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IN THE HIGH COURT OF DELHI
Mini Pushkarna, J.
Umesh Kumar - Appellant
Versus
Abhay Raj Pandey - Respondent
RFA 316 of 2022 & CM Appl. 35468 of 2022
Decided On : 15-12-2022
Important Points
Subject
Civil Law - Contract Law
Headnote
(B) Legal incapacity to recover amounts - The appellant could not substantiate his claim with any documentary evidence and thus, the court upheld the lower court's findings rejecting the claims as unproven. (Paras 10, 12)
Facts of the case:
The appellant engaged in chit fund transactions with the respondent and alleged to have given a friendly loan. The appellant claimed amounts due from the respondent but failed to prove the claims as no registration existed for the chit fund and documentary proof was absent.
Findings of Court:
The learned Trial Court found that the transaction was illegal and void due to non-registration under the Chit Funds Act, hence dismissing the suit for lack of evidence.
Issues: The core issues were whether the appellant's claims were legally valid and whether the necessary evidence was provided to substantiate those claims.
Ratio Decidendi: The court determined that a contract related to an unregistered chit fund is void ab initio and emphasized the necessity of demonstrable proof for claims made in civil suits.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. factual basis of the loan agreement. (Para 1 , 2 , 3 , 4 , 5) |
| 2. contract invalid due to legal prohibition. (Para 6 , 9 , 10) |
| 3. chit funds act must be adhered to. (Para 7) |
| 4. appeal dismissed for lack of merit. (Para 11 , 12 , 13) |
JUDGMENT
[Physical Hearing/Hybrid Hearing]
Mini Pushkarna, J. (ORAL):
1. The present appeal has been filed seeking prayer for setting aside the judgment and decree dated 31.08.2020 passed by Ld. ADJ, North-West District, Rohini Courts Delhi in suit bearing No. 671/17.
2. The case on behalf of the appellant, who was the plaintiff in the suit, is that the appellant was engaged in the business of transportation under the name and style of M/s Vishal Golden. The father of the respondent herein was running a chit fund. The appellant was a member in chit fund of the respondent and made payments for the said purpose. It is the case of the appellant that the respondent demanded Rs. 3 Lakhs from the appellant herein on 23.06.2016 for treatment of his wife for a short period. The respondent assured that he will return the same after taking next chit in his name. Thus, it is submitted on behalf of the appellant that the appellant gave a friendly loan of Rs. 3 Lakhs to the respondent. However, the respondent discontinued the chit on 23.04.2016.
3. It is submitted on behalf of the appellant that he had deposited Rs. 2,05,675/- from 26.06.2015 to 23.04.2016 with the defendant as his share in the chit. Thus, an amount of Rs. 5,05,675/- was due and payable by the respondent as on 23.04.2016. Ld. Counsel appearing for the appellant submits that the appellant demanded the said amount from the respondent, however, the appellant was beaten by the respondent and his brothers. Hence, appellant informed the police and MLC of the appellant was prepared by the doctors. It is submitted on behalf of the appellant that investigation officer (I.O) recorded the statement of the appellant as well as the respondent herein, in which the respondent admitted that he had to pay Rs. 3 Lakhs to the appellant.
4. It is the case of the appellant that on his request, respondent gave a cheque in second week of April 2017 for a sum of Rs. 30,000/- to the appellant and the same was encashed on 03.05.2017. Thereafter, appellant sent a legal notice dated 26.07.2017 to the respondent, but the respondent did not make payment to the appellant. It is in these circumstances that the appellant filed a suit for recovery for a sum of Rs. 6, 18,377/- against the respondent herein.
5. Despite service, no one appeared on behalf of respondent before the Trial Court and the respondent was proceeded ex parte vide order dated 14.12.2017.
6. By the impugned judgment dated 31.08.2020, the learned ADJ, North-West District, Rohini Courts Delhi dismissed the suit of the plaintiff. Perusal of the impugned judgment shows that the learned Trial Court has held in categorical terms that the plaintiff did not file any documentary proof with respect to any amount having been given to the defendant. Even otherwise, the contract between the appellant and the respondent was not permissible in law and is clearly prohibited by the Chit Funds Act, 1982.
7. Reference may be made to Section 4 of the Chit Funds Act, 1982 which clearly stipulates that no chit shall be commenced or conducted without obtaining the previous sanction of the State Government within whose jurisdiction the chit is to be commenced or conducted. Section 4 of the said Act is reproduced as below:
"4. Prohibition of chits not sanctioned or registered under the Act. (1) No chit shall be commenced or conducted without obtaining the previous sanction of the State government within whose jurisdiction the chit is to be commenced or conducted or of such officer as may be empowered by that Government in this behalf, and unless the chit is registered in that State in accordance with the provisions of this Act:
Provided that a sanction obtained under this sub- section shall lapse if the ch
