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Judgment
R. Banumathi, J.—These Writ Appeals are preferred against the order of learned single Judge allowing the Writ Petitions in W.P. No.
12530, 12529 and 12531 of 1993 dated 28.09.2000 and thereby quashing the Government Orders confirming the various orders passed by the
third respondent/Deputy Registrar of Chits.
Since all the Writ Appeals arise out of common order involving common issues, all Writ Appeals shall stand disposed of by this common
judgment.
W.A. No. 3114 of 2001: The first Respondent M. Prem Selvi was a subscriber to Chit Nos. 3 and 4 conducted by the Appellant - M/s.
Kalpana Chit Funds, Coimbatore for chit amount of Rs. 1 lakh each. She later withdrew from Chit No. 4 and she bid chit No. 3 for a sum of Rs.
70,000/- and received the prize amount on 27.08.1988 after executing a promissory note. The first respondent paid Rs. 50,000/- only and failed
to pay the balance instalments for Rs. 50,000/-. The Appellant - Chit Company therefore filed a petition for arbitration before the third respondent.
After conducting enquiry, the third respondent passed an award in favour of Appellant - Chit Company and directed the first respondent to pay a
sum of Rs. 53,995/- with interest at 12 percent per annum and costs. As against the order passed by the third respondent, the first respondent filed
Appeal before the Government u/s 70 of Chit Funds Act contending that there is no money due by her to the Appellant. Upon consideration of the
contention of the first respondent and the connected records Government rejected the Appeal filed by the first respondent and dismissed the
Appeal by the Order in G.O.Rt. No. 736 OR & RE Department dated 2.3.1993.
W.A. No. 3115 of 2001: The first respondent V. Madhu was a subscriber to ticket Nos. 12,13, 14 and 15 in the chits conducted by the
Appellant - M/s. Kalpana Chit Funds, Coimbatore. He transferred 3 tickets No. 13, 14 and 15 and subscribing to ticket No. 13 only. He bid
ticket No. 13 for a sum of Rs. 30,000/- and received the prize amount of Rs. 70,000/- on 21.12.1988 after executing a promissory note. The first
respondent paid Rs. 30,000/- only and failed to pay the balance instalments for Rs. 70,000/-. The Appellant - Chit Company therefore filed a
petition for arbitration before the third respondent. After conducting enquiry, the third respondent passed award in favour of Appellant - Chit
Company and directed the first respondent to pay a sum of Rs. 76,095/- with interest at 12% till date of realisation and costs. As against the
Order passed by the third respondent, the first respondent filed Appeal before the Government u/s 70 of Chit Funds Act. Upon consideration of
the contention of the first respondent and the connected records Government rejected the Appeal filed by the first respondent and dismissed the
Appeal by the Order in G.O.Rt. No. 1176 CT & RT dated 21.4.1993.
W.A. No. 3116 of 2001: The first respondent V. Madhu was a subscriber to Chit No. 231/88 conducted by the Appellant - M/s. Kalpana
Chit Funds, Coimbatore for chit amount of Rs. 1 lakh each. He has subscribed 3 tickets viz., Nos. 5, 6, 7 at first. Due to default of subscriptions,
he was removed in two tickets i.e., 6 and 7 and he bid the chit for ticket No. 5 for a sum of Rs. 70,000/- and received the prize amount on
24.6.1988 after executing a promissory note. The first respondent paid Rs. 50,000/- only and failed to pay the balance instalments for Rs.
50,000/-. The Appellant - Chit Company therefore filed a petition for arbitration before the third respondent. After conducting enquiry, the third
respondent passed an award in favour of Appellant - Chit Company and directed the first respondent to pay a sum of Rs. 53,995/- with interest at
12 percent per annum and costs. As against the Order passed by the third respondent, the first respondent filed Appeal before the Government u/s
70 of Chit Funds Act contending that there is no money due by her to the Appellant. Upon consideration of the contention of the first respondent
and the connected records Government rejected the Appeal filed by the first respondent and dismissed the Appeal by the Order in G.O.Rt. No.
1505(CT & RE) Department dated 10.6.1993.
Challenging the orders of the Government in various Government Orders, first respondent(s) have filed the Writ Petitions. Learned single Judge
held that the first respondent(s) have given some cheques and blank promissory notes as security and third respondent - Deputy Registrar of Chits
has not afforded opportunity to the first respondent(s) before passing the order. The learned single Judge further held that since no opportunity was
given to the first respondent(s), there is violation of principles of natural justice. The learned single Judge further held that since the pass books in
respect of chits withdrawn by the first respondent(s) are in the custody of the Appellant Chit Fund, the third respondent ought to have drawn
adverse inference against the Appellant-Chit Fund for not producing the passbooks. Observing that the finding rendered in O.S. No. 2727 of
1990 will have a bearing on the merits of the matter, the learned single Judge quashed the Government Orders and allowed the writ petitions,
which are subject matter of challenge in these writ appeals.
Learned single Judge quashed the Government Orders and allowed the writ petitions mainly on three grounds:- (1) while considering the
appeals, no opportunity was given to the first respondent(s) by the second respondent-Government; (2) without issuing notice u/s 33 of the Chit
Funds Act, 1982, the foreman is not entitled to claim a consolidated payment from a defaulting prized subscriber inasmuch as he makes an attempt
to have effect in writing; (3) the civil suit was filed for return of documents and the judgment will have a bearing on the merits of the claim of the
appellant-chit funds.
Challenging the common Order, Mr. V. Nicholas, learned Counsel for the appellant submitted that the learned single Judge ought to have seen
that the appellant-chit funds have satisfied the authorities regarding compliance of the procedure prescribed under the Act and especially the notice
of demand u/s 33 of the Chit Funds Act. Learned Counsel for the appellant further submitted that as per his instructions, the civil suit in O.S. No.
2727 of 1990 came to be dismissed for default, which was later disposed and the said suit is in respect of some other promissory note, which has
got no relevance to the chits in question bid by the first respondent(s). Learned Counsel would further submit that in any event, even assuming that
no opportunity was given to the first respondent(s)/subscriber(s) by the appellate authority, the learned single Judge ought to have remitted the
matter back to the second respondent/appellate authority and was not justified in quashing the Government Orders.
We have heard Mr. K.S. Karthick Raja, learned Counsel for the first respondent(s)/subscriber(s). Learned Counsel has submitted that the
mandatory requirement of issuing notice of demand u/s 33 of the Chit Funds Act was not followed and no notice of demand was issued by the
appellant-chit funds and the learned single Judge rightly quashed the orders of the appellate authority for non-compliance of Section 33 of the Chit
Funds Act. Learned Counsel would further submit that as per Rule 59(3) of the Chit Funds Rules, 1984, the appellate authority ought to have
conducted an independent enquiry with reference to the records examined and absolutely no opportunity was given to the first
respondent(s)/subscriber(s), who filed appeals, challenging the orders of the third respondent/Deputy Registrar of Chits and in view of violation of
principles of natural justice, the learned single Judge rightly quashed the orders of the appellate authority.
Section 33 of the Chit Funds Act stipulates a foreman to issue a written notice to demand future subscriptions. u/s 33 of the Chit Funds Act, a
foreman shall not be entitled to claim a consolidated payment from a defaulting prized subscriber u/s 32 unless he makes a demand to that effect in
writing. Learned Counsel for the appellant-chit funds has drawn our attention to additional typed set of papers filed by the appellant and submitted
that in C.F.C. No. 29/90 and C.F.C. No. 30/90, the notice contemplated u/s 33 of the Chit Funds Act was issued while so, the learned single
Judge was not right in observing that no notice of demand was issued. Taking us through various claim petitions filed by the appellant-chit funds,
the learned Counsel has also submitted that the notice of demand in writing as contemplated u/s 33 was issued and the third respondent/Deputy
Registrar of Chits was satisfied as to the compliance of the provisions u/s 33 of the Chit Funds Act, while so, the learned single judge was not right
in saying that the mandatory provisions u/s 33 of the Chit Funds Act was not complied with.
Per contra, learned Counsel for the first respondent(s)/subscriber(s) has drawn our attention to the order passed by the third respondent in
C.F.C. No. 29/90 (pertaining to W.A. No. 3110/2001) and submitted that the order does not reflect filing of the notice in writing issued u/s 33 of
the Chit Funds Act. It was further submitted that the orders passed by the third respondent in other claim petitions also do not reflect the filing of
Section 33 notice and the compliance of the provisions u/s 33. We are not inclined to go into the question whether the appellant-chit funds issued
notice in writing u/s 33 of the Chit Funds Act and we do not propose to express any opinion on this issue since on the question of non-affording of
opportunity to the first respondent(s)/subscriber(s), we remit the matter to the appellate authority/second respondent.
In sofar as the question of non-affording of opportunity to the first respondent(s)/subscriber(s) who preferred appeals before the appellate
authority/Government, referring to the contention of the first respondent(s)/subscriber(s), learned Counsel for the first respondent(s)/subscriber(s)
submitted that no opportunity was actually afforded to the first respondent(s)/subscriber(s) by the appellate authority. As per rule 59(3) of the Chit
Funds Rules, the appellate authority on the basis of the enquiry conducted and with reference to the records examined and pass such order as may
deem just and reasonable. Though the appellate authority/Government has referred to the contention of the appellant, in our considered view, it
would have been in order if the appellate authority has afforded reasonable opportunity to the first respondent(s)/subscriber(s), who preferred
appeals before the Government u/s 70 of the Chit Funds Act. We are of the view that the appellate authority/second respondent ought to have
afforded an opportunity to the first respondent(s)/subscriber(s) and ought to have independently arrived at the conclusion with reference to the
enquiry and with reference to the records examined. Since no opportunity was afforded to the first respondent(s)/subscriber(s) who preferred
appeals, the matter ought to have been remitted back to the appellate authority. Merely because there was non-affording of opportunity the
learned single judge was not right in quashing the entire Government Orders. In our considered view the order of the learned single Judge cannot
be sustained and the matter has to be remitted back to the appellate authority/second respondent for considering the matter afresh after affording
reasonable opportunity to the first respondent(s)/subscriber(s) as well as to the appellant-chit funds.
For the foregoing reasons, the order of the learned single Judge in W.P. No. 12530, 12529 and 12531 of 1993 dated 28.09.2000 is set aside
and these writ appeals are allowed. The matter is remitted back to the second respondent/State of Tamil Nadu and the second respondent is
directed to consider the appeals preferred by the first respondent(s)/subscriber(s) afresh after affording reasonable opportunity to the first
respondent(s)/subscriber(s) as well as to the appellant-chit funds M/s. Kalpana Chit Funds and after affording opportunity to both parties, the
second respondent shall dispose of the appeal as expeditiously as possible and pass orders. In the circumstances of the case, both parties are
directed to bear their own costs.