1. Defeated plaintiff in O.S.No.611/1992 on the file of the Sub Court, North Paravur is the appellant herein. The suit was filed for recovery of an amount on the basis of a chitty transaction entered into between the plaintiff chitty company, having its registered office at Bangalore and branches in other places including one at Methala within the jurisdiction of Sub Court, North Paravur are the defendants.

2. According to the plaintiff, the first defendant was a subscriber to the chitty having sala of Rs.72,000/- and the chitty was started from its Bangalore branch from 27.04.1988 and they joined the chitty with No.166 and the first defendant bid the chitty on the 10th installment on 02.03.1989 and received the amount and executed Ext.A1 agreement jointly on 27.05.1989, whereby the amount payable as on that day was fixed as Rs.20,100/- and this has to be paid in 67 installments at the rate of Rs.300/- per month starting from 02.07.1989 onwards. It is also agreed that in default, they have to pay interest at the rate of 12% per annum. The defendants 2 and 3 are the guarantors and they also joined the agreement, undertaking to pay the amount. The first defendant thereafter paid up to 19th installment and from 20th installment onwards it has become due. So an amount of Rs.18,300/- was due from 02.01.1990, which the defendants are liable to pay with 12% interest. Though notice was issued on 23.05.1992, they did not pay the amount. So the plaintiff filed the above suit for recovery of Rs.18,300/-, interest of Rs.6,405/- and notice charges of Rs.100/-, totaling an amount of Rs.24,805/- together with future interest at the rate of 12% per annum.

3. Defendants entered appearance and filed written statement admitting the transaction. According to them, the interest of Rs.6,405/- calculated is not correct. The first defendant had paid Rs.1,500/- which has not been given credit and so the amount claimed is not correct. So they prayed for disposal of the case, accepting their contention. Thereafter first defendant filed additional written statement stating that, the court has no jurisdiction to entertain the case for a chitty that has been taken from Bangalore on 27.04.1998 and prayed for dismissal of the suit.

4. On the basis of the pleadings, following issues were framed by the court below.

i. Is the suit not maintainable?

ii. Is the interest claimed excessive?

iii. Is the discharged pleading true?

iv. Reliefs and costs

5. The representative of the plaintiff was examined as PW1 and Exts.A1 and A2 were marked on the side of the plaintiff. No evidence, either oral or documentary was adduced on the side of the defendants. After considering the contentions of both parties, the trial court came to the conclusion that, in view of Section 64 of Central Chit Funds Act, 1982 which has come into force in Karnataka from 1984, the Civil Court has no jurisdiction to entertain the suit and dismissed the suit without considering the other issues. Dissatisfied plaintiff filed A.S.No.129/1994 before the Additional District Court, North Paravur and the Additional District Court by the impugned judgment dismissed the appeal concurring with the finding of the court below that the civil court has no jurisdiction to entertain the suit in view of the bar under Section 64 of the Central Chit Funds Act, 1982. Aggrieved by the same, the second appeal has been filed by the appellant/dissatisfied plaintiff before the court below.

6. While the appeal was admitted, following substantial questions of law had been formulated.

i. Whether the provisions of the chit funds Act were enforced in the State of Karnataka where from the cury was started?

ii. Whether in view of Ext.A2 order staying the operation of the provisions of the chit funds Act in so far as it relates to the plaintiff the civil court has jurisdiction to try the suit?

iii. Whether the amount is liable to be returned as one received non-gratuitously on the ground of unjust enrichment?

7. During the pendency o