THE HONOURABLE SMT. JUSTICE P.SREE SUDHA
SECOND APPEAL No.1110 of 2004
JUDGMENT:
This appeal is filed against the Judgment and decree dated 07.07.2003 in A.S.No.102 of 1998 passed by the learned V - Additional District Judge, Warangal, in which the Judgment and decree dated 04.09.1998 in O.S.No.386 of 1995 passed by the learned II - Additional Junior Civil Judge, Warangal, was confirmed.
2. The suit in O.S.No.386 of 1995 was filed by the respondent No.1/plaintiff against the appellant herein and respondents No.2 to 4 for recovery of Rs.25,000/- with interest @ 12% per annum. The trial Court after considering the arguments of both sides decreed the suit in favour of the respondent No.1/plaintiff. Aggrieved by the said Judgment, defendant No.1 therein preferred an appeal before the first appellate Court and the same was dismissed by confirming the Judgment of the trial Court. Aggrieved by the concurrent findings of both the Courts, defendant No.1 preferred the present second appeal and raised the following substantial questions of law.
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i) Whether the courts below were right in holding that the chit will not become illegal if it run without permission of Registrar of Chits. As per the section 4 of Chit Funds Act, 1982 no chit shall be commenced or conducted without obtaining any previous sanction of the Government and said sanction shall lapse if the chit is not registered within 12 months from the date of such sanction. The finding given by the courts below stating that registration is not necessary to become the chit legal is contrary to the provisions of Chit Funds Act, 1982.
ii) Whether the courts below were justified in not following the Section 4, 5 and other provisions of Chit Funds Act while giving finding whether the chit is legal or illegal.
iii) Whether the courts below are right in decreeing the suit without following the section 4, 5 and other provisions of the Chit Fund Act since the chit fund by the respondent No.1/plaintiff was not registered one and no sanction was obtained from the Government.
3. The parties herein are referred as plaintiff and defendants as arrayed in the trial Court for the sake of convenience.
4. The brief averments of the plaintiff in the suit are that it was a registered chit fund company and defendant No.1 was joined as a member of the chit fund scheme and subscribed to a chit of Rs.1,00,000/- @ Rs.4,000/- per month payable for 25 months and became successful bidder in the auction and agreed to forego Rs.35,000/-. He received the prize amount and later defaulted to pay the future installments and hence 3 defendant No1 and defendants No.2 to 4 as guarantors are liable to pay the suit amount with interest and costs.
5. Defendants No.1 to 3 filed the written statement disputing all the averments made by the plaintiff in the plaint. They also disputed the participation of defendant No.1 in the auction and agreed to forego Rs.35,000/- and receive the said amount and that he paid Rs.8,000/- and is liable to pay Rs.92,000/-. They further stated that plaintiff has not registered its chit with Registrar of Chits, as such the chit fund business itself was illegal. They never executed agreement of guarantee and pronote as collateral security either on 18.08.1993, 10.01.1995 or on 31.05.1995 and that the entire suit itself was fictitious and was liable to be dismissed.
6. The recovery assistant of the plaintiff company was examined as P.W.1 and marked Exs.A1 to A8 through him on behalf of the plaintiff. Defendants got examined Registrar of Chits as D.W.1 and also got examined defendant No.1 as D.W1 and marked Exs.B1 on their behalf.
7. P.W.1 in his evidence stated that from 06.06.1993, defendants joined their firm and was allotted a ticket No.63A12 4 for the chit value of Rs.1,00,000/- payable in 25 installments @ Rs.4,000/- per month. The chit agreement was executed on 26.03.1993 which was marked under Ex.A1 and on being successful bidder defendant No.1 agreed to forego Rs.35,000/- and furnished the guarantors and Ex.A2 was the agreement of guarantee. Ex.A3 was the promissory note executed by the defendant No.1 along with defendants No.3 and 4. Ex.A4 was the cash voucher, Ex.A5 was the office copy of the legal notice issued to the defendants, Exs.A6 and A7 were the postal acknowledgments and Ex.A8 was the returned postal cover of the defendant No.3. He further stated that defendants have to pay Rs.25,000/- as on the date of filing the suit. In his Cross-examination he stated that signatures of all the members were obtained by the Managing Director while introducing them as subscribers. He admitted that the total amount of the chit has to be deposited with the Registrar of Chits and the chit becomes illegal, if no permission was obtained from the Registrar of Chits. He also stated that by Law No.48/93-94 envisages the amount foregone by each member was deducted on the payment of the chit amount. He denied the suggestion that defendant No.1 was not the successful bidder of the chit amount and defendants No.2 to 4 were not the sureties. 5
8. The trial Court held that though the defendant No.1 denied his signature on the exhibits filed by the plaintiff, he has admitted his signatures on the summons sent by the Court. The trial Court held that he also denied his signature even on the petitions filed by him and also on the affidavit in I.A.No.496 of 1997, this clearly shows the evasive attitude of the defendants to avoid payment of the chit amount. It was also held that on comparison of signatures of the defendant No.1 on the petitions with that of the signatures on exhibits, any prudent man can come to the conclusion that signatures belong to the same person and thus Exs.A1 to A8 proved the liability of the defendant No.1 in paying the suit amount.
9. The main argument of the appellant/defendant No.1 is that the chit was not registered with the Registrar of Chits, but the trial Court clearly held that no suggestion was made by the defence Counsel that no such permission was given by the Registrar, as such chit would become illegal. Though the defendants in the suit contended that chit itself was illegal due to rejection of permission of the Registrar of Chits, they have not filed the copy of the rejection. They contended that it is for the plaintiff to prove that it was validly registered with the Registrar of Chits. In fact, defendant No.1 became the subscriber for a 6 chit of Rs.1,00,000/- and executed the chit agreement on 26.03.1993 and also executed a promissory note marked under Ex.A3, but only at the time of filing the written statement, he came up with the plea that chit was not registered with the Registrar of Chits and he has not given any suggestion to the plaintiff to prove that effect. Defendant No.1 was a chit subscriber and he was the successful bidder, he paid considerable amount towards installment and committed default only for Rs.25,000/- as on 10.01.1995. Defendants also contended that P.W.1 was not authorized to depose on behalf of the plaintiff company.
10. Admittedly, defendant No.1 was the subscriber of Rs.1,00,000/- chit, but defaulted an amount of Rs.25,000/-, as such plaintiff filed the suit for recovery of the said amount with interest and costs. It was also clearly stated that he was participated in the bid and forgone an amount of Rs.35,000/- and received the prize amount. Plaintiff filed Exs.A1 to A4 to substantiate their version, but defendants filed only Ex.B1 i.e., by laws of the plaintiff company. The trial Court and the first appellate Court has not considered the defence of the defendants as they have not given any suggestion to P.W.1 that no such permission was given by the Registrar of chits. Plaintiff 7 in the suit itself stated that it was a registered chit fund company and he discharged his burden. Now, the onus shifts on to the defendants to prove that permission was rejected to the plaintiff company by filing the document, but they failed to do so. Mere allegation that Chit Fund Company was not registered with the Registrar of chits and it was illegal is not sufficient to establish the defence of the defendants. The trial Court also held that defendant No.1 denied his admitted signatures in the petitions and in the affidavit and it clearly shows his evasive attitude to evade chit fund amount and accordingly decreed the suit with a direction to the defendants to pay the amount. It was also held that suit was decreed against the defendants No.1 to 3 as the case against defendant No.4 was dismissed as default. The trial Court granted interest @ 12% on the principal amount of Rs.24,000/- from the date of suit i.e., from 20.06.1995 till the date of realization. Even the first appellate Court held that the interest @12% is permissible under the Chit Funds Act and accordingly confirmed the Judgment of the trial Court. In spite of answering the questions advanced, in detail by the trial Courts, the appellant herein raised the same questions as substantial questions of law before the present appeal and in fact he filed this appeal only to drag on the proceedings. Therefore, this Court finds that the present 8 appeal is devoid of merits and is liable to be dismissed with costs.
11. In the result, the second appeal is dismissed with costs, confirming the Judgment and decree dated 07.07.2003 in A.S.No.102 of 1998 passed by the first appellate Court and also the Judgment and dated 04.09.1998 in O.S.No.386 of 1995 passed by the trial Court.
Miscellaneous petitions pending, if any, shall stand closed.
_________________________ JUSTICE P.SREE SUDHA DATE:10.10.2023 tri 9 THE HONOURABLE SMT. JUSTICE P.SREE SUDHA SECOND APPEAL No.1110 of 2004 DATE: 10.10.2023 TRI