Rs 25 lakh chit fund delayed 55 days, mobile shop owner wins Rs 44,500 payout

“The Chit Fund Act does not stipulate any time limit within which the Chit Fund company has to pay the prize amount. In such a case, it implies that the Chit Fund company has to pay the prize money immediately after furnishing of sureties,’ said the commission on August 19.

The dispute involved a self-employed mobile shop owner from Mahabubnagar who had joined a Rs 25 lakh chit fund scheme, with a monthly instalment of Rs 50,000 for 50 months. He was declared the successful bidder on December 15, 2018 by the chit fund company, after foregoing Rs 10 lakh, and later furnished sureties. He complained that the chit fund prize money was delayed and that Rs 17,500 was deducted towards insurance without his consent.

Delay affected business

According to the complaint, the consumer had regularly paid his chit fund instalments from the commencement of the chit fund in May 2018 until February 2019. He said he had participated in the bid with the intention of lifting the chit amount to develop his business. He furnished four sureties, including three income-tax holders and a head nurse working in a government hospital.

The complainant alleged that despite verification of the sureties, the company did not release the prize money within the expected time. He further alleged that the delay forced him to take private loans at higher interest rates, causing financial loss and mental agony. He approached the Mahabubnagar District Commission seeking compensation for the delay, refund of the insurance amount and compensation for mental agony.

Company disputed delay

The company admitted the chit membership, its Rs 25 lakh value, the Rs 50,000 monthly subscription and the December 15, 2018 successful bid. However, it contended that the prize money could be released only after the consumer executed the required documents and furnished sureties to its satisfaction.

It claimed the sureties were furnished only on April 28, 2019 and had to be verified before payment. According to the company, the prize amount was released on May 18, 2019 and Rs 1,100 was paid as interest for a five-day delay. It also maintained that the money of Rs 17,500 insurance premium had been returned to the consumer.

More than 55-day delay

Taking note of the fact that the consumer had furnished the sureties on March 28, 2019, rather than April 28, 2019, as claimed by the company, the commission noted that payments totalling Rs 14.85 lakh had been made on three occasions, with the last payment of Rs 13,00,375 made on May 25, 2019.

The commission held that even if one week was allowed for verification, the prize money should have been paid by April 1, 2019. Instead, the last payment was made on May 25. “Apparently, there is a delay of more than 55 days,” the commission said, agreeing with the district commission‘s calculation of the delay as two months.

It noted that interest on the money of Rs 15 lakh at 12 per cent per annum for two months would amount to Rs 30,000, while the district commission had awarded Rs 25,000. The state commission also found that the Rs 1,100 paid by the company as interest was inadequate for the delay.

Rejecting the company’s claim that the Rs 17,500 insurance premium had already been returned, the commission found that evidence relied upon by the company was a receipt for chit subscription and did not establish repayment of the insurance amount. The direction to refund Rs 17,500 was upheld.

The district commission had also awarded Rs 2,000 towards proceedings costs. The state commission concluded that the district commission had properly considered the evidence and passed a reasoned order. Finding no ground for interference, it dismissed the appeal and confirmed the February 25, 2022 order.

Takeaway

If you win a chit bid and furnish the required sureties, keep records of all submissions, payments and receipts, as they can help establish when the formalities were completed and challenge any delay or disputed deduction.

Aggrieved consumers may contact the consumer helpline in their respective states (Telangana: 0771-2582902) or call the National Consumer Helpline at 1915 for assistance.

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