IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.N.KRISHNAN MONDAY, THE 30TH AUGUST 2010 / 8TH BHADRA 1932 AS.No. 571 of 1996() -------------------- OS.257/1988 of ADDL.SUB COURT,KOTTAYAM .................... APPELLANT(S)/PLAINTIFF: ---------------------------------- MUTHOOT CHIT FUNDS, CENTRAL OFFICE, KOZHENCHERRY, REPRESENTED BY ITS MANAGING PARTNER MATHEW M. THOMAS, RESIDING AT MUTHOOT HOUSE, KOZHENCHERRY. BY ADV. SRI.K.JAJU BABU,K.P.PHILIP RESPONDENT(S)/DEFENDANT: ---------------------------------- K.A. ABDUL RASHEED, KUTTISSERIL HOUSE, KARAPUZHA, KOTTAYAM. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 30/08/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: M.N. KRISHNAN, J. = = = = = = = = = = = = = = = A.S. NO. 571 OF 1996 = = = = = = = = = = = = = = = Dated this the 27th day of January , 2011. J U D G M E N T This appeal is preferred against the judgment and decree passed by the Addl. Sub Judge, Kottayam in O.S.257/98. The suit is one for realisation of the amount due under a chit transaction. It is the case of the plaintiff that the defendant had joined a kuri conducted by the Faridabad Branch of the plaintiff and had bid it in auction on the 12th instalment and thereafter had executed documents including a promissory note for payment of the future instalment as security and that he had paid the instalments upto to 30th and thereafter has committed the default. Therefore the plaintiff has prayed for a decree. A.S. 571 OF 1996 -2- 2. The defendant on the other hand would contend that he has not joined any kuri but he has taken a loan of Rs.50,000/- and had paid the amount and further the kuri was conducted in the State of Kerala which was not registered under the provisions of the Kerala Chits Act and therefore the suit is not maintainable and it is liable to be dismissed. 3. In the trial Court PW1 and DW1 were examined. Exts.A1 to A8 were marked. On an analysis of the materials the trial court found in favour of the plaintiff regarding the joining of the chitty but dismissed the suit on the ground that the chitty is not registered under the provisions of the Kerala Chit Act and therefore the suit is not maintainable. It is against that decision the plaintiff has come up in appeal. A.S. 571 OF 1996 -3- 4. Though notice was served on the respondent he has not turned to contest the appeal. The point that arises for determination in the appeal is whether the trial court was justified in dismissing the suit. 5. It has to be remembered that the definite case of the plaintiff is to the effect that the defendant has joined in a kuri conducted by the Faridabad Branch of the plaintiff and had bid it in auction and had promised to pay the balance instalments due under the kuri. Ext.A2 is the variyola. It is very clearly stated in the variyola that the chit is started from the Faridabad Branch dated 24.12.84. After the kuri was bid in auction certain other documents were also executed in this case. A.S. 571 OF 1996 -4- 6. Ext.A3 is a certificate relating to the Registrar of the firm and Ext.A4 is the promissory note executed in favour of Mutthoottu Chit Fund, Faridabad Branch. Ext.A5 is also executed in favour of Mutthoottu Chit Fund, Faridabad Branch. Ext.A6 also relates to Faridabad Branch. Therefore these documents are executed by the defendant to the Faridabad Branch. While he was examined also he had admitted in page 5 of the deposition that it is written in Ext.A2 that the chit is from Faridabad Branch. The defendant knows Malayalam. Similarly he also admits that in other documents as well the place Faridabad is shown. Therefore the defendant has not entered into a contract with blind eye but had singed in documents which relates to the chit commenced at Faridabad. When a chit is commenced at a place in A.S. 571 OF 1996 -5- Faridabad wherein the Kerala Chit Act is not applicable, the provisions of the Kerala Chits Act cannot be extended to such transactions. As early as in 1994 (2) KLT 353 John v. Oriental Kuries Ltd the Hon'ble judge of this Court had an opportunity to deal with the this question and His Lordship had made it very clear that S.3 (1) of the Act i.e. Chitties Act of 1975 applies only to kuries started in Kerala and has no application to a kuri started outside Kerala. Further even then a kuri is started in violation of the provisions under Section 3, in the decision reported in 1999 (2) KLT 512 Nadarajan v. Nadarajan this Court held that the commencement of such a kuri is not void so as to make a suit not maintainable. The same dictum has been followed by another learned judge of this Court in the decision reported in 2009 (4) A.S. 571 OF 1996 -6- KLT 786 (Employees Kuries Ltd. v. Claramma). It is stated therein that “Chit conducted without previous sanction of State Government or Authorized officer without registration is not void or illegal but violation of S.4 invites penal consequences.” 7. Further in order to make the provisions of the Kerala Chit Act applicable especially S.3 the words used are 'started and conducted'. So unless the kuri is started and conducted in the State of Kerala the bar of S.3 is not attracted. 8. Here is a case where admittedly from the document which are available the kuri is started by the Faridabad Branch of the plaintiff and even if the money is received in Kerala it will not amount to starting and conducting so as to attract S.3 of the Act. Therefore from the materials available I have absolutely no A.S. 571 OF 1996 -7- hesitation to hold that materials are sufficient to hold that the kuri is commenced at the place Faridabad which is not within the Kerala State and it is not started and conducted in Kerala and even if started and conducted in Kerala it is not void. Therefore the trial court's finding to the contra is incorrect and therefore it requires interference. From these discussions I find that the suit is maintainable. 9. The plaintiff has bid the kuri at the time of 12 instalment. He was liable to pay the balance instalment. It is admitted that he has paid the instalment up to 30th and therefore has committed default after the period of the entire instalment. Now the suit is instituted for the realisation of the balance amount due which is perfectly maintainable and therefore the plaintiff is entitled to the relief as prayed A.S. 571 OF 1996 -8- for. The defence case of Rs.50,000/- as rejected by the trial court has to be upheld as well. In the result the appeal is allowed and the judgment and decree of the lower Court are set aside and the suit is decreed and the plaintiff is given a decree for realisation of Rs.30,960/- with 12% interest on the sum of Rs.27,500/- from the date of suit, i.e. 7.10.88 till 25.12.95 and at the rate of 6% from 25.12.95 till realisation from the defendant and his assets with costs. The plaintiff is directed to suffer his own costs in the appeal. M.N. KRISHNAN, JUDGE. ul/- A.S. 571 OF 1996 -9- M.N. KRISHNAN, J. = = = = = = = = = = A.S. No. 571 OF 1996 = = = = = = = = = = = J U D G M E N T 27th January, 2011.