Choppadandi Rajaiah, vs M/S.Margadarsi Chit Fund Pvt. ...
2021 Latest Caselaw 3718 AP

               HON'BLE SRI JUSTICE B.KRISHNA MOHAN

              CIVIL REVISION PETITION No.6561 OF 2012

ORDER :

This Civil Revision Petition arises against the order in I.A.No.981

of 2012 in O.S.No.140 of 2010 on the file of Senior Civil Judge,

Ramachandrapuram, East Godavari District dated 11.12.2012 dismissing

the application under Order 7 Rule 11 CPC to reject the plaint.

2. Heard the learned counsel for the petitioner herein and the

learned counsel for the 1st respondent herein who is the contesting

respondent.

3. The petitioner herein is the petitioner in the I.A., and the 6th

defendant in the suit. The 1st respondent herein is the 1st respondent in

the I.A., and the plaintiff in the suit. The 2nd respondent herein is the

2nd respondent in the I.A., and the 1st defendant in the suit. The other

respondents herein are the other respondents in the I.A., and the other

defendants in the suit who are proforma parties.

4. The facts of the case are that the 1st respondent herein filed

O.S.No.140 of 2010 on the file of Senior Civil Judge, Ramachandrapuram

against the respondents No.2 to 6 and the petitioner herein for recovery

of a sum of Rs.1,17,419/- (Rupees One lakh seventeen thousand four

hundred and nineteen only) with costs and claiming future interest at

12% per annum from the date of suit till its realization on the ground

that the 1st defendant became a member of the chit fund scheme 2 BKM, J CRP No.6561 of 2012

organized by the plaintiff's company, realized the chit amount, became

a defaulter and the other defendants stood as guarantors. During the

pendency of the said suit, the petitioner herein filed an I.A.981 of 2012

before the Court below to reject the plaint under Order 7 Rule 11 CPC

contending mainly on the ground that the civil suit is barred with effect

from 26.11.2007 and the dispute shall be resolved only by way of

arbitration under Section 53A of the A.P. Chit Funds Act, 1971.

5. The same was opposed by the 1st respondent herein/plaintiff in

the suit. On consideration of the matter on merits, the Court below

dismissed the above said I.A., vide its order dated 11.12.2012. Against

which, the present Civil Revision Petition arises in which the interim

stay of all further proceedings in the suit was ordered by this Court vide

its interim order dated 03.01.2013.

6. The learned counsel for the petitioner herein submits that the

Section 53A of AP Chit Funds Act, 1971 came into force with effect from

26.11.2007, the chit agreement is dated 12.09.2006 and cause of action

arose even according to the plaint that the 1st defendant committed

default on 16.02.2009. He further submits that when the dispute arose

is the relevant date for the purpose of applicability of Section 53A of

the A.P. Chit Funds Act, 1971, but not the date of either registration of

membership of the chit or the date of execution of the chit agreement.

In this case the dispute arose as per the plaint was on 16.03.2009

subsequent to the introduction of Section 53A of the Act, dated

26.11.2007. Hence the above said suit instituted subsequently is barred 3 BKM, J CRP No.6561 of 2012

and the 1st respondent herein ought to have availed the remedy of

arbitration for resolving the above said dispute between the parties in

view of Section 53A of the Act.

7. Per contra, the learned counsel appearing for the 1st respondent

submits that the Court below rightly dismissed the above said I.A., as

the suit is maintainable. He further submits that the above said State

legislation was repelled by operation of Central Enactment viz., Central

Chit Funds Act, 1982 which came into force with effect from

15.09.2008. But, this Hon'ble Court in the Judgment reported in 2013

(1) ALT 182 held the operation of the Central Act is prospective only

and the acts done under the above said repelled State Act are saved.

Since the Chit agreement is dated 12.09.2006 in the present case which

is prior to the Central enactment which came into force with effect

from 15.09.2008, the State Act would continue to apply and

consequently the suit is also maintainable under the said enactment.

8. Having regard to the above said facts and circumstances, and in

view of the above said rival contentions, it is to be seen that earlier the

suits were maintainable under the above said State Act i.e., A.P. Chit

Funds Act, 1971. Taking into consideration the membership registration,

chit agreement, guarantor's agreement and execution of promissory

note and other documents, the 1st respondent herein filed the above

said suit and pursuing the same before the Court below. But, the

petitioner herein who is the 6th defendant and stood as one of the

guarantors filed the above said I.A. for rejection of the plaint mainly 4 BKM, J CRP No.6561 of 2012

relying upon Section 53A of A.P. Chit Funds Act, 1971 contending that

the civil suit is barred with effect from 26.11.2007 and the only course

open for the 1st respondent/plaintiff is to proceed with the arbitration

proceedings for resolving the dispute. On the other hand the 1st

respondent still relies upon the provisions of the above said provision of

the repelled State Enactment Act as pending proceedings/transactions

are saved on the ground that the repel and operation of subsequent

Central Act is only prospective in nature.

9. On perusal of the order of the Court below specifically with

respect to the point No.3 at page 6 of its order dated 11.12.2012 to the

extent of holding that "Section 53A of A.P. Chit Funds Act, has no

application to the present case on hand as the chit agreement is dated

12.09.2006" is set aside by this Court with a liberty to the Court below

to proceed with the suit and decide the above said controversy in the

main suit after completion of the trial and hearing of the parties.

Insofar as Points No.1 and 2 of the order under challenge in the above

said order dated 11.12.2012, this Court affirms the same. However, the

trial Court is directed to dispose of O.S.No.140 of 2010 pending before

it as expeditiously as possible preferably within six (06) months from the

date of receipt of a copy of this order. The interim order passed by this

Court dated 03.01.2013 is vacated.

10. In the result, the Civil Revision Petition is disposed of. There

shall be no order as to costs.

                               5                             BKM, J
                                                     CRP No.6561 of 2012

As a sequel, miscellaneous petitions, if any pending in this case,

shall stand closed.

________________________ JUSTICE B. KRISHNA MOHAN Dt.23-09-2020 Yvk