MARIMUTHU vs Lakshmi

THE 1st opposite party against whom and the 2nd opposite party a decree has been passed by the District Forum is the appellant. THE transaction alleged by the complainant in respect of which, according to him, the opposite parties have committed deficiency in service is a chit transaction. THE complainant was a subscriber to a chit conducted by the opposite parties as partners. According to the complainant the chit amount was of Rs. 5,000/- and the duration was 40 months, and the subscription was Rs. 125/- per month. THE complainant had paid subscriptions for twenty-eight months and the opposite parties suddenly stopped the monthly auction. THE complainant demanded for the amount subscribed by him i.e. Rs. 3,500/-. But the opposite parties did not pay the amount. On these grounds the complaint has been filed.

THE opposite parties denied that they are liable to pay any amount to the complainant and contended that the petition is not maintainable and untenable. The District Forum, on consideration of evidence, came to the conclusion that the complainant''s case was true and it passed an award. It is against this order the 1st opposite party has come up with this appeal.

Now in the appeal, the learned Counsel appearing for the appellant/1st opposite party raises a legal plea, viz., in view of Section 64 of the Chit Funds Act, the District Forum had no jurisdiction to try the complaint, and therefore, the order passed by it is unsustainable. After hearing both sides, we find there is much force in this contention of the appellant. Section 64 of the Chit Funds Act, 1982 (Act 40 of 1982) is to the following effect: "64. Disputes relating to Chit business- (1) Notwithstanding anything contained in any other law for the time being in force, and any dispute touching the management of a chit business shall be referred by any one of the parties to the dispute, to the Registrar for arbitration of 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 or a subscriber, past subscriber, or a deceasecd subscriber. Explanation- For the purpose of this subsection, 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 or due from him to a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber whether such debt or demand is admitted or not; (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; and (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 question arises as to whether any matter referred to for the award of the Registrar is a dispute or not for the purpose of Sub-section (1), the same shall be decided by the Registrar whose decision thereon shall be final. (3) No Civil Court shall have jurisdiction to entertain suit or other proceedings in respect of any dispute referred to in Subsection (1)."

It is clear from Clause (1) under the Explanation given to Sub-section (1) that a dispute regarding a claim by a subscriber against the foreman is a matter which shall be referred to the Registrar for arbitration as required under Sub-section (1). As per Sub-section (3) of Section 64, no Civil Court shall have any jurisdiction to entertain suit or other proceedings in respect of any dispute referred to in Sub-section (1). From these, it is clear that a dispute as the one in the present case, has to be referred to the Registrar for arbitration as per Section 64 and no Civil Court shall have jurisdiction to resolve the dispute. This being the case, the question is whether the Consumer Forum will have jurisdiction to decide the case in a complaint before it when the dispute falls within the ambit of Section 64 of the Chit Funds Act. It may be noted that Section 3 of the Consumer Protection Act reads thus : "3. Act not in derogation of any other law- The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force."

Apparently, in view of this section, any of the provisions of the Consumer Protection Act shall not be in derogation of the provisions of Section 64 of the Chit Funds Act. It therefore follows that a dispute arising out of a chit transaction which comes under Section 64 of the Chit Funds Act has to be referred to the Registrar only for arbitration and no complaint can be filed before a Consumer Forum. Of course, the Consumer Protection Act is a later enactment compared to the Chit Funds Act. But that is not material when the provisions of the Consumer Protection Act shall not be in derogation of Section 64 of the Chit Funds Act.

THERE is another reason also because of which the Consumer Protection Act cannot have jurisdiction. That is, when there are two Acts, one being a special Act and the other general, the provisions of the special Act will prevail over the provisions of the general Act. THERE is no doubt that the Chit Funds Act is a special Act and the Consumer Protection Act is comparatively a general Act. The Supreme Court in its record judgment in Chairman, Thiruvalluvar Transport Corporation v. Consumer Protection Council, I (1995) CPJ 3 (SC)=(1995) 2 SCC 479 has held that the Motor Vehicles Act, 1988 is a special Act in relation to claims of compensation arising out of the use of motor vehicles and the Consumer Protection Act, 1986, being a law dealing with the question of protection of consumers in general, could be said to be a general law in relation to the specific provisions concerning accidents arising out of the use of motor vehicles found under Chapter XII of the 1988 Act. Similarly the Chit Funds Act, 1982, dealing with disputes arising out of chit transactions, is a special law and the Consumer Protection Act, 1986 is a general law. THEREfore applying the principle that ordinarily the general law must yield to the special law, matters which will come within the purview of Section 64 of the Chit Funds Act must be referred to the Registrar as stated therein, and they cannot be decided by the Consumer Forum/Commission constituted under the Consumer Protection Act, 1986. For these reasons, the award passed by the District Forum cannot be sustained. However, the learned Counsel appearing for the 1st respondent/complainant would argue that Section 4 of the Chit Funds Act prohibits commencement or conduct of a chit without obtaining the previous sanction of the State Government and unless the chit is registered in accordance with the provisions of this Act, but the chit in the present case is not a sanctioned or registered one and therefore the provisions of Section 64 are not attracted. We find no merit in this contention. If a chit is conducted without previous sanction of the State Government and is not registered, the consequence would be that the Foreman of the chit, as per Section 76 of the Chit Funds Act - for contravention of Section 4, shall be convicted and punished with imprisonment for a term which may extend to two years or with fine which may extend to five thousand rupees or with both. Section 64 of the Chit Funds Act refers to only any dispute touching the management of the Chit and it does not say that this section would apply to those chits which have been sanctioned and registered. Section 64 will apply to any chit whether it is sanctioned and registered or not. Therefore, as stated above, we do not see any force in the submission of the learned Counsel.

FOR the foregoing reasons, in the result, we allow the appeal, set aside the order passed by the District FORum and dismiss the complaint. The complainant will be at liberty to refer the dispute to the Registrar under Section 64 of the Chit Funds Act for arbitration if he is so advised. There will be no order as to costs. Appeal allowed.