ORDER :

G.R. Swaminathan, J.

1. The petitioner was a subscriber to one of the chit groups run by the third respondent. The value of the chit was Rs. 3.00 lakhs payable at Rs. 10,000/- per month in 30 monthly installments. He bid in the second auction held on 20.08.1998 in the third month. The case of the petitioner is that he prized the chit for a sum of Rs. 2.10 lakhs, the discount being Rs. 90,000/-. He executed a promissory note for a sum of Rs. 2.70 lakhs and three of his relatives stood as sureties. Yet the foreman paid him only a sum of Rs. 86,900/- after deducting Rs. 3,100/- towards verification charges, Rs. 10,000/- towards the current installment and retaining a sum of Rs. 1.00 lakh as Fixed Deposit for a period of twelve months. The petitioner continued to remit the monthly dues till the 20th installment. Following his default, the foreman issued legal notice dated 13.02.2000 calling upon the petitioner to pay the entire balance amount of Rs. 1,42,222/-. After receiving the same, the petitioner paid a sum of Rs. 9,400/-, Rs. 8,500/- and Rs. 8,250/- on various dates. Since the demand of the chit company was not complied with in full, the foreman filed ARC No. 905 of 2000 before the District Registrar of Chit Funds, North and South, Chennai claiming a sum of Rs. 1,24,537.60/- with interest at the rate of 24% per annum. The petitioner filed his response to the claim. The Arbitrator/District Registrar of Chits by award dated 08.10.2001 allowed the claim of the chit company and directed the petitioner herein as well as the guarantors to pay a sum of Rs. 1,24,537.60/- with interest at the rate of 24% per annum from the date of the filing of the arbitral case. Aggrieved by the same, the petitioner filed an appeal under Section 70 of the Chit Funds Act, 1982 before the State Government. The Government by the impugned order bearing G.O.(D) No. 109, Commercial Taxes and Registration (K) Department, dated 10.03.2006 declined to interfere with the award of the Chit Registrar except as regards the rate of interest, which was reduced from 24% to 12% per annum. The other contentions of the petitioner were rejected. Challenging the same, this writ petition came to be filed.

2. A detailed counter affidavit has been filed by the third respondent. The learned counsel appearing for the third respondent reiterated the contentions set out therein. According to the third respondent, the total chit value was Rs. 3.00 lakhs. The amount paid by the petitioner was Rs. 1,94,459.40/-. Adding the interest amount of Rs. 18,997.00/-, the claim in the ARC was quantified at Rs. 1,24,537.60/-. The third respondent denied the allegation of the petitioner that the entire prize amount was not paid to him. The learned counsel would further contend that the jurisdiction of this Court under Article 226 of the Constitution of India is rather limited and that this Court cannot conduct any factual investigation. The proceedings under the Chit Funds Act are summary in nature. In as much as the impugned order has not been shown to be illegal or perverse or against law, he prayed for dismissal of the writ petition.

3. The question that now arises for consideration is whether the rights of the petitioner have been infringed or not. To answer this, it is necessary to have a look at the statutory scheme. The parliament enacted the Chit Funds Act, 1982 (Central Act 40 of 1982) to provide for the regulation of chit funds and for matters connected therewith. It repealed the earlier State legislations including the Tamil Nadu Chit Funds Act, 1961. The constitutional validity of the Act was upheld by the Hon'ble Supreme Court in Shriram Chits and Investment (P) Limited vs. Union of India, (1993) Supp 4 SCC 226. The jural relationship between a chit fund entity and the subscribers created by a chitty agreement and the issue as to whether it is a debt in praesenti or a pr