Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1998 Supreme(Mad) 1682

High Court of Judicature at Madras
THE HONOURABLE CHIEF JUSTICE MR. M.S. LIBERHAN & THE HONOURABLE MR. JUSTICE E. PADMANABHAN
The Shriram Chits and Investments (P.) Ltd. - Appellant
Versus
M. Krishnan and Others - Respondents
W. A. No. 704 of 1998 and C. M. P. No. 7222 of 1998
Decided On : 11 December 1998

Appearing Advocates: R. Krishnaswami, P. Meenakshisundaram (For Nos. 1 To 3), R. Balasubramanian (For Nos. 4, 5)

The court interpreted Section 65(3) of the Chit Funds Act, which allows the Registrar to admit a dispute after the expiry of the limitation period if sufficient cause is shown, liberally.

Headnote:
CHIT FUNDS ACT, 1982 - SECTION 64, 65 - LIMITATION - SUFFICIENCY OF CAUSE - INTERPRETATION - COURT'S DISCRETION - ARBITRATION - AWARD - CHALLENGE - EFFECT.
Fact of the Case:

A chit subscriber defaulted on payments from the 8th month onwards. The chit foreman filed a suit in the City Civil Court, which was later returned as not maintainable due to Section 64(3) of the Chit Funds Act. The foreman then instituted arbitration proceedings under Section 64 on 22-7-1991. The arbitrator awarded the foreman Rs. 36,720/-. The subscriber and guarantors challenged the award on limitation grounds. The State Government, the appellate authority, rejected the appeal as time-barred. The writ petitioners filed a writ petition challenging the award and the appellate authority's order.
Finding of the Court:

The court held that the claim was not barred by limitation. The court interpreted Section 65(3) of the Chit Funds Act, which allows the Registrar to admit a dispute after the expiry of the limitation period if sufficient cause is shown, liberally. The court found that there was sufficient cause for the delay in filing the arbitration petition, as the foreman had been prosecuting a suit before the Civil Court, which was later returned as not maintainable. The court also held that the claim was not barred by limitation even if the period spent before the Civil Court and the return of the claim were excluded, as the arbitration petition was filed within three years from the date of the last chit instalment.
Issues: 1. Whether the claim was barred by limitation? 2. Whether the foreman was entitled to recover the amount claimed?
Ratio Decidendi: 1. The court held that the claim was not barred by limitation, as the foreman had shown sufficient cause for the delay in filing the arbitration petition under Section 65(3) of the Chit Funds Act. The court also held that the claim was not barred by limitation even if the period spent before the Civil Court and the return of the claim were excluded, as the arbitration petition was filed within three years from the date of the last chit instalment. 2. The court held that the foreman was entitled to recover the amount claimed, as the subscriber had defaulted on payments and the award of the arbitrator was valid.
Final Decision: The court allowed the writ appeal, set aside the order passed by the Hon'ble Single Judge in W. P. No. 17029 of 1994, and confirmed the Award of the Registrar.

Judgment :-

E. PADMANABHAN, J.

In this writ appeal notice of motion was ordered on 24-6-1998. The respondents have entered appearance. With the consent of the counsel appearing for either side the writ appeal itself is taken up for final disposal.

2. This writ appeal is directed against the order of the Hon'ble Single Judge dated 9-7-1997 made in W. P. No. 17029 of 1994, filed by the respondents 1 to 3 herein. For convenience the parties will be referred as arrayed in the writ petition.

3. The writ petitioners in all three in numbers have joined together and filed W. P. No. 17029/94 praying for the issue of certiorarified mandamus calling for the proceedings of the first respondent in ARC No. 825 of 1991 dated 5-7-1993 and Lr. No. 36627/CL/94-1 dated 7-9-1994 of the third respondent quash the same and forbear the respondents from proceeding further.

4. Admittedly, the second respondent in the writ petition is the, Foreman and a registered Chit Company. One Sivasubra-manian Subscribed himself to Chit Group No. MDH.5 in Chit No. 55/85 in T. Nagar Branch for the value of Rs. 30,000/-. He was the successful bidder in the auction held on 14-8-1985 and prized the chit at Rupees 16,890/-. The subscriber received the prize money of Rs. 13,110/- for which the writ petitioners and one Alfred were the guarantors for the due payment of the money and executed promissory note on 19-9-1985 promising to pay Rs. 27,000/-. The said subscriber after receiving the prize money did not pay the subscription from the 7th instalment and therefore the Chit Fund Company instituted proceedings before the Arbitrator for recovery of Rs. 21,000/- being the future instalments and Rs. 18,630/- towards interest, aggregating Rs. 40,630/- with interest at 12% from the date of petition and till date of realization.

5. The said dispute was taken on file by the Registrar of Chits on 22-7-1991 under Sections 66 and 67 of the Chit Funds Act, 1982. The arbitration petition was heard on various dates. Before the Arbitrator, the Foreman had examined the witnesses and none of the respondents have chosen to let in evidence. But their counter statements were taken into consideration. The objection that has been raised by the subscriber as well as the guarantors is that the claim is barred by limitation and therefore the petition is not maintainable. It was pointed out by the Foreman that before framing of the rules and notifying the authority a suit has been presented before the City Civil Court and that the claim is not barred by limitation.

6. The Arbitrator disallowed a portion of the interest and held that the subscriber and the guarantors are liable to pay Rupees 27,000/- towards principal and Rupees 9,720/- towards interest and in all aggregating to Rs. 36,720/-. Accordingly an Award was passed on 5-7-1983. Being aggrieved the writ petitioners have filed an appeal before the State Government which rejected the appeal as time barred on 7-9-1994. In fact originally, the State Government, the appellate authority was not made a party at all and subsequently the writ petitioners have prayed for impleading and also prayed for quashing the orders of the appellate authority, the State Government. In fact, the Award was sought to be executed by filing execution proceedings before the City Civil Court.

7. Before the Hon'ble Judge the writ petitioners contended that the claim is barred by limitation. The Hon'ble Single Judge by order dated 9th July, 1997 allowed the writ petition along with another connected writ petition and remitted the matter to the State Government, the appellate authority for fresh disposal according to law. Being aggrieved, the foreman had preferred the writ appeal.

8. Mr. R. Krishnaswamy, the learned counsel appearing for the appellant contended that the learned Judge having held that the suit claim is not barred, ought not to have set aside the proceedings and remanded the matter for fresh disposal to the appellate authority and the suit claim is at any rate we

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