Closure Of Chit Fund Company Without Notice Is Deficiency In Service: Kerala Consumer Commission Orders ₹8.25L Refund, ₹30K Compensation

The District Consumer Disputes Redressal Commission, Ernakulam recently directed a chitty company based in Kodungallur, its Managing Director and Board of Directors to refund an amount of Rs. 8.25 lakhs paid by its subscriber as instalments over a period of around 11 years after the company closed down its offices without notice.The Bench comprising D.B. Binu (President), V. Ramachandran and Sreevidhia T.N. also ordered a compensation of Rs. 25,000 for the monetary loss, mental agony, hardship and harassment faced by the complainant in addition to ordering Rs. 5,000 as costs.They were considering a consumer complainant preferred by a senior citizen and professional drama artist, who had joined the 1st opposite party chitty company at the request of its director. The kuri was to mature in 2030 and the scheme was for Rs. 16.5 lakhs.After joining the chitty in 2011, the complainant had made 110 instalments of Rs. 7,500 each, totalling Rs. 8.25 lakhs, through the company's bank account.When he approached the bank in 2021 to make the 111th instalment, he was informed that the company's account had been closed. Even though he tried to contact the opposite parties, there was no response and finally, he came to know that the company closed its offices without notice and cheated subscribers.Subsequently, a lawyer notice was sent but it was returned unserved. Aggrieved, he came before the Commission alleging deficiency in service, unfair trade practice and cheating. As evidence, the complainant produced his passbook and other documents, and filed a proof affidavit in lieu of chief examination. Since the opposite parties did not appear before the commission even after substituted service through paper publication, they were set ex parte.Relying on the Supreme Court decision in Shriram Chits (India) Pvt. Ltd. vs. Raghachand Associates, the commission concluded that the complainant, being a chit subscriber was a consumer and the chit company was a service provider as per the Consumer Protection Act.The commission also found that there was deficiency of service and unfair trade practice on the side of the opposite parties since the offices and branches were shut down without notice or explanation to subscribers and refund of amounts already collected. It observed:“Such conduct amounts to:• a complete failure to perform the basic contractual obligation of properly conducting the kuri till maturity or settling the subscriber's account;• an “imperfection, shortcoming or inadequacy” in the manner of performance of service, squarely falling within “deficiency” under Section 2(11), and• an unfair trade practice under Section 2(47), as the opposite parties induced subscribers to join the kuri and continued to collect instalments, while later abruptly closing operations and denying the promised benefit.”It thus found that the complainant was entitled to refund of instalments already paid with 12% interest in addition to compensation and costs, which the opposite parties are to bear jointly and severally.“This case is a stark reminder that behind every financial transaction lies a human story. The complainant is not a seasoned investor but an elderly drama artist who has spent a lifetime bringing art and culture to society, and who entrusted his hard-earned savings to the opposite parties with the simple hope of security in his later years. Instead, he was met with silence, closure of offices without notice, and utter disregard for his dignity and peace of mind. The anguish of discovering that years of diligent payments have vanished into uncertainty, and the strain of having to pursue legal remedies at this stage of life, cannot be measured in figures alone. As a consumer and as a senior citizen, he was entitled to honest conduct, transparency and fair dealing—standards which the opposite parties have woefully failed to meet,” the Bench had observed.Case No: C.C No. 496 of 2022Case Title: Sathish Sangamithra v. Finisyer Kuries Pvt. Ltd. and Ors.Counsel for the complainant: Binni KamalClick to Read/Download Order

Closure Of Chit Fund Company Without Notice Is Deficiency In Service: Kerala Consumer Commission Orders ₹8.25L Refund, ₹30K Compensation

K. Salma Jennath

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Closure Of Chit Fund Company Without Notice Is Deficiency In Service: Kerala Consumer Commission Orders ₹8.25L Refund, ₹30K Compensation

K. Salma Jennath

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