PER S.K. NAIK, MEMBER

           Revision petitioner is a Pvt. Ltd. Company registered under the Companies Act.  It is running a business of managing Chit Funds.  The petitioner is aggrieved from the order dated 8.4.2005 passed by the A.P. State Consumer Disputes Redressal Commission, Hyderabad (for short ‘State Commission’) vide which appeal of the respondents/complainants against the majority order passed by two Members of District Forum, Visakhapatnam was allowed and the petitioner/opposite party was directed to pay a sum of Rs.1,57,500/- to the respondents/complainants within a period of six weeks.

Narrated briefly, facts of the case are that – Respondents/ complainants had enrolled themselves as a subscriber member of the petitioner – Company for a value of Rs.3 lakhs to be deposited @ Rs.7500/- per installment, p.m. for a total of 40 installments.  They have been subscribing to the fund on a regular basis.  In an auction conducted in the month of June 2001, the respondent/complainant had succeeded in winning the bid on their offer to forgo an amount of Rs.64,000/-. The petitioner/opposite party was accordingly required to pay them the prize amount of Rs.2,36,000/-. When this commitment was not honoured, despite the complainants having submitted the requisite form and sureties, a legal notice was issued, where after a compliant was filed before the District Forum alleging deficiency in service and requesting for direction to the petitioner/opposite party to release  the bid money.

          Petitioner/Opposite party contested the complaint.  After hearing the parties and on perusal of the evidence produced by both side ; the President of the District Forum gave the finding that the petitioner/opposite party was not justified in withholding the bid amount and subsequently adjusting the same against default dues of one Ch. Durga Rao for whom the respondent/complainants had stood as guarantors.  As against this, the majority judgment passed by the two Members of the District Forum held that the petitioner/opposite party cannot be deprived of their right of lien over the bid amount since the respondent/ complainant stood as surety/guarantor and the petitioner/opposite party was entitled to recover it from anyone of the guarantors as per terms of the agreement.  The complaint, thus, came to be dismissed vide the majority order of District Forum.

          It was in this background that the respondent/complainant filed an appeal before the State Commission who as stated earlier did not agree with the majority judgment dismissing the complaint but up-held the view expressed by the President of the District Forum and has directed the petitioner/opposite party to pay an amount of Rs.1,57,500/-, however, with interest only @ 12% p.a. as against 24% awarded by the President of the District Forum. It is this order of the State Commission that is the subject matter of challenge in revision petition before us.

          Learned counsel for the petitioner has assailed the order of the State Commission on two grounds.  His first and foremost contention is that the State Commission has failed to take cognizance of the agreement entered into between the parties.  According to para 9 of this agreement, they have a lien on all amounts  standing to the credit of the guarantors.  The complainants having stood guarantee for another subscriber member Ch. Durga Rao who had in a similar manner won a bid amount of Rs.2,40,000/- on 6.2.2000 but had defaulted in paying the installments, they were entitled to recover the dues from them. The respondent/ complainants having submitted themselves as guarantor, they were liable to make good the defaulted amount of the said Ch. Durga Rao who has since expired.  Legally, the petitioner company is fully entitled to recover the dues of deceased Ch.Durga Rao from the respondent/ complainant alone.  According to the learned counsel, the State Commission has miserably failed to accept this legal proposition.

          The other count on which, learned counsel proposes to assail  the order of the State Commission is that the respondent/complainant has failed to complete  the formalities such as furnishing of adequate surety from solvent guarantors and, therefore, he was not entitled to receive the bid amount.

          Per contra, learned counsel for the respondent/complainant has submitted that the State Commission was fully aware of the terms of the contract but has rightly opined that if the respondent/complainants were liable to pay the dues of deceased Ch.Durga Rao who had won the bid on 6.2.2000, they should not have permitted, respondent/ complainants to enter the arena of auction on 3.6.2001 specially when the said Ch.Durga Rao had died on 6.9.2000 and had paid only 12 installments, leaving a sum of Rs.2,40,000/- as arrears.  Secondly, there is no evidence worth the while to prove that the respondent/ complainant had failed to furnish any surety.  No notice or communication has been shown to have been issued by the petitioner – Company giving an opportunity or ultimatum for the respondent/complainant to furnish the sureties.  He has, therefore, justified the order passed by the State Commission.

          We have heard the learned counsel for the parties as also have perused the records of the case.

          Facts with regard to the respondent/complainants as also Ch.Durga Rao having joined the petitioner – Chit Fund Co. as subscriber member are not in dispute.  It is also not in dispute that Ch.Durga Rao had participated in auction held on 6.2.2000 and won a bid amount of Rs.1,54,000/- which was paid to him for which the present respondent/complainant stood as sureties/guarantor.  Death of Ch.Durga Rao on 6.9.2000 is not in dispute ; so is the factum of participation of the present respondent/complainants in an auction on 3.6.2001 where they agreed to forego Rs.64,000/- in the bid amount of Rs.3 lakhs to obtain the balance of Rs.2,36,000/-.

          The question, therefore, that arises is whether the petitioner – Company could withhold the payment of the bid money after the complainants had succeeded in the auction on the plea of their standing sureties to the deceased Ch.Durga Rao.  While, as per the petitioner – Chit Fund Company, they are entitled to transfer the bid amount of the complainants and credit the same to the account of the defaulter deceased Ch.Durga Rao in accordance with the terms of the agreement ; the sequence of events goes to show that the dealings of the petitioner/opposite party with the respondent/ complainants have not been transparent, fair and just.  Admittedly, the defaulter deceased Ch.Durga Rao had succeeded in the auction on 6.2.2000 and had subsequently died on 6.9.2000.  No doubt, the complainants had stood as one of the sureties, but petitioner/opposite party never bothered to ask him to make good the defaulted amount of Ch.Durga Rao until after 3.6.2001 when the respondent/ complainant had succeeded in the auction for himself.  Neither any notice prior to this date nor even thereafter was ever issued by the petitioner – Chit Fund Co. either asking him to pay the defaulted amount of deceased Ch.Durga Rao nor did they ever give any notice indicating their intention to transfer the bid money to settle the account of the deceased defaulter.  Thus, there has been a clear breach of the principle of natural justice.  Absence of any notice with regard to the transfer of the complainant’s bid money to settle the account of the deceased defaulter, in our view amounts to deficiency in service, despite the clause referred to in the agreement.

          The contention of the learned counsel for the petitioner – Chit Fund Co. that they had filed a Civil suit for the recovery of the defaulted amount of Ch.Durga Rao in which the present complainants were a party and a decree has been passed against them.  The  petitioner had during the pendency of the matter before the Consumer Fora, chosen to seek remedy in respect of their defence in the complaint and had filed suit before Civil Court which is said to have been decreed.  Therefore, in the revision, the claim of the complainant vis-à-vis deficiency of service.  With reference to the defence taken by the opposite party has been examined and adjudicated.

          The second contention with regard to the complainants not furnishing any sureties/guarantors also has no weight since the complainants have claimed that they had completed all the formalities with regard to the release of the bid amount. The petitioner/opposite party has not been able to produce any evidence to show that any demand was made of the complainant to furnish the guarantors so as to unable them to release the bid amount.

          Once, it is admitted by the petitioner – Chit Fund Co. that the respondent/complainants have succeeded in their bid, the bid should have been  paid to the complainants irrespective of their having stood guarantor to any other member.  We are, therefore, of the view that the order passed by the State Commission is perfectly in order and needs no interference.  The revision petition accordingly, is dismissed with no order as to cost.

                                                       …………………..………J

     (R.K. BATTA)

      (PRESIDING MEMBER)

                                                                   ……………….……………

                                                        (S.K. NAIK)

                                                                            MEMBER

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