TMI Blog1978 (2) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... h 17, 1976, she bid at the auction and was declared as the highest bidder of the chit and the prize amount thereunder was admittedly Rs. 35,400. Under the chit agreement duly entered into between the petitioner and the respondent, it is open to a subscriber to bid in a particular month and become the prized subscriber. But the prized subscriber is obliged to furnish sufficient security to the respondent-company in order to entitle him to draw the, prize money. One of the clauses agreed to provides that the prized chit subscriber, before drawing the prize amount, will be required to furnish necessary securities or sureties or both to the satisfaction of the foreman as provided for in the registered bye-laws for the due payment of the future instalments by the subscriber. The clause also contemplates that the prized chit subscriber can furnish security of immovable properties within the Corporation limits of Madras to the satisfaction of the foreman. Ultimately, the clause provides that the foreman shall have the absolute right and discretion in deciding as to the adequacy or acceptability of the securities and/or sureties offered. Complying with the provisions of the Tamil Nadu Chit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghly unsatisfactory. The sum and substance of the controversy is that the petitioner charges the respondent-company as having repudiated a contract without justification and that such a repudiation has been accepted by the petitioner and as a result of such acceptance of the repudiation caused voluntarily by the respondent-company by an act of omission or commission on their part, the petitioner is entitled, as a matter of fact in law, for the refund of the paid up instalments (for the 20 months to which she subscribed) and by the non-payment of the same on demand since it has remained unpaid for a period of 21 days after the demand, a deeming situation of inability to pay the debts has arisen within the meaning of section 434(1)( a ) of the Act and section 433( e ) thereunder and, therefore, the petition is maintainable. Learned counsel for the respondent, denied that the security of immovable property offered by the petitioner was accepted. In the alternative, he would say that the company had the option and, indeed, a right under the contract to demand not only security by way of immovable property but also such other securities to the satisfaction of the foreman, as contempla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the liability or the nature of the indebtedness of the company in question to the claimant in a petition under section 433( e ) of the Act. It is for consideration whether such a prima facie dispute has arisen as between the petitioner and the respondent. No doubt, from the correspondence, it is not clear whether the company has accepted the security of immovable property offered by the petitioner. Whilst Mr. Panchapagesa Iyer's case is that he forwarded the title deeds of the petitioner's immovable property for acceptance and that it was accepted, the case of Mr. G. Ramaswami, appearing for the respondent, is that there was no such categorical acceptance or communication. The documents of title were only being investigated and it was in that context that the company called for additional security, as they could do under the terms of the contract extracted already. It is within the discretion of the foreman of the company to decide about the adequacy or acceptability of the securities or the sureties offered. In this case, the admitted case is that besides the security of immovable property offered by the petitioner, an unreasonable demand for additional security by way of ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner. Even if, as alternatively contended by Mr. Panchapagesa Iyer, the petitioner is restricting her claim to the refund of the instalments paid by her towards the chit, here again there is a fallacy. Earlier, this court took the view in Company Application No. 462 of 1976 in C.P. No. 80 of 1972 [ Jannet Chit Funds ( P .) Ltd., In re [1979] 49 Comp. Cas. 261, 265 (Mad.)]. "...that the prize chit amount paid to the highest bidder in a particular chit series is not a loan simpliciter but it is an advance from the common fund of the organisation, to each subscriber who is the prized A common fund consists of subscriptions made by all the members and also includes the instalments paid by the prized chit holder after he bids and which he undertakes to pay after executing the promissory note by himself along with sureties. Every incoming credit and the outgoing debit is from the common fund of the chit company or organisation." This aspect, which is peculiar to a chit organisation, has to be borne in mind before the demand by the petitioner for payment of the instalment money already paid by her could be sought for when the period of the chit is not over. The contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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