Karnataka High Court
M/S Shriram Chits (K) Private Ltd vs The Additional Registrar Of on 17 January, 2013
Author: Dilip B.Bhosale
Bench: Dilip B Bhosale
1
®
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 17TH DAY OF JANUARY, 2013
BEFORE
THE HON'BLE MR. JUSTICE DILIP B BHOSALE
WRIT PETITION Nos.40215 C/W 40218, 40220 - 40222, 40224,
40227 to 40229, 40232 to 40235, 40239, 40240, 40316 -
40318, 40320, 40321, 40323, 40326, 40327, 40456 to 40479
OF 2012, (GM-RES)
BETWEEN
M/S SHRIRAM CHITS (K) PRIVATE LTD
"AKSHODAYA", NO. 259/31,
1ST FLOOR, 10TH CROSS,
WILSON GARDEN, BANGALORE - 560 027
REPRESENTED BY ITS MANAGER-LEGAL
SRI SADANANDAGOWDA ... PETITIONER
COMMON IN ALL PETITIONS
(By Sri. PRABHULING K NAVADAGI)
AND
1. THE ADDITIONAL REGISTRAR OF
CO-OPERATIVE SOCIETIES,
(INDUSTRIAL CO-OP.SOCIETIES)
OFFICE OF THE REGISTRAR OF
CO-OPERATIVE SOCIETIES,
NO.1,ALI ASKAR ROAD, BANGALORE - 560 052
2. THE JOINT REGISTRAR OF CO OPERATIVE
SOCIETIES & CHITS,
OFFICE OF THE JOINT REGISTRAR
OF CHITS, PAMPA MAHAKAVI ROAD,
CHAMARAJPET,
BANGALORE - 560 018
2
3. THE DEPUTY REGISTRAR OF
CO-OPERATIVE SOCIETIES-I,
BANGALORE URBAN DISTRICT, BANGALORE
RESPONDENTS 1 TO 3 COMMON IN ALL PETITIONS
4. BASAVARARAIAH
AGE: MAJOR, C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40215/2012
4. ROOPA M.G., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40218/2012
4. ROOPA M.G., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD, BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40220/2012
4. ROOPA M.G., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,BANASHNAKARI II STAGE,
K R ROAD,BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40221/2012
3
4. RANGHANATH B.R., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40222/2012
4. RANGHANATH B.R., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40224/2012
4. RAGHUNATH B.R., AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40227/2012
4. UMA SREENATH
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40228/2012
4. UMA SREENATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,BANASHNAKARI II STAGE,
K R ROAD,BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40229/2012
4
4. UMA SREENATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40232/2012
4. UMA RANGANATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40233/2012
4. UMA SREENATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40234/2012
4. MARUTHI B R
AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40235/2012
5
4. UMA RANGANATH
AGE: MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE - 560 070
4th RESPONDENT IN W.P. NO. 40239/2012
4.N.R. GIRIDHAR,
AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40240/2012
4. LEELA, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40316/2012
4. LEELA, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40317/2012
6
4. LEELA, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40318/2012
4. LEELA, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40320/2012
4. MAHIMA, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40321/2012
4. PRAMILA BHONSLE, AGE MAJOR
NO. 294/A, 7TH MAIN,
4TH BLOCK, JAYANAGAR
BANGALORE
4th RESPONDENT IN W.P. NO. 40323/2012
4. NARAYAN PRASAD, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40326/2012
7
4. NARAYAN PRASAD, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40327/2012
4. VENKATA RAMAIAH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40456/2012
4. VENKATA RAMAIAH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40457/2012
4. VENKATARAMAIAH D., AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40458/2012
4. VENKATARAMAIAH D, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40459/2012
8
4. RANGANATH
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40460/2012
4. RANGANATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40461/2012
4. RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40462/2012
4. RANGANATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40463/2012
4. RANGANATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40464/2012
9
4. RANGANATH, AGE MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40465/2012
4. ASHWATH NARAYAN RAO
AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40466/2012
4.ASHWATH NARAYAN RAO, AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40467/2012
4.ASHWATH NARAYAN RAO
AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40468/2012
4.ASHWATH NARAYAN RAO, AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40469/2012
10
4.ASHWATH NARAYAN RAO
AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40470/2012
4.ASHWATH NARAYAN RAO, AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD,
BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40471/2012
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40472/2012
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40473/2012
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40474/2012
11
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40475/2012
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40476/2012
4.JOSHI V.L., AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40477/2012
4.N.R.DIWAKA, AGE: MAJOR
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE-560 070
4th RESPONDENT IN W.P. NO. 40478/2012
N.R. DIWAKAR, MAJOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
4th RESPONDENT IN W.P. NO.40479/2012
12
5.SRI B N RADHAKRISHNA
AGE: MAJOR,
MANAGING DIRECTOR,
C/O RAGHCHAND ASSOCIATES,
NO. 2927, FIRST FLOOR,
14TH CROSS ROAD,
BANASHNAKARI II STAGE,
K R ROAD, BANGALORE - 560 070
5TH RESPONDENT COMMON IN ALL PETITIONS
THESE WPs. ARE FILED UNDER ARTICLES 226 & 227 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMUGNED ORDER DATED 10.7.09 VIDE ANNX-D PASSED BY R1
THE ADDL. REGISTRAR OF CO-OPERATIVE SOCIETIES IN
APPEAL.
QUASH THE IMPUGNED ORDER AT ANNX-C DATED 3.5.07
PASSED BY R3 THE DY. REGISTRAR OF CO-OPERATIVE
SOCIETIES -1 AND CONSEQUENTLY ALLOW THE DISPUTE
RAISED BY THE PETITIONER VIDE ANNX-B
THESE W.Ps. COMING ON FOR PRELIMINARY HEARING
THIS DAY, THE COURT MADE THE FOLLOWING:
ORAL JUDGMENT: (DILIP B. BHOSALE J.)
This group of writ petitions challenge separate orders, with identical findings and reasons, dismissing the appeals filed by the petitioner against separate orders passed by the Deputy Registrar of Co-op. Societies - I, Bangalore District, and nominee of Joint Registrar of Chits, 13 Chamarajpet, Bangalore. In view thereof all the petitions were heard together and are disposed of by this common order.
2. Petitioner-Company is in the business of chit funds regulated by the Chit Fund Act, 1982 (for short `the Act'). The respondents in these petitions other than the authorities under the Act are subscribers. They subscribed to the chit commenced and conducted by the petitioner between 1995 and 1998. The subscribers had executed on demand pronote for prompt payment of subscription amounts and they had also signed consideration receipts and since they did not comply with the repayment of future liability, the petitioners raised disputes as provided for under section 64 of the Act.
3. The Deputy Registrar while dealing with the disputes on merits framed the following issues for consideration:
14
1. Whether the disputant company has proved to have conducted the chit business in accordance with the provisions of the Chit Fund Act, 1982?
2. Whether the respondents have participated in these chits and are they liable for the claim of the disputant?
The Deputy Registrar answered the first issue in negative and as a consequence thereof refused to grant any relief in favour of the petitioner. Against the orders passed by the Deputy Registrar in all the disputes, the petitioner filed appeals before the Addl. Registrar of Co-operative Societies, Bangalore, under section 70 of the Act. In the appeal, the appellate authority affirmed the findings recorded by the Deputy Registrar and dismissed all the appeals. It is in this backdrop the petitioner has filed these writ petitions against those orders.
4. Learned counsel for the petitioner at the outset submitted that the authorities below overlooked the provisions of section 114 of the Indian Evidence Act to 15 presume that the petitioner commenced and conducted chit in accordance with the provisions of the Act having regard to the admitted facts placed on record. In other words, he submitted that the respondent - subscribers participated in the chit, took all the benefits and when they were supposed to comply with the repayment of future liability they refused and took a defence that the chit was not registered as provided for under section 4 of the Act. He invited my attention to illustration (f) appended to Section 114 of the Indian Evidence Act in support of this contention. Next he submitted that the authorities below were wrong in not entertaining the dispute on the ground that the chit was not registered and it was commenced without obtaining previous sanction of the State Government. The chit was a contract which is legally enforceable and merely because it was not registered, it does not become void, since it falls within meaning of `chit' defined by clause (b) of section 2 of the Act. In support of this contention he placed reliance upon the 16 Judgment of Calcutta High Court in LAKHAN JENA & ORS. Vs. ARJUN NAIK decided on 15th May, 1914 - 24 Ind Cas 387. He further submitted that non- registration of chit or commencement of the chit without obtaining previous sanction would at the most attract the penal action contemplated by section 76 of the Act and that the relief sought in the dispute cannot be refused.
5. Before I advert to the submissions urged on behalf of the petitioner, it would be advantageous to have a glance at some relevant provisions of the Act. Section 4 of the Act provides for prohibition of chits not sanctioned or registered under the Act. Under this provision no chit shall be commenced or conducted without obtaining previous sanction of the State Government and its registration in that State, in accordance with the provisions of the Act. It further provides that a sanction obtained under this section shall lapse if the chit is not registered within twelve months from the date of such sanction or 17 within such period or periods not exceeding six months in the aggregate as the State Government may, on application made to it in this behalf allow. Section 5 provides for prohibition of invitation for subscriptions except under certain conditions. Under this provision no persons shall invite the public to subscribe for tickets in any chit unless it is clearly indicated that the previous sanction required under section 4 has been obtained with particulars of the section. Section 6 provides for form or chit agreement. Section 7 provides for filing of every chit agreement in duplicate by the foreman, such as the petitioner, with the Registrar. The Registrar, in turn, shall retain one copy of the chit agreement and return the duplicate to the foreman with an endorsement that the chit agreement has been registered. Section 8 provides for minimum capital requirements for the commencement, etc. of a chit and creation of a reserve fund, by a company. Section 9 provides for commencement of chit. Under sub-section (1) thereof every foreman shall, after all 18 the tickets are fully subscribed, file a declaration to that effect with the Registrar. Sub-section (2) empowers the Registrar, after satisfying himself about all requirements, to grant a certificate of commencement to the foreman. Sub-section (3) provides that no foreman shall commence any auction or the draw of any chit or appropriate any chit amount unless a certificate of commencement referred to in sub-section (2) is obtained by him. Section 17 provides for preparation and maintaining of minutes of the proceedings of every draw and section 18 provides for filing of copies of the minutes with the Registrar. It states that a true copy of the minutes of the proceedings of every draw certified as such by the foreman shall be filed by the foreman with the Registrar within 21 days from the date of draw to which it relates. Section 20 provides for the security to be given by foreman for proper conduct of the chit. Section 23 provides for maintaining books, records etc., to be kept by foreman. Section 24 provides for preparing and filing of balance sheet with the Registrar. 19 Section 45 mandates that all records pertaining to a chit shall be kept by the foreman for a period of eight years from the date of termination of the chit.
6. In the present case, the petitioner did not produce a single document on record to show that they complied with all the requirements under different provisions, referred to above, before the Authorities below or for that matter before this Court. Both the authorities below after having considered the documents produced before them and the arguments advanced have recorded a categoric finding that for running a chit between 1995 and 1998 the petitioner did not obtain the previous sanction of the State Government nor was their chit registered in the State in accordance with the provisions of the Act. Apart from the documents showing previous sanction and registration of the chit, the petitioner could not and did not produce any other document in support of their case such as chit agreements with an endorsement of the Registrar (Section 20
7); declaration (Section 9(1)); commencement certificate (Section 9 (2)); minutes with the Registrars endorsement (Sections 17 & 18); security (Section 20); the records (Section 23) etc., were not produced to show that the chit was conducted in accordance with law so as to attract the presumption under Section 114 of the Evidence Act.
7. The petitioner before the authorities below contended that their record is not traceable and therefore, they had applied for copies of all the relevant documents from the office of the Joint Registrar of Co-op. Societies, Bangalore Urban, Bangalore but they failed to make copies of the documents available. In short it was contended that they had obtained previous sanction and they were registered as contemplated by section 4 of the Act. Except the bare submission, nothing was produced on record by the petitioner in support of their case. In view thereof, when I asked learned counsel appearing for the petitioner whether the petitioner is in a position to produce any such 21 document contemplated by the provisions of the Act to show that they had commenced the chit with the previous sanction and the chit was registered, his reply was in the negative. It is in this backdrop in my opinion both the authorities below have rightly held that the petitioner has miserably failed to prove that they conducted the chit business in accordance with the provisions of the Act.
8. Section 114 of the Indian Evidence Act in my opinion has no application to the facts of the present case. The chit fund business is governed and regulated by the Act, which was brought into force to prevent chit fund institutions from taking advantage either of the absence of any law governing chit funds in any State and to exploit the absence of any lacuna or relaxation in any State by extending their activities in such States. In my opinion, if compliance of all the requirements, which one should, under the provisions of Act, is not made before commencement and while running/conducting the chit 22 fund, such as obtaining previous sanction and registration of the chit, the Court cannot and should not presume existence of the facts connected with unauthorized chit fund. The reliance placed on section 114 of the Evidence Act is misplaced having regard to the facts of the present case and non-compliance of the mandatory provisions of the Act. The submission of learned counsel that starting a chit and participation of the subscriber is a contract and such contract is enforceable and merely because the chit was not registered, it cannot be stated that such contract cannot be enforced. In my opinion, this submission deserves to be rejected outright. If this submission is accepted, perhaps no chit fund institution would ever seek previous sanction for commencement of the chit and comply with all the mandatory requirements under the Act. There is a clear prohibition of running a chit without complying all the conditions provided for under the Act. The contract which is basically void, cannot be enforced in law. That apart, the relief in the dispute under Section 64 23 of the Act, which provides for a remedy to chit fund institutions for raising a dispute, in my opinion, can be granted only if they start and run the chit business in accordance with the provisions of the Act. A company such as the petitioner, which has no regard for the provisions of law or which do not comply with mandatory requirements of law cannot be heard to seek any relief by filing dispute under section 64 of the Act. The only Judgment relied upon by the learned counsel for the petitioner in support of his contention in my opinion has no application to the facts of the present case. In the case before the Calcutta High Court it was held that the rule of estopple, which binds landlords and tenants, mortgagors and mortgagees, bailors and bailees, applies to employees and contracting parties generally who cannot accept the benefits of the contract and yet when called upon to perform their duties under it repudiate it as made without right or as otherwise wanting in force, provided the contract is not actually in violation of law or wholly - void. 24
In the circumstances, I find no merit in these petitions. Hence the petitions are dismissed.
Sd/-
JUDGE SAK