M/s. Mayavaram Financial Corporation Limited vs The Registrar of Chits, Karaikal

Maheswaran, J.—The Registrar of Chits, Karaikal, has filed a complaint against the revision petitioner under S.14 of Pondicherry Chit Fund Act, 1966 (hereinafter referred to as the Act).

The allegations are that M/s. Lakshminarayana Industries, represented by one, Alagirisamy was the subscriber in Group A 2 of Mayavaram Financial Corporation, Karaikal. The total amount of group A 2 is for Rs. 1,00,000/- and the monthly subscription is Rs. 1,000/-. At the fourth auction, the said Messrs, Lakshminarayana Industries were declared as the ''prized subscriber.'' That auction was conducted on 9th January, 1976. The said Lakshminarayana Industries offered two sureties and they were rejected by A 1 as it was not to the satisfaction of the Foreman. Under S.14(2) of the Act, the Foreman of the Group A 1 chit fund company should deposit the prized amount into any one of the approved banks, which he has not done. On the other hand, he conducted re-auction on 11th February, 1976. The Foreman has, therefore, contravened the provisions of S.14(a) of the Act, which is punishable under S.56 of the Act. A 2, the Branch Manager was also charged along with A 1 as he was responsible for the improper conduct of the chit.

The learned Sub Divisional Judicial Magistrate, Karaikal, convicted the revision petitioner under S.14(2), read with S.56 of the Act and sentenced him to pay a fine of Rs. 100/- and also directed the revision petitioner to deposit the prize amount of Rs. 42.643 in any approved bank, and ordered A 1, the revision petitioner to allow P.W.1, T.S. Alagirisamy to draw that amount after furnishing sufficient sureties to the satisfaction of the revision petitioner. He, however, found A 2 not guilty and acquitted him. The revision petitioner is aggrieved and has filed this revision petition.

Before me, learned counsel appearing for the revision petitioner, contended that the learned Magistrate was wrong in holding that there was an infringement of S.14(2) of the Act that the reauction held by the revision petitioner is valid and there is no necessity to deposit any amount under S.14(2) of the Act. Certain facts need narration before dealing with this question by the revision petitioner.

M/s. Lakshminarayana Industries is one of the subscribers in A 2 group conducted by A 1 Corporation for a sum of Rs. 1,00,000/-. This industry is represented by P.W.1. The fourth auction was conducted by the Corporation on 9th January, 1976. P.W.1 was the successful bidder in that auction, and he was declared as the prized subscriber. The bid amount was for Rs. 42,643/-. Ex. P.2 is a letter, dt. 10th January, 1976 wherein the Section Head of the revision petitioner Corporation alleges that Lakshminarayana Industries has been declared as a prized subscriber in the fourth auction held on 9th January, 1976. The fact that the said Lakshminarayana Industries has been declared as prized subscriber, admits of no doubt.

The said Lakshminarayana Industries has been advised to furnish sufficient sureties to the satisfaction of the Foreman. Under Ex. P 4 Lakshminarayana Industries furnished the names of two sureties. On 30th January, 1976, under Ex.P 5 the revision petitioner Corporation writes to Lakshminarayana Industries that

unless they make arrangements to receive the prized amount furnishing adequate satisfactory acceptable security on or before 3rd February, 1976 the auction will have to be cancelled and reauction held without any further communication.

It should be noted that the revision petitioner Corporation gave only three days'' time for furnishing fresh securities. On 5th February, 1976, a printed intimation was sent under Ex. P 6 informing Lakshiminarayana Industries that the fourth auction held on 9th January, 1976 and confirmed in favour of P.W.1 has been cancelled due to their failure to provide surety to the satisfaction of the Corporation for payment and that reauction will be conducted on 11th February, 1976. Therefore, P.W.1 wrote a letter to the revision petitioner under Ex. P.7 saying to delete the name and settle the accounts. But, the records do not show that the name of Lakshiminarayana Industries has been deleted. It is under these circumstances P.W. 1 wrote to the District Registrar, Pondicherry, requesting him to take suitable action on the chit company. The Registrar then filed a private complaint out of which this criminal revision has now arisen.

Learned Counsel for the revision-petitioner contended that under S.13(e) of the Act, the Foreman of the revision petitioner has every power to substitute the subscriber in the place of defaulters and hold a reauction under S. 13(f) of the Act. S.13(e) and (f) run thus:-

The Foreman shall be entitled (e) to substitute subscribers in the place of defaulters and (f) to do all other acts that may be necessary for the due and proper conduct of the chit.

In the instant case, P.W.1 is a prized ''subscriber''. The ''prized subscriber has been defined in the Act as a subscriber who has either received or is entitled to the prize amount [S.2(14)]. The ''defaulting subscriber'' has been defined as a subscriber who has defaulted in the payment of subscriptions due according to the terms of the chit agreement. According to the learned counsel appearing for the revision petitioner, Lakshiminarayana Industries represented by P.W.1 has defaulted to furnish proper security, and therefore, is a defaulter within the meaning of S.13(e). A reading of S.13(e) of the Act leaves on me an impression that it relates only to the defaulting subscribers who default in the payment of subscriptions due according to the terms of the chit agreement and not the ''prized subscriber'' for default in furnishing of security. S.13(f) of the Act, in my view, will refer to acts other than what is mentioned under S.13(a) to (e) of the Act. Further, a reading of the whole Act shows that the question of substituted subscriber would arise only in the case of non-prized subscriber under Chapter IV. Prized subscribers are dealt with under Chapter V. There appears to be no provisioning to conduct reauction of the chit in the case of failure of a prized subscriber to furnish sufficient security. On that view, the action of the revision petitioner Corporation in conducting a reauction in pursuance of Ex.P.6 is wrong.

The other question is whether the revision petitioner is bound to deposit the prized amount in any approved bank in accordance with the provisions of S.14(2) of the Act. It is contended for the petitioner by his learned counsel that as Lakshiminarayana Industries is no longer a subscriber and P.W.1 has written that he does not want to be a subscriber any longer and that the accounts may be settled, no question of deposit under S.14(2) of the Act arises. It is true that the letter written by P.W.1 on behalf of Lakshiminarayana Industries states that as the revision petitioner Corporation has lost confidence in them, he has also lost confidence in the revision petitioner and therefore, the name of Lakshiminarayana Industries may be deleted and their account settled. But, the records do not show that the name of Lakshiminarayana Industries has been struck off or deleted from the list of subscribers. There is a clear finding by the learned Magistrate that P.W.1 continues to be one of the subscribers. S. 14(2) of the Act states as follows:-

If owing to the default of the prized subscriber the prize amount due in respect of any drawing remains unpaid before the date of the next succeeding drawing the foreman shall deposit the same forthwith in an approved bank mentioned in the chit agreement and intimate in writing the fact of such deposit to the prized subscriber.

A reading of this S.14(2) will show that in the case of default of prized subscriber the unpaid prize amount due shall be deposited in an approved bank mentioned in the chit agreement and that the fact shall be intimated to the prized subscriber. This is the very thing which the learned Magistrate has now ordered. There is no error of jurisdiction in the Magistrate ordering the prize amount to be deposited in an approved bank and directing P.W.1 to draw the amount if so deposited after furnishing sufficient security to the satisfaction of the revision petitioner. There are no grounds to interfere in this criminal revision.

The criminal revision is dismissed.