Maragadarsi Chit Fund Ltd vs Mr. Gujjari Venkateshamgari ...
2023 Latest Caselaw 3552 Tel

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                                                                 PSS, J.
                                                          S.A.No.1452 of 2005



        HONOURABLE SMT. JUSTICE P. SREE SUDHA

               SECOND APPEAL No.1452 OF 2005

JUDGMENT:

This Second Appeal is filed against the Judgment and

decree passed in A.S.No.46 of 2004 dated 12.08.2005 on the file

of Principal District Judge, Medak at Sangareddy.

2. The appellant herein mainly contended that the reduction

of rate of interest by the first appellate Court from 12% to 6%

from the date of institution of the suit till the date of realisation is

contrary to law. The first appellate Court did not assign any

reason for reduction of rate of interest and as per Section 61 r/w

Sections 24 and 25 of the Andhra Pradesh Chit Fund Act, 1971

which authorises the "Foreman" to charge interest at the rate of

12%per annum till the date of realisation and would prevail over

Section 34 of the Code of Civil Procedure. He also relied upon

clause 20(B) of the Registered Statutory Bye-Laws i.e., Ex.A2 and

Clause 15(a) (II) of Ex.A3 Chit agreement. He further contended

that though the respondent No.1 herein remained exparte in the

trial Court, the first appellate Court took lenient view without any

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S.A.No.1452 of 2005

basis and requested this Court to set aside the Judgment and

decree passed by the first appellate court.

3. Heard arguments of both sides and perused the entire

evidence on record.

4. The parties herein are referred as plaintiff and defendants

as arrayed in the trial court for the sake of convenience.

5. The Margadarsi Chit Fund Limited, Sangareddy represented

by its Branch Manager filed a suit vide O.S.No.50 of 1999 against

defendant Nos.1 to 6 for recovery of Rs.3,05,175/- along with

interest stating that on 06.04.1997, Defendant No.1 joined as a

member of the Chit Fund scheme of their company for a chit

value of Rs.5,00,000/- with monthly subscription of Rs.10,000/-

for fifty months. On 26.10.1997, defendant No.1 participated in

the auction and became successful bidder by forgoing

Rs.2,25,000/- and received the balance amount. D2 to D6

executed an agreement of guarantee to the future liability of D1.

D1 paid Rs.70,000/- upto the date of payment of prize amount

and his future liability was Rs.4,30,000/-. Defendant No.1

committed default in payment of instalments from 15.01.1999

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S.A.No.1452 of 2005

onwards. In spite of repeated demands made by the plaintiff,

defendants failed to pay the balance amount and thus, plaintiff

company got issued legal notice to defendants and filed the suit

for recovery of amount.

6. Defendant No.3 filed a written statement and other

defendants remained ex-parte. Defendant No.3 in his written

statement admitted all the averments of the plaint and stated

that defendant No.6 is the father of defendant No.1 and a house

bearing No.3-5-31, situated at Sangareddy is standing in the

name of defendant No.6 and requested for attachment of the said

house for recovery of the suit amount and also to decree the suit

against D1 and D6 only.

7. The trial court examined PW1 on behalf of the plaintiff

company and got marked Exs.A1 to A9. Defendant No.3 was

examined himself as DW1 and marked Exs.B1 to B4 on behalf of

the defendants.

8. DW1 in his evidence stated that during the pendency of the

suit, i.e., on 31.03.2002, defendant No.1 paid Rs.2,90,000/-

towards one time settlement and the balance to be paid was only

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S.A.No.1452 of 2005

Rs.15,175/-. Both the plaintiff company and defendant No.3 filed

their calculation memo before the trial Court. As per the plaintiff-

company defendant has to pay balance of Rs.1,23,616/-,

whereas, as per defendant No.3, defendant No.1 has to pay only

Rs.14,543/. The trial Court held that on 27.02.2004, the learned

counsel for the plaintiff-company conceded that calculation

memo filed by defendant No.3 is correct, but the trial Court

decreed the suit for an amount of Rs.3,04,546/- with interest @

12% per annum from the date of suit till the date of payment of

Rs.2,90,000/- i.e., on 31.03.2002 and thereafter to recover the

balance amount with interest @ 12% per annum from

31.03.2002, till the date of decree and at the rate of 6% per

annum from the date of decree till realisation.

9. Aggrieved by the said Judgment and decree, defendant No.1

preferred an appeal before the first appellate court. The trial

Court also observed that in the cross-examination of DW1,

he admitted that there was no record to show regarding the

payment of Rs.2,90,000/- towards one time settlement between

the plaintiff-company and the defendants. He also admitted that

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S.A.No.1452 of 2005

receipt passed for payment of Rs.2,90,000/- shows that it was a

part payment.

10. The first appellate Court held that the suit claim as on the

date of filing the suit i.e., on 17.11.1999 was Rs.3,04,546/- but

defendant No.1 paid Rs.2,90,000/- on 31.03.2002. The chit fund

company is entitled for pendentelite interest on Rs.2,90,000/-

from the date of the suit (17.11.1999) till its payment i.e., on

31.03.2002. As the appellant paid major sum of Rs.2,90,000/-,

the chit fund company is only entitled to interest @ 6 % per

annum and thus it was held that defendant No.1 was liable to

pay only Rs.43,980/- with interest @ 6 % per annum from

12.08.2005, till the date of realisation.

11. In the present Appeal the main contention of the

appellant/plaintiff is that the first appellate Court cannot reduce

the rate of interest, but the first appellate Court stated that major

portion of amount i.e., Rs.2,90,000/- out of Rs.3,04,546/- was

paid immediately after filing of the suit, as such the interest was

reduced from 12% to 6% per annum. Therefore, the argument of

the appellant herein that no reasons were assigned cannot be

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S.A.No.1452 of 2005

accepted. The appellant herein also contended that as per the

Chit Fund Act, 1971 they are entitled for interest @ 12% and it

prevails over Section 34 of Code of Civil Procedure and the

reduction of interest is also against the Bye-Laws of the

company, as such requested the Court to set aside the order to

the extent of reduction of interest.

12. Admittedly, the suit claim was Rs.3,04,546/- as on the date

of filing of the suit, but immediately after the filing of the suit,

defendant No.1 paid a substantial amount of Rs.2,90,000/- and

as per the calculation memo, after deduction of the said amount

appellant is entitled for Rs.43,980/- towards suit claim and as

per the Chit Fund Act, plaintiff is entitled for interest @ 12% per

annum from 31.03.2002 till the date of decree and 6% per

annum from the date of decree, till the date of realisation and

thus the order of the first appellate Court is modified as stated

above.

In the result, the second appeal is partly allowed and the

appellant is entitled for balance amount of Rs.43,980/- with

interest @ 12% per annum from 31.03.2002 till the date of decree

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S.A.No.1452 of 2005

and @ 6% per annum from the date of decree till the date of

realization. There shall be no order as to costs.

As a sequel, miscellaneous applications pending, if any, shall

stand closed.

____________________________ JUSTICE P. SREE SUDHA

Dt. 03-11-2023.

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PSS, J.

S.A.No.1452 of 2005

HONOURABLE SMT. JUSTICE P. SREE SUDHA

SECOND APPEAL No.1452 OF 2005

Dt. 03.11.2023

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