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1997 Supreme(Mad) 36
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE E. PADMANABHAN
Tuticorin Trading and Credit Corporation Chit Fund (P) Ltd.
Versus
The Joint Registrar of Chits, Tuticorin & Another
W.P. No. 174 of 1988
Decided On :Decided on : 10-01-1997
For the Petitioner:V. Shamugham, Advocate.
For the Respondents:N. Govindarajan, Government Advocate.
The foreman is entitled to 5% commission from non-prized defaulting subscribers under the Chit Funds Act, 1982.
Headnote:
CHIT FUNDS ACT - REGISTRATION OF CHIT AGREEMENT - FOREMAN'S COMMISSION - INTERPRETATION OF SECTIONS 21(1)(B), 22(4), AND 30(1)(3) - FOREMAN ENTITLED TO 5% COMMISSION FROM NON-PRIZED DEFAULTING SUBSCRIBER.
Fact of the Case:
The petitioner, a foreman under the Chit Funds Act 1982, filed a writ petition challenging the deletion of the term “Foreman's commission of 5% of the Chit amount” from the agreement submitted for registration. The respondents, the Joint Registrar of Chits and the Deputy Registrar of Chits, contended that the foreman was not entitled to commission from non-prized defaulting subscribers.
Finding of the Court:
The court held that the foreman was entitled to 5% commission from non-prized defaulting subscribers as well. The court interpreted Sections 21(1)(b), 22(4), and 30(1)(3) of the Chit Funds Act, 1982, and found that there was no provision in the Act that prohibited the foreman from collecting commission from non-prized defaulting subscribers.
Issues: Whether the foreman was entitled to 5% commission from non-prized defaulting subscribers.
Ratio Decidendi: The court held that the foreman was entitled to 5% commission from non-prized defaulting subscribers based on the following reasoning: * Section 21(1)(b) of the Chit Funds Act, 1982, allows the foreman to deduct 5% of the Chit amount as commission, remuneration, or for meeting the expenses of running the Chit. * Section 22(4) of the Act prohibits the foreman from appropriating any amount in excess of what is allowed under Section 21(1)(b). * Section 30(1)(3) of the Act provides that the foreman shall pay the defaulting subscriber who has been substituted till the termination of the Chit, such amount as provided for, subject to deductions as may be provided for in the Chit agreement. The court found that there was nothing in these provisions or any other provision of the Act that prohibited the foreman from collecting commission from non-prized defaulting subscribers.
Final Decision: The court allowed the writ petition and directed the respondents to register the Chit agreement as originally proposed by the petitioner. The court also held that there was nothing in the Act that disabled the foreman from collecting 5% as commission and other expenses as provided for in the Act from and out of the amounts payable to a non-prized-defaulting subscriber.
1. The writ petitioner prays for issue of a writ of certiorafified Mandamus to call for the records of the 2nd respondent in M.M. No. 22108/A/86 dated 3.10.1986 on his file confirming the order of the first respondent in ADM 2129/A.2/86 dated 24.3.1986 on file and quash the same.
2. The petitioner, a foreman under the Chit Funds Act 1982, who had submitted an agreement for registration before the 1st respondent, the Joint Registrar of Chits, Tuticorin has filed the above Writ Petition. The petitioner is aggrieved by the deletion of the term “Foremans commission of 5% of the Chit amount in clause IV of the Agreement”. The petitioner Foreman contends that he is entitled to 5% of Chit amount as Foremans commission even from a non prized subscriber. Only in respect of defaulting subscriber, the 1st respondent declined to register the agreement in respect of specific portion of clause IV, by which the stipulation is sought to be provided that the defaulting subscriber is also liable to pay 5% Commission of the chit amount to the Foreman. Clause IV of the agreement for which approval and registration sought for reads as follows:—
“The contribution of any defaulting subscriber who is not removed till the termination of the Chit or the contributions of any defaulting subscriber removed under Article VI(3) but not substituted under Article VI(5) under provision of Sec. 29(1) till the termination of the Chit shall, in accordance with Sec. 30(3), if and when he turns up to collect the same within 15 days from the date of termination of the Chit subject to deduction of Foremans commission of 5% of Chit amount . Penalty and interest, if any, paid by him under Sec. 21(1) (c) and Article VI(3), postage, stationery and other incidental charges and any amount due to the Foreman mentioned under Art. 12(2) be paid to the respective defaulting subscriber, or if he does not turn up to collect as aforesaid, be deposited with the approved bank mentioned in Art. 11”
The respondent have objected to the underlined portion of Clause IV, on the ground that the same is not in conformity with the provisions of The Chit Funds Act and Rules. The 1st respondent has passed orders on 24.3.1986. The appeal preferred before the 2nd respondent, was also rejected on 3-10-1986. The order passed by the 2nd respondent, as contended by the learned counsel for the petitioner, has not decided the issue, but has merely confirmed the proceedings of the 1st respondent without application of mind.
3. The respondents have filed a counter. In the counter, they have contended that the Foreman of the Chit is entitled to collect or charge 5% or the commission only from the prized subscirbers and not from the non-prized defaulted subscriber. The respondents further contend that the claim of the Foreman for payment of 5% commission even in respect of defaulting subscriber cannot be permitted as it is not in conformity with the statutory provisions. The respondents further contended that under Sec. 30(3) o f the Act, the contributions of any defaulting subscriber who has not been substituted till the termination of the Chit shall be paid to him writhin 15 days from the date of termination of the Chit, subject to such deductions as may be provided for in the Chit agreement”. The respondents further contend that deduction of 5% arise only when the subscriber become a prized-subscriber and only in respect of prized subscriber alone, the Foreman is entitled to deduct 5% commission and not in respect of default ting subscriber.
4. The question that has to be decided in the present Writ Petition is as to whether the Foreman could stipulate in the agreement for payment of 5% commission in respect of defaulting subscriber who had not been substituted.
5. The counsel for the petitioner as well as the respondents fairly stated that there is no controversy with regard to the liability to pay 5% commission by the prized subscriber as well as the substituted subscriber when he becomes a
