Per:  K.V.Krishna Murthy:   

            The complainant is a subscriber of Chit Fund run by OP company having a branch at Koppal town.  The chit amount was Rs.50,000/- payable in 40 installments.  The complainant was a prized subscriber in the auction held in 14^th installment on 12-08-2013.  The discount amount was Rs.9,300/-.  The complainant intended to deposit the prized amount in fixed deposit with OP Company towards security for future installments.  But the OP Company deposited the prized amount of Rs.40,000=00 in fixed deposit on 18-11-2013 as per Ex.A.2.     So, there is a delay of more-than 3 months

            2.  Alleging deficiency in service, the complainant has claimed compensation under the following heads;

1.  Compensation for 3 months delay in

        payment of chit amount                                         -  Rs.   25,000.00

1. Compensation for physical & mental agony         -  Rs.   25,000.00
2. Compensation for deficiency in service                 -  Rs.   25,000.00
3. Litigation & other expenses                                       -  Rs.      5,000.00

TOTAL                                              -  Rs.   80,000.00

            3.  The OP Company resisted the claim on the ground that the complainant is not a consumer and also there was no deficiency in service.

            4.  The advocate for complainant has cited decision in A.C.Sreedharam V/s M.V.Narayana – CPC (1) 2013 – 434, which states the principles of Chit Fund Company and Consumers of Service.  He also cited the decision in Branch Manager, Margadarsi Chit Fund Ltd., V/s District Consumers Disputes Redressal Forum – 2004 NCJ 376 for similar purpose.  Another decision in Branch Manager, Keral State Financial Ent.V/s Vijayakumar – 2008 (3) CPR 274 (KSCDRC) has also been cited regarding deficiency in service.

            5.  A chit fund business run by the finance companies must be treated as service u/sec. 2(1)(o) of the Consumer Protection Act – 1986.

6.  As per provisions of Sec. 2(1)(g) of Consumer Protection Act – 19896 – ‘deficiency’ means –

• Any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;

7.  Section – 3 of the Chit Funds Act – 1982 states –

Save as otherwise expressly provided in this Act –

(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in the memorandum or articles of association or bye-laws or in any agreement or resolution whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act ; and

(b) any provision contained in the memorandum, articles, bye-laws, agreement or resolution aforesaid, shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

11.  Section – 25 of the Chit Funds Act – 1982 reads thus;

25. Liability of foreman to subscribers :- (1) Every foreman shall be liable to account to the subscribers for the amounts due to them.

(2)  Where there are more than one foreman in a chit, each one of them jointly and severally and, if the foreman is a firm or other association of individuals, each one of the partners or individuals thereof jointly and severally and, if the foreman is a company, the company as such shall be liable to the subscribers in respect of the obligations arising out of the chit.

8.  From the provisions of law aforementioned, there is no difficulty in concluding that the dispute is entertainable by the District Forum.

9.  Section – 22 of the Chit Funds Act – 1982 states –

22.  Duties of foreman: - (1) The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions be bound to pay him the prize amount:

Provided that the prized subscriber shall be entitled to the payment of the prize amount without any security whatsoever if he agrees to the deduction therefrom of the amount of all future subscriptions and in such a case, the foreman shall pay the prize amount to the prized subscriber within seven days after the date of the draw or before the date of the next succeeding installment, whoever is earlier:

Provided further that where the prize amount has been paid to the prized subscriber under the first proviso, the amount deducted shall be deposited by the foreman in an approved bank mentioned in the chit agreement and he shall not withdraw the amount so deposited except for the payment of the future subscriptions.

(2)  If, owing to the default of the prized subscriber, the prize amount due in respect of any draw remains unpaid until the date of the next succeeding installment, the foreman shall deposit the prize amount forthwith in a separate account in an approved bank mentioned in the chit agreement and intimate in writing the fact of such deposit and the reasons therefore to the prized subscriber and the Registrar :

Provided that where any prized subscriber does not collect the prize amount in respect of any installment of a chit within a period of two months from the date of the draw, it shall be open to the foreman to hold another draw in respect of such installment.

(3) Every payment of the prize amount or the amount of future subscriptions under sub-section (1), and the deposit of the prize amount under sub-section (2) shall be intimated to the subscribers at the next succeeding draw and the particulars of such payment or deposit shall be entered in the minutes of the proceedings of that draw.”

10.  Section 31, 32, 33 (1), (4) and (5)of the Chit Fund Act – 1982 states that –

“31. Prized subscriber to furnish security: - Every prized subscriber shall, if he has not offered to deduct the amount of all future subscriptions from the prize amount due to him, furnish, and a foreman shall take, sufficient security for the due payment of all future subscriptions and, if the foreman is a prized subscriber, he shall give security for the due payment of all the future subscriptions to the satisfaction of the Registrar.

32.  Prized subscriber to pay subscriptions regularly: - Every prized subscriber shall pay his subscriptions regularly on the dates and time and at the place mentioned in the chit agreement and, on his failure to do so, shall be liable to make a consolidated payment of all the future subscriptions forthwith.

33.  Foreman to demand future subscriptions by written notice:-

(1) A foreman shall not be entitled to claim a consolidated payment from a defaulting prized subscriber under Section 32 unless he makes a demand to that effect in writing.

(2) x x x x x x x x

(3) x x x x x x x x

(4) All consolidated payments of future subscriptions realized by a foreman shall be deposited by him in an approved bank mentioned in the chit agreement before the date of succeeding installment and the amount so deposited shall not be withdrawn except for payment of future subscriptions.

(5) Where any property is obtained as security in lieu of the consolidated payment of future subscriptions, it shall remain as security for the due payment of future subscriptions.

            11.  A cursory look at Section – 22 of the Chit Funds Act – 1982 cited above makes it clear that foreman shall pay the prized amount to the prized subscriber within 7 days after the date of draw.  In this particular case, the date of draw was 12-05-2014.  But the company paid the prized amount to the prized subscriber on 11-10-2014.  Hence there exists a delay around 5 months in the payment of prized amount.  Hence there is a deficiency in service on the part of the foreman because there is inadequacy or shortcoming in the manner of performance which is required to be maintained u/sec. 22(1) of the Chit Funds Act – 1982.

12.  Counsel for the OP Company contended that there is a deficiency in service because of delay in payment of prized amount in view of decision of the National Commission in Vijaya Lakshmi And Ors., V/s Vijaya Bhargavi Chit Fund Co. Ltd., - I (2006) CPJ 153 NC.  The facts of the case in that decision were different and the National Commission never holds that the prized amount can be paid after the statutory period, in which event there will be no deficiency in service.

13.  In the instant case, the chit value was Rs.5,00,000=00.  The discount amount was Rs.1,05,000=00.  The company paid Rs.3,36,000=00 on 11-10-2014.  The auction was conducted in 29^th month.  So cumulative share was Rs.2,89,524=00.  Cumulative dividend was Rs.60,676=00.  Therefore, there was no problem for the company to pay the amount deducting the future liability amount immediately after the statutory time.  There was no demand in writing by the foreman for payment of consolidated fund.  In the circumstances, the deficiency in service is evident, which requires to be compensated adequately.

14.  In the above circumstances, compensation of Rs.15,000=00 is awarded towards mental loss suffered by the consumer due to the negligence of the opposite party u/sec. 14(1)(d) of the Consumer Protection Act – 1986.  A further sum of Rs.5,000=00 is awarded towards deficiency in service  

15.  In the result, this Forum directs the OP Company to pay a sum of Rs.20,000=00 (Rupees twenty thousand only) to the complainant with interest thereon at 10% p.a. from the date of complaint till actual payment.  In addition, Rs.3,000=00 to be paid towards litigation expenses.  Time granted for compliance reported by OP is upto 30^th June 2015.

Complaint Partly Allowed.

Dictated to the Stenographer, typescript, edited, corrected and then pronounced in the Open Forum on 21-02-2015.

                                                                                                    President

Member-in-charge.

// ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.

             President

Member-in-charge.