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1999 Supreme(AP) 857
Andhra Pradesh High Court
Judges : B.SUDERSHAN REDDY
Margadarsi Chit funt Pvt.Ltd., Hyderabad - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 09-28-99
Headnote:AP Chit Funds Act, 1971 - -Secs 12(2), 13(1) (b),14(4) and AP Chit Fund Rules, Rule 3,Clauses (16 & 17) - Scope and amplitude of Sec13(1) (b)&14(4) - Provisions of the Act are regulatory in nature - In order to interpret a law, one must understand background and purpose for which the law was enacted - Expression, "commission" or "remuneration" - Meaning of - Foreman not entitled to collect any amount for meeting expenditure connected with the execution of Chit agreement and also not entitled to appropriate amount for payment of a particular demand other than prescribed commission and remuneration - No Foreman is entitled to receive or appropriate to himself any amount other than the commission or remuneration not exceeding 5% of Chit amount - Rule 16(3) does not confer any right to Foreman to collect from subscribers, amounts incurred by him for running Chits
Refusal by Officer concerned in pursuance of Government Memorandum to register bye-law, unless relevant bye-law dealing with procedure for meeting the expenditure relating to execution of chit agreement deleted from proposed bye-law submitted by registration - Justified - Bye law can not be equated to that of statute or statutory rules - If there is any conflict between statute and subordinate legislation, statute prevails over subordinate legislation
( 1 ) THESE writ petitions may be disposed of by a common order, as the question that arise for consideration in all these writ petitions is one and the same.
( 2 ) THE petitioners are the companies/ firms. They are doing chit fund business in the State of Andhra Pradesh. The details of each one of the petitioner and particulars of their business activity and the number of branches they have in the State of Andhra Pradesh need not be noticed as such details may have no bearing whatsoever on the question that falls for consideration.
( 3 ) THE petitioners in this batch of writ petitions are aggrieved by the proceedings issued by the 1st respondent-Government of Andhra Pradesh dated 4-6-1992 contained in the Memo No. 78348/regn. II-2/91-92 which is purported to be in the nature of clarification issued at the instance of the 2nd respondent-Director of Chits and Inspector General of Registration and Stamps. Since the whole controversy revolves around the said Memo, it may be appropriate to notice the said memo: GOVERNMENT OF ANDHRA PRADESH REVENUE (REGN-II) DEPARTMENT Memo No. 78348/regn-II-2/91-92 Dated 4-6-1992 Sub: A. P. Chit Fund Act 1971 Registration of the Bye-Laws of the chit - Incorporation certain clauses some amounts from the subscribers-Clarification - Regarding. Ref: From the I. G. of Registration and Stamps, Lr. No. CF/24005 of 1991 dated 4-6-1991.----- The attention of the Inspector General of Registration and Stamps, is invited to his reference cited and he is informed that clause (16) of Rule 3 provides for the procedure to be adopted for meeting the expenditure connected with the execution of chit agreement etc. , but the said provision does not empower the foreman to levy and collect any excess quantum of amount provided in Section 13 (1) (b) of the said Act. Subsection (4) of Section 14 clearly puts an embargo on the foreman not to appropriate for himself any amount in excess of what is entitled to under clause (b) of Section 13 (1 ). In view of the above, the collection of any amounts in excess of what is provided in Section 13 (1) (b) is clearly violative of the provision of the said Act and the Foreman of the Chit Company cannot collect the amounts of excess of what is provided in the said Act basing on clauses (16 and 17) of the Rule 3 as those clauses do not specifically empower the foreman to collect the amount in excess of what the Act provides. The Inspector General of Registration and Stamps is requested to take further course of action in the matter accordingly. T. Gopal Rao Secretary to Government. The 2nd respondent-Director of Chits and Inspector General of Registration and Stamps, Andhra Pradesh, Hyderabad in turn while communicating the said memo issued by the Government, instructed all the concerned to implement the said memorandum and (sic with) strict compliance.
( 4 ) IT is evident from a bare reading of the impugned memorandum that according to the respondents that neither the A. P. Chit Funds Act, 1971 (for short the Act ) nor the A. P. Chit Fund Rules, 1971 (for short the Rules ) authorise the foreman to levy and collect any excess quantum of amount other than what is provided under Section 13 (1) (b) of the Act. In nutshell, according to the 1st respondent-Government, the rules do not empower the foreman to levy and collect any excess quantum of amount otherwise than what is provided under Section 13 (1) (b) of the Act. It is the case of the petitioners that sub-rule (16) of Rule 3 of the said Rules is an enabling provision entitling the foreman to collect the expenses from the subscribers, which the foreman may incur relating to and conduct of the chit in the manner shown in the Bye-laws which are subject to the scrutiny and approval of the Registrar of Chits. The expenditure incurred by the foreman relating to and conduct of the chit has nothing to do with the commission or remuneration as provided for under Section 13 (1) (b) of the Act. It is the case of the pet
