Andhra Pradesh High Court - Amravati
A. Dhanlakshmi vs M/S. Nischala Chit Fund P Ltd., on 8 September, 2022
THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI
APPEAL SUIT No.721 of 2006
JUDGMENT:
Assailing the judgment and decree, dated 09.08.2006,
passed in O.S.No.110 of 2003 on the file of learned Additional
Senior Civil Judge, Tenali, defendant filed the present appeal.
2. For the sake of convenience and brevity, the parties
herein are referred to as per their array in the O.S.No.110 of
2003.
3. Plaintiff is a company registered under the Companies
Act and carrying on chit fund business; that on 20.12.2022,
defendant No.1 joined as member of chit NLD 02; that
defendant No.1 was also allotted ticket No.6; that defendant
No.1 agreed to subscribe Rs.10,000/- per month before tenth
of each month payable in fifty equal monthly instalments;
that in the auction conducted on 26.05.2002, defendant No.1
participate and became highest bidder for Rs.2,75,000/-; that
defendant No.1 received the bid amount; that defendant No.1
paid Rs.50,000/- and thereafter did not pay the balance
amount; that defendant Nos.2 and 3 stood as guarantors and
executed guarantee agreement; that the defendants executed
promissory note; that defendant No.1, as stated supra
received Rs.2,75,000/- on 19.06.2022 under receipt
Nos.15312 to 15317; that defendant No.1 committed default
in payment of the instalments; that defendant Nos.2 and 3 is
co-extensive with defendant No.1.; that the defendants are
liable to pay the suit amount. Hence, the suit is filed.
4. The defendants filed written statement and admitted
with regard to defendant No.1 being member of the chit; that
due to sudden demise of her husband, defendant No.1 could
not visit the plaintiff office to pay subscription; that in July,
2003, defendant No.1 approached the plaintiff for payment of
arrears of subscription with an understanding that the
plaintiff promised to appropriate the amount; defendant No.1
was also member in two other chits; that plaintiff promised to
appropriate the amounts into the suit filed by the plaintiff;
that under three tickets, the plaintiff is having an amount of
Rs.2,80,000/- of defendant No.1; that by misrepresenting
plaintiff, obtained signatures of defendant Nos.2 and 3; that
defendant Nos.2 and 3 never stood as guarantors; that
plaintiff did not follow the procedure under Chit Funds Act
and eventually prayed to dismiss the suit.
5. Basing on the above pleadings of both the parties, the
trial Court framed the following issues for consideration:
1. Whether plaintiff is entitled to suit claim?
2. To what relief?
6. During course of trial, PW1 was examined on behalf of
the plaintiff company and Exs.A1 to A22 and Exs.X1 and X2
were marked. On behalf of the defendants, defendant No.1
examined herself as DW1 and got examined DWs2 and 3, but
no documents were marked.
7. The trial Court, on consideration of oral as well as
documentary evidence and legal aspects, decreed the suit
with costs by the judgment and decree, dated 19.08.2006
and directed the defendants to pay interest at 12% per
annum from the date of the suit till the date of decree and
thereafter interest at 6% per annum on principal amount of
Rs.4,50,000/-. Aggrieved by the said judgment and decree,
the above appeal is filed.
8. Heard M.V. Suresh, learned counsel for the appellant/s
and Sri K. Sankaraiah, learned counsel for the respondent.
9. Learned counsel for the defendant No.1/appellant
contends that respondent company did not follow the
mandatory provisions of A.P. Chit Fund Act, 1971. He
contends that respondent failed to comply with Sections 3, 5
and 8 of Chit Funds Act and relevant Rules. He contends that
plaintiff did not obtain certificate of commencement of
business and there are interpolations on promissory note and
eventually prayed the Court to allow the appeal and set aside
the judgment and decree of the trial Court.
10. Learned counsel for the respondent supported the
judgment and decree of the trial Court.
11. From the above contentions, the following points arise
for consideration in this appeal:
1. Whether respondent/plaintiff adhered to the provisions
of AP Chit Funds Act?
2. Whether respondent/plaintiff is entitled for the suit
claim?
3. To what relief?
Point Nos.1 and 2:
Since points 1 to 3 are interrelated, they are dealt
together.
12. Ex.X2 shows list of subscribers. Byelaws of the
company are registered. Exs.A13, A15 and A17, show renewal
notices. In fact, defendant No.1 is also working in another
chit fund company, and she is aware of the legal
consequences. Ex.X1 is chit commencement certificate, dated
20.08.2002 and Exs.X1 and X2 show that the respondent
company strictly adhered to the procedure contemplated
under the AP Chit Fund Act and started chit.
13. Defendant No.1 having joined in the chit, paid some
monthly instalments after emerged as the highest bidder,
raised a number of pleas only to drag on the proceedings.
Since Exs.X1 and X2 prima facie show that the plaintiff
company followed the procedure, the contention of defendant
No.1 that respondent did not follow the procedure falls to
ground.
14. Defendant No.1 joined as member, paid certain
instalments. After that she was emerged as highest bidder.
After receiving price amount defendant No.1 failed to repay
the amount. Curiously, defendants pleaded that their
signatures were obtained on blank printed forms. Defendant
Nos.2 and 3 stood as guarantors and liability of guarantors is
co extensive with that of principal borrower.
15. The evidence on record show that defendant No.1 failed
to repay the amount and hence, the suit is filed for recovery
of amount. Defendant Nos.2 and 3, as guarantors along with
defendant No.1 are liable to pay the suit amount. Nothing
contra was elicited in the cross-examination of PW1 and the
evidence of PW1 along with Exs.A1 and A2 prima facie prove
the claim of the plaintiff. Hence, this Court is of considered
view that plaintiff is entitled to recover the amount and 1 st
defendant failed to repay the amount. D2 and D3 being the
guarantors are equally liable to pay the amount along with
D1. Thus, points 1 and 2 are answered accordingly.
Point No.3:
16. In view of the above discussion, the appeal is liable to
be dismissed.
17. In the result, the appeal is dismissed confirming the
judgment and decree, dated 09.08.2006, passed in
O.S.No.110 of 2003 on the file of learned Additional Senior
Civil Judge, Tenali. No costs.
As a sequel, all the pending miscellaneous applications
shall stand closed.
________________________________
JUSTICE SUBBA REDDY SATTI
Date : 08.09.2022
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THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI
APPEAL SUIT No.721 of 2006
Date : 08.09.2022
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