JUDGMENT:

This appeal is preferred against the judgment and decree, dated 15.09.2011, passed in O.S.No.162 of 2008 on the file of the Court of XII Additional District Judge (Fast Track Court), Vijayawada.

2. Heard Sri Y.Subrahmanyam, learned counsel appearing for the appellants/defendants 1 & 2 and Sri Bhargav, learned counsel appearing for Sri P.Durga Prasad, learned counsel appearing for the

1st respondent/plaintiff.

3. The plaintiff-Margadarsi Chit Fund Limited is a company registered under the Indian Companies Act, 1956, doing chit fund business. On 27.05.2006, the 1st defendant joined as a member in a chit fund scheme with chit series No.FT4DB in the plaintiff company. The value of the said chit is Rs.20,00,000/-. The duration of the said chit was 40 months with a monthly subscription of Rs.50,000/- payable by the 1st defendant. The 1st defendant participated in the auction of the said chit in auction No.2 and became a successful bidder having agreed to forego a sum of Rs.8,00,000/- as bid amount. Defendants 2 to 6 are guarantors for prompt repayment of the subscriptions to the said chit. All the defendants 1 to 6 jointly executed a promissory note in favour of the plaintiff company for a sum of Rs.18,50,000/- and all the defendants 2 to 6 jointly executed an agreement of guarantee for a sum of Rs.18,50,000/- in favour of the plaintiff company. The plaintiff company paid the prize amount to the 1st defendant on 22.06.2006 by way of a cheque. The 1st defendant paid the subscriptions to the said chit up to 13th instalment and committed default in payment of subscriptions from 14th instalment onwards. In total, the 1st defendant paid a sum of Rs.6,50,000/- including dividend which were given to him and he is liable to pay the remaining balance amount under the said chit. All the defendants 1 to 6 are jointly and severally liable to pay a sum of Rs.15,43,729/- with interest to the plaintiff company towards the due amount under the said chit. Even after issuance of legal notice by the plaintiff company, the defendants 1 to 6 did not choose to repay any amount to the plaintiff company. Hence, the plaintiff company filed the present suit for recovery of the amount due under the said chit. 4. The 1st defendant filed written statement denying the allegations leveled against him and further contending as follows:

The plaintiff has to prove that it is a company registered under the Companies Act, that the person who filed the plaint was properly authorized to file the suit against the defendant, and that the authorization which was given to the person who filed the suit is a valid authorization. The plaintiff has to further prove that the Registrar of Chits issued a certificate to commence business under the suit chit and that the bye-laws were registered with the Registrar of Chits before commencement of the business. The plaintiff filed the suit with all false allegations by suppressing the truth. The suit is liable to be dismissed with costs against the 1st defendant.

5. Defendants 3 to 5 did not choose to contest the suit and remained ex parte.

6. Defendants 2 and 6 filed written statement contending as follows:

Defendants 2 to 6 are not aware of the 1st defendant joining as a member of the chit fund scheme of the plaintiff company and about execution of the chit agreement by the 1st defendant with the plaintiff company or the auction of the suit chit by the 1st defendant in auction No.2 and about receiving of the prize amount from the plaintiff company. The sole proprietor of the 1st defendant is no other than the husband of the 2nd defendant. The 6th defendant is a close relative to the 2nd defendant and her husband. In view of their close relationship with the proprietor of the 1st defendant concern, in the month of February 2006, the sole proprietor of the 1st defendant requested defendants 2 to 6 to put their signatures on some papers as witnesses for his joining as a member in the chit. Believing the words, defendants 2 and 6 p