Delhi District Court
M/S Sree Gokulam Chit And Finance vs . Kapil Arora & Ors on 10 September, 2021
M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors
IN THE COURT OF MS. COLETTE RASHMI KUJUR:
ADJ-10: TIS HAZARI COURTS: DELHI.
CNR NO.:- DLCT01-000883-2012
SUIT NO.:- 44/12
UNIQUE CASE ID NO.:- 14723/16
IN THE MATTER OF :-
M/s Sree Gokulam Chit and Finance
Company P Ltd.
Delhi Branch Office:-
First Floor, 1-E/18, Jhandewalan Extn.
New Delhi-110055.
(through its present POA holder/AR Mr.
Rajiv Sharma)
....Plaintiff
VERSUS
1.Kapil Arora Prop. Divine Fabrics 1/3, 2nd Floor, Jai Dev Park, East Punjabi Bagh, New Delhi-110026.
2. Mr. Gaurav Narang s/o Late Sh. Narender Nath Shop no. 15, Block BU, DDA Market, Pitam Pura, New Delhi-110088 Also at:
Plot no. 5 & 6, 1st Floor, Block B-6, Sector 2, Rohini, Page 1 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors New Delhi-110085.
....Defendants SUIT FOR RECOVERY OF RS. 5,78,767/-
Date of Institution of the Suit : 20.04.2012
Date on which Judgment was reserved : 15.04.2021
Date of Judgment : 10.09.2021.
::- J U D G M E N T -::
1 This is a suit under order XXXVII for recovery of amount
of Rs. 5,78,767/- alongwith pendentelite and future interest from defendant Kapil Arora and Gaurav Narang.
2 As per the pleadings of the plaintiff, it is chit fund company under the name and style of Shree Gokulum Finance Company Limited having its office in Chennai and branch office at Jhandewalan Extension, New Delhi. The defendant no. 1 is averred to be a member/subscriber in the chit group bearing no.
J2J/0536/13 who was declared as a prized subscriber at a fifth bid and accordingly was released and paid a sum of Rs. 7,46,292/- on 16.01.2009 vide cheque no. 126805 as chit price money in lumpsum by the plaintiff company.
3 The defendant's at that time agreed and undertook to pay the future chit installments regularly and without delay alongwith interest @ 18 % per annum, the defendant no. 1 Kapil Arora Page 2 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors executed agreement for payment of future subscription. The defendants, nonetheless miserably failed adhere to the financial discipline as agreed by them and failed to deposit monthly subscription/chit in the aforesaid chit group. Accordingly, a sum of Rs. 5,78,767/- remains overdue and outstanding as on 20.01.2012 as arrears of monthly instalments.
4 A legal cum demand notice dt. 15.03.2012 was issued calling upon the defendants to make the payment/dues including the interest at the rate 15% per annum asking them to deposit it within 15 days of the receipt of said notice. The defendants neither replied nor tendered the payment to the plaintiffs instead they extended lame and baseless excuses.
5 Upon filing of the present suit on 20.04.2012, summons were issued to the defendants. Thereafter on 09.08.2016 it was observed by the court that the present suit has been lingering at the stage of service of defendant no.1 for many as four years as no steps were being taken by the plaintiff despite direction therefore, the suit against the defendant was dismissed for non- prosecution to be carried further only qua the defendant no. 2. Leave to defend application filed by the defendant no.2 was allowed on 11.04.2017. Thereafter WS of the defendant was filed. But the defence of the defendant was struck of on 25.07.2017 being beyond the period of 30 days. Thereafter, the matter was fixed for PE, however, the counsel for defendant no 2 moved an application under section 64 (3) of the Chit Fund Act Page 3 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors challenging the jurisdiction of the Civil court. The adjudication of the application was adjourned, to be taken up at the final stage. Under these circumstances, PW-1 was examined, cross examined and discharged and PE was closed.
6 PW-1 has relied upon the following documents i.e. copy of certificate of incorporation of the plaintiff company which is Ex. PW1/1, copy of original receipt by which chit/bind amount was given by the company to the defendant no. 1 which is Ex. PW1/2, copy of original receipt by which chit/bind amount was given by the company to the defendant no. 1 which is Ex. PW1/3, copy of agreement for payment of future subscriptions signed by both the defendants which is Ex. PW1/4, copy of agreement of guarantee signed by both defendants which is Ex.PW1/5, copy of promissory note executed by both defendants which is Ex. PW1/6, copy of statement of account alongwith certificate under section 65 B of the Evidence Act of the previous AR of the company Sh. Sachin Kaushik which is Ex. PW1/7, copy of legal notice which was sent by company to defendant vide receipt which is Ex. PW1/8 and Ex. PW1/9.
7 During cross examination of the said witness, the witness stated that it was a matter of record as to the role of defendant no.2. Witness further deposed that he had said so already in his affidavit in detail. Witness denied the suggestion that defendant no. 2 does not have any liability to pay anything to the plaintiff. No further questions were asked in the cross examination.
Page 4 of 10 CS No 14723/16M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors Thereafter PE was closed.
8 Final arguments heard.
9 The defendant has argued that the plaintiff's case be dismissed for want of jurisdiction as per provision of Section 64 clause 3 of the Chit Funds Act, 1982.
10 The section is being reproduced herein for ready reference.
Section 64 in the Chit Funds Act, 1982 Disputes relating to chit business:-
Notwithstanding anything contained in any other law for the time being in force, any dispute touching the management of chit business shall be referred by any of the parties to the dispute, to the Registrar for arbitration if each party thereto is one or the other of the following, namely:-
(a) a foreman, a prized subscriber or a non-prized subscriber, including a defaulting subscriber, past subscriber or a person claiming through a subscriber, or a deceased subscriber to a chit;
(b) a surety of a subscriber, pas subscriber, or a deceased subscriber.
Explanation;- for the purpose of this sub-section, a dispute touching the management of a chit business shall include;-
(i) a claim by or against a foreman for any debt or demand due to him from a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber whether such debt or demand.
(ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a loan by a foreman and recovered from the surety owing to the default of the principal borrower, whether such sum or demand is admitted or not;
(iii) a refusal or failure by a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber to deliver possession to a foreman of land or any other asset resumed by him for breach of conditions of the assignment. (2) Where any person question arises as to whether any matter referred to for the award of the Registrar is a dispute or not for the purposes of sub-section (10, the same shall be decided by the Page 5 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors Registrar whose decision thereon shall be final.
(3) No civil court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub-
section (1) 11 It is argued that the jurisdiction of the civil court is specifically barred under the said provision. It is argued that the defendant no. 1 was member/subscriber of the Chit in the group bearing no. J2J/0536/13 and accordingly, released Chit amount of Rs. 7,46,292/- on 16.01.2009 vide cheque no. 126805 which the defendant no. 1 failed to deposit through monthly subscription and a sum of Rs. 5,78,767/- remained as overdue as on 22.01.2012. It is argued that the entire body of the plaint does not disclose in what capacity defendant no. 2 is being sued but a document of the agreement of guarantee executed by the defendant no. 2 as guarantor of defendant no. 1 is annexed. Even the legal demand notice shows that the defendant no. 2 is the guarantor of defendant no. 1.
12 In reply to these arguments, the counsel for plaintiff submits that the present suit is very much maintainable as the issue of guarantor has already been decided on 11.04.2017 by Ld. Predecessor of this Court Ms. Kamini Lau, Ld. ADJ in favour of the plaintiff. The order categorically notes that it is not disputed by the defendant no.2 that he had signed the Agreement of Guarantee and various documents executed between the plaintiff and the defendant no.1 bears his signatures. The order clearly observes that the promissory note does not differentiate the Page 6 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors Principal Debtor and the Surety and both are jointly and severally bound to make the payment of dues. Therefore it is well settled that the present matter can proceed against defendant no. 2 as per law.
13 Secondly, it is submitted that the plaintiff's company is not registered under Chit Funds Act, 1982 but under the Madras Chit Funds Act, 1961 with Registrar of Chits at Chennai which is extended to Delhi. Hence, the clause under Section 64(3) Chits Fund Act is not applicable upon the plaintiff's company. The defendant was under an obligation to show a notification whereby the Chits Fund Act, 1982 was extended to Delhi but no such notification was brought before the court. According to the plaintiff's counsel, there is no specific notification by the Chennai State Government in compliance of Section 13 of the Chit Funds Act, 1982 thereby the plaintiff company is still being governed by the Madras Chits Fund Act.
14 The plaintiff has relied upon the judgment of Hon'ble High Court of Delhi titled as Smt. Shakuntala Devi & Ors. Vs. M/s Madadgar Chit Fund Pvt. Ltd. dated 19th October, 2010 whereby it was observed, 'Further under Section 21 of the Indian Contract Act, 1872 a contract does not become voidable because it was contracted under a mistake as to any law in force in India. The illustration appended to this Section is also relevant. It reads as under:
"A and B make a contract grounded on the erroneous belief that a particular debt is barred by the Indian Law of Limitation; the contract is not voidable."Page 7 of 10 CS No 14723/16
M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors This position has also been reiterated by Supreme Court in AIR 1976 SC 2243 Dhanyalakshmi Rice Mills & Ors. Vs. The Commissioner of Civil Supplies & Anr.. It is thus clear that in the instant case although both the parties had voluntarily entered into this chit agreement under the mistaken belief that the Tamil Nadu Chit Fund Act 1961 was still in operation; yet this mistake of law is not by itself a ground to make such a contract voidable. This is clear from a reading of Section 21 of the said Act.' 15 The plaintiff has also relied upon the judgment of Hon'ble High Court titled as Sanjiv Kumar Vs. Ramwa Chit Funds (P) Ltd. dated 04 May, 2006 [AIR 2006 Delhi 274], [130 (2006) DLT 170] wherein it was held that, "13. Madras Chit Funds Act, 1961 may not have been enacted by the Union Parliament but under the Union Territories (Laws) Act, 1950, the central government by notification in the official gazette was/is empowered the extend any enactment to the union territory of Delhi with such restrictions(s) or modification (s) as it thinks fit.
14. Article 239 of the Constitution of India deals with Union Territories. The Union Territories are administered by the President of India acting through an administrator appointed by him. However, the President of India, who is the Executive Head of the Union Territories, does not funciton as a head of the Central Government, but under the specific powers conferred under Article 239 of the Constitution of India. The Union Territories though administered by the Central Government do not get merged with the Central Government.
15. The act therefore is not applicable to Union territory of Delhi. In view of the above, it cannot be held that the decree passed is a nullity and without jurisdiction. The present revision petition is accordingly dismissed. No costs."
16 The Hon'ble High Court of Delhi in Sanjiv Kumar case supra has noted that the Ld. Counsel appearing for petitioner submitted that the chit funds were earlier governed by Madras Chit Funds Act, 1961 and thereafter Chit Funds Act, 1982 which was passed by the parliament and notified by publication in the Page 8 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors gazette of India on 20th August , 1982. That the Act on being gazetted became applicable to Delhi eclipsing the earlier enactment viz. Madras Chit Funds Act, 1961. Hence Madras Chit Funds Act ceases to be applicable.
17 On this argument, it held that on a bare reading of the provision shows that the enforcement of the Act was postponed to a date which may be fixed by the Central Government by notification in the official Gazette. The central government has been given the power to fix different dates on which the dates on which the said enactment may be enforced in different states.....the Act did not come into operation on being passed by the Parliament or by the Presidential assent. The legislative enactment itself provides that the delegate i.e. the Central government is empowered to decide when and in which part of the country the enactment should be brought into operation. Resultantly, it was held that the Chits Funds Act, 1982 was inapplicable in the Union territory of Delhi.
And as per the Madras Chit Funds Act, 1961, Section 57. Cognizance of offences:- No court inferior to that of a salaried magistrate of the first class shall try and offence under this Act.
18 In view of the above discussion and the fact that the Defendant has been unable to show how and when the Chit Funds Act, 1982 became applicable to the National Capital territory of Delhi whereas the plaintiff has brought his Page 9 of 10 CS No 14723/16 M/s Sree Gokulam Chit and Finance vs. Kapil Arora & Ors evidence, examined witnesses and replied to the objections to which I have no ground to doubt, the suit is decreed in favour of the plaintiff and against the defendant no. 2 for an amount of Rs. 5,78,767/- along with interest @ 6% per annum from the date of filing of the suit till the realization of the decreetal amount. Costs of the suit are also awarded in favour of the plaintiff. Decree sheet be prepared accordingly.
File be consigned to record room, after due compliance.
Announced in the open court on 10.09.2021. (Colette Rashmi Kujur) ADJ-10/Central/THC Delhi.
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