1. This Second Appeal is arising out of the judgment dated 23.09.2013 in A.S.No.50 of 2012 on the file of Family Court-cum-Additional District and
Sessions Judge, Karimnagar, which is arising out of O.S.No.178 of 2007 on the file of Senior Civil Judge, Karimnagar.
2. For the sake of convenience, the parties are referred to as arrayed before the trial Court.
3. Heard learned Counsel for the appellants as well as the learned counsel for the respondent and perused the record.
4. The appellants are defendants in the suit. The suit was filed by the plaintiff/chit fund Company represented by its Recovery Officer, for recovery of
an amount of Rs.1,86,232/- with future interest at the rate of 12% per annum from the defendants.
5. The brief averments in the plaint are that defendant No.1 joined the chit fund scheme as a subscriber/member in the month of March, 2004 and was
allotted with Ticket No.3. Defendant No.1 agreed to subscribe the chit at the rate of Rs.10,000/- per month, payable on or before 5th of each calendar
month for 50 instalments and the value of the chit is Rs.5,00,000/-. Defendant No.1 also executed agreement of chit on 24.02.2004 as per the bye-
laws of the Chit Fund Company. Defendant No.1 participated in the auction of chit on 24.09.2006 and agreed to forego Rs.95,500/- out of
Rs.5,00,000/-, which was duly confirmed by the plaintiff-Company. As per the Rules of the plaintiff-Company, in order to draw the amount, the
successful bidder has to furnish the sureties of independent guarantors for due payment of future monthly instalments. Accordingly, defendant No.1
furnished the guarantors (defendant Nos.2 to 4) and has withdrawn the amount of Rs.3,86,720/-. The guarantors also agreed to stand as sureties and
they jointly executed demand pronote for Rs.1,90,000/- on 11.11.2006, accepting the future liability. Later, the defendant No.1 committed default in
paying the instalments from the 33rd instalment which fell due on 05.11.2006 and when the plaintiff-Company approached the 1st defendant, he did
not respond and the Company was constrained to issue legal notice dated 10.05.2007, demanding for repayment of the amount. Inspite of receiving the
notice, the defendants did not give any reply. Therefore, the plaintiff-Company has filed the present suit for recovery of Rs.1,86,232/- from the
defendants and prayed to decree the suit.
6. On the other hand, a detailed written statement was filed by defendant No.1 contending that he was regularly paying the monthly instalments
without any default upto 42nd instalment (August, 2007) through cheques and it is his further contention that the amount of 41st instalment dated
27.06.2007, was adjusted from the interest over the deposit of Rs.3,00,000/- and Rs.1,50,000/-deposited by defendant No.1 with the plaintiff, and
therefore, prayed to dismiss the suit in limini. Further, defendant No.1 has also taken a plea that the trial Curt has no jurisdiction to try the suit, as the
cheques were issued at Nizamabad by the plaintiff-Company.
7. Basing on the pleadings, the trial Court has framed the following issue for trial :
“Whether the plaintiff is entitled for the suit claim ?â€
Later, the following additional issues are also framed:
“1. Whether this court does not have jurisdiction to try the suit ?
2. Whether the suit is prematured and not maintainable ?
3. To what relief ?â€
8. During the course of trial, on behalf of the plaintiff, PWs.1 and 2 were examined and Exs.A-1 to A-9 were got marked. On behalf of defendants,
DWs.1 and 2 were examined and Exs.B-1 to B-70 were got marked.
9. On considering the oral and documentary evidence on record, the trial Court has partly decreed the suit for a sum of Rs.96,354/- in favour of
plaintiff directing the defendants to pay the said amount, charging interest at the rate of 6% per annum on the principal amount from the date of suit till
the date of realisation. It is the specific finding of the trial Court that DW-1 admitted in his evidence that he paid 31 instalments of Rs.8,864/-each as
on 24.09.2006 and the plaintiff has paid the prize amount on 11.11.2006 by way of cheques drawn on SBH, Karimnagar to a tune of Rs.3,86,720/-,
which were encashed by him and that the plaintiff also adjusted instalment Nos.32 and 33 while paying the amount to a tune of Rs.1,71,170/-. The trial
Court also held that no record was produced by the defendants to show that they have paid subsequent subscription since 34th instalment onwards,
therefore, the plaintiff is entitled to recover the amount from the defaulted subscribers/defendants and that the suit is not premature and it is
maintainable.
10. Being aggrieved by the judgment and decree of the trial Court, defendants have filed an appeal in A.S.No.50 of 2012 on the file of Family Court-
cum-Additional District and Sessions Judge, Karimnagar.
11. The first appellate Court, after hearing the appellants and considering the material on record, has framed the following points for consideration:
“1. Whether the plaintiff is entitled for the suit claim and on the otherhand the defendant No.1 is entitled for Rs.1,33,919/- as claimed in the written
statement ?
2. Whether the judgment and decree in O.S.178 of 2007 dt.13-6-2012 of the trial Court is sustainable ?
12. On considering the rival contentions of the parties and material on record, the first appellate Court has dismissed the appeal confirming the
judgment of the trial Court with a specific finding that as far as the decree passed in the suit is concerned, the defendant failed to substantiate any
ground in the appeal and the alleged adjustment pleaded by the defendants cannot be taken into consideration in the suit, as there is no set-off or
counter-claim before the trial Court.
13. Being aggrieved by the judgment of the first appellate Court, this second appeal is filed by the defendants raising the following substantial questions
of law along with the grounds of appeal:
“1. That, the trial court and appellate court failed to take into consideration, that the suit filed by the respondent is not maintainable in law in facts.
2. That the trial Court and appellate Court failed to take into consideration that the suit is not maintainable since the subject chit has not been
conducted as per A.P.Chit Fund Act, 1971, more particularly Section 3, 4, 7 and 8 of the Act.
3. That, the trial Court and appellate Court failed to take into consideration, that the respondent failed to file mandatory documents i.e. registered by-
laws, without which no person shall start or conduct any chit.
4. That the trial Court and appellate Court failed to take into consideration, the appellant has specifically taken a ground that the respondent has not
registered the by-laws of specific Chit and in the Cross examination, PW-1 deposed “I cannot give the reasons for non filing of the by-laws of suit
chit. That the details of payment of dividend are available in the registered by-laws. It is not true to say that, only to suppress the contents of the
registered by-laws, the registered by-laws are not filed into the court.
5. That, the trial court and appellate court failed to take into consideration that the respondent fails to take commencement of chit certificate, in regard
to subject chit, as per law, without the said certificate no person shall commence any auction are draw of any chit.
6. That, the trial Court and appellate court failed to take into consideration that the respondent fails to furnish the copies of registered by-laws and chit
agreement to the subsisting of the chit subscribers which is contravention of the Section 8 of the Chit Fund Act.
7. That, the appellate court mechanically endorsed the judgment and decree passed by the trial court without discussing anything about grounds of
appeal and law.
8. That, the trial court and appellate court failed to take into consideration that the appellate court and trial court fails to give any reasoning for the
adjustment of the money paid to the respondent, even after the respondent admitted the receipt of the same except saying that “these cannot be
taken into consideration of the sameâ€.
9. That the trial court and appellate court failed to take into consideration that admittedly the plaintiff behalf the PW-1 and PW-2 were examined both
the PW-1 and PW-2 admitted and acknowledged the Exhibits B3, B4, B5, B9 [deposit receipts].
10. That, the trial court and appellate court failed to take into consideration that the admitted facts need not be proved.â€
14. This Second Appeal is coming up for admission since 2014 and it underwent numerous adjournments. It is the specific contention of the appellants
that the registered by-laws of the Chit Fund Company were not filed before the Court and that the chit was not conducted as per the A.P. Chit Funds
Act, 1971. But, the above said two questions cannot be considered as substantial questions of law and are not tenable as defendant No.1 himself has
admitted that he is one of the subscribers to the, has entered into agreement of chit with the plaintiff and that the chit was auctioned and he received
an amount of Rs.3,86,720/- after paying 31 instalments. Further, the defendant/appellant also entered into agreement of guarantee under Ex.A-3 along
with defendant Nos.2 to 4. The 1st defendant, after knowing well about the plaintiff’s Chit Fund Company, subscribed to the chit, paid 31
instalments, participated in the auction and received payment of Rs.3,86,720/- from the plaintiff’s Company, and therefore, now cannot question
about the registration of the Chit Fund Company at a belated stage. On perusal of the substantial questions of law, it is evident that they relate to the
findings of factual aspects by both the Courts below, but are not on law. Both the Courts have given a concurrent finding that the appellants are in due
to the Chit Fund Company.
15. The learned counsel for appellants has relied on the judgments of Apex Court in Commissioner & Secretary to Govt., Commercial Taxes &
Religious Endowments Department and others v. Sree Murugan Financing Corporation, Coimbatore and others AIR 1992 SC 1383 and on the
judgment of High Court of Andhra Pradesh in Margadarsi Chit Fund Pvt. Ltd., Hyderabad v. Government of Andhra Pradesh & others
MANU/AP/0718/1999, wherein, their Lordships have held as under :
“when a Foreman starts a chit, under Section 3 he has to apply for registration of the bye-laws. It is only thereafter, he can approach the
subscriber and get the chit agreements as prescribed under Section 5 executed and file them under Section 6. He cannot commence the business till
he secures the certificate under Section 7(2).â€
16. The aforesaid proposition does apply to the facts and circumstances of the present case, as defendant No.1 in this case has not taken the plea
before the trial Court that the Chit Fund Company is not duly registered. If at all defendant No.1 has any grievance against the plaintiff-company, he is
at liberty to take legal action against it for not getting it registered. It is also relevant to mention that the plaintiff-Company has filed the Xerox copy of
Certificate of Incorporation as per Annexure-I, but as it is a Xerox copy, the trial Court has not marked it as an exhibit. Hence, it can be construed
that the plaintiff-Company is registered as per Sections 3 to 5 of the A.P. Chit Funds Act.
17. Learned counsel for the appellants has also relied on the judgments of Hon’ble Supreme Court in Saurav Jain & another v. M/s.A.B.P.Design
& another AIR 2021 SC 3673 and in Bharat Kala Bhandar Ltd. v. Municipal Committee, Dhamangaon AIR 1966 SC 249, wherein, their Lordships
have held as under:
“New grounds can be raised for the first time if it involves substantial question of law, which does not require adducing additional evidence
specifically, one concerning the jurisdiction of the Court.â€
But, the aforesaid proposition is not applicable to the facts of the present Case, as the Apex Court has got plenary jurisdiction under Article 136 of the
Constitution read with its power to do complete justice under Article 142, but not for the High Courts. In the present case, admittedly, the appellants
have not filed any counter-claim or set-off before the trial Court to claim any dues as stated by him.
18. Further, there is limited scope under Section 100 of CPC while dealing with the appeals by the High Courts. In a Second Appeal, if the High Court
is satisfied that the case involves a substantial question of law, then only, the Court can interfere with the orders of the Courts below. On perusal of
the entire material, this Court is of the considered view that the orders of the Courts below are not perverse and there is no misreading of evidence,
and therefore, it is not proper to interfere with the concurrent fact findings of the Courts below, in the absence of substantial question of law.
Therefore, the Second Appeal deserves to be dismissed.
19. In the result, the Second Appeal is dismissed at the stage of admission, confirming the judgment dated 23.09.2013 in A.S.No.50 of 2012 on the file
of Family Court-cum-Additional District and Sessions Judge, Karimnagar. No order as to costs.
Pending miscellaneous applications, if any, shall stand closed.
