Chit Fund Companies in India delays payment of Prize money amount, which should be paid immediately after furnishing of security. The relevant Acts governing Chit Funds did not grant any time for payment, thereafter. Delay in payment is Unlawful and this view is also affirmed by Consumer courts.
The prize amounts should be paid immediately after furnishing security:
Almost all of us are nowadays subscribers to the chits of one or the other chit fund company. And it is the experience of almost all the subscribers that the prize amounts are not paid promptly when we become successful bidders. The Chit Fund companies are delaying the payments by making a false propaganda that they can take one month’s time for payment of prize money.
The relevant Acts did not grant any time for payment:
Here is an attempt to understand as to what is the actual time granted for payment of prize money by the relevant acts.
The very first sentence of the Section 14 of the Andhra Pradesh Chit Funds Act, 1971 reads as under:-
“14. Duties of the foreman :- {1) The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions be bound to pay him the prize amount ;”
Similarly the very first sentence of the Section 22 of the central Act, THE CHIT FUNDS ACT, 1982 too reads verbatim as under:-
“22. Duties of foreman.—(1) The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions, be bound to pay him the prize amount:”
The words “on the prized sub-scriber furnishing sufficient security” “ be bound to pay” have to be closely studied and understood which un-ambiguously and explicitly convey the meaning that no time is allowed for payment of the prize amount after submission of sufficient security and it can never be at the discretion of the chit fund company.
In spite of very clear legal provision as explained above the payment of prize money is willfully and unlawfully delayed even today unabated by most of the chit fund companies for nearly a month or so even after submission of sufficient security. By following this unfair trade practice the chit fund companies are making unlawful gains by earning interest on the huge prize amounts which belonged to the subscribers the moment sufficient security was provided by them.
The Consumer Court too has affirmed this:
When this malpractice of this intentional delay by a reputed chit fund company was challenged by me, it was clearly held by the District Consumer Forum, Kadapa, way back in the year 2010 itself {in its Order dated 13-10-2010 in my CC No.72/2010}, that as per provisions of the A.P. Chit Funds Act, the opposite parties should pay the prize monies immediately after furnishing security without any delay and concluded that there was deficiency of service on the part of the company, thus clearly establishing that withholding of prize amounts after submission of security is unlawful.
It is submitted that though the District Forum has categorically concluded that no time is allowed in the relevant Act for payment of prize money after submission of the security, and ordered for payment of interest for the belated payment of the prize money and also awarded costs to me, in my individual case, it could not give any specific general direction, because of the obvious limitations of jurisdiction in C P Act as it is concerned with only the aspect of the deficiency in service.
My enquiries revealed that almost all the chit fund companies in the two states of AP and Telangana are following this malpractice. The chit fund companies in the other states too, I don’t think would be more kind to the Subscribers. They too would perhaps be cheating the subscribers in a similar way.
As no action was initiated in the desired direction, even by the Registrar of chits concerned in the matter, even when the matter was brought to his notice by me, it can be safely concluded that this is happening with the knowledge and connivance of the authorities who are supposed to regulate the activities of the chit fund companies.
A specific mention, however, needs to be made here about the most reputed chit fund company, which was sometime back forced to refund the deposits as they collected the same under the name of HUF, is however, honestly making payments of the prize amounts soon after submission of the security by the successful bidders.
Urgent need for a SUO MOTU probe:
The Hon’ble Supreme Court has long back rightly asserted its sky-high powers to chase injustice. The relevant observation reads as under:
“Where there is manifest injustice, a duty is enjoined upon this Court to exercise its suo motu power ….as it is well-settled that illegality should not be allowed to be perpetuated and failure by this Court to interfere with the same would amount to allow illegality to be perpetuated.”
{CRIMINAL APPEAL NO.1428 OF 2011 Arising out of S.L.P.(Crl.) No. 6349 of 2010)}
There is an urgent need for intervention of the Supreme Court by exercising its suo motu powers to stop this unfair trade practice being perpetuated by the chit fund companies, for generations and safeguard the interests of the gullible chit subscribers who are blissfully ignorant that they are being cheated.
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