THE HON’BLE SHRI JUSTICE ANIL KUMAR JUKANTI

ORDER:

This Writ Petition is filed seeking the following relief:

“…to issue writ, order or direction more particularly one in the nature of the writ of mandamus declaring the award passed by the Respondent No.3 i.e., Deputy Registrar in A.R.B.No.768/2018 dated 28-12-2022 which is contrary to Section 64 of the Chit Fund Act and consequently set aside the same including attachment of the salary of the petitioners passed in E.P.No.204 of 2022 in A.R.B.No.768 of 2018 on the file of the 2nd Additional Junior Civil Judge, Karimnagar and pass...”

2. Heard Mr. Nimma Narayana, learned counsel for petitioners and Mr. K.P.Vijay Kumar, learned counsel appearing for respondent No.4.

3. Brief facts:

Petitioner No.1/opponent No.1 joined Chit series No.FKRT15P, registered with the Assistant Registrar of Chits, Karimnagar, vide P.S.O.No.680/2015, dated 29.10.2015, with Chit Registration No.663/2015 dated

31.10.2015 bearing Ticket No.18 for (50) installments @ Rs.20,000/- per month, the value of chit Rs.10,00,000/-. Petitioner No.1 signed chit agreement with chit fund company (respondent No.4) on 31.10.2015 agreeing to pay chit installment at the rate of Rs.20,000/- every month continuously for the period of (50) months and the chit commenced with effect from

31.10.2015, to be terminated on 30.11.2019.

4. Petitioner No.1 participated in the chit auction and became successful bidder, agreed to forgo Rs.4,00,000/-. Petitioner Nos.2 to 6 stood as guarantors, they jointly executed an agreement of guarantee bond on 15.03.2016. A promissory note was executed on 15.03.2016 by petitioner No.1 along with petitioner Nos.2 to 6 in favour of respondent No.4 (Kapil Chits (Kakatiya) Private Limited). Petitioner No.1 received prize money of Rs.6,00,000/- through cheque bearing No.108844,109051 dated 15.03.2016 and an amount of Rs.1,33,989/- was deducted (installments) vide cheque No.052.

5. After 29^th installment, petitioner No.1 defaulted monthly subscription. It is the case of respondent No.4 that inspite of notice to petitioner No.1, by registered post with acknowledgment due, to pay chit amount, petitioner No.1 did not come forward and petitioners failed to pay the amount due to respondent No.4 with interest. Respondent No.4 was forced to file proceedings before Chit Arbitrator/Deputy Registrar of Chits at Karimnagar. 6. The Arbitrator/Deputy Registrar of Chits after issuing summons to petitioners proceeded with the matter. A paper publication was also made in “Nava Telangana” on 17.11.2022. By order dated 28.12.2022, the Arbitrator held that petitioners failed to disprove the claim of respondent No.4 and accordingly allowed the petition.

7. Challenging the said order and seeking to set aside the same, including attachment of salary of petitioners passed in E.P.No.204 of 2023 in A.R.B.No.768 of 2018, petitioners filed the present writ petition.

8. Learned counsel for petitioners invited attention of this Court to Section 64 of Chit Funds Act, 1982, and submitted that any dispute related to chit business shall be referred to the Registrar of Chits for Arbitration and it is the Registrar who has to decide whether a dispute is existing or not. That this primary duty and responsibility entrusted to the Registrar has not been discharged.

9. Learned counsel submitted that in Section 64 of the Chit Fund Act, 1982, it is spoken as “…‘shall’ be referred by any of the parties to the dispute to the Registrar for arbitration...”. That Section 64 of Chit Funds Act, 1982, makes it mandatory that the dispute is referred to Registrar for arbitration. In the absence of such procedure being followed, the award passed by the Deputy Registrar of Chits is not valid in the eye of law. Learned counsel further submitted that Section 64 of Chit Funds Act, 1982, if read with Rules 45 and 48 of Telangana Chit Funds Rules, 2008, the award dated

28.12.2022 being invalid has to be set aside.

10. On the other hand, learned counsel for respondent No.4 co