Unethical Financial Activities: District Commission Directs Vaidi Chit Fund Company To Pay Compensation

The District Consumer Disputes Redressal Commission, Hyderabad – II, consisting of Sri Vakkanti Narasimha Rao (President), Sri P.V.T.R Jawahar Babu (Member), and Smt. Madhavi Sasanakota (Member), allowed the complaint against Vaidi Chitfunds Pvt Ltd (Chit Fund Company), Prodduttor Shilpa, and Prodduttor Janardhan. The Commission found them liable for deficiency of service and unfair trade practices involving unethical financial activities. The Commission ordered the Chit Fund Company to pay the Complainant Rs. 2,75,017 along with 15% per annum interest, and additionally, Rs. 10,000 as compensation for the mental agony and reimburse Rs. 5,000 towards the costs of the litigation incurred by the Complainant. Brief Facts: The Complainant subscribed to a chit fund for Rs. 6 lakhs for a period of 40 months and a monthly installment of Rs. 15,000. The chit fund's contribution amounts were not fixed and varied based on billing. He made payments through bank transactions or cheques, starting from April 2018 until July 2021 when the chit matured. Upon completion of the chit, he did not receive the prized chit amounts as promised. Despite repeated demands for accounts and dividends entitled to him, the Chit Fund company delayed the matter, refusing to provide any account information. After significant persuasion, the Chit Fund company issued a cheque for Rs. 5,25,000 as a partial payment out of the total chit amount. The cheque was meant to settle a legally enforceable debt and all the parties involved were aware of it. However, when he presented the cheque to his SBI account, it was dishonored with the reason given as "Funds Insufficient". The Complainant sent a legal notice demanding payment of the amount specified in the dishonored cheque within 15 days which was not responded to. Contentions of the Parties: The Complainant alleged that the Chit Fund Company is engaged in unethical financial practices by intentionally issuing a cheque without sufficient funds in their account. He submitted that such a constitutes a deficiency of service and unfair trade practices, reflecting unethical financial activities on their part On the other hand, the Chit Fund Company refuted the claim of deficiency of service and argued that the Complainant is not considered a "Consumer" as they failed to make full payments owed to the Chit Fund Company. The company contended that the Complainant concealed information about making NEFT payments of Rs. 25,000/- and Rs. 1,00,000/-, which were pending reconciliation along with late payment interest and dividend forfeiture for several months. The Chit Fund Company further alleged that the Complainant attempted to blackmail them by involving her husband, who apparently works in the Complainant's office but has no connection to the Chit Fund Company's operations. The company clarified that they are managed by another partner, and the Complainant's husband is unrelated to their business. Observations of the Commission: The District Commission allowed the complaint and pointed out that the Chit Fund Company issued a dishonored cheque, indicating an outstanding amount of Rs. 5,25,000/- owed to the Complainant. Additionally, the Chit Fund Company failed to provide any evidence supporting their claim of making NEFT payments. The Commission emphasized that the Chit Fund Company's failure to pay the total chit amount to the Complainant, even after the chit duration period had ended, constituted a deficiency of service and an unfair trade practice. As a result, the Commission concluded that the Chit Fund Company must pay the Complainant Rs. 2,75,017 along with 15% per annum interest. Furthermore, they ordered the Chit Fund Company to compensate the Complainant and their family with Rs. 10,000 for the mental agony and trauma caused. Lastly, the Chit Fund Company was directed to reimburse Rs. 5,000 as litigation costs incurred by the Complainant. Case Title: S.V. Narayana Reddy vs Vaidi Chitfunds Pvt Ltd. Counsel for Complainant: K.Balakrishna, Advocate Counsel for Opposite Parties: T.Pavan, Advocate Click Here To Read/Download Order

Unethical Financial Activities: District Commission Directs Vaidi Chit Fund Company To Pay Compensation

Sachika Vij

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Sachika Vij

Unethical Financial Activities: District Commission Directs Vaidi Chit Fund Company To Pay Compensation

Sachika Vij

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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Sachika Vij

This is a premium content
Available exclusively to
Our subscribers