Back
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ANIL K.NARENDRAN, P.G. AJITHKUMAR, JJ.
Hi-Line Kuries Pvt Ltd, Rep. By Chairman, P. Vijayakumar – Appellant
Versus
Sukheesh – Respondent
O.P(C)Nos.3330 & 3399 of 2018, C.R.P.Nos.787, 789, 790 & 791 of 2019 and O.P(C)Nos.703 & 875 of 2020
Decided on : 07-04-2022
Constitution of India, 1950 - Article 254(2), 254(1), 367 - Chit Funds Act, 1982 - Section 64 (1), 85 - Kerala Chitties Act, 1975 - Section 2(2), 70 - States Reorganisation Act, 1956 - Section 5 (2) - Travancore Chitties Act, 1120 - Section 4 - Cochin Kuries Act, 1107 - Section 4 - General Clauses Act, 1897 - Section 6 - Chit Funds Act, 1982 - Section 90(1) - Sections 3, 4, 5, 8, 9 and 15 - Application of Act to certain existing chitties - Prohibition of chits not sanctioned or registered under Act - Prohibition of invitation for subscriptions except under certain conditions - Disputes relating to chit business - Repeal and saving - Whether forum prescribed under sub-section (1) of Section 64 of Chit Funds Act, 1982 - Whether rigour of sub-sections (1) and (3) of Sections 64 is mitigated by provisions of clause (a) of Section 85 of Act or not - Whether payable in cash, kind or any other article of value or in such other manner as may be provided for in agreement -
Finding of the Court:
In view of provisions under clause (a) of Section 85 of Chit Funds Act, 1982, nothing in Chit Funds Act shall apply in respect of any chit started before commencement of said Act -provisions under Chapter XII of Chit Funds Act, 1982, which deals with disputes and arbitration, and forum for disputes resolution provided under sub-section (1) of Section 64 of said Act have no application to any chit started in State of Kerala before commencement of Chit Funds Act, i.e., to any chit - Therefore, forum prescribed under subsection (1) of Section 64 of Chit Funds Act, 1982 shall have no jurisdiction to entertain any dispute in respect of any chit started before commencement of said Act - Civil court shall continue to have jurisdiction to entertain any suit or other proceedings in respect of any disputes in respect of any chit started before commencement of Chit Funds Act - Therefore, bar contained in sub-section (3) of Section 64 of Chit Funds Act has no application to any suit or other proceedings filed before civil court, in respect of dispute relating to any chit started before commencement of said Act.
Result : Ordered accordingly
A suit for realization of money in a chit transaction may be barred under Section 64 of the Chit Funds Act, 1982, if the dispute falls within the scope of the dispute resolution mechanisms prescribed by the Act. Specifically, Section 64(1) stipulates that disputes relating to the validity of a chit or any other matter that the rules or the Registrar are empowered to decide should be referred to arbitration or the prescribed authority, rather than civil courts (!) .
If the dispute involves the recovery of money arising from a chit transaction that is governed by the Act and the matter is within the jurisdiction of the dispute resolution process under Section 64, then filing a suit in a civil court for realization of money may be barred. This is because the Act intends to provide a comprehensive mechanism for resolving such disputes, and civil suits are precluded when the dispute can be effectively addressed through these statutory procedures.
However, if the money recovery claim pertains to issues outside the scope of the dispute resolution mechanisms provided under Section 64—such as disputes arising from transactions prior to the applicability of the Act or issues not covered by the Act—the bar may not apply, and a suit could be maintainable.
ORDER :
Anil K. Narendran, J.
The above original petitions and civil revision petitions are listed before the Division Bench based on an order of reference dated 18.08.2020 made by a learned Single Judge. The common question referred for consideration of the Division Bench is as to whether the forum prescribed under sub-section (1) of Section 64 of the Chit Funds Act, 1982, must be the forum from the date of commencement of the said Act in Kerala, i.e., 30.04.2012, for filing of cases relating to chits, including the chits started prior to the commencement of the said Act in Kerala and whether the rigour of sub-sections (1) and (3) of Sections 64 is mitigated by the provisions of clause (a) of Section 85 of the Act or not.
2. Heard the learned counsel for the petitioners and also the learned counsel for the respondents in the respective original petitions/civil revision petitions.
3. The Kerala Chitties Act, 1975, was enacted by the State Legislature to define, amend and consolidate the law relating to chitties in the State of Kerala, which came into force with effect from 25.08.1975. Clause (2) of Section 2 of the Act defines ‘chitty’ to mean a transaction, whether called chitty or kuri, by which one or more persons, hereinafter called the ‘foreman’ or ‘foremen’, enter into an agreement with a number of persons that every one of the contracting parties shall subscribe a certain amount of money or quantity of grain or other commodity by periodical instalments for a certain definite period and that each in his turn, as determined by lot or by auction or by both, shall be entitled to the prize amount, whether payable in cash, kind or any other article of value or in such other manner as may be provided for in the agreement. Section 70 of the Act deals with application of the Act to certain existing chitties. As per Section 70, the provisions of this Act, save those contained in Sections 3, 4, 8, 9 and 15 shall, so far as may be, apply to chitties started before the commencement of this Act in the Malabar district referred to in sub-section (2) of Section 5 of the States Reorganisation Act, 1956.
4. The Kerala Chitties Act, 1975, was enacted to bring forth a uniform law relating to chitties applicable to the whole State of Kerala, in the place of the Travancore Chitties Act, 1120, the Cochin Kuries Act, 1107 and the Cochin Starting of Kuries (Restriction) Act, 1120. There is no law on the subject, in the Malabar area. As per Section 4 of the Travancore Chitties Act, 1120, as amended by Act X of 1964, transactions partaking of the nature of a chitty but not falling within the definition in c lause (2) of Section 3 are void. As per Section 5 of the said Act, any person who conducts or is responsible for the conduct of any transaction of the nature of those declared void by Section 4 shall be punishable with imprisonment of either description for a term which may extend to six months or with fine or with both. As per sub-section (1) of Section 6 of the said Act, no chitty shall, after the commencement of the Act, be conducted unless it is registered in accordance with the provisions of the Act. As per sub-section (2) of Section 6, any person contravening the provisions of sub-section (1) of Section 6 shall be liable to a fine which may extend to five hundred rupees. Similarly, as per Section 4 of the Cochin Kuries Act, 1107, transactions partaking of the nature of a kuri but not falling within the definition in s ub-section (1) of Section 3 are void. As per Section 5 of the said Act, every kuri shall be registered in accordance with the provisions of the Act, and if not so registered, it shall be void and the foreman shall be liable to a fine not exceeding five hundred rupees.
5. In A.N. Nadarajan v. K.G. Nadarajan and another [1999 (2) KLT 512] this Court noticed that, even though the Kerala Chitties Act, 1975, was enacted to bring forth a uniform law relating to chitties applicable to the whole State of Kerala, in the place of the Trava
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
