DWARKADHISH CHITS PVT. LTD. vs SANJU RAM AGGARWAL

THIS is an appeal against the Order dated 16th October, , 1992 passed by the State Consumer Disputes Redressal Commission, Delhi in Case No. C-294/91 on the complaint filed by the present Respondent-Sanju Ram Aggarwal. The complaint was against the present Appellants M/s. Dwarkadhish Chits Pvt Ltd. and its Director-Dalip Kumar. The facts as gathered from the record are that in February, 1988 Dalip Kumar-Opposite Party induced the Complainant to become a subscriber/member for chit No. D-4 being run by the Opposite Party for the total value of Rs. 90,000/- having 3(members. The monthly subscription was Rs 3,000/-for 30 months'' period. The Complain ant started paying instalments w.e.f. March 1988 and up to September, 1989 he paid Rs 41,700/-in all. Besides that amount the Opposite Parties had been adjusting dividend of Rs 900/- per month in the amount of the Complainant except with respect of instalment Nos. 1 and 6. In this way Rs. 15,300/- have become due to the Complainant on account of dividend. Under the Madras Chit Fund Act and the Rules thereunder as applicable to the Union Territory of Delhi the Opposite Parties were bound to inform the Complainant about the date and time for draw of the chit but the Opposite Parties never informed the Complainant about that fact. The Complainant had been paying the instalments amount to the Opposite Parties in good faith. Thus they have violated the agreement as well as the provisions of the said Act and Rules. In October, 1989 the Complainant got suspicious of the malafide intention of the Opposite Parties and contacted the Opposite Party-Dalip Kumar to refund the amount paid so far but the Opposite Parties refused to pay back the deposited amount. The Complainant thereupon served notice dated 5.6.1991 on the Opposite Parties through his Counsel asking for the refund of the amount but to no effect. The amount of instalment paid and dividend accrued comes to Rs. 67,000/-. According to the Complainant he is a businessman and had he not been induced to part with that money by the Opposite Parties then certainly he would have invested the said amount in his business and would have at least made VA times to the amount invested in the chit within the period 3te years. Thus the Complainant claimed compensation/damages to the tune of Rs. 42,297/ -. According to the Complainant, he is entitled to Rs. 1,26,895/- in all on account of principal amount, interest, dividend, compensation/damages with further interests till realisation of the said amount from the Opposite Parties.

THE Opposite Parties contested the claim and denied the plea of the Complainant that he was not intimated about the date and time of the various auctions held by them. According to the Opposite Parties they had been sending intimation card during the first week of every month by post. They admitted about the factum of demand made by the Complainant for the refund of the amount but averred that the Complainant was told that he could be paid back after making a deduction of 5% of the chit amount or 25% of the net contribution which ever was less and as such the Opposite Party was liable to pay only Rs. 32,100/-. The said amount was payable only after the termination of the chit or when the substituted subscriber becomes prized subscriber whichever is earlier. The Complainant refused to accept the above amount of Rs. 32,100/- and asked for the immediate payment of the entire amount. It is also the case of the Opposite Parties that the Complainant had given guarantee for chit payments made to Maninder Pal Bel, Mahesh Kumar Sharma and one Subhash Chand Saini who are all prized subscribers of other chit groups and as per these guarantees the amount paid by the Complainant stood pledged to the Opposite Parties. All the abovenamed persons for whom the Complainant was guarantor, were defaulters of the Opposite Party-Company and as such the amount due to the Complainant has been adjusted towards the part payment recoverable from those defaulters. The Complainant denied that he ever stood guarantor for the above named persons. According to him the alleged signatures on the guarantee bonds had been forged. The State Commission gave the following findings: (i) Had the amount due to the Complainant had been adjusted towards the alleged defaulters notice would have been given the Opposite Parties. (ii) The Opposite Parties have not produced the accounts books of the Company before the Commission in support of their contention that some opersons for whom the Complainant said to have stood as guarantor were defaulters nor any notice was served on such alleged defaulters and on the other hand the Complainant filed affidavits of such alleged defaulters who had denied the averments of the Opposite Parties and those affidavits had not been challenged by the Opposite Parties. (iii) The Opposite Parties had not been informing the Complainant or the subscriber about the dates of draws regularly and that the records produced by the Opposite Parties about the draws were manipulated and fabricated and could not be relied upon. (iv) That after payment of the 19th instalment in September, 1989 Rs. 50,000/- had become due to the Complainant which included Rs. 14,200/- as dividend earned by him and after deductions of 5% of the chit amount i.e. Rs. 4500/-, the remaining amount had become due to the Complainant.

IN view of the above findings the State Commission directed the Opposite Parties to pay an amount of Rs. 52,500/- with interest at the rate of 15% from 1st October, 1989 till the date of payment within a period of 60 day s from the date of the order. Feeling aggrieved of that order the Opposite Parties have come before this Commission by way to this appeal.

THE main argument advanced on behalf of the Appellants before us that no opportunity was given to the Appellants herein to cross-examine the Complainants or the persons who had filed affidavits supporting the Complainant''s case, There h nothing on the file to show that the Opposite Parties made any request before the State Commission to call the Complainant or the persons who had filed affidavits for the purpose of cross-examination. On the other hand the Order of the State Commission shows that the affidavits filed by the alleged defaulters had not been challenged by the Opposite Parties. We do not find any ground to discard that finding of the State Commission. The finding of the State Commission that the intimation about the dates of draws was not given to the Complainant regularly nor draws were regularly held on every third Sunday of the month in accordance with the chit agreement was also not seriously challenged before us. We have gone through the order of the State Commission in which it has discussed this point in detail after examination of the records filed by the Opposite Parties. As noticed above the State Commission has gone to the extent of saying that the discrepancies in records filed and relied upon by the Opposite Parties lead to one inescapable conclusion that the entries about the draws were manipulated and the records had been fabricated and they could not be relied upon nor were the draws held on every third Sunday of the month. We do not find any ground to differ with that finding of the State Commission.

AS we have endorsed the above findings of the State Commission we do not find any force in the present appeal and dismiss the same with costs which we assess at Rs. 1,000/-. Mr. Y. Krishan, Member

THE first and the preliminary question to be considered in this case is whether the dispute between the parties is a consumer dispute which attracts the provisions of the Consumer Protection Act and, in particular, whether the Complainant can be deemed to be a consumer as defined in that Act. Chit fund has been defined in the Chit Funds Act, 1982. According to the definition, parties to an agreement subscribe a certain sum of money in instalments periodically over a period of time and each subscriber is entitled to a prize amount and a dividend. In this arrangement there is no service rendered by the chit fund to a prized subscriber: the prized subscriber is entitled to receive only the prize amount which is the difference between the chit amount and the "discount". The discount is a part of the gross contribution of the parties to the chit fund and is intended for running the chit fund and also for giving dividend to prized subscribers. The dividend is not in the nature of return on investment or distribution of profits, but a part return of the discount or gross contribution to the prized subscriber.

CONSIDERING , therefore, the nature of the chit fund, and the dividend and prize money that a prized subscriber can receive, the chit fund renders no service to the prized subscriber. A prized subscriber cannot be deemed to be a consumer of any goods or service. There is also no arrangement of hiring of service for consideration between the chit fund and the prized subscribers. As such, subscribers to chit fund cannot be deemed to be consumers under the Consumer Protection Act. Hence, the Complainant in this case is not a consumer under the Act. In the result, the Consumer Forums have no jurisdiction to entertain disputes between the chit fund and one of its prized subscribers, or between the prized subscribers. It may be that some of the prized subscribers of the chit fund in this case have committed fraud, forgery and cheating but that by itself would not attract the provisions of the Consumer Protection Act, 1986.

I am, therefore, of the view that there has been a wrongful exercise of jurisdiction by the State Commission when it had entertained and disposed of the complaint. The complaint before the State Commission is, therefore, dismissed and the State Commission''s order is set aside. There is no order as to costs. Before hand over this order it may be mentioned here that the order of the State Commission refers to the chit fund having been registered under the Madras Chit Funds Act (1961). This chit fund was registered in Delhi in 1988 and by this time the Act of 1982 passed by Parliament had repealed, inter alia, the Tamil Nadu Chit Funds Act, 1961 which was then in force in the Union Territory of Delhi-Section 90 of the Act of 1982 refers. Hence, in passing the order, I have gone by the provisions of the Act of 1982.