Per Sri A. Hazarath Rao, President:-

The complainant filed this complaint u/s 12 of the Consumer Protection Act seeking compensation of Rs.50,000/- for deficiency of service; return of Rs.50,000/- paid by him to the opposite party; Rs.2,00,000/- as damages for reputation and mental agony and Rs.5,000/- towards legal expenses.

2.  In brief the averments of the complaint are:

        The complainant is doing small business in Mayabazar, Guntur.  The complainant is a subscriber of the chit bearing No.GMO 10/29.  The value of the said chit was Rs.5,00,000/- spread over for 40 months @ Rs.12,500/-pm.   The said chit commenced on 10-05-10.   In May, 2011 the complainant became a successful bidder of the said chit.   The opposite party on 30-05-11 handed over the cheque bearing No.243749 for Rs.2,93,088/- drawn on Union Bank of India to the complainant.   The opposite party deducted Rs.1,00,000/- towards  fixed deposit in the name of the complainant and got him entered as subscriber in another chit bearing No.GMO 14/19.   The complainant paid chit installments from June, 2011 to September, 2011.   The opposite party denied to receive monthly subscriptions when offered by the complainant. The opposite party informed the complainant that he was removed from new chit 14/19 and Rs.30,000/- was deducted from his total payment of Rs.50,000/- as penalty.  The complainant issued a notice for which there was no reply.   The complainant suffered mentally due to the above acts of the opposite party.  The complaint therefore be allowed.

3.  The contention of the opposite party in nutshell is hereunder:

        The complainant is not a consumer within the meaning of Consumer Protection Act.   The complainant became a successful bidder in May, 2011 for the chit bearing No.10/29.  The complainant furnished 3^rd party security towards his future liability and executed necessary security documents.   The opposite party after deducting Rs.11,412/- towards subscription dues, stamps and miscellaneous and documentation charges, Rs.13,500/- towards subscription charges in chit No.14/19 and Rs.50,000/- towards Shriram Life Insurance premium gave cheque for Rs.2,93,088/-.   The complainant subscribed another chit bearing No.14/19 for Rs.5,00,000/- spread over for a period of 40 months @Rs.12,500/- pm.   The complainant on 18-06-11 paid Rs.12,500/- plus Rs.1,000/- towards admission fee on 18-06-11.  The said amount of Rs.13,500/- was deducted from the amount payable towards the prized money in chit No.10/29.   The complainant subsequently paid two installments and the 4^th installment in part.  The complainant in all paid Rs.41,088/- towards the chit bearing No.14/19.  Subsequently the complainant became a defaulter in payment of installments.   The opposite party issued several reminders and notices requiring the complainant to pay arrears of installments.   Having no other go the opposite party removed the membership of the complainant on 03-01-12 in chit NO.14/19 and intimated the same to the complainant.   The opposite party deducted Rs.25,000/- towards 5% of chit amount as damages for breach of contract and Rs.50/- towards incidental charges from Rs.41,088/-.   The opposite party is willing to pay Rs.16,038/- to the complainant in respect of the chit bearing No.14/19.   The complainant paid 21 installments only towards the chit 10/29 and committed default subsequently.   The opposite party issued notice to the complainant as well as his guarantors of the chit 10/29 for payment of Rs.2,26,479/-.  The opposite parties  did not commit any deficiency of service.   The complaint therefore be dismissed.

4.   Exs.A-1 to A-5 and Exs.B-1 to B-8 were marked on behalf of the complainant and opposite party respectively.     

5.  Now the points that arose for consideration in this complaint are:

1. Whether the complainant is a consumer?
2. Whether the opposite party committed deficiency of service?
3. Whether the complainant is entitled to compensation?
4. To what relief?

6.  Admitted facts in this case are these:

          a.  The complainant is a subscriber of the chits bearing No.10/29               and 14/19 (Exs.A-4 and A-3) respectively.

        b.   The complainant became a prized subscriber of the chit                      bearing No.10/29.

        c.  The opposite party paid Rs.2,93,088/- towards prized                          amount (Ex.A-5).

        d.   The complainant paid Rs.41,750/- towards chit 14/19                                 excluding dividend (Ex.A-3).

        e.  The opposite party deducted Rs.50,000/- towards annual                     premium of     Shriram Life Insurance Company (Ex.A-2).

        f.   The opposite party removed the complainant from the chit                   bearing No.14/19.

        g.  The opposite party issued notice to the complainant and his                        guarantors on 04-05-12 (Ex.A-1).          

7.   POINT No.1:-   The averments in para 7 of version revealed that the opposite party collected Rs.100/- towards stamps and miscellaneous charges, Rs.1,000/- towards documentation charges and Rs.5,000/- towards LJ charges in respect of the chit bearing No.10/29.    The averments in para 6 of version revealed that the opposite party collected Rs.1,000/- towards admission fee for the chit 14/19 subsequent to encashing the cheque for Rs.2,93,088/-.   Under those circumstances, the complainant squarely comes under the definition of consumer.   We therefore answer this point in favour of the complainant.

8.  POINT No.2:-   The complainant filed this complaint on 13-06-12 after receiving Ex.A-1 notice in May, 2012.  Ex.A-3 pass book revealed that the complainant paid three installments for the chit bearing No.14/19 subsequent to encashing the cheque for Rs.2,93,088/-.   Under those circumstances, the contention of the complainant about the opposite party forcing him to join the chit bearing No.14/19 cannot be accepted.    

9.  Deficiency of service in respect of chit bearing No.14/19:-

        The contention of the complainant is that the opposite party denied to receive the installment amounts though offered.   Nothing prevented the complainant from offering the installment amount by way of demand draft or pay order or in the least giving notice in writing to that affect.  The complainant failed to do either of these.   Under those circumstances, the contention of the complainant cannot be accepted.   

10.   Ex.B-2 is the agreement of chit and it amounted to a contract between the complainant and the opposite party.   Under the caption non prized subscriber the following was mentioned:

                “ If a non-prized subscriber fails to pay subscription for the three consecutive installments, he shall be liable to be removed from the list of subscribers and the foreman, at his option, shall be entitled to substitute a new subscriber in place of defaulting subscriber or may himself subscribe for the ticket and the defaulted ticket of the chit will be dealt with in accordance with the relevant provisions of the Chit Funds Act.

        The Foreman, at his discretion, can waive the interest-partly-or fully and also can postpone the removal of membership in suitable and deserving cases.   A removed subscriber, not substituted, may be re-admitted on such terms as the Foreman deems proper.   A removed subscriber is entitled to the amount actually subscribed by him i.e, exclusive of dividends, less 5% of the chit amount towards damages for breach of contract.  This amount is payable on application at the end of the chit period or earlier, if the vacancy is substituted”.

11.   Chapter IV of A.P. Chit Funds Act deals with non prized subscribers. Section 20 of the said Act deals with removal of defaulting subscriber and it reads as follows:

         “20. Removal of defaulting subscribers:- A non-prized subscriber who defaults in paying his subscription in accordance with the terms of the chit agreement shall be liable to have his name removed from the list of subscribers. Every such removal shall, with the date thereof, be entered in the relevant book maintained by the foreman. A written notice of such removal shall be given by the foreman to the defaulting subscriber within fourteen days of such removal.

(2) A true copy of the entry referred to in sub-section (1) shall     be filed by the foreman with the Registrar within fourteen     days from   the date of         such removal.

      (3) Any defaulting subscriber aggrieved by the removal of his     name from the list of subscribers may within seven days of    the communication to him of the notice of removal, appeal      to     the Registrar.

      (4) The Registrar may, after giving the parties an opportunity of making a representation pass such      order on the appeal as he     thinks fit and the decision of the Registrar shall be final”.

12.   The complainant failed to approach the Registrar within the time prescribed after receiving Ex.A-1.  The clause in Ex.B-2 chit agreement extracted supra (regarding removal of membership) is in conformity with Section 20 of A.P. Chit Funds Act and its validity is not questioned.   It is not within the competence of this Forum in our considered opinion to decide whether deducting 5% of the chit amount towards damages for breach of contract as mentioned in Ex.B-2 chit agreement is legal or illegal and the same has to be decided by competent authority.   The opposite party expressed its willingness to pay Rs.16,038/- in respect of the chit bearing No.14/19.   Since the opposite party acted in accordance with chit agreement, we are of the opinion that it did not commit any deficiency of service regarding chit 14/19.   The opposite party ought to have returned the amount of Rs.16,038/- to the complainant when it issued Ex.A-1 notice.   Not returning that amount to the complainant either by way of draft or pay order in our considered opinion is not proper.  

13.  Deficiency of service in respect of chit bearing No.10/29:-

        Being hard pressed for money the complainant agreed to forego Rs.1,32,000/- from out of Rs.5,00,000/- and became a prized subscriber for Rs.3,68,000/-.   It is not out of place to mention that M/s Sriram Chits Private Limited and M/s. Shriram Life Insurance Company Limited are different/distinct legal entities.   Ex.A-2 revealed that M/s Shriram Life Insurance Company Limited issued original of Ex.A-2 for Rs.50,000/- on 30-05-10 in favour of the complainant.   The opposite party issued cheque for Rs.2,93,088/- after the complainant furnishing 3^rd party security for his future liability and executing necessary documents.   The contention of the opposite party about the complainant voluntarily taking policy of insurance from M/s Shriram Life Insurance Company Limited cannot be accepted as he was hard pressed for money and agreed to forego Rs.1,32,000/-.   Under those circumstances the contention of the complainant that he taking the original of Ex.A-2 policy under pressing circumstances is having considerable force and probable.   Such conduct on behalf of the opposite party forcing/pressurizing prized subscribers to part with some amount towards business of its sister concern in our considered opinion amounted to unfair trade practice which squarely comes under the purview of deficiency of service.   Under those circumstances directing the opposite party to return Rs.50,000/- together with interest @12% p.a., from 30-05-11 will meet ends of justice. 

14.   Since the complainant joined as member of the chit bearing No.14/19 the opposite party deducting subscription towards installment and admission fee cannot be said as improper.   The calculation mentioned by the opposite party in para 7 of its version tallied with the admitted cheque amount.    We therefore opine that the opposite party did unfair trade practice in deducting Rs.50,000/- towards insurance premium of its sister concern.   For the discussion made supra we answer this point accordingly.

15.  POINT No.3:-    The complainant claimed Rs.50,000/- towards deficiency of service and Rs.2,00,000/- as damages for reputation and mental agony.    The complainant also contributed his part being a silent spectator to the acts done by the opposite party and kept quite till receipt of Ex.A-1 notice.   The complainant did not place any material before this Forum to show that he lost his reputation.   Non payment of installments amounts by him as agreed under Ex.B-2 made the opposite party to remove him as a member.   Compensation to be awarded should commensurate with the injury complained off.   Considering the circumstances of the case, awarding Rs.5,000/- as damages will meet ends of justice.  We therefore answer this point accordingly in favour of the complainant.

16. POINT No.4:-   in view of above findings, in the result the complaint is partly allowed as indicated below:

1. The opposite party is directed to pay Rs.50,000/- (Rupees fifty thousand only) together with interest 12% p.a., from 30-05-11 till payment (for the chit 10/29).
2. The opposite party is directed to pay Rs.16,038/- (Rupees sixteen thousand and thirty eight only) together with interest @12% p.a., from the date of Ex.B-4 i.e., 03-01-12 till payment.
3. The opposite party is directed to pay Rs.5,000/- (Rupees five thousand only) as damages to the complainant.
4. The opposite party is directed to pay Rs.1,000/- (Rupees one thousand only) towards costs.
5. The above order shall be complied within a period of six weeks from the date of receipt of the copy of the order. 

Typed to my dictation by Junior Stenographer, corrected by me and pronounced in the open Forum dated this the 30^th day of November, 2012.

          MEMBER                                                               PRESIDENT

APPENDIX OF EVIDENCE

                                                         DOCUMENTS MARKED

For Complainant :

For Opposite Party: 

                                                                                                                  PRESIDENT