Case Law Details
Incorporated Chit Funds Association Vs State of Tamil Nadu (Madras High Court)
Issue before the Court
Appendix II of the Tamil Nadu Chit Fund Rules, 1984 (the TN Chit Funds Rules) was substituted by an amendment thereto which was effected by G.O.Ms.No.176, Commercial Taxes and Registration (G), dated 29.11.2017 in exercise of powers conferred by Section 89 read with Section 62 and 63 of the Chit Funds Act, 1982 (the Chit Funds Act). The said amendment is challenged in this writ petition on the ground that it is arbitrary, capricious and unconstitutional. Although the amendments to Appendix II as a whole are challenged in the writ petition, at the time of hearing, the learned counsel for the Petitioner confined the challenge to the amendment to Clause 12 of the Appendix which deals with disputes before the Arbitrator. Previously, the fee payable by the Petitioner was Rs.30/- for every thousand or part thereof of the amount of claim in dispute. By the impugned amendment, the fee was increased to Rs.50/- for every thousand or part thereof of the amount of claim in dispute. In other words, the fee was increased from 3% of the amount claimed to 5% of the amount claimed. The said increase is challenged on the ground that it is an exorbitant increase which would cause immense hardship whether the claim is made by the foreman or by the subscribers to a chit fund. In this regard, it is submitted that the jurisdiction of the civil court has been ousted under the Chit Funds Act. If parties were in a position to approach the civil court, the court fee would be 3% of the amount claimed, whereas, as a result of the amendment, the court fee is 5% of the amount claimed. In fact, if filed in the High Court, the court fee would be only 1% of the amount claimed. Therefore, the Petitioner has challenged the amendment to Appendix II of the TN Chit Funds Rules.
Held by High Court
The contention of the learned counsel for the Petitioner is that a 3% court fee is being levied in the civil courts in Tamil Nadu and that, therefore, the levy of 5% ad valorem fee is arbitrary. The said contention is untenable because the Chit Funds Act provides for the speedy resolution of disputes and the nature of services provided under the Chit Funds Act cannot be compared with or equated with that of civil courts. Similarly, the amendment to Appendix II cannot be said to be arbitrary merely because Schedule IV of the A&C Act provides for a lower percentage of ad valorem fees. Typically, the amount claimed in arbitration proceedings under the A&C Act is much larger than the amounts claimed in proceedings under the Chit Funds Act. Therefore, a comparison of the ad valorem fee percentage as between arbitration under the A&C Act and the Chit Funds Act is invidious and untenable. Hence, it cannot be said that the equality clause of the Constitution is violated.
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