Complaint filed on:11-01-2023.

                                                      Disposed on: 30-10-2023

BEFORE THE DISTRICT CONSUMER DISPUTES

REDRESSAL COMMISSION, TUMAKURU

DATED THIS THE 30^th DAY OF OCTOBER, 2023

PRESENT

SMT.G.T.VIJAYALAKSHMI, B.Com., LLM., PRESIDENT

SRI.KUMARA.N, B.Sc. (Agri), LLB., MBA., MEMBER

SMT.NIVEDITA RAVISH, B.A., LLB. (Spl). LADY MEMBER

CC.No.6/2023

Sri,Doddaiah S/o Late Chikkanna

Aged about 58 years, R/o

Lakkanagowdanapalya, Kotthagere,

Hobli, Kunigal Taluk, Tumkur District.

……………….Complainant/s

(By Sri.Muralikrishna(JMM), Advocate)

                                                V/s

1.       The Senior Manager,

          MARGADARSHI CHITS(KAR)

          PVT LTD, Basaveshwaranagar Branch,

          No.717, Poorna Shashi Complex, 1^st Floor,

          Modi Hospital Road, Bengaluru- 056 008.

2.       Sri. P.Lakshman Rao, Director,

          MARGADARSHI CHITS(KAR)

          PVT LTD, Regional Office,

          S.801/802 South Block, 8^th Floor

          Manipal Centre, Deccan Road,

          Bengaluru – 560 042.

3.       Sriram Development Officer,

          MARGADARSI CHITS(KAR) PVT LTD,

          Regional Office, 801/802, South Block,

          8^th Floor, Manipal Centre, Deccan Road,

          Bengaluru – 560 042.

4.       The Manager, MARGADARSHI CHITS(KAR)

          PVT LTD, No.717, West of Card Road, 2^nd Stage,

          Bengaluru – 560 086.

……………….Opposite Party/s

(OP1, 2 & 4 – By Sri.K.Naveen Nayak, Adv.,)

(OP3 – served absent)

: O R D E R :

BY SRI.KUMARA.N., MEMBER

This complaint is filed by the complainant to direct the OP No.s1 to 4 to pay the chit amount of Rs.8,50,000-00 collected from the complainant with interest @ 18% PA and to pay Rs.50,000-00 towards damages for deficiency in service and prays to award cost and other reliefs.

2.   The Opposite Party No.1 is the Senior Manager, MARGADARSHI CHITS(KAR) PVT LTD, Basaveshwaranagar Branch, No.717, Poorna Shashi Complex, 1^st Floor, Modi Hospital Road, Bengaluru- 056 008, the Opposite Party No.2 is the Sri. P.Lakshman Rao, Director,  MARGADARSHI CHITS(KAR) PVT LTD, Regional Office, S.801/802 South Block, 8^th Floor Manipal Centre, Deccan Road, Bengaluru – 560 042, the Opposite Party No.3 is the Sriram Development Officer, MARGADARSI CHITS(KAR) PVT LTD, Regional Office, 801/802, South Block, 8^th Floor, Manipal Centre, Deccan Road, Bengaluru – 560 042 and Opposite Party No.4 is the The Manager, MARGADARSHI CHITS(KAR)  PVT LTD, No.717, West of Card Road, 2^nd Stage, Bengaluru – 560 086 (Hereinafter called as OP No.1, OP No.2, OP No.3 and OP No.4/OPs)

 3.      It is the case of the complaint that the complainant obtained two chits namely LTO14V BN/12 and LTO14V BN/13 from the OPs as advised and suggested by the OP No.3 and the OP No.3 promised the complainant that out of two chits, one of the first chit will be awarded and granted to the complainant, but the OPs not awarded/granted so far and the complainant from October-2020 to January-2021 paid Rs.1 lakh each towards two chits, which totaling to Rs.7,50,000-00, monthly subscription to the OPs and the OPs collected Rs.3,000-00 towards fees from the complainant.  The complainant further submitted that the entire world including India suffered due to Covid-19 for the period 2019-2021 and the Government of India imposed lock-down, as a result, the OPs office also closed that period.  The complainant further submitted that he was shocked to see the letter dated:28.12.2021, sent by the OPs, wherein the OPs stated as the complainant unable to continue both the chits and as per the policy, the OPs intimated the complainant to take back Rs.99,940-00 each, in total Rs.1,99,880/-.  The complainant paid Rs.6,00,120-00 in two chits and unable to pay due to lock-down, but the OPs without considering the lock-down situation and without giving any concession, initiated and removed the complainant from the chits.  The complainant visited 03 times to the OPs office at Bangalore personally, but in the office none of the responsible persons available and thereafter given request letter on 29.01.2022, but the OPs not responded.  The OPs not guided and cooperated properly and removed the complainant from the chits, which leads to deficiency in service on the part of OPs.  Hence, the complainant issued legal notice dated:22.09.2022, in spite of it, the OPs not responded.  Hence, this complaint.

4.        After the complaint registered, Commission notice was issued to the OPs, the OPs 1, 2 and 4 appeared through counsel and filed the version, but the OP No.3 remained absent.  The OPs 1, 2 and 4 contended that the complainant subscribed for two chits bearing Nos.LT014V BN-12 and LT014V BN-13 with the OPs and each chit value is Rs.15,00,000-00 payable at Rs.1,00,000-00 each Per Month for 50 months.  The OPs and the complainant entered registered chit agreement dated:31.07.2020 for both chits as per Section 6 of Chit Fund Act.  Therefore, the OPs and the complainant are binding to follow the terms and conditions of the said agreement.  The OPs 1, 2 and 4 further submitted that the complainant has paid an amount of Rs.6,99,999-00 and four installments respectively in both the chits and the complainant completely failed to pay remaining installments.  Hence, the OPs on v and the OPs denied all other averments in the complaint as false and prays to dismiss the complaint.

5. On 16.06.2023, the complainant counsel filed IA U/o 6 Rule 17 of CPC R/w Sec. 151 to amend the complaint Para-2, line-6 to insert Rs.1,00,000-00 instead of Rs.50,000-00.  Upon hearing, the said IA allowed on cost of Rs.500-00 and the complainant counsel produced amended complaint. 

6.        On 30.06.2023, the OPs offered some proposal for settlement, but, the complainant’s counsel after the discussion refused the settlement proposal. 

7.        The complainant has filed his affidavit evidence and marked the documents at Ex.P1 to P6/7.  The OP No.1 has filed his affidavit evidence on behalf of OP Nos.1, 2 and 4 and marked the documents at Ex.R16. 

8. .       We have heard the arguments of both side counsels.

9.       On perusal of the pleadings and documents produced by both parties, the points that would arise for our consideration are:-

1. Whether the complainant proves the deficiency in service on the part of OPs?

2. Is complainant entitled to the reliefs sought for?

10.     Our findings on the aforesaid points are as follows:

Point No.1: Partly Affirmative

Point No.2: As per below order

:R E A S O N S:

Point Nos.(1) & (2):- Point No.1 to 2:

11. The complainant counsel argued that, the complainant subscribed two chits bearing No’s; LT014V BN-12 and LT014V BN-13 from the OPs and each chit value is Rs.50,00,000-00 payable at Rs.1,00,000-00 each Per Month for 50 months and from October-2020 to January-2021, the complainant paid Rs.1 lakh each towards two chits, which totaling to around Rs. 750000-00 &  fee of Rs.3,000-00 to the OPs. The complainant subscribed the two chits based on the advice and assurance of the OP No 3, that out of two chits, one chit is awarded to the complainant. The complainant due to covid 19, unable to continue the chits and the OPs without proper coordination with the complainant, removed from the subscription, which leads to deficiency on the part of OPs, hence prayed to allow the case and award compensation. The complainant produced, ExP1 & P2/Original Passbook, Ex.P3/Original Agreement, Ex.P4/Original repudiation letter sent by OPs, Ex.P5  & P6/Original receipts, Ex.P7/Reply sent by OPs to the Legal notice.

12.      The counsel for OPs argued that the complainant and the OPs entered registered chit agreement dated:31.07.2020 for both chits as per Section 6 of Chit Fund Act.  Therefore, the OPs and the complainant are binding to follow the terms and conditions of the said agreement.  The OPs submitted that the complainant has paid an amount of Rs.6,99,999-00 towards chits and four installments respectively in both the chits and the complainant completely failed to pay remaining installments.  Hence, the OPs on 13.03.2021 issued NPRC (Non Prized Removal Letter) to the complainant, in that, without alternative, the OPs issued MRCL (Member Removal Conformation Letter) on 25.08.2021 in both the chits U/s 28 of Chit Fund Act 1982 and the OPs counsel prays to dismiss the complaint. The OP counsel produced 16 documents which are Ex.R1/Original chit agreement dated:31.07.2020, Ex.R2/Original MRCL (Member Removal confirmation letter dated:25.08.2021, Ex.R3/acknowledgment, R4/Original intimation of amounts due to defaulting subscriber, Ex.R5/acknowledgment, Ex.R6/Original account extract of Mr.Doddaiah in LTO14VBN12, Ex.R7/Original Chit agreement dated:31.07.2020 in LTO14VBNB, Ex.R8/Original MRCL (Member Removal Confirmation letter dated:25.08.2021 in LT014VBNB, Ex.R9/original RPAD endorsement, Ex.R10/Digital intimation of amounts due to defaulting subscription LT014VBNB, Ex.R11/Original RPAD Endorsement, Ex.R12/Digital Account extract of Mr.Doddaiah in LTO14VBNB, Ex.R13/Original NPRL letter dated:13.03.2021 with respect to LTO14VBN12, Ex.R14/Original NPRL letter dated:13.03.2021 w.r.t. LTO14VBNB, Ex.R15 & 15(a)/postal receipts, Ex.R16/Reply notice dated:15.10.2022. 
13. As alleged by the complainant, that the OP No3, promised that, the first chit, out of two awarded to the complainant, and the OPs not properly coordinated the complainant, the complainant not produced believable evidence to prove it.

14. .In this case, it’s clear that, the complainant subscribed two chits bearing No’s; LT014V BN-12 (ExR1)and LT014V BN-13 (ExR7)from the OPs and each chit value is Rs.50,00,000-00 payable at Rs.1,00,000-00 each Per Month for 50 months and from October-2020 to January-2021, the complainant paid Rs.1 lakh each towards two chits, i.e. Rs 349999.00 and Rs 350000.00 respectively, which totaling to Rs. 6,99,999-00, is an admitted facts, not disputed. The complainant after Jan 2021, i.e. from Feb 2021, not paid the subscription amounts in two chits, accordingly as per the Chit Fund Act 1982,Sec 27, the OPs, on 13.03.2021 issued (ExR13 & ExR14) NPRC (Non Prized Removal Letter) to the complainant (ExR15 & ExR15a), as there is no response from the complainant, without alternative, the OPs, as per Chit Fund Act 1982,Sec 28, issued (ExR2 & ExR8) MRCL (Member Removal Conformation Letter) on 25.08.2021(ExR3 & ExR9) to the complainant in both the chits and the complainant removed from the list in both chits, i.e.  LT014V BN-12 & LT014V BN-13 and as per Chit Fund Act 1982,Sec 29.substituted (ExR6) Mr. Rambabu Pampanna and (ExR12) Mr. K.A, Rame gowda respectively on 19-09-2021. The OPs, as per Chit Fund Act 1982, Sec 30,issued letter, i.e., intimation of amounts due to defaulting subscribers on 24-12-2021, by deducting 5% of the total chit amount towards penalty, stated as Rs 99939.00 & Rs 99940.00 payable to the complainant in both the chits, but not paid the said amount to the complainant nor transferred to the complainant account within fifteen days from the termination of the chit subject or the default subscriber substituted i.e. on 19-09-2021, but the OPs intimated the complainant on 24-12-2021, i.e. lapse of around three months, which leads to deficiency of service on the part of OPs..  

15. on perusal of the Chit Fund Act 1982 and the Chit agreements (ExR1 & ExR7), according to the Section 30 in the Chit Funds Act, 1982, (1): A foreman shall, out of the amounts payable by and realized from the substituted subscriber towards the installments relatable to the period before the date of the substitution (including the arrears due from the defaulting subscriber), deposit, before the date of the next succeeding installment, in a separate identifiable, account in an approved bank mentioned in the chit agreement, an amount equal to the contributions made by the defaulting subscriber, less such deductions as may be provided for in the chit agreement and shall inform the defaulting subscriber as well as the Registrar of the fact of such deposit and shall not withdraw the amount so deposited except for payment to the defaulting subscriber.  (3); The contributions of any defaulting subscriber who has not been substituted till the termination of the chit shall be paid to him within fifteen days from the date of termination of the chit subject to such deductions as may be provided for in the chit agreement. The chit agreement reflected as; “The Foreman, at his discretion, can waive the penalties partly or fully and also can postpone the removal of membership in suitable and deserving cases.  An expelled Subscriber, not substituted, may be re-admitted such terms as the Foreman deems proper.  A cancelled 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.  The amount is payable on application at end of the chit period or earlier, if the vacancy is substituted”.

16.     In the above discussion, it’s clear that, the complainant become defaulter subscriber in both the chits from February 2021, onwards, after completion of the procedures as per sec, 27, Sec 28, Sec 29, of, the Chit Funds Act, 1982, on 19-09-2021, the complainant substituted with Mr. Rambabu Pampanna and Mr. K.A, Rame gowda in chits LT014V BN-12 & LT014V BN-13 respectively. The OPs, as per the Chit Fund Act 1982 Section 30, and the chit agreement entered by the complainant & the OPs, the OPs / The Foreman has the discretionary power to impose penalties to the defaulting subscriber, as such, the OPs / The Foreman, can waive the penalties, partly or fully, or  can impose penalty of 5% of the chit amount to be deducted from the subscription amount received, towards damages for breach of contract, accordingly in this case the OPs imposed 5% of the chit amount to be deducted from the subscription amount received from the complainant. The discretionary power must be used reasonably, impartially and avoiding oppression or unnecessary injury by considering circumstances. In this case the both the chits operational for the period of 50 months, started from October 2020 to November 2024, but the complainant become, the defaulter subscriber in both the chits from February 2021, and the OPs substituted the complainant on 19-09-2021, as a result the OPs without harm running the said chits from September 2021 onwards, the OPs while imposing penalties, should consider the extent of harm and loss incurred during / particular period. In this case when the OPs has discretionary power of imposing penalty of up to 5% of the total chits amount, it’s for the taking in to consideration of chit period, i.e. 50 months, accordingly the complainant existence in the chit period, closed in less than 12 months, start from October 2020 to September 2021. The OPs on 30-06-2023, put-forth settlement proposal, but the complainant refused to accept the settlement proposal and made allegations against the Commission regarding settlement.  Considering the facts and circumstances prevailing on that time,, it is just and proper to direct the OPs to impose the penalty of 4% of the total chit amount i.e. Rs.2,00,000-00 each  to be deducted from the subscriptions in two chits, i.e. Rs.3,49,999-00 and Rs.3,50,000-00, which workout to be  Rs.1,49,999.00 & Rs.1,50,000.00, (Total Rs.2,99,999.00), to be refunded to the complainant. The OPs as per, the Chit Fund Act 1982, Sec 30, contributions of the defaulting subscriber, shall be paid to defaulting subscriber within 15 days of the termination of the subscription and or got substitution, but the OPs, not paid nor transferred to the complainant account, within fifteen days from the termination of the chit subject or substituted date i.e.19-09-2021 and OPs intimated the complainant, in this regard, in its letter dated 24-12-2021,ie after the lapse of three months, hence the OPs are liable to pay interest @ 8% PA on Rs.2,99,999-00 from the date of complaint to till its realization as compensation. The OPs compelled the complainant to approach this commission, hence, the OPs are liable to pay litigation cost of Rs.8,000-00 to the complainant. Accordingly we pass the order as;

The complaint filed by the complainant is allowed in part.

The OPs are jointly and severally directed to Pay Rs 2,99,999-00 with interest @ 8% PA from the date of complaint to till its realization to the complainant.

The OPs are further jointly and severally directed to pay Rs.8,000-00 towards litigation cost.

The OPs jointly and severally directed to comply the above order within 45 days from the date of receipt/knowledge of this order, otherwise, it carry fine of Rs.100/- per day.

Furnish the copy of order to the complainant and opposite parties at free of cost.