LAWS(KER)-1987-4-42

SUBBARAMA SASTRI Vs. RAGHAVAN

Decided On April 03, 1987
SUBBARAMA SASTRI Appellant
V/S
RAGHAVAN Respondents

JUDGEMENT

(1.) We will first deal with Civil Appeal 85/1972. The appellants were the plaintiffs in O.S. No. 78 of 1964 on the files of the Subordinate Judge's Court, Palghat. The suit was based on a Kuri transaction (Chit Fund). The respondents were subscribers to the Kuri. They committed default after they had prized it and realised the Kuri amounts. Hence the suit was filed for realisation of the principal sum with interest and the balance Kuri due.

(2.) The suit was decreed by the Subordinate Judge by his Judgment dated 24th June, 1965. An appeal was filed before the High Court. A Division Beach of the High Court heard the appeal and partly allowed it by modifying the decree of the Trial Court re-fixing the interest, largely influenced by the fact that the Kuri transaction and the contract between the foreman of the Kuri and the subscribers (defaulted) burdened the subscribers with unconscionable interest and were unreasonable.

(3.) To appreciate the reasoning of the Division Bench it is necessary to set out the scheme of the Kuri. The respondents took two tickets in a Kuri (Chit Fund) started by the appellants in September, 1962. Under the scheme of the Kuri, there will be bidding at monthly intervals. The subscriber bids and prizes the ticket depending upon his need. When he does so, he voluntarily surrenders the benefit of dividends which is distributed among the subscribers. For example, suppose the Kuri amount is Rs.5,000/- consisting of 50 tickets valued at Rs.100/-. At the first bid the lowest bid is 3500/- by A. A gets this amount and the balance of Rs.1500/- will be distributed among the other subscribers. But the prized subscriber has a duty to pay the entire amount in instalments without default. Here the respondent bid and prized both the tickets; one on the third draw and the other at the 10th and received the amounts. As per rules of the Kuri they executed bonds to secure future instalments. However, they committed default in paying the future instalments. That resulted in the suit. The main contention which found favour with the High Court, raised in defence, was that the rules of the Kuri contained several unconscionable and penal provisions like the provisions relating to the payment of all the future instalments in a lump with interest at 12 per cent ignoring the claim of the defaulting subscribers to their share in the reduction (the dividend).