Per Sri A. Hazarath Rao, President:-
The complainant filed this complaint under section 12 of the Consumer Protection Act, 1986 against opposite parties seeking Rs.4,42,500/- being the prize amount; Rs.25,000/- towards mental agony; Rs.1,00,000/- towards damages and Rs.5,000/- towards legal expenses.
2. In brief the averments of the complaint are hereunder:
The complainant was a member of the chit bearing No.SPTM2/24 for Rs.5,00,000/- run by the opposite party. The said chit was spread over for a period of forty months. The complainant paid monthly subscriptions for 28 months and became highest bidder in the auction held for 29th month and agreed to forego Rs.57,500/-. The opposite party has to pay Rs.4,42,500/-. The complainant submitted sureties namely Srilakshmi, Puttigampala Venkata Subba Rao and I. Sobha Rani working as teachers in Government schools along with salary certificates and each of the sureties is drawing about Rs.20,000/- pm. The opposite party developed animosity against one of the sureties namely Vadlamudi Srilakshmi as she filed CC 45 of 2012 before this Forum and it was partly allowed. The opposite party brought pressure against the said Srilakshmi to withdraw CC 45 of 2012 on the file of this Forum and the said Srilakshmi was reluctant to withdraw CC 45 of 2012. The said Srilakshmi is a close friend of the complainant. The sureties proposed are not defaulters in the branch and one of them is not even a member. Puttigampala Venkata Subbarao was a subscriber in a chit of the opposite party at Guntur branch. The sureties proposed in this chit are sureties in the chit bid by Puttigampala Venkata Subba Rao. A dispute arose between the said Subba Rao and the opposite party branch at Guntur regarding diversion of Rs.50,000/- to M/s Sriram Life Insurance Company. The opposite party is in the habit of depriving the subscriber of the entire bid amount by diverting a part of prized money towards its sister concern i.e., Sriram Life Insurance. The opposite party has nothing to do with Guntur branch which is a separate unit. The opposite party rejected the sureties on false and frivolous grounds. The opposite party did not consider even the fresh sureties offered by the complainant. The conduct of the opposite party clearly manifested its malafides. The opposite party has no right to withhold payment of prize money for such a long time by exercising revengeful attitude. The complainant’s purpose of bidding the chit was totally lost in view of the above conduct of the opposite party. The complaint therefore be allowed.
3. The contention of the opposite party in brief is hereunder:
The complainant is not a consumer within the meaning of section 2(1)(d) of Consumer Protection Act and also there is no consumer dispute as defined u/s 2(1)(e) of the Consumer Protection Act for adjudication. The complainant was a member in the chit bearing No.SPTM2/24 and its value of Rs.5,00,000/- was spread over for 40 months. The complainant became a successful bidder in the auction held on 25-06-12 and agreed to forego Rs.57,500/- and the opposite party has to pay Rs.4,42,500/- after the complainant producing solvent and sufficient sureties. The complainant submitted Vadlamudi Srilakshmi, Puttigampala Subba Rao and I. Shobha Rani as sureties. The prized subscriber has to furnish sureties to the satisfaction of the foreman of the opposite party and the foreman has got every right to accept or reject any or all of the sureties. Surety once offered and accepted will not be entertained again as surety for another chit holder till the liability of previous chit holder is cleared. On verification of those sureties the foreman found that they were defaulters of the company and also its group of company. Sri P.V. Subba Rao is a defaulter with the opposite party’s branch at Guntur-I. The complainant herein Pulivarthi Ramesh Babu and Vadlamudi Srilakshmi were guarantors. An award was passed on 08-06-12 for Rs.1,96,961/- in AOP.46 of 2012. The judgement debtors in that AOP did not pay the decretal amount so far. The complainant also is a defaulter as the said Subba Rao became a defaulter. Thus the foreman of the opposite party has rightly rejected the sureties. The opposite party on 30-07-12 informed the complainant that the sureties offered by her were not acceptable and requested the complainant to furnish another sureties. As the complainant failed to comply with the opposite party’s demand as per the said letter the opposite party again informed the complainant that prize amount will be deposited in separate account in the approved bank as per the provisions of the AP Chit Fund Act. As the complainant failed to comply with the said demand the opposite party deposited the prize amount payable to the complainant in separate account in the approved bank. The same was duly intimated to the complainant and the Registrar. The opposite party returned the demand draft for Rs.23,000/- sent by the complainant to the opposite party along with her notice. The sureties offered by the complainant namely M. Padmajyothi and P. Swapna Rani are not acceptable since the complainant herself became a defaulter. The opposite party has no vindictive attitude towards the complainant. The opposite party did not commit deficiency of service. Rest of the allegations contra mentioned in the complaint are all false and are invented for the purpose of the case. The complaint therefore be dismissed.
4. Exs.A-1 to A-5 on behalf of complainant and Exs.B-1 to B-8 on behalf of opposite party were marked.
5. Now the points for consideration are:
1. Whether the complainant is a consumer and whether there is a triable consumer dispute?
2. Whether the opposite party committed deficiency of service by rejecting sureties arbitrarily?
3. Whether the complainant is entitled to any compensation?
4. To what relief?
6. Admitted facts in this case are these:
a. The complainant is a subscriber of the chit bearing No.SPTM 2/24.
b. Value of the said chit was Rs.5,00,000/- spread over for a period of 40 months (Ex.A-5).
c. The complainant became a highest bidder in the auction held on 25-06-12 and agreed to forego Rs.57,500/-.
d. The opposite party has to pay Rs.4,42,500/- to the complainant being a highest bidder.
e. The complainant produced sureties of Vadlamudi Srilakshmi, Puttigampala Venkata Subba Rao and I. Shobha Rani working as teachers in Government Schools.
f. One of the sureties namely Vadlamudi Srilakshmi field CC 45 of 2012 before this Forum alleging deficiency of service and it was partly allowed.
g. Puttigamapala Venkata Subba Rao was a subscriber in a chit of the opposite party company at Guntur branch (Ex.A-1).
h. The complainant furnished fresh sureties namely M. Padmajyothi and P. Swapna Rani.
i. Exchange of notice between the complainant and the opposite party (Ex.A-2 and A-3).
j. The opposite party returned the DD dated 11-09-12 for Rs.23,000/- to the complainant (Ex.A-4).
7. POINT No. 1:- As foreman of the opposite party is receiving commission on auction of every chit, the complainant thereby became a consumer. The complainant contended that the opposite party rejected sureties arbitrarily and thus raised a triable consumer dispute. Therefore the contention of the opposite party that the complainant is not a consumer and there is no triable consumer dispute is devoid of merit. We therefore answer these points against the opposite party.
8. POINT No.2:- The rejection of sureties by the opposite party is justifiable or not is the question before this Forum. The opposite party relied on clause (20) of loan agreement executed by the complainant (Ex.B-8) and Ex.B5 counter foil.
9. The terms and conditions of Ex.B-8 agreement dated 21-08-10 is binding on both the parties. The relevant portion in clause 20 of Ex.B-8 is extracted below for better appreciation:
“Security surety to be furnished by the subscriber for the due payment of future subscription:-
Prized subscriber before drawing chit amount must furnish suitable/sufficient, necessary security or sureties to the satisfaction, of Foreman for payment of future installments. If the subscriber does not have unencumbered net pay equal to the net salary fixed for the surety in his agreement or not able to produce documentary evidence for his income ie.., proof of income to the satisfaction of the Foreman or whose net salary is less than the sureties salary and is not able to produce the documentary proof of income to the extent of balance or if the subscriber did not pay monthly subscriptions payable to the chit every month on or before the auction date the securities under the clauses (d)(e)(h) only will be accepted. If the subscriber has the net salary/income as stated above and the payment pattern is regular the sureties mentioned under the clause (a) shall normally be accepted………………………………………………………………………………………………. II. Normally sureties and securities are accepted only from such places or towns where the Foreman’s offices are situated. However the Foreman may at his discretion accept sureties from any other place. Surely once offered and accepted will not be entertained again as surety for another chit holder till then liability of the previous chit holder is cleared. Any member who has not monthly or regular income or whose monthly income does not exceed that the amount as specified for subscribers may be called to furnish securities mentioned under (d)(e)(h), the prized subscriber and the sureties must show proof that their terms of service is atleast one year longer than the future liability. The expenses for verification and inspection of the surety offered, stamp value, typing, registration, stationery legal and all other expenses shall borne by the successful bidder.”
10. In clause 20 of Ex.B-8 it was clearly mentioned that sureties once offered and accepted will not be entertained again as surety for another chit holder till the liability of the previous chit holder is cleared. Ex.B-6 was the award passed by the Deputy Registrar of the chits on 08-06-12 in Dispute No.46 of 2012. As seen from Ex.B-6 Puttigampala Venkata Subba Rao furnished the complainant herein, Vadlamudi Srilakshmi and Pulivarthi Ramesh Babu as sureties to his bid amount in the auction held by M/s Sriram Chits Private Limited, Guntur-I branch. Ex.B-6 award was passed u/s 64 of the Chit Fund Act against Puttigampala Venkata Subba Rao, the complainant herein, Vadlamudi Srilakshmi and Pulivarthi Ramesh Babu. Ex.B-6 revealed that the said Puttigampala Venkata Subba Rao one of the sureties furnished by the complainant became a defaulter. The complainant contended that the said Subba Rao was not a surety with the opposite party branch at Sattenapalli. The said contention is devoid of merit as both the opposite party herein and the disputant in dispute No.46 of 2012 were branches of same company. By implication the complainant herein also became a defaulter by 08-06-12 as rightly contended by the opposite party.
11. The opposite party in para 8 of its affidavit mentioned that further the sureties offered by the complainant i.e., M. Padmajyothi and P. Swapna Rani are not acceptable since the complainant herself is a defaulter as stated above. It is the contention of both the parties that the complainant became a highest bidder in the auction held on 25-06-12 i.e., after the order passed by the Registrar in dispute No.46 of 2012. Foreman of the opposite party permitted the complainant to participate in the auction held on 25-06-12 though she became a defaulter. Nowhere in Ex.B-8 it was mentioned that a subscriber who stood as surety cannot participate in the auction in case he/she becoming a defaulter when stood as surety to another prized subscriber. The complainant though a defaulter according to the opposite party further required her to furnish fresh sureties under Ex.B-1 dated 30-07-12. The opposite party cannot blow hot and cold at the same breath i.e., the opposite party can reject the sureties who became defaulters according to 20(ii) of Ex.B-8 and at the same time cannot require the complainant to furnish fresh sureties though a deemed defaulter in its another branch. The said conduct of the opposite party is blameworthy.
opposite party filed Ex.B-5 i.e, counterfoil of receipt (Andhra Bank, Sattenapalli) showing that it deposited Rs.7,00,000/- on 31-07-12 which included the prized amount payable to the complainant in a sum of Rs.4,42,500/-. The opposite party addressed Ex.B-3 letter dated 08-08-12 to the complainant who in turn received it on 09-08-12 (Ex.B-4). In Ex.B-3 the opposite party mentioned “In these circumstances the company has no other option except to deposit the prize amount in the approved bank as per the provisions of the AP Chit Funds Act, after such deposit the said amount will be adjusted towards future subscriptions payable by you in the said chit.” By the date of Ex.B-3 the opposite party has not deposited the prized amount payable to the complainant as per the provisions of the AP. Chit Funds Act. By way of Ex.B-1 dated 30-07-12 the opposite party informed the complainant requiring her to produce fresh and solvent sureties at the earliest possible time to the satisfaction of the foreman and to get the prize money released. The contents of Exs.B1 and B3 falsified the opposite party’s contention that it deposited Rs.4,42,500/- under Ex.B-5. It can therefore be inferred that the opposite party did not deposit the prize amount payable to the complainant in any bank as per Chit Funds Act. Being a financial organization the opposite party is not expected to put forward such allegations which are contradictory by themselves. The said conduct of the opposite party is also blameworthy.
13. The opposite party permitting the complainant to participate in the auction against its rules, holding the payment of prized amount on that ground also, not depositing the prized amount in a bank according to Chit Funds Act amounted to deficiency of service. Rejecting fresh sureties submitted by the complainant namely M. Padmajyothi and P. Swapna Rani also amounted to deficiency of service. The opposite party returning the DD for Rs.23,000/- sent by the complainant is not justifiable. For the discussion made supra, we hold that the opposite party committed deficiency of service and answer this point against the opposite party. Under those circumstances directing the opposite party to pay Rs.4,42,500/- to the complainant together with interest @12% p.a., from 01-09-12 till payment and the complainant to pay subsequent installments after deducting the dividends will meet ends of justice.
14. POINT No.3:- The complainant claimed Rs.25,000/- towards mental agony and Rs.1,00,000/- as damages. The contention of the complainant about her purpose of bidding became futile is having considerable force. Awarding Rs.20,000/- as damages towards mental agony in our considered opinion will meet ends of justice.
15. POINT No.3:- In view of above findings, in the result the complaint is allowed partly as indicated below:
1. The opposite party is directed to pay Rs.4,42,500/- (Rupees four lakhs, forty two thousand, five hundred only) to the complainant together with interest @12% p.a., from 01-09-12 till payment.
2. The opposite party is directed to issue notice to the complainant demanding future subscriptions minus dividend within a week in writing from the date of receipt of this order.
3. The complainant is directed to pay the future subscriptions within a week thereafter after receiving notice in writing from the opposite party.
4. The opposite party is directed to pay Rs.20,000/- (Rupees twenty thousand only) as compensation to the complainant.
5. The opposite party is directed to pay Rs.2,000/- (Rupees two thousand only) towards costs of the complaint.
The above order shall be complied within a period of six weeks from the date of receipt of the copy of the order
