The main legal point established in the judgment is the broad correlation required between services provided and fees charged, and the authority of the State Government to frame rules in relation to the fixation of fees for the resolution of disputes under the Chit Funds Act.

ORDER :

Senthilkumar Ramamoorthy, J.

1. Appendix II of the Tamil Nadu Chit Fund Rules, 1984 (the TN Chit Funds Rules) was substituted by an amendment thereto which was effected by G.O.Ms. No. 176, Commercial Taxes and Registration (G), dated 29.11.2017 in exercise of powers conferred by Section 89 read with Section 62 and 63 of the Chit Funds Act, 1982 (the Chit Funds Act). The said amendment is challenged in this writ petition on the ground that it is arbitrary, capricious and unconstitutional. Although the amendments to Appendix II as a whole are challenged in the writ petition, at the time of hearing, the learned counsel for the Petitioner confined the challenge to the amendment to Clause 12 of the Appendix which deals with disputes before the Arbitrator. Previously, the fee payable by the Petitioner was Rs. 30/- for every thousand or part thereof of the amount of claim in dispute. By the impugned amendment, the fee was increased to Rs. 50/- for every thousand or part thereof of the amount of claim in dispute. In other words, the fee was increased from 3% of the amount claimed to 5% of the amount claimed. The said increase is challenged on the ground that it is an exorbitant increase which would cause immense hardship whether the claim is made by the foreman or by the subscribers to a chit fund. In this regard, it is submitted that the jurisdiction of the civil court has been ousted under the Chit Funds Act. If parties were in a position to approach the civil court, the court fee would be 3% of the amount claimed, whereas, as a result of the amendment, the court fee is 5% of the amount claimed. In fact, if filed in the High Court, the court fee would be only 1% of the amount claimed. Therefore, the Petitioner has challenged the amendment to Appendix II of the TN Chit Funds Rules.

2. We heard Mr. A. Muthukumar, the learned counsel for the Petitioner and Mr. T.M. Pappiah, the learned Special Government Pleader for the Respondents.

3. Mr. Muthukumar submitted that he is confining the challenge to the amendment to Clause 12 of Appendix II which deals with fees for raising a dispute before the Arbitrator. He pointed out that the chit fund business is a low margin business and therefore the imposition of a fee at 5% of the amount claimed is arbitrary and would cause considerable hardship to parties who intend to raise a dispute by way of arbitration. He invited the attention of the Court to Section 64 of the Chit Funds Act which deals with disputes relating to the chit business. He pointed out that a claim by or against the foreman for any debt due from a subscriber or from the foreman would lie before the arbitrator. Similarly, a claim by a surety from the principal borrower in respect of a loan advanced by a foreman and recovered from the surety would also lie before the arbitrator. Likewise, claims arising out of refusal or failure by a subscriber or legal heirs or representatives of a deceased subscriber to deliver possession to a foreman of land in respect of surety offered would also lie within the scope of arbitration under Section 64. Under Section 64(3), the jurisdiction of the civil court is ousted in respect of the dispute specified in Sub Section (1) of Section 64. Therefore, Mr. Muthukumar submitted that but for Section 64(3) an aggrieved person could have approached the civil court by paying a court fee at 3% of the amount claimed. Instead, such person is constrained to approach the arbitrator and, as a result of the impugned amendment, becomes liable to pay ad valorem fees at 5% of the amount claimed. The next contention of Mr. Muthukumar is that the impugned amendment has been made under Section 62 and 63 of the Chit Funds Act. Section 62 deals with inspection of documents in the Registrar's Office. Although section 63 deals with levy of fees, he contended that it does not deal with the levy of fees in relation to a dispute before the arbitrator under the Chit Funds Act. Even with regard to the rule making power under