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IN THE HIGH COURT OF KERALA AT ERNAKULAM
N.NAGARESH
Ajith Kumar R.C. – Appellant
Versus
Kerala State Financial Enterprises Ltd.(KSFE) – Respondent
| Table of Content |
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| 1. the court finds the ksfe justified in requiring unencumbered property as security. (Para 8 , 13 , 14) |
| 2. the ksfe's demand for the certificate is based on protecting innocent sureties. (Para 10 , 12) |
JUDGMENT :
N.NAGARESH, J.
The petitioner is the Managing Partner of a Partnership Firm named M/s. Ashirvad Builders. The petitioner joined six different Chits of KSFE. The petitioner duly paid the instalments. In the auctions conducted, the petitioner successfully secured all the six Chits in the year 2024. The total prize amount was Rs.42,15,122/-. An amount of Rs.21 lakhs was given to the petitioner.
2. In order to release the balance prize amount, the petitioner offered a property jointly owned by the petitioner and his mother. As the mother could not come from Bangalore consequent to a knee surgery, the petitioner proposed another property owned by the petitioner's Partner Mr. Aravind. The said property has an extent of 3.84 Acres. The said property is more than sufficient to release the balance amount of Rs.21,15,122/-. Mr. Aravind later withdrew his consent to offer his property as security for the petitioner's Chit.
3. The petitioner thereupon proposed to substitute
The requirement for a Blood Relationship Certificate in property security for chits is ultra vires the Chit Funds Act, 1982, as it imposes unjustified additional conditions.
A chit subscriber incurs a debt upon prizing a chit, enabling the creation of an equitable mortgage for securing future obligations, contrary to the trial court's dismissal on grounds of limitation.
A mortgage exists despite subsequent transfers by the mortgagor, and the creditor-debtor relationship in chitty transactions is affirmed, allowing the mortgagee to recover against subsequent assignee....
The court held that reasonable security must be assessed by the creditor, and a certified copy of the title deed is insufficient for the disbursement of prize amounts under the statutory contract.
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