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Judgment
The present revision petition has been filed by the petitioner/complainant seeking setting a side of the order of the State Commission dated 14.12.2017 in first appeal No.217/2016 of the respondent.
The brief facts of the case are that the petitioner had joined a chit fund bearing No.LTO11XR-16 consisting of 50 members organized by the respondent of an amount of Rs.10 lakhs commencing from May, 2014. He continued to pay monthly subscription without any fail. The complainant/petitioner participated in the auction conducted by the respondent on 27.7.2014 and purchased it for Rs.6 lakhs. The respondent directed him to collect the necessary forms for submission of the sureties. He submitted surety form signed by three members who were Government employees but it was not accepted. He also submitted the title deed in respect of his agriculture property situated at Pedakancharla village in Vinukonda mandal alongwith incumbrance certificate. Despite that the chit fund amount of Rs.6 lakhs was not disbursed to him. He thereafter submitted other sureties. Yet the amount of Rs.6 lakhs was not released to him. He issued a legal notice which was not replied by the respondent. The petitioner/complainant, however, continued to pay the monthly instalments regularly and filed the complaint before the District Forum.
In the written version the respondent took the plea that since the petitioner/complainant could not produce sufficient sureties, the amount of Rs.6 was not released to him. It was further submitted that sureties submitted by the complainant had to be to the satisfaction of the respondents. Since the petitioner could not submit the requisite sureties, the amount of Rs.6 lakhs was deposited in a separate account in the approved bank in terms of the procedure stipulated in the Chit Funds Act and this fact was intimated to the complainant/petitioner vide letter dated 23.8.2014. The complainant/petitioner, however, continued submitted sureties which were found insufficient since the sureties were found defaulters in the other chit fund case by the opposite party and, therefore, the surety forms were rejected and complainant/petitioner was asked to furnish fresh sureties, vide letter dated 30.12.2014. It is submitted that it is under these circumstances the money could not be released to the petitioner and therefore, there was no deficiency in service on their part.
Parties led their evidences before the District Forum. After hearing the arguments of the learned counsels of the parties and perusing the evidence and documents place on record, the District Forum concluded that there was deficiency in service on the part of the respondent and issued following directions: -
"With the above said discussion and under the facts and circumstances of the case, we are of the considered opinion that the complainant is entitled for the bid amount of Rs.6,00,000/- with interest from the date of demand i.e. 20.12.2014 till realization and costs of this complaint from the opposite parties as the purpose of bidding in the chit auction for a loss of Rs.4,00,000/- out of Rs.10,00,000/- chit amount was not served Point No.3: In the result, the complaint is allowed in part, directing the opposite parties to disburse the bid amount of Rs.6,00,000/- vide Chit No.LTO11XR-16 dt. 27.7.2014 with interest @ 18% p.a. from the date of demand i.e. 20.12.2014 till realization to the complainant. We further direct the opposite parties to pay Rs.5,000/- towards the cost of the complaint to the complainant. Time for compliance is two months from the date of this order."
This order was impugned by the respondent before the State Commission. The State Commission after hearing the parties and perusing the record concluded that there was deficiency in service on the part of the respondent. It, however, partly allowed the appeal and issued following directions: -
It is true that the District Forum ought not to have granted interest for the past period from 20.12.2014 till realization. But there cannot be any dispute that the Forum has discretion to award interest pendentelite and future interest on the basis of the principle of Section 34 Civil Procedure Code. However, we find the rate of interest at 18% is excessive in this case since the appellant had already deposited the amount in a separate account and is willing to release the same on proper sureties. We are therefore of the opinion that the rate of interest should be reduced to 6%.
For the foregoing reasons we allow the appeal in part. The order of the Forum is modified reducing the rate of interest to 6% from 18% payable from the date of complaint i.e. 11.2.2015 till realization. Time for compliance is two months. No costs."
This order is impugned by the petitioner/complainant before us praying that the impugned order be set aside.
It is argued that the State Commission has wrongly reduced the rate of interest from 18% to 6% without any basis and no compensation for the deficiency in service on the part of the respondent has been awarded to him. It is submitted that the compensation granted by the District Forum @ 18% was, in fact, for compensating the complainant and the State Commission had committed illegality in reducing the rate of interest without granting any compensation. It is also argued on behalf of the petitioner that they had regularly paid all the monthly instalments and therefore they had paid a total amount of Rs.10 lakhs towards the chit fund and had never defaulted.
Learned counsel appearing on behalf of the respondent argues that since they had already deposited the money as per the agreement with the approved bank therefore the reduction in the rate of interest is justified. Learned counsel for the respondent submitted that the petitioner had filed an execution petition for execution of the order of the District Forum and during the pendency of the execution petition, the impugned order has been passed and pursuant to the impugned order they had already deposited the entire decretal amount which included Rs.6 lakhs plus interest calculated @ 6% on 9.3.2018 and has submitted that they are not entitled to pay any interest for any period beyond that date as they had already complied with the direction of the State Commission. It is further argued that in the facts and circumstances of the case the grant of 6% interest was justified and the impugned order does not suffer from any illegality or infirmity and the revision petition be dismissed.
We have heard learned counsel for the parties and gone through the documents placed on record. There is a concurrent finding on the fact that there was a deficiency in service on the part of the respondent. The only issue for consideration is whether the reduction of the interest from 18% to 6% p.a. by the State Commission is justified or not. It is apparent from the orders of both the Fora below that 18% interest had been awarded as compensation for the deficiency in service on the part of the respondent. Learned counsel has drawn our attention to clause 2 of the Chit Fund Agreement between the parties wherein the respondent had made themselves entitled to charge interest @ 18% p.a. in case of default in payment of subscription by the chit fund holder. In view of the fact that the contract permits the respondent to charge interest @ 18% in case of default i.e. deficiency on the part of the chit fund holder, when deficiency in service on their part stands proved, they are also liable to pay compensation @ 18% p.a. In view of this, we are satisfied that the reduction in the rate of interest without giving any reason for doing so and also without giving any compensation for the deficiency in service and mental agony, the State Commission has committed illegality. Learned counsel for the respondent has also argued that under clause 10 they were entitled to pay interest @ 12%. This argument is not valid for the simple reason that the interest in this case is not interest on the principal amount but it is byway of compensation. In view of this fact, the impugned order of the State Commission is set aside and the order of the District Forum is restored. It is, however, made clear that the respondent has to pay interest @ 18% till the date he deposited the money with the State commission towards satisfaction of the decree passed by the State Commission.
With these direction, the revision petition stands disposed of.