BEFORE THE DISTRICT FORUM (UNDER CONSUMER PROTECTION ACT, 1986) MEDAK AT SANGAREDDY

         Present :Smt. Meena Ramanathan,B.Com.,Lady Member

         Sri G.Sreenivas Rao, M.Sc.,B.Ed.,LL.B., PGADR (NALSAR)  Male Member

Wednesday the 24^th day  of August 2011

C.C. No. 23 of 2011

Between:

V. Nagaraj S/o Raja Mouli,

Aged about 35 years,

Occ: Government Employee,

R/o Vidya Nagar, Sangareddy Town,

District: Medak.                                                                      ……Complainant

And

The Manager,

M/s Shriram Chits Private Limited,

Opp: New Bus Stand,

Sangareddy Town,

District: Medak.                                                                      ….Opposite party

      This case came of for final hearing before us on 22.08.2011 in the presence of complainant in person and that of Sri G. Venkat Ramulu, Advocate for opposite party, upon hearing arguments of both sides, on perusing the record and having stood over for consideration till this day, this Forum delivered the following:

O R D E R

(Per Se Smt. Meena Ramanathan, Lady Member)

1.                 This complaint is filed under section 12 of C.P. Act, 1986 by complainant alleging that he joined in the chit for a value of Rs. 5 lakhs vide chit reference No. SRLC.16/35 for a duration of 50 months @ Rs. 10,000/- per month. Commenced from May 2009 with the opposite party. The complainant has been paying the monthly installments regularly and he was successful bidder in the month of January 2011 and the chit was knocked down in his favour for Rs. 3,95,500/-. The complainant stated to have furnished the sureties as required but the opposite party failed to release the chit amount.

                   It is further alleged that the complainant visited the opposite party a number of times but he was informed that as he stood surety for one M. Selvaraju, who is a defaulter, opposite party advised to update the chit of M. Selvaraju and only then would release the chit amount. The said Selvaraj undertook to pay the installments which were due. However, complainant paid Rs.1,37,000/- in to the account of Selvaraj and update the installments obtaining the amount against huge interest. Even then the opposite party did not release the chit amount. The pass book of Selvaraj was updated and later the opposite party officials have struck off he entries for reasons best known which amounts to deficiency of service and unfair practice. The opposite party even refused to furnish the statement of account of Selvaraj. That the complainant issued notice to opposite party on 08.04.2011. In spite of it, opposite party failed to release the chit amount nor replied. The complainant suffered for want of money and the very purpose is not served. Hence the complaint with a prayer to direct the opposite party to release the chit amount of Rs. 3,95,500/- with interest @ 24% p.a. from the date of auction; to award compensation of Rs. 25,000/-; to award damages of Rs. 25,000/- , to pay notice charges of Rs. 2,000/-, to pay costs of the proceeding and award any other relief or reliefs.

2.              Opposite party filed their counter alleging that the complainant did not pay the amount of Rs. 1,37,000/- and is put to strict proof. Complainant was never insulted and they did not render any deficiency services. Complainant approached the Forum with unclean hands. To the notice, the opposite party gave reply. The complainant stood as guarantor to Chit No. SRLC 14/39 held in the name of M. Selvaraj, who is a defaulter. The same was intimated to complainant to clear off he dues but complainant failed to. Opposite party is entitled to recover the due amount from the guarantors or the subscriber, as shown in chit agreement clause 17 sub-clause (C) and (D). As per chit agreement, complainant is not entitled to receive the chit amount without clearing the dues of M. Selvaraj and not entitled for any damages. M. Selvaraju became successful bidder and received the prize money from the company and the guarantors thereon furnished guarantee for repayment of Rs. 4,80,000/-. Complainant is one of the guarantors to above chit. As the subscriber M. Selvaraju failed to pay the amount, a suit being O.S. No. 155/2010 on the file of Senior Civil Judge, Sangareddy for recovery of amount which was decreed. Hence, prayed to dismiss the complaint with costs.

3.              Both the parties let in evidence on their behalf in the form of affidavits reiterating the contents of the complaint and counter. Complainant also filed the arguments in writing on his behalf raising several queries.

4.                Complainant exhibited seven document in “A” series and the opposite party exhibited six documents in “B” series. Further, opposite party raised objection over marking of Ex. A3 and A7 documents.

                   Ex.A1 is the original passbook of complainant in respect to chit in dispute. Ex.A2 is original passbook of M. Selvaraju, pertains to chit ref No. SRLC 14/39. Ex. A3 is original receipt for Rs. 30,000/- another Photostat copy of receipt for Rs. 1,37,000/- (which the opposite party objected to mark the Photostat copy). Ex.A4 is office copy of notice dated 08.04.2011, issued by complainant to opposite party. Ex.A5 is original postal receipt. Ex.A6 is the postal acknowledgement of opposite party acknowledgement the A4 notice and Ex.A7 is the notarized affidavit of M. Selvaraj clubbed with Photostat copy of receipt for Rs. 1,37,000/- (which the opposite party objected to mark).

                   Ex.B1 is reply notice dated 19.04.2011 addressed to N. Chandra Shekar Rao, advocate, Sangareddy. Ex.B2 is Photostat copy of agreement of chit dated 20.10.2008. Ex. B3 is the Photostat copy of agreement of guarantee dated Nil. Ex. B4 is the original surety form pertain to chit ref No. SRLC 14/39 of M. Selvaraju. Ex.  B4 is the original salary certificate and Photostat copies of identity card, driving licence and electricity bill, pertains to complainant. Ex.B5 is the Photostat copy of decree in O.S. No. 155/2010 dated 18.03.2011 on the file of Senior Civil Judge, Sangareddy. Ex. B6 is the Photostat copy of the execution petition No. 31/2011 in O.S. No. 155/2010.

5.               The points for consideration are:

                   1). Whether the complainant is entitled for the chit amount of Rs. 3,95,500/- together with interest and costs as prayed for?

                   2). To what relief?

6.                There is no dispute that the complainant is a subscriber of chit bearing Ref. No. SRLC 16/35 and was paying the chit installments regularly and that the chit was knocked down in favour of complainant in the month of January 2011 for Rs. 3,95,500/-. It is also not in dispute that the complainant has furnished the required sureties for withdrawing the monies. The only dispute is that the complainant stood as guarantor for the chit bearing Ref. No. SRLC 14/39 for Rs. 5,00,000/- along with three other persons pertaining to one M. Selvaraju and that the said M. Selvaraju after withdrawing the bid amount became a defaulter. And that as M. Selvaraju failed to pay the chit installment monies, the opposite party did not release the chit amount of Rs. 3,95,500/- in favour of complainant and was asked to clear the entire defaulted amount of M. Selvaraju. And that the complainant paid the amount of Rs. 1,37,000/- towards the arrears of M. Selvaraju, which the opposite party denies and claims it to be paid by M. Selvaraju. Whereas the same contention is nullified by the complainant by way of exhibiting A7 document. Whoever the person may be, the fact remains that an amount of Rs. 1,37,000/- is paid towards arrears outstanding in respect of chit bearing Ref. No. SRLC 14/39 of M. Selvaraju. A perusal of Ex. A7 establishes that the amount of Rs. 1,37,000/- covered by receipt No. 334550 153122 dated 25.02.2011 was in-fact paid by V. Nagaraju for M. Selvaraju. This amount includes the installment money upto March 2011 in respect of Chit No. SRLC 14/39 as per complainant. In spite of the it, the opposite party did not choose to release the chit amount of complainant for the reasons best known.

7.              The opposite party even failed to explain why it withheld such a huge amount of Rs. 3,95,500/- pertaining to complainant even after making a payment of Rs. 1,37,000/- is not understandable. A perusal of Ex. B2 and Ex. B3 goes to show that these documents were stated to have been executed much earlier to holding of auction in respect to chit ref. SRLC 14/39. How, the guarantors came into the picture without any cause of action and how did the opposite party execute these documents and for what purpose it was executed is not explained. Any prudent person can understand that only after conclusion of auction, the Foreman would direct the subscriber to furnish the relevant sureties. In the instant case, much before the knocking of the chit in favour of M. Selvaraju, the opposite party executed the agreement of chit and Agreement of Guarantee; even before any cause of action arose is nothing but void ab initio. Hence, these documents B2 and B3 do not have any legal sanctity in the eye of law and can no more be termed to be agreements and therefore not binding on the executants thereon. Even the blank kept unfilled therein also vouchsafes our belief. Without there being any estoppels, the act of the opposite party in withholding the monies payable to a subscriber amounts to sheer negligence, deficiency in service and unfair practice of trade. The attitude of opposite party can also be observed from the documents exhibited in this Forum. Ex.B4 document goes to show that the sureties of IV grade employees will not be accepted. The surety No. 3 by name Mohd. Wahid Ali and surety No. 4 by name K. Ramesh are Class-IV employees and their net salary much below the prescribed limit. How did the opposite party accept these sureties is also not explained. Admittedly, the surety form was received and duly filled in by the opposite party on 05.11.2008 and verified on the same day. If this is taken to be true, how is the opposite party entitled to enforce the documents executed prior to this day on the complainant is unjustified.

                   The opposite party vehemently objected to mark the receipt of Rs. 1,37,000/-. A perusal of this disputed receipt shows a stamp is affixed on it which is as follows: “Amount receive without prejudice to our rights and contents”. This clearly shows that since there is a suit pending for recovery, knowing fully well, the opposite party affixed this stamp. And surprisingly, this amount was not reflected in the suit proceedings before the learned Senior Civil Judge, Sangareddy. For the reasons best known, the opposite party restrained itself from informing the Senior Civil Judge’s court in the proceedings pending thereof. And the same can be evident from the ex-parte decree passed in O.S. No. 155/2010 on 18.03.2010. Admittedly, in Ex. B6 (filed by opposite party itself), it is shown that an amount of Rs. 1,37,000/-plus(+) Rs. 1,370/- is paid by the Judgment Debtors, but no date is mentioned as to when it is paid. Whereas A bald and vague assertion is made by the opposite party showing clause 17 (C ) and (D) of Ex. B2 Agreement of chit. We quite agree with the contention of the counsel for opposite party but how the opposite party is entitled to enforce these clauses on the complainant without any cause of action is not explained. However there is no provision entitling the opposite party Foreman to withhold the monies of the subscriber when the arrears are cleared off. In the instant case, when it was brought to the notice of complainant that there are outstanding arrears in respect of chit Ref. No. SRLC 14/39, they were immediately deposited by the complainant, (either himself or through some other person), the opposite party has not denied about the payment, for the reasons best known, it withheld the monies payable to the complainant. For any reason, the opposite party has no right or Authority to withhold the monies in the above instance. The acts of the opposite party constrained and compelled the complainant to move this Forum. The deficiency of service, negligence and unfair practice on the part of the opposite party are apparent from the fact of the records. As stated, due to non-receipt of monies, the complainant might have suffered a lot.

8.                It is brought to the notice of this Forum by the complainant that Mr. M. Selvaraju is the subscriber of opposite party company for the following chits, the details are hereunder:-

1). Chit bearing Ref.No. SRLB 5/26 for the value of the value of Rs.2,00,000/-; duration 50 months; monthly installments @ Rs. 4,000/- inclusive of dividends; commenced in September 2005 and concluded in November 2009 (on the name of M. Selvaraju).

2). Chit bearing Ref. No. SRLJ/92/31 for the value of Rs. 50,000/-; duration 50 months; monthly installments @ Rs. 1,000/- inclusive of dividends; commenced in 6/2006 and concluded in 7/2010 (on the name of wife of M. Selvaraju).

3). Personal Loan bearing No. SNG 1248 P/07 for Rs. 1,50,000/- commenced on 11/2007 and concluded on 5/2010; instalment payable at Rs. 7,938/-.

4). Chit bearing Ref. No. SRLC 14/39 for the value of Rs. 5,00,000/-; duration 50 months; monthly instalments @ Rs. 10,000/- inclusive of dividends; commenced in September 2008 and concludes in October 2012.

9.                On analyzing the above information, it can be inferred that though there is no source of income to Mr. M. Selvaraju, the opposite party permitted him to participate in the chits and conduct the proceedings. ‘What is the procedure for joining the members in chit groups is not explained by the opposite party. Without verifying the capacity of a subscriber and without obtaining the source and means of income, how does the opposite party join persons like M. Selvaraju is also not explained. If a person who is drawing the net amount less than Rs. 15,000/-, how is he capable to pay the monthly installment of Rs. 10,000/- is not comprehensible, However, these facts are not in issue/dispute.

                   In view of aforementioned discussions, we answer the point No. 1 in favour of the complainant and against the opposite party.

10.              Point No. 3: In the result, we allow the complaint and direct the opposite party to pay Rs. 3,95,500/- together with interest @12% per annum from 28.02.2011 (the date on which the amount of Rs. 1,37,000/- is cleared in respect of chit Ref.No. SRLC 14/39) till realization and further to pay the compensation of Rs. 25,000/- for the ordeals experienced by the complainant and further to pay the costs of Rs. 2,000/-. We disallow the other claims of the complainant. Time for compliance: One month.

                   Typed to dictation, corrected and pronounced by us in the open forum  this         24^th        day of August, 2011.

                     Sd/-                                                                             Sd/-

              LADY MEMBER                                              MALE MEMBER

APPENDIX OF EVIDENCE

For Complainant:                                                   For Opposite parties:

            -Nil-                                                                                           -Nil-

WITNESS EXAMINED

For Complainant:                                                   For Opposite parties:

             -Nil-                                                                                           -Nil-

EXHIBITS MARKED

For Complainant:                                                            For Opposite parties:

                                                                                                                                   Sd/-

LADY MEMBER

Copy to

1)      The Complainant

2)      The Opp.Parties

3)      Spare copy