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.50,000/- payable in 40 installments.  The complainant was a prized subscriber in the auction held in 22^nd month.  The discount amount was Rs.6,100/-.  The date of auction was 11.4.2014.  Cheque for Rs.38,836/- was issued to the complainant as per Ex.A.7.  The cheque is dated: 02-8-2014.  The date of encashment of cheque was not known.  So, there is a delay of more-than 3 months in making payment although the complainant has furnished the security on 30-04-2014 (vide Ex.A.3) and approached the office at Koppal several times requesting for payment.

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

1.  Compensation for late payment of chit amount              -  Rs.   25,000.00
2. Compensation for physical & mental agony                    -  Rs.   25,000.00
3. Compensation for deficiency in service                           -  Rs.   25,000.00
4. Litigation & other expenses                                             -  Rs.      5,000.00

TOTAL                                     -  Rs.  80,000.00

            3.  The complaint was filed on 16.8.2014.  OP No.1 was served on 19.8.2014.  OP No.2 was served with notice of the proceedings on 21.8.2014.  The advocate filed vakalat for OP No.1 & 2 on 12-09-2014.  On that day direction issued by this Forum to file the written version in the office of the Forum by 18-10-2014.  The complainant has filed affidavit evidence on 18-10-2014.  Case was posted for argument on 31-10-2014.  On that day the advocate for OP filed written version of OP No.1.

            4.  In the case of Rajpipla Co-Operative Housing Society Ltd., V/s Magic Properties Pvt.Ltd., & Anr., - [2014] CJ 103 (N.C), the National Commission observed as follows;

“Xxxxxxxx. The preliminary objection should form part of the written version or written version should be filed within the time prescribed, under Section 13 of the C.P. Act or the written version should be accompanied by a separate application raising the preliminary objection.  The litigant is not directed to dodge the provision of the C.P. Act, on the ground that, without filing the written version, his preliminary objection should be decided, first of all, Section 13 of the C.P. Act, clearly provides that the written version must be filed within 30 days, from the date of service and if there is some genuine ‘sufficient’ ground, this Commission can further extend the time to 15 days’, meaning thereby, that written version has to be filed within 45 days, from the date of service.  This is a mandate given by the Apex Court, by three Judges’ Bench, reported in the case of Dr.J.J.Merchant and others vs. Srinath Chaturvedi, III (2002) CPJ 8 (SC), where it was unambiguously laid down:

“……… From the aforesaid section, it is apparent that receipt of the complaint, the opposite party is required to be given notice directing him to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum or the Commission.  For having speedy trial, this legislative mandate of not giving more than 45 days in submitting the written version or the version of the case is required to be adhered to.  If this is not adhered, the legislative mandate of disposing the cases within three or five months would be defeated.”

2.  In case, if the preliminary objection is filed, first of all and that too, in the absence of written version, the very object of the scheme of C.P.Act, 1986, shall stand defeated.  The requirement of Law is that the case must be decided within 180 days.”

            5.  In paragraph – 6 of the decision, the National Commission stated as follows;

“6. We are of considered view, that C.P.Act and CPC envisage two different procedures.  Under the C.P.C., there is no time frame.  Under C.P.Act, a Consumer Complaint has to be decided, within 180 days and Revision Petitions and First Appeals are to be decided, within 90 days.  Moreover, C.P.C. provides a long procedure, but Consumer Protection Act, 1986, provides a summary procedure.  Order 8, Rule 1 cannot be equated with Section 13 of the C.P.Act.”

                 6.   Following the above decision, we are not looking into the written version filed by OP No.1 on 31-10-2014 considering the provisions of Section 11(4) and 13(3) of the Consumer Protection Act – 1986.

            7.  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.

            8.  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.

9.  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;

10.  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.

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

13.  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.”

14.  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 02.8.2014.  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.

15.  In the above circumstances, a sum of Rs.5,000/- (Rupees five thousand only) is awarded as compensation for deficiency in service with interest thereon at 10% p.a. from the date of complaint till actual payment to the complainant.    In addition,  Rs.3,000/- (Rupees three thousand only) towards litigation expenses.  Time granted for compliance report by OP is up to 28-02-2015.

                                                                                                                                                          Complaint Partly Allowed.

// ANNEXURE //

List of Documents Exhibited for the Complainant.

Witnesses examined for the Complainant / Respondent.