Andhra HC (Pre-Telangana)
Branch Manager, Margadarsi Chit Fund ... vs District Consumers Disputes Redressal ... on 19 February, 2004
Equivalent citations: AIR2004AP343, 2004(2)ALD645, 2004(2)ALT822, [2005]123COMPCAS194(AP), AIR 2004 ANDHRA PRADESH 343, 2006 (4) AKAR (EE) 470 (AP), (2004) 3 CIVLJ 381, (2004) 17 INDLD 430, (2004) 2 ANDHLD 645, (2004) 2 ANDH LT 822, (2005) 123 COMCAS 194, (2006) 1 BANKCLR 773
Author: Bilal Nazki
Bench: Bilal Nazki
JUDGMENT Bilal Nazki, J.
1. These two revisions have been filed under Article 227 of the Constitution of India and they are disposed of by this common judgment.
2. Two complaints came to be filed before the District Consumers Forum, Vizianagaram. In the complainant out of which CRP No. 2439 of 2002 arises the complainant contended that she became a subscriber of the chit and was allotted a number for a total chit amount of Rs. 2,50,000/- payable on monthly subscriptions @ Rs. 5,000/- per month for 50 months commencing from 6.2.2000 to 21.3.2004. As the complainant was in need of money for bypass surgery of her mother and also father, she participated in the auction on 18.2.2001. She was the highest bidder or Rs. 1,57,000/-as against Rs. 2,50,000/-. She produced all the relevant documents, but this amount was not given to her.
3. In the second complaint which has given rise to CRP No. 3365 of 2002 the complaint and claimed that he was a petrol bunk owner. He was induced by the other side to become a member of the chit fund. According to the complainant, he was promised that if he would take two chits, he could avail the chit amount in the first auction for the first chit and the second one for the subsequent month. He was already facing some financial constraints and was paying a very heavy rate of interest towards bank and financiers. Eventually he became a member of two chits each for Rs. 5,00,000/- and the monthly subscription was Rs. 10,000/- for each chit. The period of chit was, 50 months. The chits commenced on 27.8.1998. According to him, he should have been declared successful bidder in the first auction, but that was not done, therefore there was deficiency of service. Eventually he was informed on 14.2.1979 that he had become a successful bidder and he was asked to give certain documents. He furnished the sufficient sureties and documents, but the amount was not disbursed to him. Under these factual situations the complaints were filed.
4. The revisions came up before a learned Single Judge of this Court. The main ground of challenge agitated before the learned Single Judge appears to have been that the Consumer Forum had no jurisdiction to entertain the complaints. The learned Single Judge thought it fit to refer the matter to this Court after framing the following question, "Whether a subscriber of a chit fund company falls within the meaning of consumer under Section 2(1)(d) of the Consumer Protection Act, 1986 and whether such subscribers can invoke the jurisdiction of the District Fora, State Commission or National Commission under the provisions of the Consumer Protection Act, 1986, if so, under what circumstances."
5. We have heard the learned Counsel for the parties. The main contention of the learned Counsel for the petitioners is that in chit fund companies there are no debtors and creditors, there are, as a matter of fact, group transactions which are in the nature of co-operative transactions and there is no element of service and hence the question of deficiency of service would not arise at all.
Since the question of service would not arise, therefore the Consumer Protection Act would not be applicable. The chit funds are managed and organized under the Chit Funds Act, 1982 (49 of 1982). Before appreciating the arguments we have to refer to certain provisions in the Chit Fund Act. 'Chit' is defined under Section 2(b) which lays down--
"Chit means a transaction, whether called chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount."
6. Chit agreement, chit amount, chit business, defaulting subscriber, discount, draw, foreman, non-prized subscriber, prize amount, prized subscriber, Registrar and ticket have also been defined. Section 8 is important which lays down that a company shall not commence or carry on chit business unless it has paid up capital of not less than rupees one lakh. Sub-section (3) of Section 8 also lays down that every company carrying on chit business shall create and maintain a reserve fund and transfer the balance of profit of each year to such reserve fund, a sum equal to not less than ten per cent of such profit. Sub-section (4) of Section 8 also lays down that the company shall not appropriate any sum or sums from the reserve fund except with the prior approval of the Registrar. The Chit Fund Act also provides for appointment of a Registrar and Foreman. Section 28 also provides a procedure for removal of defaulting subscribers. Under Section 31 it is laid down that every prized subscriber shall furnish sufficient security. Under Section 32 a prized subscriber is bound to pay the subscription regularly. The chit fund company can be wound up in accordance with Chapter X of the Act. Powers of the Registrar have been mentioned in Section 53. Disputes can be settled by an arbitrator in accordance with Chapter XII. Under Section 73 the Reserve Bank has an advisory role. Penalties are prescribed under Section 76. The chit fund company is liable for punishment if it contravenes any of the provisions mentioned in Section 76.
7. The learned Counsel for the petitioners submitted the judgments reported in Assistant Director of Mines and Geology, Khammam v. Tarakarama Labour Contract Co-operative Society, Venugopalnagar, Khammam and Ors., , Dealwell Engineering Works, Seciunderabad v. V.V. Choudary, Ananthapur and Anr., , Shriram Chits and Investment (P) Ltd: v. Union of India and Ors., , Dhoosa Narasimloo v. Yelala Rajanna and Anr., ILR 1958 409 (AP) and Dwarkadhish Chits Private limited and Anr. v. Sanju Ram Aggarwal, 1995 (1) CPR 627, in order to show that the chit fund company is a co-operative business where nobody is serving anybody, but they are mutually serving each other. Even if that were a fact, even then we do not think that the jurisdiction of the Consumer Forums would be excluded because the mutuality of interest is present in all cooperative societies and also even in all companies. If this argument is accepted, then all the cooperative societies and even the companies would be excluded from the jurisdiction of the Consumer Forums. Having a look at the Consumer Protection Act, 1986 we do not have any doubt that a chit fund company is providing a service and the members of the chit fund company are consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. Section 2(IXd) lays down:
"Consumer means any person who
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person."
Section 2(IXo) also lays down:
"Service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service."
8. The judgments relied on by the learned Counsel for the petitioners are not relevant.
9. For the above said reasons, we hold that the chit fund companies are amenable to the jurisdiction of the Consumer Forums under the provisions of the Consumer Protection Act, 1986. The reference is answered accordingly and the revision petitions are dismissed. No order as to costs.