MODEL CHIT CORP LIMITED vs Meera

-THESE two appeals arise from a common order passed by the State Commission partly allowing the complaint filed by Dr. Meera (Appellant in FA No. 468 of 2006) alleging deficiency in service on the part of M/s. Model Chit Corporation Ltd. (Appellant in FA No. 226 of 2006 ).

BRIEFLY stated the facts of the case are that undisputedly the complainant Dr. Meera was subscriber of two chits bearing number LT 4 SLP 03 for Rs. 25 lakh and LT/3 GLP 38 for Rs. 50 lakh. This complaint is related to the chit bearing No. LT/3 GLP 38 for Rs. 50 lakh only. It was the case of the complainant that she has been subscribing regularly except for ten-month period for which monthly subscription was not paid and an oral understanding was reached between the parties that she will be paying 10 instalments at a time or she will give bank guarantee, but the Model Chit Corporation removed the membership of the complainant and an amount of Rs. 24,40,410 was naid whereas in fact the complainant was entitled to receive Rs. 40 lakh including interest from 1st May, 2003. It is not in dispute that the complainant has already received Rs. 2,450,00 and since the Model Chit Corporation has not paid the remaining amount of Rs. 15,50,000 to which as per complainant, she was entitled to, and since the matter was not getting sorted out between the parties, a complaint alleging deficiency in service on the part of the Model Chit Corporation, was filed before the State Commission. The complaint was resisted by the opposite party, M/s. Model Chit Corporation. The State Commission after hearing the parties and perusal of material on record passed the following order: "keeping the facts and circumstances in view, we are of the considered opinion that the complainant is entitled to the dividend amount of Rs. 15,50,000 less foreman''s commission of 5% i. e. Rs. 2,50,000, i. e. , a sum of Rs. 15,00,000 together with compen-sation of Rs. 15,000 and costs of Rs. 5,000 to be paid within a period of six weeks from today, failing which the said amount will attract interest @ 9 p. a. till payment. In the result, the complaint is allowed in part and the opposite parties are directed to pay to the complainant a sum of Rs. 13,00,000 together with a sum of Rs. 15,000 towards compensation and costs of Rs. 5,000. Time for compliance six-weeks, failing which the said amounts will attract interest @ 9% p. a. till payment. "

Aggrieved/dissatisfied by this order, both the parties have filed these two separate appeals before us.

We heard the learned Counsel for the parties and perused the material on record. First Appeal No. 226 of 2006

IT is argued by the learned Counsel for the appellant that as per bye-laws of Model Chit Corporation, if there is default in subscribing by the chit holder, then the Chit Corporation is entitled to not to pay the dividend. The State Commission has erred in granting dividend amount of Rs. 13 lakh, whereas it is the case of the complainant Dr. Meera, that the order passed by the State Commission is correct to the extent it has passed but the complainant is also entitled to another amount of Rs. 2,50,000 as there is a double deduction on the part of the appellant 5% by way of breach of contract and another 5% as foreman''s commission. The appellant is not entitled to both these deductions. After hearing the learned Counsel for the parties and perusal of material on record, we find that there is no disputing the fact that the appellant was a subscriber by way of monthly subscription towards ''chit'' and since, admittedly, the complainant was defaulted in paying 10 monthly subscriptions, then we have to examine that in such a case, what would be its effect, as enshrined in the bye-laws of Model Chit Corporation made under Section 3 of the Andhra Pradesh Chit Fund Act, 1971? The bye-laws have the force of law. Section 21 (a) of the bye-laws reads as under: "21. Penalties and fines imposed, if any, on defaulting subscriber. (a) Non-prized subscriber-If a non-prized subscriber fails to deposit his monthly subscription before the due date, penalty will be charged @ 3 paise per rupee or part thereof. If the default is continued to second month, penalty will be charged @ 6 paise per rupee or part thereof per month. If the default continues for more than two months, the subscriber will not be entitled to dividends, in addition to the aforesaid penalty charges. A subscriber, who has not made up-to-date payments of all the instalments due from him, will not be permitted to bid in the auction. If a non-prized subscriber fails to pay the subscription for three consecutive instalments, he shall be liable to be removed from the list of subscribers and the Foreman, at his option, shall be entitled to substitute a new subscriber in place of the defaulting subscriber and the defaulted ticket of the chit will be dealt with, subject to the bye-laws and the relevant provisions of the Act. The Foreman, at his discretion, can waive the penalties partly or fully and also postpone the removal, in suitable and deserving cases. An expelled member may be readmitted on such terms as the Foreman deems proper. A cancelled member is entitled to the amount actually subscribed by him, i. e. exclusive of dividends, less 5% of the chit amount towards damages for breach of contract. This amount is payable on application at end of the chit period or earlier, if the vacancy is substituted and the substituted member draws the prize amount. "

(Emphasis supplied)

IT is not disputed that the complainant had not paid 10 monthly subscription and as per 2nd sub-para of the Section 21 (a) of the bye-laws, reproduced earlier, the chit fund holder was liable to be removed from the list ot subscribers and this was exactly what was done in this case. The position of the subscription whose membership is cancelled is also incorporated in the above section, which dearly states that a cancelled member is entitled to amount actually subscribed by him exclusive of dividend less 5% of chit fund amount towards damages of breach of contract and this is precisely what has been done by the appellant in this case. What has been deducted by way of breach of contract is only 5%, i. e. amount of Rs. 2,50,000 from the amount subscribed by the complainant and rest of the amount has been returned. The State Commission, in our view, completely erred in allowing the complaint by way of granting of dividend which under the aforementioned circumstances, the complainant was not entitled to. In the aforementioned circumstances, we are unable to sustain the order passed by the State Commission, which is set aside and the Appeal is allowed. First Appeal No. 468 of 2006

THIS Appeal has been filed by the appellant on the ground that the deduction of Rs. 2,50,000 by the Model Chit Corporation should be granted to them which has not been allowed by the State Commission, even when it was specifically prayed for in the complaint together with dividend from 40th month to 50th month with penal interest and exemplary cost.

THE legal position and the status of the appellant Dr. Meera, has already been examined in the discussion in the Appeal filed by Model Chit Corporation. As held in the Appeal filed by Model Chit Corporation, as per provision of bye-law, the defaulter is not entitled to any dividend and whatever she had subscribed has to be refunded after deducting 5% of the amount for breach of contract and this has precisely what has been done. A further plea has been advanced by the learned Counsel for the appellant that the appellant Dr. Meera has subscribed for 40 months, hence they are entitled to refund of Rs. 40 lakh.

Having gone through the complaint (Paras 6 and 7) filed before the State Commission as also the grounds of Appeal before us, we do not find even a remote reference either in the complaint or in the Memo of Appeal that the complainant had subscribed Rs. 40 lakh. What is clearly mentioned in the complaint, as well as in the grounds of Appeal is the entitlement of dividend of Rs. 15,50,000. When we drew the attention of the learned Counsel for the appellant as to on what ground, they wish to make us believe that Dr. Meera had subscribed Rs. 40 lakh, as this finds no mention in the complaint nor in the grounds of Appeal, the learned Counsel for appellant was unable to satisfy us on this point. In view of this, we find that there is no merit in this plea as well.

IN the aforementioned circumstances, we find no merit in this Appeal hence dismissed. In the result First Appeal No. 226 of 2006 (filed by M/s. Model Chit Corporation) is allowed and the complaint is dismissed. First Appeal No. 468 of 2006 (filed by Dr. Meera) is dismissed being without merit.

KEEPING in view the peculiar facts and circumstances of the case, no order as to costs. Ordered accordingly.