REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL  APPEAL NO. 1498 OF 2005

K. Sagar, M.D.,  Kiran Chit Fund ...Appellant Musheerabad

Versus

          A. Bal Reddy & Anr. ...Respondents

J U D G M E N T  

Dr. ARIJIT PASAYAT, J.

1. 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.   

2. 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

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Rs.45,300/- in instalments.  The complainant approached the

District Forum for a direction to the opposite parties to pay

Rs.14,000/- to him.

3. 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

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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.

4. 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

subscribers.

5. 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).    

6. Learned counsel for the respondent No. 1 who appeared

in person took the stand that this issue was no specifically

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raised before the forums below and therefore should not be

entertained.

7. 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  revision

petition.

8. In the aforesaid background, we are of the view that the

issue relating to jurisdiction has to be decided by the forums

first.    

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9. 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.

10. The  appeal  is  allowed  to  the  aforesaid  extent  with  no

order as to costs.

………………………….………..J. (Dr. ARIJIT PASAYAT)

………………………….……….J. (P.P. NAOLEKAR)

New Delhi, June 11, 2008

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