chit pass book was issued in the name of minor, so his father has filed the claim for recovery. Issuance of a cheque covered by Ex. A-3 cannot be a basis to claim in respect of unauthorized chit for its recovery. When there was an agreement between the parties which an illegal transaction even if any amounts were collected by the promissor the same cannot be recovered trhough a court of law under the Maxim Exturpi Causa non Oritor actio i.e., in the sense that even if the contract is partly performed the money cannot be recovered by filing a claim. This aspect was not taken into consideration by the District Forum. As such the order is liable to be set aside.
In the result appeal is allowed setting aside the order dated 16.04.2007 passed by the District Forum II, Visakhapatnam as erroneous and consequently the complaint is dismissed but without costs.
Sd/-MEMBER\
Sd/- MEMBER
Dated :04/08/2010
