DATE OF FILING : 18.10.2010

BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM, IDUKKI

Dated this the 26^th day of September, 2011

Present:

SRI.LAIJU RAMAKRISHNAN PRESIDENT

SMT.BINDHU SOMAN MEMBER

C.C No.223/2010

Between

Complainant : M.N. Jayachandran, S/o Narayan Nair,

Mundamattam House,

Thodupuzha P.O.,

Idukki District.

(By Advs: Prince J. Pananal &

K.T. Thomas)

And

Opposite Parties : 1. The Managing Director,

M/s Sree Gokulam Chit & Finance

Co. (P) Ltd.,

Sree Gokulam Towers, No.66,

Arcot Road, Kodambakkam,

Chennai – 600024.

2. The Branch Manager,

M/s Sree Gokulam Chit & Finance

Co. (P) Ltd., Thodupuzha Branch,

Thodupuzha P.O.,

Idukki District.

(Both by Adv: V.K. Beena)

O R D E R

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)

The complainant joined in 3 number of chits bearing ticket Nos.12, 13 and 14 at the opposite party company. All the 3 chits are having a sala value of Rs.10,00,000/- and they were commenced on 4.9.2004 and terminated on 4.4.2006. The chit No.14 was prized in the name of the complainant in the month of April 2004 and the other 2 chits Nos.12 and 13 prized in the month of May 2005. At the time of disbursing the chit amount of the chit No.14, for the security of the same, the complainant issued a blank signed cheque of the complainant’s wife Mrs. N.B. Sheela bearing Account No.839685 of Canara Bank, Thodupuzha Branch. And also got signature of his wife, in guarantee agreement as well as in a debt acknowledgement through the complainant, believing that she is only a witness to these documents.

(cont......2)

- 2 -

While the complainant received the prize money of the chit Nos.12 and 13, the 2^nd opposite party forced the complainant for getting the signature of the complainant’s wife as well as another lady into the guarantee agreement and also in the debt acknowledgement as witnesses. The complainant also produced a title deed and tax receipt towards the assurance of the repayment of the prized amount. The guarantor of the same was one Mrs. Sobhana M.P., Kollamkudiyil, Keerikode, Thodupuzha East P.O.. and the title deed of her having No.1474/2004 of SRO, Karikodu and tax receipt of the same with an extent of 17 cents. The 2^nd opposite party also got several blank signed papers of the complainant, his wife and the said Sobhana, which are duly stamped and without stamped. All the papers were produced by the complainant after annexing the signature. Thereafter the complainant could not repay the further instalments promptly because of the financial crisis. Even then the complainant paid Rs.6,92,900/- each in all the three chits inclusive of dividend on the amount paid. After that the complainant paid Rs.10,000/- each in the 3 chits on 4.7.2006. But the opposite party issued 3 notices dated 6.11.2006 to the complainant claiming an amount of Rs.2,97,100/- per chit along with the interest there on. Another notice was served in the month of December 2006 by legal assistant of the opposite party claiming an amount of Rs.3,33,203/- per chit including the interest. The interest was calculated at the rate of 18% per annum. The 1^st opposite party instituted a false case against the complainant’s wife alleging that she has issued a cheque towards the repayment of the defaulted amount along with 18% interest, before the Chief Judicial Magistrate Court, Thodupuzha, but the complainant’s wife was acquitted for the same. The complainant several times contacted the opposite party for the settlement of the same and the opposite party insisted to pay Rs.50,000/- each in all the 3 chits and so the complainant paid the same on 5.9.2010 and he spent about Rs.10,000/- for various trips to Madras, Guruvayoor and Ernakulam for discussing with the 1^st opposite party for the same. But the matter is not at all settled and the opposite parties tried to realise the amount from the complainant. They had threatened the complainant and the sureties that they would make forged documents with the documents entrusted to them at the time of availing the chit amount. So the complainant was served a notice stating that the total outstanding amount is Rs.5,23,852/- and the interest is calculated as 26% per annum. Eventhough the interest rate is calculated as 26%, the opposite party never revealed about the rate of interest. The chits were terminated on 4.4.2006 and a period of 3 years has been lapsed. The opposite parties are not entitled to demand any amount from the complainant because it is barred as per Limitation Act. Hence the petition is filed for cancelling the demand notice issued by the opposite party dated 26.7.2010 for an amount of Rs.15,70,556/- and also for getting direction to return the title deed and other documents produced by the complainant and the sureties, also for compensation.

(cont....3)

- 3 -

2. It is admitted by the opposite party in the written version that the complainant had joined in 3 number of chits at the opposite party in the period 2004- 2005 and each of the chits were having a sala value of Rs.10 lakhs. The complainant had received an amount of Rs.7,50,000/- in each chit and so a total amount of Rs.22,50,000/- has received from the opposite party. The opposite party never received any blank signed cheque leaves from the complainant and his sureties. At the time of getting the prized amount, the complainant and his wife signed in the chit agreement created between them and it is agreed to pay 18% interest while there is any due in the instalments. After receiving the amount, the complainant never paid the dues of the chit even 5 years has been expired. Notice was issued to the complainant in the year 2006 demanding an amount of Rs.2,97,100/- in each chit and were not paid by the complainant. The opposite party have the right to realise the amount with interest if there is subscription dues in these chits. The opposite party had filed appeal against the order under Section 138 of Negotiable Instrument Act. Never the complainant tried for settlement to the opposite party. The opposite party calculated as, 4 months payment + dividend – sala value = balance amount was the future liability with 18% interest calculated. So these opposite parties are entitled to receive the due amount with interest from the complainant. The complainant received 3 number of chits of having a sala value of Rs.30 lakhs and not paying any interest to the opposite party after the receipt of the same and so the complaint is liable to be dismissed.

3. The point for consideration is whether there was any deficiency in service on the part of the opposite parties, and if so, for what relief the complainant is entitled to?

4. The evidence consists of oral testimony of PWs 1to 4 and Exts. P1(series) to P11 marked on the side of the complainant and Exts. R1(series) to R6(series) marked on the side of the opposite parties.

5. The POINT :- The complainant filed affidavit and produced evidence as PW1. Copies of the notices issued by the legal assistant of the opposite parties dated 6.11.2006 are marked as Ext.P1(series) for a total amount of Rs.3,28,746/- in each chit. The notices issued by the opposite parties dated 11.12.2006 demanding an amount of Rs.3,33,203/- in 3 number of chits marked as Ext.P2(series). Wife of the complainant was acquitted in the criminal case filed by the opposite party under Section 138 of Negotiable Instrument Act as ST No.33/2007 and the copy of the judgement is marked as Ext.P3. Notices issued by the opposite party demanding an amount of Rs.5,23,852/- from the complainant and his sureties for each chit are marked as Ext.P4(series). The statement of account issued by the opposite party to the complainant stating that the total liability is Rs.10,39,628/- as on 16.12.2006 is

(cont....4)

- 4 -

marked as Ext.P5. On cross examination of the learned counsel for the opposite party, PW1 deposed that he was having another 3 number of chits before joining in the disputed chits and they were having a sala value of Rs.5 lakhs and were repaid by the complainant promptly. It is also admitted that the complainant was not able to repay the instalments in the disputed chit. The debt acknowledgement signed by the complainant and his wife in the 3 chits are marked as Ext.P6(series). It is also stated by the PW1 that he had signed in the guarantee agreement, debt acknowledgement and some blank papers. Copy of the guarantee agreements are marked as Ext.P7(series). Signature in the promissory note was not of the complainant. The computer extract of the payment in chit No.14 is marked as Ext.R1(series). PW1 admitted as per Ext.R1, the last payment was done on 4^th September 2007 and he had paid Rs.50,000/- in each chit, after that no payment has been done. After that PW1 paid Rs.50,000/- in the year 2010 for the settlement. In the year 2006, as per the notice issued by the opposite party, there was a due of Rs.2,47,100/- in each chit. PW1 directly met the 1^st opposite party and as per the direction of the 1^st opposite party, he paid a total amount of Rs.1,50,000/-. Ext.P9 is the statement issued by the opposite party after the settlement between the 1^st opposite party, the Managing Director and the total amount is Rs.10,98,584/-.

PW2 is the wife of the PW1. PW2 deposed that she had signed in the debt acknowledgement and guarantee agreement and issued blank signed cheque leaves to the opposite party and also signed in several papers which are blank and also filled, shown by the opposite party. The signatures were issued on believing she as a witness. Moreover, one Sobhana was also signed in several papers and the title deed of the said Sobhana was also given to the opposite party as security. PW2 never signed in any of the papers produced by the opposite party in which the revenue stamp has been affixed. On cross examination of the learned counsel for the opposite party, PW2 admitted that the 3 chits were became due now. The documents are signed without reading the same. PW3 is the Branch Manager of the opposite party at the time when the complainant joined in the chit. He was also witness in the criminal case at the Judicial First Class Magistrate Court, Thodupuzha in ST No. 33/2007 Pronotes are got signed and keeping by the opposite party. The interest rates are fixed by the Head Office. Pronotes are signed by the guarantors and subscribers of the chit. The said Sobhana is the guarantor of the chit. The documents signed by the subscriber and the guarantors are marked as Ext.R2(series), R3(series) and R5(series). The computer copy of the statement of the chit of the complainant are marked as Ext.R4(series) and there is a total amount of Rs.2,47,100/- as due from the complainant and the subscription is Rs.7,52,900/- in the chit of having sala value of Rs.10 lakhs. The complainant has to pay Rs.15,70,556/- to the opposite party. No settlement talk was done between the complainant and the opposite party. Ext.R6 is the ledger copy of the statement of account of the complainant’s chit.

(cont....5)

- 5 -

PW4 is the Business Manager of the opposite party at the time when the complainant joined in the chit. PW4 had appeared before the Judicial Magistrate Court for conducting the case. Interest was calculated as per the direction of the 1^st opposite party. At the time of issuance of the chit amount, the debt acknowledgement and guarantee agreements were got signed from the subscribers and no other documents are collected. In the chit No.14, in which the amount received initially, the complainant and his wife were signed in the documents. No other persons got signed in that chit. In Ext.R3, it is seen that one Sobhana has also signed, but the PW4 never witnessed the same. But the property of the said Shobhana has been kept as security. PW4 is aware that the settlement talk has done between the complainant and 1^st opposite party and the complainant paid Rs.50,000/- in each chits after the talk. At the time when PW4 was signing in Ext.P7, there is only the signature of the said Sheela and no name and guarantor were printed there. There was correction in the paper. On cross examination of the learned counsel for the opposite party, PW4 deposed that he had resigned from the service of the opposite party and the complainant is familiar to him.

As per the complainant, he has joined in 3 number of chits at the opposite party company in the year 2004-2005 as chit Nos. 12, 13 and 14 under Group No.J2J/0047/JHH which is having a sala value of Rs.10 lakhs. Eventhough the complainant received the chit amount from the opposite party, he was not able to repay the chit instalments properly and so they were became due. A registered notice was issued by the opposite party as per Exts.P1and P2 demanding the payment of the chit amount as Rs.2,97,100/- each. Eventhough the complainant paid Rs.6,92,900/- including the dividend in each chit, the opposite party issued a notice, demanding Rs.3,33,203/- on 11.12.2006 and the amount was demanded with interest of 18%. Further they have collected an amount of Rs.15,70,556/- with a demand notice dated 26.7.2010 which is the due in 3 number of chits which the complainant is not legally bound to pay. The complainant is liable to pay the amount received and a mediator talk has been done and after that the 1^st opposite party reduced the amount as Rs.2,47,100/- in each chits on 20.9.2007. So the complainant is not liable to pay any interest to the opposite party other than Rs.2,47,100/-. As per the complainant, the complainant joined in 3 number of chits with a sala value of Rs.10 lakhs and he received an amount of Rs.7,50,000/- in each chit. As per the opposite party, the amount paid by the complainant was only Rs.6,92,900/- and he has to pay the balance due instalments Rs.2,47,100/- each in 3 number of chits with 24% interest and there is a due of Rs.5,22,852/- from the complainant in each number of chit. Ext.R4 statement of account also shows the same. As per Exts.R2, R3 and R5 promissory notes and agreement signed by the complainant and his sureties at the time of receiving the amount, it is agreed that they are ready to pay with 24% interest.

(cont....6)

- 6 -

The only dispute regarding the same is whether the opposite party is entitled to get the interest of the due instalments of the chits?

Here the complainant has already paid an amount of Rs.7,52,900/- and the balance instalments due from the complainant is Rs.2,47,100/- each. At the time of receiving the chit amount, the complainant have signed in guarantee agreement and the sureties also signed there which are already marked as Ext.P7(series). He is liable to pay the future instalments of the chits to the opposite party. The chit was commenced only on 4.9.2004 and it was terminated on 4.4.2006. After receiving the amount, the complainant states that he had paid only Rs.10,000/- and Rs.50,000/-. After that the complainant paid Rs.50,000/- to the opposite party as per the settlement with the 1^st opposite party. As per the settlement talk with the 1^st opposite party, the complainant has to pay Rs.2,47,100/- in each chit and he is not liable to pay further interest for the same. The allegation of the complainant that the interest rate calculated by the opposite party is illegal and they are not bound to charge such a hike interest from the complainant.

But we think that the complainant already received the chit amount from the opposite party on 24.11.2004. The complainant received the chit amount from the opposite party on 24.11.2004 and on 30.5.2005 as per Exts. R2, R3 and R5. After that the complainant paid only Rs.60,000/- to the opposite party and it is also seen from the Ext.R4(series) ledger produced by the opposite party, that he paid an amount of Rs.50,000/- on 4.9.2007 and it is also admitted by the opposite party. But the total amount calculated by the opposite party as per Ext.P9 which is the certified copy of the documents filed before the Judicial 1^st Class Magistrate Court, Thodupuzha, is Rs.10,98,584/-. In each chit, the balance amount has reduced to Rs.2,47,100/- as per the complainant, after the settlement talk between the M.D of the opposite party. But the complainant never paid the amount to the chit account after receiving the chit amount of a sala value of Rs.30 lakhs from the opposite party. The complainant should pay the requisite interest to the opposite party. But in the agreement signed by the complainant which is Exts.R2, R3 and R5, it is written that the interest is calculated as 24%. We think it is not proper and illegal, the opposite party never produced any authorised document to show that the opposite party can collect the prescribed interest rate from the complainant if there is a due in the chit account. The opposite party never produced any circular from the Government or circular from RBI stating that the opposite party can calculate the interest rate for the due instalments of the chit as 24% and it is a gross deficiency in service from the part of the opposite party to calculate such a hike interest without any legal entity. So the absolute amount for the payment of the complainant is Rs.2,47,100/- each, in three number of chits. The complainant is liable to pay that amount to the opposite party and the learned counsel for the complainant also argued that they are ready to pay the legal entitied amount to the opposite party.

(cont....7)

- 7 -

So we fix an interest rate of 9% for the due instalments for the period of due. The complainant himself admitted that there is a balance of Rs.2,47,100/- for each chit after the termination of the same and it is stated by the opposite party as per Ext.R1 statement of account of the opposite party and as per Ext.R4 statement of account of the opposite party. The amount is also admitted by the opposite party in Ext.P9.

Hence the petition partially allowed. The opposite parties are directed to settle the three number of chit accounts as Nos.12, 13 and 14, of the complainant with 9% interest per annum for the balance instalment dues which is for Rs.2,47,100/-, in each chit as per Ext.P9, Exts. R1(series) and R4(series), from the date of termination of the chits.

Pronounced in the Open Forum on this the 26^th day of September, 2011

Sd/-

SRI. LAIJU RAMAKRISHNAN (PRESIDENT)

Sd/-

SMT. BINDHU SOMAN (MEMBER)

APPENDIX

Depositions :

On the side of the Complainant :

PW1 - M.N. Jayachandran.

PW2 - N.B. Sheela.

PW3 - Krishna Das. E.K.

PW4 - A.V. Santhosh.

On the side of the Opposite Party :

Nil.

(cont.....8)

- 8 -

Exhibits :

On the side of the Complainant :

Ext.P1(series) - Copies of the notices issued by the legal assistant of the opposite

parties dated 6.11.2006.

Ext.P2(series) - Copies of the notices issued by the opposite parties

dated 11.12.2006.

Ext.P3 - Copy of the Judgement of the Judicial Magistrate Court,

Thodupuzha, dated 13.4.2010 in ST No.33/2007.

Ext.P4(series) - Notices issued by the opposite party dated 26.7.2010.

Ext.P5 - The statement of account issued by the opposite party.

Ext.P6(series) - The debt acknowledgement signed by the complainant and his wife

in the 3 chits.

Ext.P7(series) - Copy of the guarantee agreements.

Ext.P8 - Copy of the complaint filed by the opposite party before the

Chief Judicial Magistrate Court, Thodupuzha.

Ext.P9 - The certified copy of the document in ST 33/2007 of

JMC, Thodupuzha which is the statement of account.

Ext.P10 - Copy of the deposition of PW2 in ST No.33/2007, in the

Court of Judicial Magistrate of 1^st Class Court II, Thodupuzha.

Ext.P11 - Copy of the affidavit filed by the opposite party before the

Chief Judicial Magistrate Court, Thodupuzha in ST No.33/2007.

On the side of the Opposite Party :

Ext.R1(series) - The computer extract of the payment in chit No.14.

Ext.R2(series) - The documents signed by the subscriber and the guarantors in

chit No.13.

Ext.R3(series) - The documents signed by the subscriber and the guarantors in

chit No.14.

Ext.R4(series) - The computer copy of the statement of the chit No.13.

Ext.R5(series) - The documents signed by the subscriber and the guarantors in

chit No.12.

Ext.R6(series) - The computer copy of the statement of the chit No.12.