Telangana

Mahbubnagar

CC/08/72

V. Bheemappa S/o Buganna O/c Busioness - Complainant(s)

Versus

The Manager, Kapil Chit Funds Pvt. Ltd., Mahabubnagar. - Opp.Party(s)

Sri S. Venkateshwarlu

27 Nov 2008

ORDER

BEFORE THE DISTRICT CONSUMER FORUM AT MAHABUBNAGAR

Wednesday, the 26^th day of November, 2008

 

                   Present:- Sri M.Rama Rao, B.A.,LL.B., President

     Sri P.Venkateshwara Rao, B.com., LL.B., Member

       Smt.B.Vijaya Kumari, M.Sc. B.Ed., C.C.P., Member

 

                                                                            C.C.NO. 72  Of   2008

Between:-

 

V. Bheemappa S/o Bugganna, age: 45 years, Occ: Business, R/o Allipur village, Maddur Mandal, Mahabubnagar District.  

 

                                                                                              … Complainant.

And

Kapil Chit Funds Pvt. Limited, Mahabubnagar, Rep. by its Manager,                   Behind Mallikarjuna Enterprises, New Town, Mahabubnagar.  

                                                                                         … Opposite Party

 

 This C.C. coming on before us for final hearing on 12-11-2008,             in the presence of Sri S. Venkateshwarlu, Advocate, Mahabubnagar for the complainant and of Sri C. Rajeev Kumar, Advocate, Mahabubnagar for the opposite party and having stoodover for consideration till this day, this Forum delivered the following:  

 

O R D E R

 

 (Sri M.Rama Rao,  President)

 

1.        This is a complaint filed on behalf of the complainant under section 12 of Consumer Protection Act, 1986 seeking a direction to the opposite party to pay a sum of Rs.32,500/- i.e., prize amount in second chit and amount of Rs.5,000/- in first chit and interest of Rs.10,400/- @ 24% p.a. on Rs.32,500/- along with compensation of Rs.10,000/- and also to pay Rs.5,000/- towards costs of the complaint to the complainant.

 

2.     The complaint averments are as follows:-  The complainant is the chit member of the opposite party in two chits of Rs.50,000/- each.  The opposite party has allotted the chit numbers i.e., NTL02E/28 for the first chit and NTL02E/29 for the second chit to the complainant.  The chits’ duration is 40 months.  The complainant has to pay Rs.1,250/- per month for each chit.  The complainant paid the subscription amount in four installments for the first chit and 24 installments for the second chit to the opposite party.   On 27.1.2007 the complainant has participated in chit auction for second chit and he was selected for prized amount of Rs.32,500/-.  But the opposite party did not pay the prize amount to the complainant and the opposite party insisted the complainant to furnish sureties of four Government Employees.   The complainant did not furnish the sureties as demanded by the opposite party.  But the complainant showed immovable property in substitute for the Government employees’ sureties.   The opposite party has not satisfied about the immovable security and has not paid the prize amount to the complainant despite several demands made by the complainant.   The opposite party is rendering financial services to the members.  So the activities of the financial services will come under the purview of the C.P. Act, 1986 and the complainant is a consumer, as such this Forum is having jurisdiction to award the reliefs.  The opposite party has to pay the total prize amount of Rs.32,500/- in second chit and Rs.5,000/- of first chit which is paid in four installments, to the complainant.  The complainant has suffered from mental agony due to non payment of prize amount by the opposite party.  Hence the opposite party is liable to pay the amount of Rs.62,900/- which includes prize money and interest thereon and first chit amount and compensation and costs of the complaint.   Hence the complaint. 

 

3.     The opposite party filed counter with the following averments:-  It is true that the complainant is a chit subscriber with OP in two chits No.NTL02E/28 for the first chit and NTL02E/29 is the second chit in the same chit group each for the chit value of Rs.50,000/- payable in 40 monthly installments @ Rs.1,250/- per month.  The complainant paid 4 chit installments in chit No.NTL02E/28 and 12 chit installments in chit No.NTL02E/29. The complainant participated in the auction on 27.4.2006 but not on 27.1.2007 as alleged by him in respect of chit No.NTL02E/29 having agreed to forego Rs.17,500/-.  In order to withdraw the chit prize amount the complainant has to furnish sufficient sureties/security to the satisfaction of the foreman as per the terms of chit Agreement and Bylaws.  It is denied that the complainant showed immovable property in substitute for the Government employees’ sureties for which OP has denied.   In fact, had the complainant showed some title deeds as surety, he might have given the particulars of the property in the complaint.   The complainant deliberately did not furnish either personal sureties or any immovable property for withdrawal of the prize amount as alleged.  On 15.5.2006 and on 31.5.2006 the opposite party sent a letter informing the complainant stating that he has not submitted the sureties so far for withdrawal of the prize amount and even after the receipt of the said letter the complainant did not reply.    On 7.8.2006 the OP company sent another registered letter to the complainant requesting him to furnish sufficient sureties to the satisfaction of the foreman to draw the prize amount within 7 days from the date of receipt of the letter and in default the bid will be cancelled and the bid loss on re-auction and damages for breach of contract i.e., 5% of the chit value shall be recovered from the complainant.   Even after receipt of the said letter the complainant neither furnished the sureties nor gave any reply.   It is further submitted that the complainant failed to withdraw the prize amount by furnishing the sufficient sureties.  On 28.9.2007 as per Clause No.20 (h) (iv) of the chit agreement duly executed by the complainant the bid loss has to be borne by the subscriber in case if he fails to draw the prize amount.  Accordingly, on 19.4.2007 as per the terms of the chit agreement the opposite party re-auctioned the bid in respect of auction dated 27.4.2006 in chit No.NTL02E/29 for which the bid of the complainant was confirmed in favour of the other subscriber by name Ramadevi as she became the successful bidder in the said auction of the same chit group for Rs.6,500/- for which there is a bid loss of Rs.11,000/- and the complainant shall bear the said loss including the damages of Rs.2,500/- towards breach of contract and Foreman’s commission as per the terms of chit Agreement and Bylaws.    It is denied that this Hon’ble Forum is having jurisdiction to try the matter as the OP is rendering the financial services.  The subject matter shall not come under the purview of C.P. Act.   The OP had already terminated the complainant from the roll of the membership from the two chits bearing Nos. NTL02E/28 and NTL02E/29 respectively by issuing the registered removal letters dated 6.10.2006 and 29.11.2007.  The complainant had acknowledged the receipt of the said removal letters and thereafter did not give any reply.   As per the Section 20 (3) of A.P. Chit Fund Act, 1971, any defaulting subscriber aggrieved by the removal of his name from the list of subscribers may, within 7 days of the communication of the notice of removal to him, appeal to the Chit Registrar having jurisdiction.   As per Section 20 (4) of the Act, 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 Chit Registrar be final.   But the complainant has no legal right or locus-standi to file the present C.C. before this Hon’ble Forum and the same is liable to be dismissed with costs on the ground of the Jurisdiction.   The OP is not at all liable to pay any amounts to the complainant as alleged, the other claims under the head towards compensation, interest and costs is totally false, incorrect and not entitled for the same.  The claims under different heads are incorrect and speculative and the same is liable to be rejected.   

 

4.  The complainant filed his affidavit and got marked Exs.A-1 to A-9 on his behalf.

 

5.  The opposite party filed their affidavit and got marked Exs.B-1 to B-16 on their behalf. 

 

6. The point which falls for consideration is whether the complainant is   entitled to the reliefs as prayed for?

 

7.     The facts which are not in dispute are that the complainant joined in two chits of Rs.50,000/- each.  The duration of the chit period is 40 months from 28.1.2006 to 27.4.2009.  Every member has to pay Rs.1,250/- towards monthly subscription.  The complainant paid (4) installments in first chit bearing No.NTL02E/28 and participated in the auction of second chit bearing No.NTL02E/29 held on 27.4.2006 and was declared as highest bidder as quoted Rs.17,500/- discount.  The complainant has not drawn the prize amount of Rs.32,500/-.  The complainant discontinued/stopped the payment well before the completion of the chit period.  The complainant was terminated from the scrolls.    

 

8.     The contention of the complainant is that though he was successful bidder in the chit auction held on 27.4.2006, the OP failed to pay the prize amount of Rs.32,500/-.  Thus there is a deficiency of service on the part of OP and he is entitled to get the prize amount together with interest.   According to the OP, though the complainant was declared successful bidder, he failed to furnish the acceptable sureties to receive the prize amount.   The OP conducted the re-auction and the bid was confirmed in favour of one Ramadevi as substituted subscriber and the name of the complainant was removed from the chit.  As such the complainant is not entitled for any amount.    

 

9.    There is no dispute that the complainant joined in the said two chits and in first chit he paid 4 installments amount and he stopped the payment of further installments.  It is evident from Ex.A-1, Pass Book of first chit, the complainant paid net amount of Rs.4,250/- and Rs.750/- was adjusted/credited by OP towards dividend.    With regard to the second chit, the complainant claimed that he paid 24 installments.  On the other hand, according to OP, the complainant paid only 12 installments.   The Pass Book of the second chit was marked as Ex.A-2.  In that the OP recorded 12 installments payment particulars.   It is evident from Exs.A-3 and A-4 that the complainant also paid two more installments under these receipts and these receipts are not recorded in Ex.A-2.  In view of Exs.A-2 to A-4, we hold that the complainant paid 14 installments amount in second chit.   It is also evident from the said documents that the complainant has paid net amount of Rs.13,749/- and Rs.3,751/- was adjusted/credited by OP towards dividend under 14 installments. 

 

10. Now it has to be seen whether the complainant is entitled to receive any amount under the said chits.  There is no dispute on the fact that though the complainant was declared as prized subscriber in the chit auction held on 27.4.2006, he has not received the prize amount of Rs.32,500/-.    The learned counsel for OP argued that the subsequent subscriber quoted the discount @ 6,000/- whereas the OP already distributed Rs.17,500/- i.e., discount offered by the complainant towards dividend to all the chit members.  Since the complainant did not receive the prize amount in terms of Clause 20 (iv) of Agreement i.e., Ex.B-1, the complainant should bear the loss of Rs.11,500/- i.e., difference amount in discount between the first and subsequent auctions, because it was already distributed to the chit members towards dividends.   He further argued that apart from this amount the complainant is also liable to pay Rs.2,500/- towards Foreman’s commission in terms of Ex.B-1 Agreement.    Apart from this the OP sustained heavy monetary loss due to ousting of the complainant.   As such the amount paid by the complainant will not compensate the loss occurred to the OP and as such OP is not liable to pay anything.   The learned counsel for the complainant vehemently contended that the OP breached the agreement and willfully not accepted the sureties furnished by his client and OP arbitrarily removed the complainant from the chit membership and substituted with another member, as such there is no loss to OP and even according to Clause 15 (4) of Ex.B-2, the complainant is entitled to receive the net amount paid by him.   

 

     It is not in dispute that the complainant defaulted in payment of installments.  Therefore he was liable to be removed from the list of subscribers as per Clause 17 of Ex.B-2 and this was exactly what was done in this case.   Now we have to examine that in such case what would be its effect as per terms of agreement.  The Clause 15 (4) of               Ex.B-2 deals with repayment of contribution to the chit on the termination of the chit to non prized and unpaid prized subscribers.  According to this Clause (4) “A subscriber removed from the chit before termination, for any reason is entitled for refund of only the net amount of subscription deposited by him/her, less five per cent of chit amount towards damages for breach of contract.  This refund will be made after the substituted subscriber draws the prized amount or at the close of the group”.    

 

    The OP categorically admitted that he terminated the complainant from the scroll on 11.7.2007 vide Ex.B-10 i.e., well before the termination of chit period and substituted the vacant with another member by name Ramadevi and the said substituted subscriber was declared as highest bidder of the chit re-auction held on 19.4.2007 vide Ex.B-14 and she has drawn the prize amount.   Therefore, in view of the Clause 15 (4) of   Ex.B-2 and the principles laid down in the decision of the Hon’ble National Commission reported in CPJ 2008 (3) P.72, in the case of Model Chit Corporation Ltd. and others Vs. Dr. Meera, we hold that the complainant is not entitled for any dividend or other amount except the net amount of his subscription, less five per cent of chit amount towards damages for breach of agreement. 

  

     It is evident from Exs.A-1 to A-4 that the complainant has paid net amount of Rs.17,999/- towards subscription in total in both the chits.  According to our above opinion, 5% of chit amount i.e., Rs.2,500/- is to be deducted from the subscribed amount in each chit and rest of the amount has to be returned.  Accordingly, after deduction the complainant is entitled for Rs.12,999/-. 

 

    The complainant is claiming Rs.10,000/- and Rs.5,000/- towards his compensation and costs of the complaint.   The complainant has not filed any material before us to substantiate his claim.  As such he is not entitled for any compensation.  However he is entitled for Rs.500/- towards costs of the proceedings.   We are of the considered opinion that the complainant is not entitled for any interest on his amount up to the time granted by this Forum to OP to comply with the order.  However in case of non compliance of the orders by OP within the stipulated time, in our opinion the complainant is entitled to receive his amount of Rs.12,999/- together with interest @ 12% p.a. thereon from the very next day of completion of time granted to till the payment is made by OP. 

 

11.    In the result, the complaint is allowed.   The opposite party is directed to pay Rs.12,999/- towards subscription amount and Rs.500/- towards costs of the proceedings to the complainant within one month from the date of receipt of this order, failing which the OP is liable to pay the subscription amount together with interest @ 12% p.a. thereon from the next day onwards to till the payment.    

 

        Typed to dictation, corrected and pronounced by us in the open Forum on this the 26th day of November, 2008.           

 

        

 MEMBER                                MEMBER                              PRESIDENT 

     Appendix of evidence

       Witness examined

 

For complainant: Nil                                                    For opposite party:  Nil

Exhibits marked for Complainant:-  

 

Ex.A-1:        Pass Book of Chit No.NTL02E/28.

Ex.A-2:        Pass Book of Chit No.NTL02E/29.

Ex.A-3:        Cash Receipt of Chit No.NTL02E/29.

Ex.A-4:        Cash Receipt of Chit No.NTL02E/29.

Ex.A-5:        Cash Receipt of Chit No.NTL02E/29.

Ex.A-6:        Cash Receipt of Chit No.NTL02E/29.

Ex.A-7:        Cash Receipt of Chit No.NTL02E/28.

Ex.A-8:        Cash Receipt of Chit No.NTL02E/28.

Ex.A-9:        Chit Form.

 

Exhibits marked for OP:-  

 

   

Ex.B-1:        Agreement of Chit, dt.27.1.2006.

Ex.B-2:        Agreement of Chit, dt.27.1.2006.

Ex.B-3:        Minutes of Proceedings, dt.27.4.2006.

Ex.B-4:        Letter issued by OP, dt.15.5.2006.

Ex.B-5:        Letter issued by OP, dt.31.5.2006.

Ex.B-6:        Removal Notice issued by OP, dt.4.7.2006.

Ex.B-7:        Certificate of Posting, dt.9.7.2006.

Ex.B-8:        Removal Notice issued by OP, dt.7.6.2007.

Ex.B-9:        Postal Acknowledgement.

Ex.B-10:      Removal Notice issued by OP, dt.11.7.2007.

Ex.B-11:      Postal Acknowledgement.

Ex.B-12:      Bid Cancellation letter issued by OP, dt.7.8.2006.

Ex.B-13:      Postal Acknowledgement.

Ex.B-14:      Minutes of Proceedings, dt.19.4.2007.

Ex.B-15:      Subscriber Ledger.

Ex.B-16:      Subscriber Ledger.

 

By the Forum:

     - Nil-

                                                                                                                                                                                                                            PRESIDENT

Copy to:-

1. Sri S. Venkateshwarlu, Advocate, Mahabubnagar for the complainant.
2. Sri C. Rajeev Kumar, Advocate, Mahabubnagar for the opposite party.