JUDGMENT :

1. Assailing the judgment and decree, dated 09.08.2006, passed in O.S.No.110 of 2003 on the file of learned Additional Senior Civil Judge, Tenali, defendant filed the present appeal.

2. For the sake of convenience and brevity, the parties herein are referred to as per their array in the O.S.No.110 of 2003.

3. Plaintiff is a company registered under the Companies Act and carrying on chit fund business; that on 20.12.2022, defendant No.1 joined as member of chit NLD 02; that defendant No.1 was also allotted ticket No.6; that defendant No.1 agreed to subscribe Rs.10,000/- per month before tenth of each month payable in fifty equal monthly instalments; that in the auction conducted on 26.05.2002, defendant No.1 participate and became highest bidder for Rs.2,75,000/-; that defendant No.1 received the bid amount; that defendant No.1 paid Rs.50,000/- and thereafter did not pay the balance amount; that defendant Nos.2 and 3 stood as guarantors and executed guarantee agreement; that the defendants executed promissory note; that defendant No.1, as stated supra received Rs.2,75,000/- on 19.06.2022 under receipt Nos.15312 to 15317; that defendant No.1 committed default in payment of the instalments; that defendant Nos.2 and 3 is co-extensive with defendant No.1.; that the defendants are liable to pay the suit amount. Hence, the suit is filed.

4. The defendants filed written statement and admitted with regard to defendant No.1 being member of the chit; that due to sudden demise of her husband, defendant No.1 could not visit the plaintiff office to pay subscription; that in July, 2003, defendant No.1 approached the plaintiff for payment of arrears of subscription with an understanding that the plaintiff promised to appropriate the amount; defendant No.1 was also member in two other chits; that plaintiff promised to appropriate the amounts into the suit filed by the plaintiff; that under three tickets, the plaintiff is having an amount of Rs.2,80,000/- of defendant No.1; that by misrepresenting plaintiff, obtained signatures of defendant Nos.2 and 3; that defendant Nos.2 and 3 never stood as guarantors; that plaintiff did not follow the procedure under Chit Funds Act and eventually prayed to dismiss the suit.

5. Basing on the above pleadings of both the parties, the trial Court framed the following issues for consideration:

1. Whether plaintiff is entitled to suit claim?

2. To what relief?

6. During course of trial, PW1 was examined on behalf of the plaintiff company and Exs.A1 to A22 and Exs.X1 and X2 were marked. On behalf of the defendants, defendant No.1 examined herself as DW1 and got examined DWs2 and 3, but no documents were marked.

7. The trial Court, on consideration of oral as well as documentary evidence and legal aspects, decreed the suit with costs by the judgment and decree, dated 19.08.2006 and directed the defendants to pay interest at 12% per annum from the date of the suit till the date of decree and thereafter interest at 6% per annum on principal amount of Rs.4,50,000/-. Aggrieved by the said judgment and decree, the above appeal is filed.

8. Heard M.V. Suresh, learned counsel for the appellant/s and Sri K. Sankaraiah, learned counsel for the respondent.

9. Learned counsel for the defendant No.1/appellant contends that respondent company did not follow the mandatory provisions of A.P. Chit Fund Act, 1971. He contends that respondent failed to comply with Sections 3, 5 and 8 of Chit Funds Act and relevant Rules. He contends that plaintiff did not obtain certificate of commencement of business and there are interpolations on promissory note and eventually prayed the Court to allow the appeal and set aside the judgment and decree of the trial Court.

10. Learned counsel for the respondent supported the judgment and decree of the trial Court.

11. From the above contentions, the following points arise for consideration in this appeal:

1. Whether respondent/plaintiff adhered to the provisions of AP Chit Funds Act?

2.