The Supreme Court of India Civil Appellate Jurisdiction Civil Appeal No. 1498
Sagar, M.D., Kiran Chit Fund Musheerabad Versus A. Bal Reddy & Anr.
ARIJIT PASAYAT, J.
Challenge in this appeal is to the order passed by the National Consumer
Disputes Redressal Commission, New Delhi (in short the `National
Commission'). Before National Commission challenge was to the order passed by
the Andhra Pradesh State Consumer Disputes Redressal Commission, Hydrabad (in
short the `State Commission'). By its order dated 19.6.2001 the State
Commission allowed the appeal filed by the respondent No.1 (hereinafter
referred to as the Complainant'). The District Forum II Hyderabad had
dismissed the complaint filed by the complainant.
Factual scenario giving rise to the revision before the National Commission is
as follows: The complainant joined as a member in Chit Fund Co. of which
opposite party No. 1 is the Managing Director and opposite party No. 2 is the
manager. The present appellant was running a chit for Rs.1 lakh with monthly
payment of Rs.5,000/- for 20 months in the year 1995. He was a prize bidder
subscriber. He was paid Rs.60,000/- by cheque. The complainant defaulted after
paying for 11 months from January, 1996. When the present appellant issued a
notice to him demanding an amount of Rs.79,300/-, the complainant replied that
out of the chit amount of Rs.70,000/-, the present appellant paid only
Rs.60,000/- and the balance of Rs.10,000/- was payable to him with
interest and that since he paid Rs.54,700/- already, he is ready to pay the
balance of 2 Rs.45,300/- in instalments. The complainant approached the
District Forum for a direction to the opposite parties to pay Rs.14,000/- to
Though the appellant i.e. Kiran Chit Fund accepted membership of the
complainant to the Chit Fund, it took the stand that the prize amount has been
paid to M/s Kiwanis Finance Pvt. Ltd. as per the authorization letter of the
complainant an no due certificate was also given to the complainant. There
was exchange of affidavits. The District Commission proceeded on the basis that
admittedly the commission was a defaulting prized subscriber. It also held that
there was no scope of taking any action on the complaint.Accordingly, the
complaint was dismissed. In appeal, the State Commission took the view
that a sum of Rs.45,300/ was to be paid to the complainant. It took the
view that whether the chit fund was a consumer cannot be adjudicated in the
appeal. Accordingly the appeal filed by the complainant was allowed. The
National Commission was of the view that in the cheque somebody had added some
figures but who did the
mischief was not known. However since somebody has committed the mischief, the
revision petitioner before it cannot be granted any benefit.The revision
petition was accordingly dismissed without cost.
In support of the appeal, learned counsel for the appellant submitted that the
Consumer Forums have no jurisdiction to entertain the dispute between a chit
fund and one of its prized subscribers or between the prized
Strong reliance was placed on a decision of the National Commission in M/s
Dwarkadish Chits Pvt. Ltd. and Anr. vs. Sanju Ram Aggarwal in First Appeal No.
590 of 1992 decided on 13th January, 1995 reported in (1986-96) National
Commission and SC on Consumer Cases 2469(NS).
Learned counsel for the respondent No. 1 who appeared in person took the stand
that this issue was no specifically 4 raised before the forums below and
therefore should not be entertained.
We find that M/s Dwarkadish Chits' case (supra) dealt with the issue of
jurisdiction under the Consumer Protection Act, 1986 (in short the `Act') as to
whether the Consumer Forums established under the Act have jurisdiction to
entertain dispute between the chit fund and one of its prized subscriber or
between the subscribers. It is not correct as contented by the respondent
No. 1 that the question of jurisdiction was not raised. In fact the State
Commissioner observed that since the respondents before it i.e. functionaries
of the chit fund were not consumers, the issue regarding jurisdiction cannot be
adjudicated in the appeal before it. The National Commissioner unfortunately
does not appear to have referred to its earlier decision while dismissing the
In the aforesaid background, we are of the view that the issue relating to
jurisdiction has to be decided by the forums first. 5
We therefore, set aside the impugned order of the National Commission
confirming the order passed by the State Commission, and remit the matter to
the State Commission to consider the question of jurisdiction. To avoid
unnecessary delay let parties appear before the State Commission without
further notice on 7th of July, 2008 so that the date of hearing can be fixed.
We make it clear that we have not expressed any opinion on the merits of the
case. The parties are permitted to produce certified copy of the judgment so
that necessary follow up action can be taken.
The appeal is allowed to the aforesaid extent with no order as to costs.
(Dr. ARIJIT PASAYAT)
P.P. NAOLEKAR) New Delhi, June 11, 2008