Askar Chits ordered to pay ₹12 lakh to subscriber in Medchal–Malkajgiri dispute
HYDERABAD: The District Consumer Disputes Redressal Commission, Ranga Reddy, has directed a Askar chit fund company and its directors to pay ₹12,10,000 to a subscriber after finding deficiency in service and unfair trade practice.
The commission ordered Askar Chits Private Limited and its directors to pay the amount with 9% annual interest from February 28, 2021, the date of the chit auction, until realisation. The company must also pay ₹50,000 as compensation and ₹10,000 towards litigation costs.
Delay in payment of prized amount
The complainant, Durga Venkata Ramana, a businessman from Chintal in Medchal–Malkajgiri district, stated that he joined two chits run by the company on April 28, 2017. Each chit had a value of ₹15,00,000 with a monthly subscription of ₹30,000 for 50 months.
He became the successful bidder in one chit in 2018 and received the full amount. However, after becoming the prized subscriber for the second chit on February 28, 2021, he was entitled to ₹13,38,000 after forfeiting dividend.
According to the complaint, the subscriber agreed to deductions of ₹1,28,000 towards future liabilities and charges. After deductions, the company had to pay ₹12,10,000, but failed to do so.
The company cited financial difficulties during the Covid-19 pandemic and requested six months’ time, stating it could not collect subscriptions from other members.
11 postdated cheques
After repeated demands, the company issued 11 postdated cheques of ₹1,00,000 each drawn on Indian Bank, Medak branch, as part payment of the amount.
When the complainant presented the cheques on March 31, 2023, they were returned on April 4, 2023, with the endorsement “insufficient funds.”
Legal notices sent on April 10, 2023, were returned with the remark “door locked.” The complainant subsequently filed cheque bounce cases under Section 138 of the Negotiable Instruments Act before a Metropolitan Magistrate court in Medchal–Malkajgiri district.
Commission rejects company’s defence
The chit fund company told the commission that the Covid-19 pandemic led to defaults by several subscribers, affecting its ability to pay the prized amount. It also claimed that fixed deposits had been maintained with the Registrar of Chit Funds.
However, the commission observed that the company failed to produce documents proving such deposits or the claimed winding-up proceedings.
The commission noted that the company issued cheques but failed to honour them and did not submit evidence supporting its defence.
Order and compliance timeline
The bench held that the company and its directors failed in their duty to pay the lawful amount to the successful bidder, amounting to deficiency in service.
The commission ordered the opposite parties to jointly and severally:
Pay ₹12,10,000 with 9% annual interest from February 28, 2021 until realisation
Pay ₹50,000 compensation for mental and financial distress
Pay ₹10,000 towards litigation costs
The commission granted 45 days for compliance, failing which the amount will attract 12% annual interest.
