Andhra Pradesh High Court - Amravati
Between vs And on 8 May, 2024
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI
(Special Original Jurisdiction)
WEDNESDAY ,THE EIGHTH DAY OF MAY
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE SRI JUSTICE NYAPATHY VIJAY
CIVIL REVISION PETITION NO: 7100/2017
Between:
Pendela Hari ...PETITIONER
AND
Devagudi Manohar Reddy and Others ...RESPONDENT(S)
Counsel for the Petitioner:
1. A BHASKARA CHARY
Counsel for the Respondent(S):
1.
2. GP FOR ARBITRATION (AP)
The Court made the following:
2
HON'BLE SRI JUSTICE NYAPATHY VIJAY
C.R.P.Nos.7100, 7066, 7067 and 7068 of 2017
COMMON ORDER:
As a common issue is involved in all the revision petitions they were heard together and are adjudicated by this common order as below.
2. For the sake of convenience, the facts in C.R.P.No.7066 of 2017 are taken to be the lead case for narration of facts.
3. The present civil revision petition is filed against the order dated 17.11.2017 passed in E.A.No.132 of 2017 in E.A.No.36 of 2016 in E.P.No.389 of 2014 in O.S.No.371 of 2013 passed by the Principal Senior Civil Judge, Kadapa.
4. The Petitioner is the plaintiff. The O.S.No.371 of 2013 was filed against Respondent No.1 herein for recovery of amounts due. The suit was decreed on 21.10.2014 and as Respondent No.1 was not paying the amounts due under the decree, the petitioner filed E.P.No.389 of 2014 for attaching the schedule amount of Rs.3,47,266/- under Order 21 Rule 52 C.P.C towards the fixed deposits of Sree Veera Hanuman Chits Private Limited lying with the Assistant Registrar of Chits i.e. Respondent No.2 herein. The trial Court vide order dated 04.11.2014 directed the said amounts to be attached. Thereafter, petitioner filed E.A.No.36 of 2016 seeking to send 3 the attached amount of Rs.3,47,266/- to the Civil Court deposited account. The trial Court vide order dated 18.01.2016 accordingly directed the said amount to be sent to the Civil Courts Deposit Account of the said Court. The amounts directed to be sent in E.A.No.36 of 2016 was not complied with and hence, E.A.No.132 of 2017 was filed to issue a show cause notice to the Garnishee for disobeying the orders of the Court passed in E.A.No.36 of 2016.
5. A counter was filed by the Garnishee stating that the judgment debtor and one K.Narasimha Reddy have started chit fund company in the name and style of Sree Veera Hanuman Chit Private Limited in the year 2012 and was registered under Companies Act, 1956 vide Registration No.U65992AP2012PTC079480. The said Chit Fund company was running accounts by securing the subscribers/members for the various values and periods.
6. It was pleaded that the amount deposited before Respondent No.2 was in compliance with section 20(i) of the Andhra Pradesh Chit Funds Act, 1982 (for short „the Act‟) for a period equal to the chit period or more. The amount so deposited shall not be liable to be attached in execution of a decree or otherwise until the chit is terminated and claims of all the subscribers are satisfied and section 40 of the Act prescribes the time period when the chit is deemed to be terminated. It was also pleaded that as per Rule 23 of the A.P. Chit Fund Rules, 2008, the amount deposited as security under section 20 (i) of the Act shall be released only after an 4 application has been filed by the 'foreman' stating that all the subscribers have been fully satisfied and that the judgment debtor did not file any application to that effect. In the absence of any declaration, no third person can claim the deposited amounts.
7. As a matter of fact, it was also pleaded that the judgment debtor had deposited in his name, eight (8) FDRs, which are of different values and periods and in custody of Respondent No.2. Self-attested copies of FDRs were also filed before the trial Court.
8. The trial Court referring to the provisions of the Act, as referred by respondent No.2 Garnishee, dismissed the petition as this petitioner was not a subscriber to the chits and is not entitled for the relief sought for. Consequently, the petition was dismissed and the original FDRs are directed to be returned to the Garnishee.
9. On 22.12.2017, this Court passed interim order suspending the impugned order till further orders. This Court after hearing the counsel for the petitioner on 02.01.2024 had enquired the Government Pleader for Arbitration representing respondent No.2 Garnishee as to whether there are any claims to the deposited amounts and directed the Government Pleader for Arbitration to file an affidavit with regard to the claim and details of such claim. The case was adjourned on 10.01.2024, 12.02.2024 and 16.02.2024 to 5 enable the Government Pleader for Arbitration to file an affidavit as directed. However, no affidavit was filed and hence, this Court proceeded to hear the case on merits.
10. Heard Sri A.Bhaskara Chary, learned counsel for the petitioner and learned Assistant Government Pleader for Arbitration.
11. The issues that fall for consideration in this case are as follows;
a) Whether the garnishee can retain the amount given as security under Section 20(i) of the Act merely because the foreman has not filed an application?
b) Whether the petitioner is entitled to seek to appropriate the deposits of M/s Veera Hanuman Chit Private Limited for the satisfaction of the decrees against the Jdr?
12. Point No.1. Before going into the facts, the relevant provisions of the Act are as under:
The Section 20 of the Act mandates every 'foreman' before applying for sanction under section 4 of the Act shall deposit 50% of gross chit amount in the form of Bank guarantee from an approved Bank. The relevant portion of section 20(i) reads as under:
20. Security to be given by foreman.--(1) For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under 6 section 4,-- 1 (a) deposit in the name of the Registrar, an amount equal to,--
(i) fifty per cent. of the 2 [gross chit amount] in cash in an approved bank;
and (ii) fifty per cent. of the 2 [gross chit amount] in the form of bank guarantee from an approved Bank.
13. The term 'foreman' is defined under section 2(j) of the Act and the same reads as under:
(j) "foreman" means the person who under the chit agreement is responsible for the conduct of the chit and includes any person discharging the functions of the foreman under section 39;
14. Section 40 of the Act specifies that the chit will be deemed to have been terminated when the time period of the chit amount has been expired, subject to the payment of dues to all the subscribers and when all the subscribers consent in writing for termination of chit or when 'foreman' dies or becomes of unsound mind or otherwise incapacitated. The security amount shall be released upon subjective satisfaction of the registrar under Section 20(5) of the Act.
15. Now coming to the reason for rejection given by the trial Court i.e. petitioner not being a subscriber is not entitled for the 7 said amounts. It is to be noted that the security given to the Registrar under section 20 of the Act is a security for the subscribers till the termination of the chit as prescribed under section 40 of the Act. The prohibition of attachment under section 20 (4) of the Act ceases on termination of the chit, the security amount deposited by the „foreman‟ under section 20 of the Act, no longer has the flavor of statutory security and becomes the estate of the „foreman‟. In that scenario, there is no requirement for the petitioner to be a subscriber of the chit and the reasoning of the trial court cannot be sustained on that point. There is absolutely no requirement for a third party seeking attachment of a security amount, for which there are no claims to be a subscriber.
16. Coming to the facts of this case, the attachment was initially made in the year 2014 and in the counter affidavit filed by the Garnishee, there is mention of any claim from the subscribers. Even otherwise, this conclusion appears to be inevitable as the Respondent No.2 has not filed any affidavit as mentioned supra with regard to claim by any subscriber. In the absence of any claims from any subscriber for the amounts so given by the „foreman‟, the same cannot be retained by the Garnishee for all times to come. The garnishee also cannot plead ignorance of the claims as he is the authority to release security upon subjective satisfaction under Section 20(5) of the Act as mentioned supra.
817. This Court is of the opinion that merely because the „foreman‟ did not file any application as required under Rule 23 of the A.P.Chit Fund Rules, 2008, the Registrar cannot retain the amounts for all times to come. The issue No.1 is therefore held in favor of the petitioner.
18. Point No.2. In the counter affidavit filed by respondent No.2 before the trial Court, it was specifically pleaded that the judgment debtor has deposited the 9 FDRs which were referred to in the order of the trial Court on 16.10.2014. These deposits were made in the name of the chit fund company i.e Veera Hanuman Chit Private Limited as a requirement under the Chit fund Act.
19. It was contended that these amounts were of the judgment debtor and the company had no assets or had the wherewithal to pay the deposits to the Registrar. As the judgment debtor was the source of capital for the company, the amounts deposited could be appropriated to the satisfaction of the decrees.
20. Though this argument sounded attractive, the company being an independent juristic identity and unless there is a plea followed by a finding of fact that the deposited amounts were loaned to the company by the judgment debtor and that the company is due to pay the said amount to judgment debtor. If such a finding is arrived at, the deposited amount with the Registrar of Chits could be appropriated for the satisfaction of 9 the present decrees. These aspects would be required to be gone in any independent suit or proceedings and not in the present execution proceedings. This Court is therefore of the opinion that the deposits standing in the name of Veera Hanuman Chit Private Limited with the Registrar of Chits/Garnishee cannot be appropriated for the satisfaction of the decrees against the judgment debtor at this point of time. The issue No.2 is accordingly answered.
21. Therefore, the Civil Revision Petitions are disposed of giving liberty to the petitioner to file any independent suit, if so advised for appropriate reliefs against the Veera Hanuman Chit Private Limited. No order as to costs. As a sequel, the miscellaneous petitions if any shall stand dismissed.
____________________ NYAPATHY VIJAY,J Date: 08.05.2024 KLP