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.5,00,000/- payable in 40 installments.  The complainant was a prized subscriber in the auction held in month of February – 2014.  The discount amount was Rs.1,05,000/-.  The date of deposit of prized amount was 11-10-2014 as per entry made in bank passbook, Ex.A5.   So, there is a delay of more-than 8 months in making payment although the complainant has furnished the security and approached the office at Koppal several times requesting for payment, according to the complaint averments.

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

1.  Compensation for 8 months delay in

        payment of chit amount                                     -  Rs.   35,000.00

1. Compensation for physical & mental agony                    -  Rs.   30,000.00
2. Compensation for deficiency in service                 -  Rs.   25,000.00
3. Litigation & other expenses                                       -  Rs.      5,000.00

TOTAL                                              -  Rs.  95,000.00

            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.  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.

11.  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.

12.  In the instant case, the bid date is 12-08-2013.  The auction was held in 14^th installment of the chit group out of 40 installments.  The prized subscriber do not wished to draw the prized amount.  He wanted the money to be deposited the money in fixed deposit in the same company.  In doing so, there was some delay of about 3 months because the deposit was took on 18-11-2013.  The amount deposited was Rs.40,000=00.  The interest at 9.75% on Rs.40,000=00 was would be Rs.1,000=00 only.  On consideration of the facts of the case that the complainant was willing to withdraw the amount and has not furnished the security for withdrawing the prized amount,  we do not think appropriate to grant compensation for deficiency in service only loss arisen will be allowed to be compensation u/sec. 14(1)(d) of the Consumer Protection Act – 1986.

13.   In the result, the OP Company is directed to pay sum of Rs.1,000=00 (Rupees one thousand only) with further sum of Rs.1,000=00 (Rupees one thousand only) as cost of this litigation to the complainant before the end of 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.