Case: Kerala State Fin. Entps Vs. Jacob Alexander

The plaintiff filed the suit for a direction to the State of Kerala as well as Kerala State Financial Enterprises Limited. Trichur to pay the amount due as the plaintiffs share from the unpaid auction discount with interest. The plaintiffs case in nutshell is that the defendant no. 2 was conducting a kuri which started on 17.3.1972 and terminated on 17.7.1980. The kuri had 200 tickets each with four divisions, viz., A, B, C and D and the total amount of a ticket was Rs. 50,The subscription for a ticket per month was Rs.In all (Rs. 200 for A Division, Rs. 150/for Division) there were 100 such instalments and 1018 subscribers. On each instalment two tickets were prized, one by lot and the other by auction. In case of prize by lot Rs. 5, 000/will be deducted as fixed discount and Rs. 45, 000/will be paid to the prized subscriber. Out of the fixed discount of Rs.5,Rs. 2, 500/would go as commission for the foreman and balance Rs. 2, 5000/would be divided among the subscribers in proportion to their share. In case of auction, the subscriber who bids for the maximum reduced amount would be prized and he would get an amount of Rs. 45, 000/less the auction deduction. The auction discount of all the divisions will be pooled together and would be divided among the subscribers. This auction discount is paid to those subscribers who pay the subscriptions promptly. A prized subscriber loses the sh are of the discount on default of payment of even one instalment. Asubscriber would lose the share of auction discount if he defaults three or more instalments consecutively. The conduct of kuries is governed by the Cochin kuries Act VII of 1107 (hereinafter referred to as the Act). The plaintiff was a subscriber to Division A and Division B of the ticket and paid all the subscriptions promptly and regularly. But even after the termination of kuri plaintiff was not pa id the proportionate share of unpaid auction discount, he filed the suit. Since the entire information remained with the foreman, the plaintiff expected to get Rs. 4, 000/and on the said amount he also calculated interest @ 12% per a nnum and filed the suit.The defendant no. 2 contested the suit taking the stand that the kuri Vaimpu stipulate that the auction discount lost by the subscriber is to be divided among prompt subscribers and prompt suscribers are only entitled to t he forfeited dividend as mentioned in clause 8(c) of the Vaimpu. According to defendant no. 2 the subscribers are entitled to get the amount as per the Vaimpu and since the Vaimpu does not contain any provision for distribution of the auction discount lost by a subscriber. The plaintiffs claim is untenable. Defendant no. 1, State of Kerala filed written Statement stating that the State is not a necessary party and State has nothing to do with the kuries conducted by defendant no. 2. On these pleadings the learned Trial Judge framed as many as six issues and on examining the relevant provisions of the Act as well as the Vaimpu and on examining the materials on record came to the conclusion that the foreman cannot claim anything more than what is specifically provided in the Vaimpu and under the Vaimpu the foreman can have commission as indicated. So far as amount of forfeited discount in respect of thesubscribers is concerned the learned Trial Judge came to the conclusion that in the absence of any specific provision either in the Act or in the Vaimpu and since the foreman cannot take or appropriate the amount more than what is provided for in the Vaimpu, the same should be distribu ted among the prompt subscribers on the termination of the kuri.On examining the documentary evidence on record the court came to the conclusion that a sum of Rs. 1, 81, 003.35 remained outstanding with the foreman as undivided auction discount and to this amount a sum of Rs. 2.232.87 was to be added and therefore the total amount which remained with the foreman by way of unpaid auction discount was Rs.1, 82, 667.94 and the said amount has to be distributed among the prompt subscribers including the plaintiff. On calculating the number of prompt Subscribers the court came to the conclusion that the plaintiff was entitled to Rs. 41, 247.40. With this conclusion the suit having been decreed, defendant no. 2 preferred an appeal to the High Court of Kerala.The Division Bench which initially heard the appeal being of the opinion that it raises a substantial question of law, referred the matter to a Full Bench. The question formulated by the Division Bench for being answered by the Full Bench was "Whether the discount forfeited by thesubscribers is liable to be distributed among the prompt and regular subscribers?" The Full Bench having considered the different provisions of the Act as well as the Vaimpu and taking into account the fact that the foreman has no right to retain any amount other than the commission or remuneration fixed under the Act and the Vaimpu, came to hold that the caution discount forfeited by thesubscribers also will have to be distributed after the termination of the kuri in proportion to the share of the ticket. to the subscribers who have remitted regularly the installment amounts till that date. With the aforesaid finding the appeal having been dismissed and the judgment and decree of the Principal Subordinate Judge, Trichur having been confirmed, the present appeal by special leave has been preferred.

Reasoning:
Even though notice had been duly served on the plaintiff respondent but since the plaintiff did not appear either in person or through counsel and in view of the importance of th e matter we thought it appropriate to take the assistance of a counsel and Mr. Sitaramiah, learned senior counsel agreed to render assistance to thein mind what has been stated by this court in the aforesaid case with regard to the manner in which the foreman exploits the subscribers and on examining the provisions of the Act and the Vaimpu referred to earlier, we have no hesitation to come to the conclusion that a foreman is only entitled to the commission as is provided in the vaimpu and is not entitled to anything more. In view of the specific language used in clause 8(c) of the vaimpu, the amount of auction discount has to be distributed among all the subscribers in proportion to their ticket share. We are further of the view that the forfeited discount ofsubscribers will have to be distributed among the subscribers who have remitted their subscriptions regularly.It is true that there is no specific provision in the vaimpu but since under the Act and the vaimpu the entitlement of the foreman has been indicated and the foreman cannot take anything more than what is provided for and therefore the amount has to be distributed among the regular subscribers. In our considered opinion, the Full Bench of the Kerala High Court rightly answered the question and we do not find any legal infirmity in the same.