Sahara India Ltd. vs JAWANMAL JAIN

BY the order dated 10.9.2002 in Case No. 96/2001 District Consumer Disputes Redressal Forum, Vidisha has directed the appellant-opposite parties Sahara India Ltd. to grant loan of Rs. 1,00,000/- to the respondent-complainant in terms of its scheme called "Golden Key Account" floated by the appellant way back in 1986.

UNDER the said scheme every member was required to deposit a sum of Rs. 2,500/- with the appellant-company. Out of this amount a National Saving Certificate of the value of Rs. 1,000/- was made available to every depositor. The remaining amount Rs. 1,500/- was to remain deposited with the appellant for a period of 144 months. During this period a monthly draw i.e., total 144 draws of lots were to be held and the prizes were to be given to the depositor as per the result of the draw. Forty more bumper draws also were to be held. In the instant case, the result of 60th draw held on 28.12.1991 entitled the respondent-complainant to get interest-free loan of Rs. 1,00,000/- from the appellant repayable monthly equal instalments in six years. The appellant-company did not, however, advance any such loan to the respondent who after prolonged correspondence approached the Forum below under Section 12 of the Consumer Protection Act, 1986 seeking direction to the appellant for making the said loan available to him. The claim was resisted by the appellant on the basis of certain decisions of the Supreme Court and High Court of Madhya Pradesh wherein it was held that any such scheme was contrary to the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and could not be, therefore, enforced in law.

The Forum below after hearing parties allowed the complaint and directed the appellant to advance the loan to the respondent as aforesaid.

SECTION 3 of the Act of 1978 provides that no person shall promote or conduct any prize chit or money circulation scheme or enroll as a member to any such chit or scheme, or participate in it otherwise, or receive or remit any money in pursuance of such chit or scheme. SECTION 2(e) defines ''prize chit'' as follows- "prize chit" includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lumpsum or in instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefit, thrift or any other scheme or arrangement by whatever name called, and utilizes the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes, namely, (i) giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in any other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize of gift is under a liability to make any further payment in respect of such scheme or arrangement;

(ii) refunding to the subscribers or such of them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with or without any bonus, premium, interest or other advantage by whatever name called on the termination of the scheme or arrangement, or on or after the expiry of the period stipulated therein, but does not include a conventional chit."

A perusal of the scheme in the light of the aforesaid legal provisions clearly goes to show that the scheme floated by the appellant was contrary to the provisions of the Act of 1978 and the contract entered into between the parties under the said scheme was void ab initio. In almost similar fact situation, the High Court of Madhya Pradesh in the case of Sahara India v. State of M.P. and Others, 1983 MPLJ 435, has held: "That the scheme was clearly a prize chit as defined in Section 2(e) of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. The business contravened the provisions of the Act entitling the State and its authorities to take suitable action to prevent violation of the Act."

Later on the Supreme Court in Registrar of Firms, Societies and Chits, Uttar Pradesh v. M/s. Secured Investment Co., AIR 1988 SC 492, after referring with approval the judgment of the High Court of Madhya Pradesh in Sahara India (supra), came to the conclusion that any scheme under which subscribers agree to forgo portion of their contribution in the hope of getting prize of gift, contravenes the provisions of the Act of 1978.

IT will be thus seen that the entire scheme was void ab initio and any promise made under the scheme cannot be enforced specifically. The Forum below was, therefore, clearly wrong in specifically enforcing the said scheme and directing the appellant to advance loan as per that scheme. However, the appellant was clearly guilty of adopting unfair trade practice and in obtaining deposits from the respondent under a promise which could not be performed or enforced in law. The respondent-complainant is, therefore, entitled to receive adequate compensation from the appellant, besides refund of his remaining money of Rs. 1,500/- with interest. Accordingly, we allow the appeal in part, set aside the order of the Forum below and instead direct the appellant to pay to the respondent the said sum of Rs. 1,500/- with interest @ 9% p.a. from 14.3.1987 till payment and also pay compensation of Rs. 5,000/- to the latter. The appellant shall also bear respondent''s costs of both the Fora and the same is quantified at Rs. 2,000/-. Appeal allowed.