AT HYDERABAD.

F.A. 1635/2005 against C.D. 14/2005, Dist. Forum, Medak

at  Sanga Reddy

Between-

1. Shriram Chits Ltd.,

Rep. by its AGM-Law

Sri C. Venugopal Rao

Mookambika Complex

111, Floor 4,

Lady Desika Road

Mylapore, Chennai.

2. The Divisional Manager

Shiram Chits Ltd.,

Sanga Reddy, Medak Dist.

3. The Manager

Shriram Chits Ltd.

Sanga Reddy Branch

Sanga Reddy Dist.                                       ---                         Appellants/

                                                                                                 Opposite Parties

                                                                    And

N. Chalapathi

S/o. Venkataiah

Police Constable

R/o. Sanga Reddy

Medak District.                                             ---                        Respondent/

                                                                                                 Complainant       

Counsel for the Appellants-                        Mr. C. Raghu

Counsel for the Resp-                                 Mr. S.N. Chary.

QUORUM-

                          HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT     

                                          SMT. M. SHREESHA, MEMBER

and

SRI G. BHOOPATHY REDDY, MEMBER

FRIDAY, THIS THE TWENTY FIFTH DAY OF JULY  TWO THOUSAND EIGHT

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

                                                          -----

          This is an appeal preferred by the opposite party chit fund company against the order of the Dist. Forum, Medak in directing it to pay the chit amount, and Rs. 50,000/- towards compensation besides  Rs. 1,000/- towards costs

The case of the complainant in brief is that he is  working as a police constable.  He joined as a member in the chit conducted by the appellant for Rs. 2, 00,000/- payable at Rs. 5,000/- per month for 40 instalments.   He participated in the bid held on 21.11.2004.  He became the successful bidder by foregoing Rs. 52,400/-.   When he was directed to furnish the sureties, he furnished the same.  However, the appellant had been dragging on the matter on one pretext or the other.  Even, when he expressed his readiness to deposit Rs. 50,000/- as security, they did not pay the prize amount.   When he went to the appellant in the month of December, 2004 to collect the cheque for an amount of Rs. 1,00,000/- they refused to pay the same and forced him to deposit an amount of Rs.1,00,000/- for which he agreed. However, they did not pay the chit amount.  When he approached Opposite Party No.2, he directed Opposite Party No. 3 to issue a cheque for Rs. 47,400/- being the amount subscribed by him, however, they directed him to pay Rs. 5,000/- towards charges. When the chit fund company was about to deduct Rs. 5,000/-  towards charges he did not agree.  On that he issued a notice, they got a reply with false averments.   Therefore, he sought for a direction to pay Rs. 47,600/- towards subscription amount, Rs. 1, 00,000/- towards chit amount besides Rs. 50,000/- towards mental agony.

The appellants resisted the case, while  admitting that the complainant has joined as a member in the appellant chit group No. SRMT-12/10 and executed agreement in its favour alleged that he participated in the auction held on 21.11.2004. He became the  successful bidder by agreeing to forego an amount of  Rs. 52,400/- out of Rs. 2, 00,000/-.  When they directed to furnish the sureties to release the prize money, the complainant   submitted the sureties on 30.12.2004.  On verification,  it was found that one of the sureties Sri P. Laxminarayana was a member of the chit and he had committed default in paying  the  regular instalments.  Thereupon, they  directed the complainant

to get the amount cleared for   which the complainant did not agree.   The allegation that he agreed to deposit Rs. 50,000/- and later Rs. 1, 00,000/- is denied.  These averments were made only to prejudice the mind.  He never demanded them to issue cheque for Rs. 44,700/-.  They never demanded an amount of  Rs. 5,000/- as alleged by him.   However, they admitted that they demanded the complainant to pay the amount which was due by Sri P. Lakshminarayana,  a subscriber of the chit,  as he stood as one of the sureties,  and  he was liable to pay the amounts due to them.  For the notice issued by the complainant, they gave a correct reply.  There was no deficiency of service on their  part.  Therefore, they prayed for dismissal of the complaint with costs.

The complainant in proof of his case filed Exs. A1 to A3,  while the respondents filed Exs. B1 to B7.   The Dist. Forum  after considering the evidence placed on record allowed the complaint directing the opposite parties to pay the chit amount besides Rs. 50,000/- towards compensation and costs of Rs. 1,000/-.

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.   The Dist. Forum ought to have seen the liability of the complainant as on the date of auction, and that he committed default from 9^th instalment onwards.  As against 8^th instalment he paid Rs. 2/-.  Since he committed default in payment of remaining instalments, he cannot turn round and allege that there is deficiency.  Even by the date of furnishing sureties the complainant had committed default.   One of the sureties of the complainant was,  in fact, a member of the chit, had committed default, and therefore they insisted for better sureties.  The complainant did not furnish any information with regard to the sureties.  The Dist. Forum could not have granted the entire chit amount, when he had paid only eight  instalments.  Even  by  the  date  of  

order  of  the  Dist. Forum  only   19  instalments were over and 21 instalments were remaining.  Awarding of compensation  as well  as directing  it to  pay  the entire chit amount is unjust.  At the most he was entitled to Rs. 47,645/- which was paid by him.  If the entire amount is asked to be paid, overlooking the default, it would cause loss to it.  Therefore, it prayed for dismissal of the complaint.

It is an admitted fact that the complainant was admitted as  a member in the chit  of Rs. 2,00,000/- wherein he had to pay Rs. 5,000/- per month for 40 months evidenced under Ex. A1 book.  It is also not in dispute that on 21.11.2004 he participated in the auction and agreed to forego Rs. 52,400/-.  It is also not  in dispute  that he also obtained surety forms for getting the prize amount.  The sureties that were submitted were not acceptable to the appellant chit fund company.  The appellant alleges that one of  the sureties to the chit pertaining to Sri P. Lakshminarayana was rejected  on the ground that he himself committed default for a period of 10 months.  When the complainant issued notice under Ex. A2 Dt. 2.1.2005 directing the appellant to pay the amount, they issued reply notice under Ex. A3 Dt. 20.6.2005  stating  “Therefore, I hereby call upon you to give advise to your client to furnish the solvent sureties and clear off the due amount of chit bearing No. SRLJ-52/41 pertaining to  P. Laxminarayana and receive prize money from my client’s  company, and further advise your client  not to make any such false allegations against my client, failing which my client will take legal steps by filing defamation suit against your client for which he will be held responsible for costs and consequences.”

The complainant in his affidavit stated that he agreed to deposit Rs. 50,000/- from the prize amount towards guarantee and on that the appellant asked him to collect the cheque.  However, it refused to pay the prize amount and forced him to deposit Rs. 1,00,000/- out of prize amount for which he agreed.  Even then, it did not pay the remaining amount of Rs. 47,400/-.  It is also stated that though he has requested to issue a cheque for Rs. 47,400/- it did not agree for which he got issued a registered notice, which we have earlier referred to.

In fact, the prayer of the complainant was that the opposite party may be directed to  pay Rs. 47,600/-towards subscription amount and deposit an amount of Rs. 1,00,000/-  in his name and Rs. 50,000/- towards compensation  for mental agony.   When the complainant could not furnish the sufficient sureties, the appellant is not bound to pay the prize amount.  Undoubtedly, the Dist. Forum erred in directing the appellant to pay the entire chit amount besides Rs. 50,000/- towards compensation, and costs of Rs. 1,000/-. In the first place he did not pay the entire chit amount so as to demand the entire chit amount..   The complainant did not ask the chit to be paid.   The Dist. Forum could not have directed the appellant to  pay the entire amount.   In fact, the appellant themselves admitted  that he contributed an amount of Rs. 47,645/-.  The appellant cannot appropriate the entire amount stating that the complainant had committed default, and therefore it was entitled to appropriate the entire amount.    If the complainant had defaulted he could not be entitled to the entire  amount.  At the same time, it cannot deny the amount that was paid by him towards the chit.

Since the very complainant had committed default, awarding compensation of Rs. 50,000/- is not justified.   Had the complainant been ready, and willing to perform his part of contract, viz., furnishing sureties, then for  non-payment of prize amount, the appellant could be find  fault with.  When the complainant could not furnish the solvent sureties, and when the appellant is justified in non-payment of amount.  Therefore we cannot direct the appellant to pay the entire chit amount.   What all the complainant is entitled to is  the amount that was paid by him.  Since all through, the amount was with the appellant, and despite the fact  that the complainant  had issued notice under Ex. A2, it did not pay, obviously, unless the entire chit period is over, it will not be possible  to release the amount, lest, the other  subscribers of the chit would lose dividend etc.

In the result the appeal is allowed in part, setting aside the order of the Dist. Forum.  Consequently, the complaint is allowed in part directing the appellant to pay Rs. 47,645/- with interest at the rate of 9 Percent p.a., from the date of complaint i.e., from 19.2.2005 till the date of realization with costs computed at Rs. 1,000/-.  Rest of the claim is dismissed.

PRESIDENT                            LADY MEMBER            MALE MEMBER

                                                Dt. 25. 7. 2008.

-pnr.

CORRECTED - OK