Kerala

Idukki

CC/139/2020

Simnadhu - Complainant(s)

Versus

KSFE LTD - Opp.Party(s)

Adv:K M Sanu

06 Jun 2023

ORDER

DATE OF FILING : 21.10.2020

IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, IDUKKI

Dated this the   6^th   day of  June, 2023

Present :

SRI. C. SURESHKUMAR                  PRESIDENT

SMT. ASAMOL P.                             MEMBER

SRI. AMPADY K.S.                           MEMBER

CC NO.139/2020

Between

Complainant                                        :       Simnad Salim,

                                                                   Kaprattil House,

                                                                   Vengalloor P.O.,

                                                                   Thodupuzha.

          (By Adv: K.M. Sanu)

And

Opposite Parties                                   : 1. The Manager,

                                                                   KSFE Ltd.,

                                                                   Kalloorkad Branch,

                                                                   Kalloorkad P.O.

                                                                2. The Managing Director,

           KSFE Ltd.,

          Cheppukavu, Thrissur – 680020.

      3.  KSFE Ltd.,

                                                                   Represented by the Managing Director,

                                                                   Cheppukavu, Thrissur – 680020

 (All by Adv: N.K. Vinodkumar)

O R D E R

 

SRI. C. SURESHKUMAR, PRESIDENT

1. This case originates from a complaint filed under Section 35 of the Consumer Protection Act, 2019 (the Act, for short).  Complaint averments are briefly discussed hereunder :

 

          Complainant is residing in Thodupuzha and is running a vegetable shop for his livelihood.  1^st opposite party is manager of Kalloorkad branch of KSFE, 2^nd opposite party is managing director of KSFE and 3^rd opposite party is KSFE represented by 2^nd opposite party.  Complainant had subscribed for a chitty conducted by 1^st opposite party.  Prize money was Rs.15 lakhs and tenure was of 30 months.  After remitting 3 instalments, complainant had auctioned the chitty on 4^th instalment, for the purpose of opening a new shop.  He had auctioned the chitty for prize amount coming to 70% of actual prize money.  Earlier, opposite parties had informed complainant that only security of immovable property will be necessary.  Subsequently, when he approached                                                                                                           (cont…..2)

• 2  -

them, with property documents, he was informed that he must bring 2 sureties who are government employees for releasing chitty amount.  Complainant had then produced requisite sureties also.  Apart from that, wife of complainant who was also a government employee was also offered as surety for the transaction.  Despite this, opposite parties had released only Rs.3,15,000/-.  Though complainant had repeatedly approached opposite parties for getting remaining amount, it was not released to him.  Owing to this, complainant was unable to take stock for his new shop.  He had sustained heavy financial loss due to this.  Since entire prize money was not released to him, complainant has not remitted chitty instalments.  Prized money portion which was not released to complainant is retained by opposite parties.  No information regarding this money was given to complainant.  While so, on 18.8.2020, 1^st opposite party had sent a notice to complainant demanding payment of Rs.1 lakh towards chitty arrears, within 7 days.  When the complainant had approached 1^st opposite party with the said amount, he was asked to pay an additional amount of Rs.5 lakh.  Complainant submits that opposite parties are trying to extract money from him after unauthorizedly retaining prize money of auctioned chitty for which complainant was duly entitled.  This amounts to deficiency in service from the side of opposite parties and unfair trade practice too.  Complainant therefore prays for a direction against opposite parties to settle the transaction after accepting an amount proportionate to prize money released to him.  he also seeks a compensation of Rs.50,000/- for deficiency in service and Rs.10,000/- as litigation costs from them.

 

          2.  A joint written version is filed by opposite parties.  Their contentions are briefly discussed hereunder :

 

          According to opposite parties, complaint is not maintainable in view of Section 64 of Central Chitty Act of 1982.  They further submitted that complainant had subscribed for chitty No.26/2018/A/27 of 1^st opposite party.  Prize amount is Rs.15 lakhs.  Tenure ofchitty is 30 months, instalments being of Rs.50,000/-.  It is incorrect to say that complainant had auctioned the chitty for 70% of prize amount.  He had auctioned the same for Rs.11,01,000/- which comes to 73.40% of total prize money of Rs.15 lakhs.  Rs.3,99,000/- was deducted and complainant had issued a receipt acknowledging receipt of remaining amount.   For getting auctioned prize amount of Rs.11,01,000/-, complainant had to undertake payment of total chitty dues of Rs.13,50,000/- in equated monthly instalments.  Immovable property furnished as security for the said amount was not sufficient.  Hence he has offered security of 3 employees.  However, one of them was already a surety for amounts due to KSFE in 3 other transactions.  Upon salary certificate of remaining 2 sureties, maximum amount which could be released is only Rs.6 lakhs.  Remaining amount of  Rs.7,50,000/- was retained as fixed deposit with the consent of complainant.  Thus, entire chitty amount was received by complainant.  A receipt was also issued by him for receipt of prize money.  Complainant was bound to                                                                                                                   (cont….3)

• 3  -

pay chitty instalments correctly.  However, after receiving prize money, chitty instalments were not remitted by him.  On 22.3.2019 and 11.4.2019, notices were issued to complainant seeking payment of chitty instalments and it was mentioned therein that in case of non-payment, instalments will be recouped from the fixed deposit amount.  Complainant has not cleared the arrears.  On 9.5.2019, fixed deposit of Rs.7,50,000/- was closed and proceeds were adjusted towards chitty instalments due.  Complainant has not furnished sufficient sureties.  He has only furnished sureties for Rs.6 lakhs.  Remaining chitty amount of Rs.7,50,000/- was deposited in his name as fixed deposit.  This was recouped towards chitty dues with his consent.  There is no deficiency in service from the side of opposite parties.  There was no demand for excess amount.  Opposite parties have not resorted to unfair trade practice.  Complainant is not entitled for the reliefs prayed for.  Complaint is to be dismissed with costs.

 

          3.  Case was posted for steps, after filing of written version and thereafter for evidence.  Though repeated opportunities were given, complainant has not tendered any oral evidence.  Copy of notice dated 18.8.2020 issued to complainant and copy of payment voucher produced by him were marked as Exts.P1 and P2 respectively.  From the side of opposite parties, present manager of Kalloorkad branch of KSFE was examined as RW1 and Exts.R1 to R7 were admitted.  Ext.R1 is copy of chitty agreement.  Ext.R2 is copy of receipt for auction difference.  Ext.R3 is copy of minutes of proceedings dated 12.11.2018.  Ext.R4 is copy of page No.83 and 84 of register of auction proceedings maintained by 1^st opposite party.  Ext.R5 is copy of a receipt signed by complainant for having received Rs.11,01,000/- towards auctioned prize money.  Ext.R6 is copy of application for fixed deposit signed by complainant dated 19.12.2018.  Ext.R7 is copy of notice sent to complainant dated 11.4.2019.  Ext.R8 is copy of receipt/payment/adjustment voucher dated 9.5.2019.  Ext.R8 does not contain signature of payee.  Ext.R9 is copy of authorization given by complainant to 1^st opposite party to adjust fixed deposit amount towards clearing chitty arrears.

 

          After closure of evidence, both sides were heard.  Now the point which arise for consideration are :

1)  Whether complaint is maintainable ?

2)  Whether there was any deficiency in service or unfair trade practice on the side of opposite parties ?

3)  Whether complainant is entitled for the reliefs prayed for ?

4)  Final order and costs ?

 

4.  Point No.1 :

 

          First contention advanced by opposite parties is regarding maintainability of complaint in the light of Section 64 of the Central Chit Funds Act.  These contentions                                                                                                              (cont….4)

• 4  -

are not at all sustainable in the light of decision of Hon’ble High Court of Andhra pradesh in the matter of Branch Manager, Margadarshi Chitty Vs. District Consumer Disputes Redressal Forum (AIR2004 AP 343).  It was held therein that in view of the definition given for the terms ‘consumer’ and  ‘service’ as per Section 2(1)(d) and 2(1)(o) respectively of the Old Act of 1986, chitty funds transactions amount to rendering of service as defined  and hence within the jurisdiction of Consumer Forums.  Point No.1 is answered accordingly.

 

5.  Point Nos.2 and 3 are considered together :

          According to complainant, entire prized chitty amount was not released to him.  Without releasing entire prize amount, opposite parties are attempting to realise chitty instalments from him.  He would say that excess amounts are being attempted to be collected.  Hence there is deficiency in service and unfair trade practice on their part.

 

          On the other hand, opposite parties had contended that only a portion of prized chitty amount was released as sufficient security for chitty amount to be paid in instalments along with chitty prized amount was not furnished by complainant.  According to them, Rs.7,50,000/- from the chitty amount was retained as fixed deposit as security with the consent of complainant and balance was released.   Upon perusal of documents, we find some discrepancy in this regard.  As per Ext.R4, total discount is Rs.3,99,000.  This includes Rs.75,000/- which is foreman’s commission and Rs.3,24,000/- which is auction discount to be distributed amongst remaining subscribers.  When total discount of Rs.3,99,000/- is deducted from prize amount of Rs.15 lakhs, balance payable is Rs.11,01,000/-.  Thus, admittedly, complainant was entitled to receive Rs.11,01,000/- towards auctioned prized amount.  According to opposite parties, Rs.7,50,000/- was retained as fixed deposit towards security for payment of chitty instalments.  When this amount is deducted from Rs.11,01,000/-, balance amount which was paid to complainant would come to Rs.3,51,000/-.  Though complainant claims that he has received only Rs.3,15,000/-, no documents were produced by him to substantiate this fact.  Apparently, the figure is wrongly shown as Rs.3,15,000/- instead of Rs.3,51,000/-. Opposite parties have contended that complainant had furnished sureties for Rs.6 lakhs only. Hence Rs7,50,000/- was retained as fixed deposit and remaining amount was released to him. These pleadings would give an impression that Rs.6,00,000/- was released, where in fact amount released could be only Rs3,51,000/-(11,01000 –7,50,000).  It is specifically mentioned in the written version that complainant had furnished sureties for release of Rs.6 lakhs to him.  If that be so, it was not proper on the part of opposite parties to release only Rs.3,51,000/-, instead of releasing proportionate amount for which sureties were produced by him.  in the proof affidavit filed by RW1 also it is specifically averred that only Rs.6 lakhs could be given out of the auctioned prized amount due to complainant upon the sureties of 2 persons                                                                                                            (cont….5)

• 5  -

produced by complainant.  Non-payment of Rs.6 lakhs for which sureties were furnished by complainant is certainly deficiency in service from the side of opposite parties. 

 

          In so far as deposit of Rs.7,50,000/- is concerned, on the face of Ext.R6, complainant cannot argue that the deposit was not made with his consent.  He has also given original of Ext.R9 authorisation for premature closing of fixed deposit of Rs.7,50,000/- and adjusting of that amount towards arrears of chitty instalments.  According to complainant, he had stopped remitting chitty instalments as the entire auctioned prized money was not released to him.  Though these contentions are not entirely correct, we would say that there is partial truth in it in as much as that though opposite parties had admitted that he had produced sureties for release of Rs.6 lakhs out of prized money, they had paid only Rs.3,51,000/-.  We also notice that as per clause 15(b) of the chitty agreement, in case of failure on the part of subscriber to furnish sufficient security or sureties, auction is to be cancelled and fresh auction is to be conducted.  Difference in discount of re-auction is to be borne by all subscribers.  Opposite parties have not pointed out any clause in agreement  authorizing them to release portion of chitty prize amount on the basis of security or sureties furnished by subscribers.  However, it appears that this was done to help subscribers by releasing a portion of prized amount for which security furnished by them will be sufficient.  Therefore release of a portion of chitty prized money to the subscriber to the extent of security furnished cannot be found fault with.  In the case of complainant, though he had furnished sureties for release of Rs.6 lakhs, he was paid only Rs.3,51,000/-.  Facts being so, can it be said that, complainant does not have the responsibility to pay the chitty instalments? More so, after he consented for depositing Rs7,50,000/- and later to adjust fixed deposit amount towards arrears? We do not think so.  We find no enabling clause in Ext.R1 agreement either.  Yet, non release of entire portion of price amount for which sufficient sureties were furnished by complainant will amount to deficiency in service. In addition to this, said amount is also sought to be collected from him as arrears. It was not paid or deposited in his name. We are of the view  that it would be appropriate if the amount portion which was not released is adjusted towards chitty arrears, scales could be made even if coupled with granting additional solace by way of compensation, which we fairly estimate at Rs.25,000/-.  Complainant had sought for setting off proportionate amount of chitty dues.  He seeks closure of transaction by accepting an amount in proportion to the amount actually released to him.  This does not appear to us as fair.  In view of the fact that he is bound to pay entire chitty dues which according to opposite parties  come to Rs.13,50,000/-  lakhs, as only three instalments were paid.  Deposit of Rs.7,50,000/- and subsequent adjustment of amount towards chitty instalments was done with the consent of complainant.  In addition to this, complainant will be entitled for a compensation of Rs.25,000/- and litigation costs of Rs.3000/-.  Point Nos.2 and 3 are answered accordingly. 

 

                                                                                                                   (cont…..6)

- 6  -

6.  Point No.4 :

 

In the result, complaint is allowed in part upon following terms :

 

1.  Opposite parties 1 to 3 are directed to adjust Rs.2,49,000/- towards arrears of chitty instalments due from complainant.  No interest and default charges will be collected from complainant by opposite parties on the amount found to be due after deducting Rs.2,49,000/- with interest @14% per annum (rate as per Clause 18[c] of R1) also from date of R9, in addition to Rs.7,50,000/- already deducted/adjusted. However, if chitty arrears remaining after such adjustment are not paid within 30 days of receipt of a copy of this order, balance due will carry interest @14% per annum from the date of this order. At the same time, if any amount is found to be due to complainant upon such adjustment, it shall be paid with interest @14% per annum from the date of R9.

 

2.  Opposite parties are directed to pay a compensation of Rs.25,000/- to complainant for deficiency in service with interest at the rate of 14% per annum from the date of complaint, which is, 21.10.2020, until payment or realization.

 

3.  Opposite parties are directed to pay jointly Rs.3,000/- towards litigation costs to complainant.

 

          Parties are directed to take back extra copies, without delay.

 

                             Pronounced by this Commission on this the   6^th  day of June, 2023

 

 

                                                                                             Sd/-

  SRI. C. SURESHKUMAR, PRESIDENT

 

                                       Sd/-

                                                                    SMT. ASAMOL. P., MEMBER

 

                                                                                       Sd/-                                                                                                   SRI. AMPADY. K.S., MEMBER

 

 

                                                                                                          (cont....7)

 

• 7  -

APPENDIX

Depositions :

On the side of the Complainant :

Nil.

On the side of the Opposite Party :

RW1      -  Samson P. Thomas

Exhibits :

On the side of the Complainant :

Ext.P1    - Copy of notice dated 18.8.2020 issued to complainant.

Ext.P2    - Copy of payment voucher.

On the side of the Opposite Party :

Ext.R1    - Copy of chitty agreement. 

Ext.R2   -  Copy of receipt for auction difference. 

Ext.R3   -  Copy of minutes of proceedings dated 12.11.2018. 

Ext.R4  -  Copy of page No.83 and 84 of register of auction proceedings maintained by

                1^st opposite party. 

Ext.R5  -  Copy of a receipt signed by complainant for having received Rs.11,01,000/-

                 towards auctioned prize money. 

Ext.R6   -  Copy of application for fixed deposit signed by complainant dtd19.12.2018.

Ext.R7   -  Copy of notice sent to complainant dated 11.4.2019. 

Ext.R8   -  Copy of receipt/payment/adjustment voucher dated 9.5.2019. 

Ext.R9  -  Copy of authorization given by complainant to 1^st opposite party to adjust

       fixed deposit amount towards clearing chitty arrears.

 

 

 

                                                                                       Forwarded by Order,

 

 

 

                                                                                     ASSISTANT REGISTRAR