COMPLAINANT:

Sri. M.C. Shivanandaswamy,

S/o. Channaveerappa, Aged about 43 years,

Editor, Yuvaloka Patrike, Secretary,

The Estate Staffs Union of South India,

R/o. Lakshmeesha Nagara Main Road,

CHIKMAGALUR CITY.



V/s

OPPONENT:

The Manager,

M/s. Shriram Chits Private Ltd.,

Malnad Tyres Building,

Opp: Syndicate Bank, I.G. Road,

CHIKMAGALUR CITY.



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1. The complainant has filed this complaint u/s 12 of the Consumer Protection Act against the opponent for the deficiency of service in removing him from the chit group and prays for the repayment of 29 paid installments with interest at 21% P.A. and also with a compensation of Rs.50,000/- along with court costs as detailed in the complaint.

2. The facts of the case in brief are as follows:-

The complainant is one of the member to the chit group run by the opponent company and his Ticket Number is 1380/17009/10 and he is regular in paying the chit installments and he has paid 29 installments upto 24.06.2008. Such being the case, on 10.06.2008 the opponent issued removal notice from chit group for which the complainant issued a letter dtd.19.09.2008 along with a cheque bearing No.215336 dtd.19.09.2008 for Rs.2,000/-. But the opponent returned the cheque back to the complainant along with a letter dtd.20.09.2008 stating that he has been removed from the chit group. But the opponent has not mentioned any reason for the removal from the chit.


Thereafter, he issued a legal notice to the opponent dtd.05.11.2008 enquiring about the removal of the complainant from the chit group and calling upon the opponent to accept the cheque issued towards the installments or in alternative to return the entire 29 installments paid by him with 21% P.A. interest. But after the receipt of the notice also, the opponent has neither taken back the complainant to the chit group nor returned the installment amounts paid by the complainant, but have issued a reply notice untenably. Therefore, the opponent is at deficiency of service in removing the complainant from the chit without any reason and the opponent made the complainant to suffer mentally and physically. As such, he prays for the compensation of Rs.50,000/- along with the prayer as referred above.

3. After the service of the notice, the opponent has appeared through their counsel and filed version wherein they have contended that it is false to say that they have removed the complainant from the chit group without any reason. The opponent has followed the procedure as per the agreement. The complainant has not approached this Forum with clean hands.


The complainant is the consecutive defaulter for three months and thereby they have removed him from the membership of the chit as per the chit agreement entered by the complainant with the opponent and further they are ready to repay the installment amounts as per the agreement. But the complainant is not entitled to get any interest to the said amount and he is also not entitled to continue in the chit group. Thus, they have not rendered any deficiency of service and they have acted according to the agreement and pray for the dismissal of the complaint.

4. The complainant has filed his affidavit evidence as PW.1 along with the documents and the same have been marked as Exs.P1 to P16.

5. The opponent has also filed his affidavit evidence as RW.1 along with the documents and the same have been marked as Exs.R1 & R2.

6. We have heard the arguments advanced by both the parties’ counsels.

7. Now, the points that arise for consideration of this Forum are as follows:-



i) Whether there is any deficiency in service on the part of the opponent?

ii) If so, whether the complainant is entitled to the reliefs as sought?

iii) What Order?



8. Our findings on the above points are as follows:-



i) Point No.1: In the Negative



ii) Point No.2: In the Negative



iii) Point No.3: See, as per order below



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9. Point Nos.1 & 2: The case of the complainant is that inspite of regular payments towards the chit, the opponent has removed him from the membership without any reason and after notice of due he has issued a cheque towards the installments. Even inspite of issuance of the said cheque, the opponent has not continued him as a member, instead of that they have returned the cheque. Thus, they are at deficiency of service in removing the complainant from the membership of the chit.

10. On contrary, the opponent has taken a contention that the complainant is consecutive defaulter in paying the monthly installments of chit. Thus, they have acted according to the agreement and removed the complainant from the membership and they are not denying to pay the installment amounts paid by the complainant as per the agreement. Thus, they are not at deficiency of service and submits for dismissal of the complaint.

11. The complainant has produced original cheque dtd.19.09.2008 issued in favour of the opponent, which is marked at Ex.P5 and also produced as much as eight cash paid receipts towards the payment of installments to the chit, which are marked at Exs.P8 and P9. On perusal of these documents, we came to know that the complainant is not regular in paying the installments every month and we have noted that as per the Exs.P8 to P16 he has paid once in 3 months or once in 5 months towards the payment on monthly installments. This clearly shows that the complainant is not regular in paying the monthly installments to the opponent as alleged by the opponent. The same was admitted by the complainant and it is pertinent to note that as per the agreement, which is marked at Ex.R1, we noticed that the complainant has agreed all the conditions, which were shown in Ex.R1, wherein, we observed that in case of default for consecutive 3 months, the opponent has power to remove the member from the chit group.


Thus, we are of the opinion that removing the complainant from the chit for the reason of consecutive default in paying the monthly installments will not amounts to deficiency of service and it is pertinent to note that the cheque-Ex.P5 was issued after the removal of the complainant from the chit group and we found no error in refusing the cheque on the part of the opponent and it is also pertinent to note that the complainant has failed to prove that he is regular in paying the monthly installments. Anyhow, the opponent has undertaken in their affidavit that they are ready to return the amount paid by the complainant as per the terms and conditions of the agreement.


Therefore, the complainant is under liability to accept the amount as per the agreement i.e., Ex.R1 and we noticed that in Ex.R1, the complainant has agreed to pay the foremen commission. Thus, paying the amount by deducting the foremen commission to the complainant also not amounts to deficiency of service. As such, we are of the opinion that the complainant is at liberty to approach the opponent to take back his amount paid towards the installments of the chit as per the agreement. Accordingly, the complaint filed by the complainant is liable to be dismissed. Under these circumstances, we answer the point Nos.1 and 2 in the negative.

12. Point No.3: In view of our findings on above points the complaint filed by the complainant has to be dismissed. In the result we pass the following order.

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1. The complaint filed by the complainant against the opponent is hereby dismissed.

2. Having regard to the facts and circumstances of the case there is no order as to costs.

3. Send the copies of this order to the parties.

Prattipati Pullaiah,

S/o Lakshmaiah,

R/o Chandrababunaidu Colony,

Burnpet, Near Sattenapalli Road,

Narasaraopet. … Complainant

and



M/s Shriram Chits (P) Limited,

Rep. by its Manager,

Near RTC Bus Stand,

Bapatla. …Opposite Party


O R D E R


Per Sri M.V.L. Radhakrishna Murthy, Member:

This complaint is filed U/S 12 of the Consumer Protection Act, 1986 praying to direct the opposite party to pay an amount of Rs.3,50,000/- with interest @12% p.a., from the date of auction i.e., October, 2007 till the date of realization and also to direct the opposite party to pay Rs.10,000/- towards compensation and costs.

The averments of the complaint in brief are as follows:-

The complainant joined as a subscriber in the opposite party company in chit No.BPXL-3/6, the value of the chit is Rs.5,00,000/- and the period is 50 months. The complainant has to pay Rs.10,000/- pm. The complainant has been paying every month after deducting the dividend to the agent of the opposite party and it was entered in the passbook which was maintained by the opposite party. Subsequently, complainant participated in the auction conducted in the month of October, 2007 and became highest bidder for a sum of Rs.1,50,000/-. The opposite party has to pay an amount of Rs.3,50,000/- to the complainant after deducting Rs.1,50,000/-. The complainant submitted all required documents to the opposite party for payment of Rs.3,50,000/-. But the opposite party did not pay the prize amount inspite of personal requests made by the complainant. Thereby the complainant sustained mental agony. Complainant got issued legal notice on 22-04-08 calling upon the opposite party to pay the prize amount. The opposite party received the notice and kept quite without paying any amount to the complainant. Hence, the complaint.

The opposite party filed its version which is in brief is as follows:

Most of the allegations made in the complaint are not true and correct. The complainant is put to strict proof of the same. The complaint is not maintainable either on facts or at law. The Forum has no jurisdiction to entertain this case as complainant cannot be described as consumer and there is no service involved as defined U/S 2(1)(e) of the Act. There is no deficiency of service on the part of the opposite party as there is no consumer dispute. The provision of law under which the complaint has been filed has no application to the facts of the case on hand.

It is true that the complainant joined as a subscriber in the opposite party company and subscribed a chit, the value of the chit being Rs.5,00,000/- to be subscribed @10,000/- pm for 50 months. It is also true that the complainant paid the monthly instalments for 15months excluding the dividends. It is true that the complainant participated in the auction held on 14-10-07 agreeing to forego Rs.1,36,500/- out of Rs.5,00,000/- and the complainant was declared as highest bidder. It is true that the opposite party has to pay the prize amount to the complainant. The allegation that the complainant submitted all the required documents to the opposite party for payment of Rs.3,50,000/- is not true. The complainant became the successful bidder in the auction held on 14-10-07 agreeing to forego Rs.1,36,500/- out of Rs.5,00,000/-. As per the rules of the company, in order to draw that amount, the successful bidder has to furnish independent guarantors to the satisfaction of the opposite party for due payment of the entire future monthly instalments of the successful bidder.

The complainant paid Rs.1,50,000/- and his future liability is RS.3,50,000/-. Till December, 2007 the complainant failed to furnish the sureties to draw the prize amount. As such the opposite party sent a notice dated 05-12-07 in Form A of A.P. Chit Fund Act calling upon the complainant to arrange to draw the prize money by offering acceptable security. The said notice was acknowledged by the complainant. But he failed to comply the same. Hence, the opposite party sent notice in Form B dated 18-12-07 and the same was also received by the complainant. Thus it is evident that the complainant failed to furnish acceptable sureties till issuance of notice under Form B dated 18-12-07.

The complainant offered his self Income Tax Assessment besides two employees and one guarantor who has got Income Tax Assessment. The complainant agreed to deposit Rs.2,00,000/- in fixed deposit till the completion of the chit. The opposite party demanded to give liquid surety i.e., LIC bonds as surety belonging to his wife Smt P. Lakshmi for which the complainant agreed, but subsequently he refused to furnish the said liquid surety i.e., LIC bonds of his wife. The surety form was submitted after 4 months from the date of auction after sending Form B notice dated 18-12-07. Even as per the terms and condition of the chit agreement the successful bidder has to furnish surety to the satisfaction of the foreman including assignment of LIC to the extent of the surrender value of the policy. The complainant later refused to give the LIC bonds of his wife as security. The complainant was very irregular in payment of monthly instalments even prior to the date of auction. As the complainant failed to furnish the sureties to the satisfaction of the foreman, the complainant was removed from the membership of the said chit and the same was also intimated to the Registrar of Chits. At present the complainant is entitled for refund of actual amount paid by him excluding the dividend and also 5% foreman’s commission. The details are as follows,



Net amount paid by the complainant : Rs.1,10,466/-

Less 5% Foreman’s Commission : Rs.25,000/-

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Amount payable to the complainant : Rs.85,466/-

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The opposite party requested the complainant to sign on necessary documents for payment of the above said amount but the complainant did not turn up till date. As per the rules of the opposite party company the complainant has to sign on the SRD forms and the same has to be approved by the higher authorities and then only the amount will be paid to the complainant by way of crossed cheque and the opposite party is ready to pay the said amount provided the complainant furnishes the above SRD forms. There is no deficiency of service on the part of the opposite party, as such, the opposite party is not liable to pay any interest as claim much less damages towards the alleged mental agony as averred in the complaint. There are no bonafides on the part of the complainant in filing the complaint. Hence, the complaint may be dismissed.

Complainant filed affidavit in support of his version reiterating the same. The opposite party also filed affidavit in support of its version reiterating the facts mentioned therein.

On behalf of complainant Exs.A-1 to A-6 and on behalf of opposite party Exs.B-1 to B-6 are marked.

Ex.A-1 is the Xerox copy of the pass book of the complainant. Ex.A-2 is the original passbook. Ex.A-3 is the copy of registered notice got issued by the complainant to the opposite party. Ex.A-4 is the Xerox cop of postal receipt. Ex.A-5 is the Xerox copy of acknowledgement. Ex.A-6 is another office memo of the opposite party company.

Ex.B-1 is the Xerox coy of account copy in the name of complainant maintained by opposite party. Ex.B-2 is the notice in type-A got issued by the opposite party to the complainant requesting the complainant to offer acceptable surety. Ex.B-3 is the acknowledgement. Ex.B-4 is the notice in form B got issued by the opposite party to the complainant. Ex.B-5 is the copy of postal acknowledgement. Ex.B-6 is the agreement of chit.

Now the points for determination are that,

1. Whether this Forum has got jurisdiction to entertain the complaint?

2. Whether there is any deficiency of service on the part opposite party?

3. To what relief the complainant is entitled to?



POINT No.1- It is the case of the complainant that he has joined as a subscriber in the opposite party company of the chit for the value of Rs.5,00,000/- and that he has been paying the monthly subscription and that he became the highest bidder in the 15th auction held by the opposite party during the month of October, 2007 and that he submitted all necessary documents for payment of prize amount of Rs.3,50,000/-. But the opposite party has not paid the prize amount.

It is the case of the opposite party that this Forum has no jurisdiction to entertain this case as the complainant is not a consumer and the dispute is not a consumer dispute and there is no service involved in the chit transaction.

In the latest decision reported in III (2003) CPJ 87 (NC) in Kovilakam Chits and Financial Service Ltd. Vs. K.L.Benny, in which the National Commission observed that,

Consumer Protection Act, 1986 – Section 21 - Chit Fund Act, 1982 – Section 64 – Jurisdiction – Chit fund dispute - jurisdiction of Consumer Forums to entertain chit fund disputes challenged – Remedy under C.P.A. in addition to any law in force at that time – provisions of subsequent legislation, i.e., C.P.Act, shall override provisions of older statute, i.e., Chit Fund Act, - Chit Fund cases fall within jurisdiction of Fora – Order of State Commission directing payment of prize money, upheld.

It is also held that “Section 64 (3) bars the jurisdiction of Civil Court whereas the Consumer Forums have been held to be not a civil court. In view of above without going into this controversy of orders passed by Tamil Nadu State Commission we have no hesitation in holding that chit fund cases fall very much within the ambit of Consumer Forums and chit fund falls within the definition of service as defined in Section 2(1)(o) of C.P. Act.”

In another decision reported in 2004 CTJ 704 (Andhra Pradesh High Court) (CP) in Margadarsi Chit Fund Ltd. Vs. District Consumer Redressal Forum, it is held that the chit fund companies are amenable to the jurisdiction of Consumer Forums under the provisions of Consumer Protection Act. Further it is held that the subscribers of the chit fund company falls within the meaning of consumer under section 2(i)(d) of Consumer Protection Act because chit fund company is providing service to its members.

Therefore, in view of the above decisions, we are of the view that this Forum has got jurisdiction to entertain the cases arising out of Chit Fund Act, 1982 . Accordingly, the complainant is a consumer under section 2(i)(d) of Consumer Protection Act. This issue is answered in favour of complaint.



POINT No.2:- It is not in dispute that the complainant has joined as subscriber in the chit run by the opposite party of the value of Rs.5,00,000/- and he became the highest bidder in the 15th auction held during the month of October, 2007. It is the case of the complainant that he has submitted the required surety for payment of the prize amount of Rs.3,50,000/- and in support of his contention he has filed Ex.A-6 letter which was addressed to the Senior Manager of the opposite party at Tenali by the concerned Branch Manager of the Shriram chits sending the proposal form for approval. Thus Ex.A-6 shows that he has submitted sureties in order to draw the prize amount.

It is the case of the opposite party that the surety furnished by the complainant are not sufficient, that the complainant agreed to deposit Rs.2,00,000/- in Fixed Deposit till the completion of the chit and that the opposite party demanded to give liquid security i.e., LIC bonds belonging to the wife of the complainant for which the complainant agreed and subsequently refused to furnish the said liquid surety and that the surety form was submitted by the complainant after 4 months from the date of the auction i.e., after sending Form B notice dated 18-12-07 by the opposite party, wherein, it was mentioned that as the complainant failed to take steps to offer surety to draw the prize amount, the prize amount has been deposited in the bank in a separate account and the complainant will be eligible to draw the said amount whenever he chooses to draw the prize amount after fulfillment of security formalities and that the prize amount does not cover the future liability.

The complainant committed default in payment of subsequent instalments and failed to furnish sufficient security for the due payment of the prize amount by the opposite party. In those circumstances, the opposite party company removed the complainant from the membership of the said chit and joined another subscriber in place of the complainant.

It is the case of the complainant that the opposite party has not issued any notice for removal of his membership from the chit and thereby deprived his right of appeal before the Registrar U/S 64 of the Chit Fund Act. It is the case of the opposite party that after issuing notice dated 18-12-07 the complainant was removed from the membership. In the said notice dated 18-12-07 it is not mentioned that the complainant will be removed from the membership. Before removing his membership the complainant was not given any notice regarding the removal of his membership from the chit. Thus the complainant was deprived of his right of appeal U/S 64 of Chit Fund Act. Without giving proper notice for removal of the complainant from the membership of the chit he was removed from the membership. Thus, we find deficiency of service on the part of the opposite party.

The complainant had also issued a registered notice under Ex.A-3 for which the opposite party has not given any reply. It is the case of the opposite party that the complainant is not regular in payment of subscriptions even prior to the auction held wherein he became the highest bidder. If it is so the opposite party company would have given a notice to the complainant and removed him from the membership even prior to the 15th auction. He was removed from the membership after he became the successful bidder on the ground that he has not furnished sufficient security and failed to pay the subsequent subscriptions, without giving any proper notice to the complainant for his removal from the membership.

It is the case of the opposite party that the complainant is entitled to refund of the actual amount paid by him excluding the dividends and also 5% foreman commission. The net amount paid by the complainant is shown as Rs.1,10,466/- and 5% commission of foreman is shown as Rs.25,000/- and the net amount payable to the complainant is shown as Rs.85,466/-. As per the condition 15 d of the Chit agreement Ex.B-6, the subscriber removed from the chit before termination for any reason is entitled for refund of only the net amount of subscriptions deposited by him less 5% of the chit amount towards damages for breach of contract.

In the circumstances of the case, we find that there is deficiency of service on the part of the opposite party and due to the said act of removal the complainant from membership without giving prior notice for the removal, the complainant suffered mental agony.



POINT No.3:- In view of the foregoing discussions and in view of the circumstances of the case, we feel it just and necessary to direct the opposite party to pay an amount of Rs.1,10,466/-, paid by the complainant towards the subscriptions of the chit excluding the dividends accrued thereon since they are said to have been credited to the substitute subscriber. The foreman commission will also be taken by the opposite party from the substituted subscriber at the termination of the chit or at the time of giving prize amount to him if he is a successful bidder in the succeeding auction. Therefore, there is no necessity to deduct 5% foreman commission from the subscription of the complainant.

In the result, the complaint is allowed in part as indicted below:

1. The opposite party is directed to pay an amount of Rs.1,10,466/- with interest @9% p.a., from the date of complaint i.e., from 10-07-08 till the date of realization to the complainant.

2. The opposite party is further directed to pay an amount of Rs.5000/- (Rupees five thousand only) towards compensation to the complainant for the mental agony suffered by him.

3. The opposite party is further directed to pay an amount of Rs.1,000/- towards costs of the complaint.

4. The amounts ordered above shall be paid within a period of six weeks from the date of receipt of the copy of the order failing which the amounts ordered in item Nos.2 and 3 shall also carry interest @9% p.a., till the date of realization.