Writ Petition No. 32975 of 2025 · The High Court · 2025

l. Heard Sri B.Mayur Reddy, learned Senior Counsel representing Sri Narsi Reddy Pesara, leamed counsel appearing for the petitioner and Sri N.S.Ar1un Kumar, learned Govcmment Pleader for Civil Supplies appearing for respondent Nos.l and 2.

2. The present Writ Petition is hled assailing the order dated 11 .12.2024 in C.C.No.150 of 2024 passed by the learned District Consumer Disputes Redressal Commission-III, Hyderabad { - (respondent No.2 I'rerein) Ut allorving the comp i nt filed by respondent No.4 (subscriber of chit) herein in pa,r dirccting the Opposite Parly No.2 therein i.e. The Deputy Registrar Clhits to take nccessary action asainst the OpposiLe Party No.l thererr petltroner herein and directrng the petitioner herein to pay thc I cj arnount of Rs.8,90,000/- to lespondent No.4 u,ith interest (a. !1o p.a. liom August 2023 till the date of realization alone \\ih a sum ol Rs 50,000/- towards compensation tbr the lirancial l,r I and rncntal agony caused besides Rs.5,000/- torvards costs, r,ithir 15 days liom the date of receipt of the order'.

3. The lacts leading to filing of C.C.No.l50 of 201 1 are that the petitioner herein, a Private Limitcd Company incorpol r :d under The Companies Act, 1956, has been doing chit fund busine:, Rcspondent No.4 herein, in order to meet her comrnercial rcquirenr,r ts and needs, joined as a member of the Chit Fund Scheme of the pe ,' ioner, signed the Chit Agreemcnt on 21.03.2020 and thereaftelivas i lotted ficket No.46 in the Chit Series ol L'l'5N for a total c rit value of Rs.10,00,000/- payable in 50 equal monthly ins allments @ Rs.20,0001 by 10'h of every month 5

4. It is the case of the respondent No.4 that she paid l3 installments for the penod upto March, 2020 and parlicipated in the auction conducted on I1.05.2020 and became successful bidder having agreed to fblego a sulll ol Rs.4,00,000/- out of the total chit value of Rs.10,00,000,-. Thus, the petitionei' is liablc to pay a sum of Rs.6,00,000i- to respondcnt No.4 on lurnishing sureties as per the terms and conclilions of the Chit Agrccnrcnt. Due to Covid Pandernic. respondent No.zl could not furnish sureties, and later in the month ol July, 2020 she furnished requrred sureties to the satislaction of the petitioner. But the petitioner postponed payment of the bid amount of Rs.6,00,000/- [o respondent No.4 on one pretcxt or the other

5. It is the further case ol the respondent No.4 that in the month ol March, 2021 the petitioner came fonvard to pay the bid amount of Pls.4,49,3621- after deducting the total subscription amount of Rs.1,50,6381 due liom the l4'r'to 2i'd installrnents i.e. from June, 2020 to March, 2021. Respondent No.4 claimed interest at the rate of 24o/o p.a. on the bid amount ol Rs.6,00,000/- from the month of August, 2020 to March, 2021, tbr which, the petitioner refused to pay the same. 6 -

6. It i-s the case ol the petrtioner that respondent \ r.4 committcd dethult in payment of amount tou'arcls installmenL \os.48 to 50 Thereby the petitioner issr-red lecal notice datell )3.03.201t to respondent No.4 demanding fbr payment of clr I Lulted amount together u,ith interest @ l8%, p.a

1. It is the casc ol thc petitioncr that respottrl nL No.-1 tiled complaint belbrc respondent No.2 r'ide C.Cl.No.l5() i ' 201-1 asainst thc pctitioner clairning to pay the bid arnount of Il-: ,90.000'- rvrth interest @ 24% p.a. fiom August, 2023 till the date o f 1 rl,menL

8. Despitc granting stipulated time by leamed res I ndent No.? to thc petitioner for filing wtitten vet'siott, as thc pctitio lr tailed ttr file t[.re written arguments, respondent No.2 fort'eite i the right of petitioner to file its written verslon

9. Learned respondent No.2 tiamed thc fb1lol rg points lbr consideration: " L Whether there is any unfair trade practice or t 'ficiency o/ .service ort the part of the Oppositc Parties as clain,' / uncler lhL' complainr? -r 1

2. I|thether the Compl.aint is cntitled lbr the relrc[sougl ? If so, ttt whll crtcnt? "

10. During enquiry betbre thc learned respondent No.2, on behallof respondent No.4, P.\\'. 1 r'vas exatnined and Exs A- I to A-6 were marked. On beliatf of the petitioner, no !\'itnesscs rvere examined nor were any documents marked

11. Learned respondent No.2, based on thc uatcrial available on record, vide lts order datcd 17.12.2024 held and rciterated that in spite of giving ample opportLrnity tbr the proper adjudication ol the mattcr, the petitioner lailed to appear before it, thereby petitioner's right to file written version and subsequent o'idence atlldavit and written arguments got lorfeited. tt r'vas furlher held that the negligent attitude of the petitioner clearly provcs unlair tlade practice, techniques which resulted in financiai loss to respondent No.4, thereby the petitioner has failed in fulfilling its obligations of paying the chit amount to respondent No.4 within the specified time and it amounts to deficiency in service. Leamed respondent No.2 thereby allowed the complaint filed by respondent No.4 in part directing the petitioner to pay the bid amount of Rs.8,90,000r'- to respondent No.4 with interest @ 12% p.a. ftom August, 2023 tlll date of realization besides a sum of -- 8 Rs.50,000i- tou,ards compensation for the financiar I ss and mental agony caused and I{s.5000/- towards costs

12. Aggrieved bl the said order, the petitioner has ' cd the present \Vnt Petitior.r

13. Sri B.Mayul Reddy, leamcd Senior Counsel ap caring fbr the petitioner primanll, contended that the order datct. 11 .122021 is obtained by playing fraud on leamed respondent No.. rnd therc is no deficiency ln set\ tce on the part ol thc petitioner. and thercfiu e contended that thc order passed by the lcarned resl r ndcnt No.2 is Iiable to be set aside. The leamed Senior Counsel 1u,; ner contended that the learned Resltondent No.2 has no jurisdiction t. adudicate the drspute.

11. On the other hand, Sri N.S. Arjun Kumar, lear-ni I Govemr.nent Plcader for Civil Supplies appearing on behalfresponrir rt Nos.l and 2 contended that learned respondent No.2 has jurisdir:ri n to enteftain thc complaint lodged by respondent No.4 and as ,;, ch, the order passed by the learned respondent No.2 is legal, valid ar I does not call fbr any intcrference by this Court. '/ -a I

15. In supporl of his contentions, learned Government Pleader fbr Civil Supplics placed reliance on the order passcd by the learned National Consumer Disputes Itcdrcssal Commission, Nov Delhi in Kovilakam Chits un(l Financial Seruices Lttl. Vs. K.L. BenntJ wherein it was held that the intent of thc legislation is clear that remedy under the Consumer Protcction Aot, 2019 (for short 'the 2019 Act') was in addition to any other [au,in torce and that the sard Act was enacted in the yeal 1986 rvhereas the Chit Fund Act is the statute of 1982. [t was fur1her held tliat under Section i of the Consumer Protection Act, 1986, the Act is not in de rogation of any othel larv The provisions of the said Act shall be in addition to and not in derogation of the provisions of an1, other law tbr the time being in

16. In support of his contentions, lealned Covetnment PleadeL further placed reliance on the decision ol the Hon'ble Supreme Coutl in Imperia Structures Limited Vs. Anil Patni a ntl another2 awl Shriram Chits (K) Ltd. rep. by its Manager Vs. Raghachand Associates3 . ' 2ool (2) cPC (NC) 590 '(zozo) ro scc zs: r 2021 SCC ONIiNC NCDRC 54I !.- 10 ll . We have given our earncst contentions to the c:c r :cntions raised on either side, ar-rd perused the record

18. For lretter adjudication of the matter, it is rcler ur to cxtracL thc plorisions of Section 64 olthe Chir Fund Act, 198.1 'lor shon 'the Act'). whioh states as under': "61 l)[-spules ft]lating to clit business. (l) Notuiili,; urling cutril.ting cttrtttiinctl irt ttru, r.tthcr luy, .fbr the time being in force, an.r, Llt, utt, totrching thc tn(utLtlenrctl[ of a clul bttsiness shall be referred by any ol t t parLies to the rli-;pLrtt:. tct lltc Rcgistrl:r.t'br at bitratiotl if cach pary.n thercto i,; t' ltr tltc otlrcr ctI thc lo llotrittlq, rruntcl.y. (a) a.forenan. u prized subscriber or a non-prized subs,:, ber, inclutling a dt:l ulting subscribtr, pust sub.scriber or a person clatming thr t qh u subscr iber, or t tlaccosctl suhcriber lo a chit: (b) u surcty o.f a subscriber, past subscriber, or a dccease'l uh.striher Erplcutation.- -F or the plu.poses of tlis sub-section. a di ,, ,.rtt: ttntchitry tha monogement ofa chit htLsiness shall include- (i) o cluim b.y or against a.foremanfor any debt or dentut,, due to hitt fi.ont u subscriber, or due -li-om him to a subscriber, past subscribu or [1rc norttince. ht:ir or legol r.epre.\entative ofa deceased subscriber wh.t't r such debt or clcntarul is admitted or not. (ii) a clainr by a surety* for any sum or demand duc t hin./ront the principctl borrower in respect of a loan by a foreman and .tr tcred fi-om thc surctv ovtirtg to the defaltlt of the prtncipal boruov'er, whet l r. such sum or dr:nrund i.s admittt,d or not: and '.{ --, (iii) a ret'usal or failure by a subscribcr, pa.st subscriber or the nctmince. heir or lagal reprcsentolive of a deceased subscribar to tleliver possess/on to (L fbremtut of- lcuul or ony other asset rcsunted hy hint litr brcach o[ conditions of' thc assignncnt. (2) lyherc o v qL{.estion ariscs tts lo vt'lrctlrcr atl} matcr rc.fbrrctl ro lbr thc cmard of tlrc Rcgislrar is a dispttte or not.[or tht' pru posas o-[ sub-scr:tLon (l ), thc' samc shall be decldcd by llte Registrar vhosc decisictn thercot shall fu;final. (3) No Ciril Court shall havc.juriscliclton lo ettertLrin ant stLit or othct procacrlings in respcct ofany dispute reJarrcd to in rub-sutiort (l) ' I 9. Scction 100 of the 20 I 9 Act states " 100. |'he provisions of.this Act shull be in utklttion to and not in derogation of lhe provisions of anv other lan .for thc tiruc being in.[orce- "

20. -fhe primary contention of the leamcd Senior Counsel appearing for the petitioner is that learned respondent No.2 has no jurisdiction to entertain the case since, in terms of Section 64 of the Act, the disputes relating to chit business, shall be referred to, by any of thc parties to the dispute, to Registrar of Chits for arbitration. 2l . Leamed Senior Counsel further contended that that responderlt No.4 obtained the order dated 17.12.2024 by playirLg fraud, and that there is no defrciency of serwice on the paft of the petitioner attracting the jurisdiction of leamed respondent No.2 -n- 12 22 Adrrittedly. tirc order passed by the learned rr ;pondent No.2 dated 11.12.2021 is assailcd befor.e this Courl ir thc monrh of October. 201-t \\,ithout even filing any application fir. :itnclonation of delay nor do rr.e lind any single averment explaining hc r.easons tbr. apploachinq this Courl rvith abnonnal dclay

21. The petilioncr, without availing the alternati e r.enredr, of apploaching thc Slatc or National Consumer Disp tcs Redressal Co,rnrissio. has str-aight ar.vay knocked the doors of tl s court uncier- Article 22(r of the Constitution of India. Even in this :gard, thclc is no averment in tlie atlldavit hled along with the Wr r petition as to whv petitioner has by-passed the said altemative remerL. .

24. Furlher, on perusal of the impugned order, it reflt:, ts that despite granting several ad.iournments, the petitioner failed to ile i1s rvrittcn vcrsion/writtcn arguments or appear before the learrr c[ respondent No.2. Para-6 of the irnpugned order specifically states I at respondent No.:l approached the petitioner for payment of the ch amount, but petitioner postponed the payment by saying one reaso r or other, that respondenr No.4 having understood the difficurties of re petitioner, waitcd till March, 2024, and thereafter petitioner ame rvith a .1 -= l3 proposal of making 50% of the bid amount in the month of April, 2024 and to pay the balance by October, 2024. IL is ilnher recorded in the impugr-red that rvhen respondent No.4 did liot accept thc saicl proposal ol the petitioner and demanded the wholc amounl with interest (O24% p.a. for the delayed period fi-om Augusr, 2023 till date of pa1,ment, the petitioner and its staff threatcncd respondent No..1 u,ith dire consequences and Iatel the petitioner ncither paid the arnount nor responded to the phone calls, thereby causing detlciencv in rendering ser-r,ice to respondent No.4 as per law. -t he said findings recorded by the learned respondent No.2 reflect the attitude of thc petitioner in trying to delay the payment in lavour olrcspondent No.4 25 . 'l he learned National Consumer Dispu tes Redressal Clomrnission, New Delhi in Kovilakam Chits and l-inancial Services Ltd (supra) held as under "6. Section 64(l) reads 'Notwithstanding arything contoined irr trny lat .for the time being in Jbrce...'. There is no dispLttc that Chit l,itnd Act is ct stotute of )982 whereas Consumer Protection is a stat e of 1986, whose Section 3 read as follox's; 'Act not in derogation oJ any other law. The provisions of this Act shall be in addition to and not in derogation of the provisions qf an.,' other lavt lbr the timc bcing inforce'. t4

7. O.P .1 , !9,\(t uas not in.forcc in 1982, ,,t.her.:t': oppr.tsitc is trtLe. 'l ht intcnL ()i the lesisldtion i.; clear that rone dy ,., tlcr C. P A tt rt.t irt ut{ditit,rt to art! lat in.fbrct: trl thal trne . 7'he tot'i.sIon,'t' subsLqLrt'itt lL !t:;l.ttton i.t Cl)-1 in suc:lt u situulio shal rerrklc th. Ttroti.sion ol ttldii. Stuttttt, i c ('hit:J l:und Act, 198)' . It u'as further held that Section 64(3) olthe Act bars tht jurisdiction ol Civil Courl r.r'hcL cas the C'onsuu-rer Forums have been l. :ld to be not a Civil Courr, and that the Chit [rund cases f-all very L r Lch rvithin the arnbit of Consumer l;orums and Chit Fund f-alts withir the definition scr'\rice as deflnecl ir section 2( I )(o) of the Act

26. ln Imperia Structures Limited (supra), the Apc: lour-t held that the question as to rvhether the remedies available tc he consurners undcr the provisions ol the Act would be additiona 'emedies, was considered in Tltirum ugugan Coop. Agriculturul Cre lit Societv Vs. M.Lulithal , tYational Seeds Corpn. Lttl. Vs. ll4. 4udltusudhan Redd1,5 and Virentler Jain l's. Alakananda Coop. r1 'oup Housing Society Ltl.6. lt u.as consistently held that the renr dies available undcr the provisions of the 2019 Act are additional rcrr :dies over and above those under any special enactment and: rteftained the ' (:oor) r sc-'c :os t (:(l r:) : scc ioo ilrr ny u scc ls.t o j application under the 2019 Act. It ivas also held that Section 100 ol thc 2019 Act is akin to Section 3 of the Act and Section 107 the 2019 Act saves all actions taken or purported to have been taken urrdcr thc previous Act of 1986. 21 . Gencrally, the subscribers of the Chit mostly belong to Vliddle lncome Groups, rvho invest their hard eamed money in Chits lbr the pur?ose ol future needs like education of their children, trarriagc. health or house coustruction etc

28. ln the present case on hand, admittedly the petitioner has tailed to appear before the learned respondent No.2 in order to raise any issue r,vith regard to maintainability and after abnormal dclay, has approached this Court without availing the alternative remedy, and the said course of action adopted by the petitioner shows that it is deliberately trying to delay the payment to respondent No.4.

29. On the other hand, the 2019 Act is a consumer friendly and bencficiaI legislation intended to address the grievances of the consumers. Moreover, the action of the petitioner having received the subscription amount, failed to pay the legitimate chit amount in lavour of respondent No.4, cannot be sustained. \- t6

30. 'l-herefore. we hold that the contentions raised )y thc leamed Scnior Counsel appcari.g lbr rhe petitioner that the . :arncd District clor.rsumcr Disputes Redressal co,'r,'rission, Hyde abad-III bars jurisdiction to errtertai, a,1, dispLrte toucliing the Ma r ,ger,ent ol- the Chit Fund business, cannot be acceptecl. On thc t, rer hand, any delrciency ol service a.osc e!'cn under the Act is ar; rnaintainable belorc the lcantcd rcspondent No.2 in vier.v ol tl r settled legal position o1- larr .

31. l'herefbre. u'e clo not tlnd ar,v- reaso, to intcrfc* r ith the order passcd by thc learnccl respondent No.2

32. Accordingly, \[.p No.j2975 ol 2025, with ill connected applications, is disrnissed.'fhere shall be no order as tr) ( lsts. SD/-M. NAGAMANI ASSI iTANT REGISTRAR ,TRUE COPY// JECTION OFFICER To, one fair copy to the HoN'BLE MRS JUSTICE MousHUMr r ,HATTACHARYA (For Her Ladyship,s Kind perusal) & One fair copy to the HON,BLE SRI JUSTICE GADI pRl,, EEN KUMAR (For His Lordship's Kind perusal) '1 . 11 L.R. Copies 2 I[:,Y:fl,ilt3:retary union of lndia, Ministry of Law' JL ;tice and companv The Secretarv, Telanqana Adrrocates Association _ trary, High Court Buildings, Hyderabad- One CC to SRl. NARST REDDy PESARA, Advocate [Ot, 161 3 4

5. Two CCs to GP FOR CIVIL SUPPLIES ,High Court for the State of Telangana at Hyderabad [OUT] 6 Two CD Copies DAN BS /.J r ,{ HIGH COURT DATED:1711212025 ORDER WP.No.32975 of 2025 ) ) L;,'t 1r{E SIA 03 itB zut *sr:rC.!. Z c) J., * DISMISSING OF THE WRIT PETITION, WITHOUT COSTS 6:) i{ t'rtt ' '