G LOGANAYAKI Vs. MOOLANGUDI CHIT FUNDS PRIVATE LIMITED

JUDGEMENT

(1.) THIS unnumbered company petition bearing Diary No. 8001 of 1977 is before me on an office objection that the petition, as framed originally and as amended later, is not maintainable and the relief sought for under s. 433(e) read with s. 434(1)(a) of the Companies Act, 1956 (hereinafter referred to as "the Act") cannot be granted. The petitioner was a subscriber to a chit in the respondent-company in group No. N, Ticket No. 32, for the value of Rs. 50, 000. The period of the chit was 50 months and the monthly instalment was Rs. 1, 000. The chit commenced on July 17, 1974, and on its usual run, would terminate itself on October 17, 1978. The petitioner paid about 20 instalments as per the contract between herself and the stake-holder. On the 21st month, to wit, on March 17, 1976, she bid at the auction and was declared as the highest bidder of the chit and the prize amount thereunder was admittedly Rs. 35, 400. Under the chit agreement duly entered into between the petitioner and the respondent, it is open to a subscriber to bid in a particular month and become the prized subscriber.

(2.) BUT the prized subscriber is obliged to furnish sufficient security to the respondent-company in order to entitle him to draw the prize money. One of the clauses agreed to provides that the prized chit subscriber, before drawing the prize amount, will be required to furnish necessary securities, or sureties or both to the satisfaction of the foreman as provided for in the registered bye-laws for the due payment of the future instalments by the subscriber. The clause also contemplates that the prized chit subscriber can furnish security of immovable properties within the Corporation limits of Madras to the satisfaction of the foreman. Ultimately, the clause provides that the foreman shall have the absolute right and discretion in deciding as to the adequacy or acceptability of the securities and/or sureties offered. Complying with the provisions of the Tamil Nadu Chit Funds Act of 1961, there is yet another clause in the chit agreement, providing for a contingency in which the prized subscriber defaults. If the unpaid prized subcriber fails to draw the prize amount furnishing sufficient securities for the future subscriptions before the next date of auction, that amount will be kept in an approved bank in a separate account. The latter portion of cl. 14(b) of the contract reflects only upon the right of the stake-holder to withdraw from that account every month such amounts as are payable by the defaulting prized subscriber towards the future instalments. We are not, however, concerned with this in the instant case.

(3.) THEREAFTER, on March 25, 1977, the petitioner's counsel reiterated that it was obligatory on the part of the chit fund company to pay back the paid up instalments as also the damages, or suffer the consequences arising therefrom by non-compliance with the demand specifically raised by the petitioner in such a notice of demand. I am not inclined to set out the notices which emanated from the counsel for the petitioner to the respondent since the language is very forceful and not at all appealing to a court and I am only setting out the substance of the correspondence, which would satisfy the purpose before me. Equally, the language employed by the company in reply is highly unsatisfactory. The sum and substance of the controversy is that the petitioner charges the respondent-company as having repudiated a contract without justification and that such a repudiation, has been accepted by the petitioner and as a result of such acceptance of the repudiation caused voluntarily by the respondent-company by an act of omission or commission on their part, the petitioner is entitled, as a matter of fact in law, for the refund of the paid up instalments (for the 20 months to which she subscribed) and by the non-payment of the same on demand since it has remained unpaid for a period of 21 days after the demand, a deeming situation of inability to pay the debts has arisen within the meaning of s. 434(1)(a) of the Act and s. 433(e) thereunder and, therefore, the petition is maintainable.Learned counsel for the respondent denied that the security of immovable property offered by the petitioner was accepted.