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 22^nd month.  The discount amount was Rs.1,05,500/-.  The date of auction was 11.4.2014.  Cheque for Rs.3,51,790/- was issued to the complainant on 07.8.2014.  So, there is a delay of more-than 3 months in making payment although the complainant has furnished the security and approached the office at Koppal several times requesting for payment.

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

1.  Compensation for late payment of chit amount -  Rs.1,00,000.00
2. Interest on chit amount  for late payment (18%) -  Rs.   15,830.00
3. Compensation for physical & mental agony                    -  Rs.   50,000.00
4. Compensation for deficiency in service                 -  Rs.    50,000.00
5. Litigation & other expenses                                       -  Rs.      5,000.00

TOTAL                                              -  Rs. 2,20,830.00

            3.  The complaint was filed on 25.8.2014.  OP No.1 was served on 26.8.2014.  OP No.2 was served on 30.8.2014.  The advocate filed vakalat for OP No.1 & 2 on 26.9.2014.  Written version not filed.

            4.  Section 13 (2) (a) & (b) of the Consumer Protection Act – 1986 states that –

(2) The District Forum shall, if the [complaints admitted] by it under section 12 relates to goods in respect of which the procedure specified in sub-section (1) cannot be followed, or if the complaint relates to any services, -

1. refer a copy of such complaint to the opposite party directing him to give his version of the case within a period of thirty days or such extended period not exceeding fifteen days as may be granted by the District Forum;

1. Where the opposite party, on receipt of a copy of the complaint, referred to him under clause (a) denied or disputes the allegations contained in the complaint, or omits or fails to take any action to represent his case within the time given by the District Forum, the District Forum shall proceed to settle the consumer disputes, -

1. On the basis of evidence brought to its notice by the complainant and the opposite party, where the opposite party denies or disputes the allegations contained in the complaint, or
2. [ex parte on the basis of evidence] brought to its notice by the complainant where the opposite party omits or fails to take any action to represent his case within the time given by the Forum;

5.  Section – 13 (3) of the Consumer Protection Act – 1986 lays down that – No proceedings complying with the procedure laid down in sub-sections (1) and (2) shall be called in question in any court on the ground that the principles of natural justice have not been complied with.

6.  Section – 13 (3A) of the Consumer Protection Act – 1986 states that –

Every complaint shall be heard as expeditiously as possible and endeavour shall be made to decide the complaint within a period of three months from the date of receipt of notice by opposite party where the complaint does not require analysis or testing of commodities and within five months if it requires analysis or testing of commodities;

7.  Section 11 (4) of the Consumer Protection Act – 1986 states –

Where a complaint is allowed to be proceeded with under sub-section (3), the District Forum may proceed with the complaint in the manner provided under this Act.

            8.  In this case, we have followed the above provisions.  The complainant has filed affidavit evidence on 18.10.2014.  Documents Ex.A1 and Ex.A.2 have been marked.

            9.  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.

            10.  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.

11.  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;

12.  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.

13.  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.

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

15.  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.”

16.  A cursory look at Section – 22 cited above, make it clear that the 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 11.4.2014.  But the company paid the amount to the prized subscriber on 07.8.2014.  Hence there exists a delay of more-than three months in  payment to the prized subscriber.  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.

17.  In the above circumstances, a sum of Rs.10,000/- (Rupees ten thousand only) is awarded as compensation for deficiency in service u/sec. 14(1)(d) of the Consumer Protection Act – 1986.  The complainant shall also be entitle for a sum of Rs.3,000/- (Rupees three thousand only) towards cost of this proceedings.  Time for compliance report of this order by the OP Company till the end of the present calendar year, failing which, the company shall pay interest at 10% p.a. on sum of Rs.10,000/- after the expiry of time granted for payment till actual payment.

Complaint Partly Allowed.

/ ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.