SANJEEV KUMAR vs Narinder Kumar

DISTRICT Forum, Gurdaspur vide order dated June 2, 1998 dismissed the complaint of Sanjeev Kumar, hence this appeal by the complainant. Sanjeev Kumar became a member of Group ''P'' consisting of 25 members in the scheme sponsored by M/s. Surya Financiers, opposite party No. 3 through Narinder Kumar and S. Sarabjit Singh, partners, opposite party Nos. 1 and 2 respectively. As per the scheme, every month all the members were to contribute Rs. 5,000/- and amount of the contribution was stated to be Rs. 1,25,000/-. There used to be bid and the person offering to take lesser amount used to get the same and remaining amount used to be distributed after deduction of the commission of the opposite party which was stated to be 5%. The complainant having paid all the 25 instalments upto June, 1993 claimed to be entitled to the amount of Rs. 1,25,000/- on maturity of the group scheme. Since the same was not paid, he approached the DISTRICT Forum. The opposite parties took up preliminary objection that the complaint was barred by time. It was bad for mis-joinder of opposite parties. Opposite party Nos. 1 and 2 were wrongly impleaded. Material facts were concealed. The entire amount of the chit fund stood adjusted as having been paid to the complainant. Opposite party No. 3, M/s. Surya Financiers had to recover the amount of interest from complainant on loan account. Otherwise, it was admitted that the complainant became member of Group ''P'' and was at serial No. 12. The complainant had also chits in different other groups in his name and in the names of others and had taken loan to the extent of Rs. 3,60,000/-. It was stated that the scheme was for 30 members and the total amount was Rs. 1,50,000/-. Chit No. 12 was obtained by Madan Lal, father of the complainant and it was Madan Lal who had been dealing with opposite parties making payment of the instalments and had taken loan in such groups either in his own name or in the name of M/s. Highway Goods Carrier. The amount of the chit in dispute was adjusted against loan of Madan Lal and M/s. Highway Goods Carrier referred to above. Some details were also given. The DISTRICT Forum held that the provisions of Section 64 of Chit Fund Act, 1982 were attracted to the case in hand and the complaint was not maintainable before the FORA under the Consumer Protection Act. Ultimately the complaint was dismissed.

THERE are two questions involved in this appeal, firstly as to whether the provisions of Chit Fund Act of 1986 are applicable and subsequently if such provisions are not applicable, whether the opposite parties were justified in adjusting the amount of the chit fund (so called by the opposite parties) against the account of the complainant in respect of loans advanced to Madan Lal or Highway Goods Carrier. Section 64 of the Chit Fund Act reads as under : "64. Disputes relating to chit business-(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the management of a chit business shall be referred to by any of the parties to the dispute, to the Registrar for arbitration if 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 of a subscriber, past subscriber, or a deceased subscriber. Explanation-For the purposes of this sub-section, 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 subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber to deliver possession to a foreman of loan 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 purposes 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 any suit or other proceedings in respect of any dispute referred to in Sub-section (1)."

Since there is a specific prohibition for the Civil Courts to entertain the matters covered under the provisions of Chit Fund Act, the FORA would not have jurisdiction in such like matters. Such a matter earlier came up before this Commission in Sampuran Singh Del v. The Manager, The Doraha Primary Co-operative Agricultural Development Bank Limited & Ors., II (1997) CPJ 481=1997 (2) CPC 627, relating to dispute between the members and the Co-operative Societies registered under the Co-operative Societies Act and in view of the provisions of Punjab Co-operative Societies Act, it was held that the FORA could not entertain such disputes.

The vital question for consideration is as to whether the provisions of Chit Fund Act can be attracted to the case in hand or not. The words Chit Fund has been defined under Section 2(b) as under : "(b) "chit" means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount. Explanation-A transaction is not a chit within the meaning of this clause, if in such transaction- (i) some alone, but not all of the subscribers get the prize amount without any liability to pay future subscriptions; or (ii) all the subscribers get the chit amount by turns with a liability to pay future subscriptions."

Though definition of chit fund as reproduced above is very wide and would have covered the present case as the members of group are to contribute every month specified amount but there is no provision in the scheme in question that when one or the other member becomes successful in the draw, he is not to continue contributing for the remaining instalments. It is because of this aspect of the matter that the provisions of Chit Fund Act, 1982 cannot be made applicable to the scheme initiated by the opposite parties. The approach of the District Forum in applying the provisions of Chit Fund Act to the case in hand is not legally correct. The District Forum has the jurisdiction to entertain the complaint.

THE crucial question for consideration is as to whether the opposite parties were justified in adjusting the amount of the complainant towards the loan amount due from Madan Lal, father of the complainant or from Highway Goods Carrier of which Madan Lal is the proprietor. THE complainant is a major and he is not bound by acts of his father in the matter of taking loan etc. either from the opposite party or anybody else during his life-time. It is the complainant who had hired the services of the opposite party by becoming a member of the Group Scheme. It is immaterial whether he himself in person paid the amount of his contribution or sent the same through his father. Legally the amount of scheme is payable to him and not to his father. THE opposite parties cannot have any lien on the amount due to the complainant towards any amount of loan due from Madan Lal or from Highway Goods Carrier referred to above. That being the position, there is deficiency in rendering service on the part of the opposite parties in not settling the claim of the complainant on maturity of the scheme. Since the amount of Rs. 1,25,000/- on deposit of 25 instalments is due to the complainant, the opposite party is duty bound to pay the aforesaid amount alongwith 18% interest thereon w.e.f. the date of maturity till payment alongwith cost of Rs. 2,000/-. While allowing the appeal, the order of the District Forum is set aside and directions as above are given which are to be complied within one month from receipt of copy of this order. Appeal allowed.