The High Court of Telangana dismissed the second appeal under Section 100 of the CPC filed by a guarantor challenging a decree passed in a chit fund suit, holding that no substantial question of law was involved.
Second appeal dismissed at the admission stage without costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
MONDAY, THE SECOND DAY OFIUARCH TWO THOUSAND AND TWENTY
PRESENT
THE HONOURABLE DR. JUSTICE SHAMEEMAKTHER
SECO ND APPEAL NO: 63 OF 2020
Appeal under section 100 of Civil ProcedureCode, against the Judgmentand Decree, dated 13-1 1-2019 in A.S.No.59 of 2016 on the file of the Court of theI Additional District Judge, Karimnagar,preferred againstthe Judgmentand Decree, dated 28-03-2016 in o.s.No. 90 0f2000 0n the file of the court of the Additional Senior Civiljudge, Karimnagar, Betlveen:
V. Ch. Nata Raju, S/o Chalamaraju,Aged56 years, Occ. Employee,Rl/o Q.No.12, Centinary Colony, KamanpoorMandal, Karimnagar District
...OttaatANT/APPELLANT/DEFENDANTNo.2
AND
....RESPONDENT No.1/RESPONDENT No.1/PLAINTIFF
... R E s P o N D E N r sNo. 2 to4/ SEEFg[,Jffi Tsr i ]?; i tX
IA NO :2 OF 2020
Petition under Section151 of cPCpraying that in the circumstances statedin the affidavit filed in supportof the petition,the High Court may be pleasedto grant stay of all furtherproceedings pursuantto the Judgmentand Decree, dated 28-03- 2016 in 0.s.No. 90 of 2000on the file of the Hon'bleAdditional Seniorcivil judge, Karimnagar, confirmed by Judgmentand Decree, dated13-11-2019passedin A.S.No. 59 of 2016 on the file ofthe Hon'bleI Additional District Judge,Karimnagar, pending final disposal of the Second Appeal
Counsel for the Appellant: SRIM.A. RAHEEM
Counsel for the Respondents:NONEAPPEARED
The Court made the following: ORDER
THE HON,BLE DT. ]USTICE SHAMEEM AKTHER
SECOND APPEAL No.63 of 2O2O
JUDGMENT:
This Second Appeal, under Section 100 of the Code of Civil Procedure, 1908, is filed by the appellant/defendant No.2, challenging thejudgment and decree, dated 13,11.2019, passed in A.S.No.59 of 2Qt6, by the I Additional District Judge, Karimnagar, whereby, the judgment and decree, dated 28.03.2016, passed in O.S.No.90 of 2000, by the I Additional Senior Civil Judge, Karimnagar, was confirmed.
2, Heard the learned counsel for the appellant/defendant No.2 and perused the record.
"The plaintiff is a company registered under the Indian Companies Act, 1956, with registration No.01-13396 of t99t-92 and hat heen doing chit fund business, with its registered office at
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3-1-582, C.V.R.N.Road,Karimnagar. The defendantNo.1 joined the chit fund scheme asa member in LT2Fseriesstarted in the month of February,1997 and was allotted ticketNo.17 in his name. He agreed to subscribe @Rs.10,000/- per month, payable on or before 15th of eachcalendarmonth for 50 months and the total prize money of the chit was Rs.5,00,000/-'The defendant No'1 participated in the auction held on 22.02.1998and becamea successful bidderagreeing to forego Rs.2,25,000/-.The defendant No.1 furnished defendantNos.2to 4 as guarantors. The defendant Nos.2 to 4 executed ademand promissorynote For Rs.3,50,000/- being the future liability,undertakingto pay the said amountin case of default by defendantNo.1' After furnishing guarantee, the defendant No.1, beinga successfulbidder, was paid Rs'2,75,000/- after deducting duesand verification charges' Thereafter,the defendant No.1committed default in paymentfrom26th instalment' The plaintiff Companydemanded him to pay the instalments due and also issued legalnotice on 21.06.2000 to all the defendants.In Spite of the same,the defendantsneitherrepliedto the legalnotice norpaid the chitamount due. Hence,the plaintiff is constrained to file the subject suit."
"The defendant No.2 admittedthat the defendant No'1joined as a member inthe Chit fund scheme run by the plaintiff Company with a value of Rs.5,00,000/-with durationof 50 months@ Rs.10,000/-per month andbecamea successfulbidder in the
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auction. The defendant No.1 did not commit any default in payment of the chit amount. Since the defendant No.1 repaid entire chit amount, the defendant No.2, who stood as aguarantor, is not liable topay any amount to theplaintiff Company. But the plaintiff Company, with mala frde intention to extort extra money from the defendants, filed the subject suit with false and baseless allegations. There is no cause of action for theplaintiff Company to file the subject suit and the subject suit is barred by limitation. The subject suit is devoid of merit and is liable to be dismissed"
2. Whether the suit is within limitation?
3. To what relief ?
B, On merits, the trial Court decreed the suit with costs against the defendant Nos.2 to 4 for an amount of Rs.2,84,456/- and subsequent interest on amount of Rs.2,45,850/- al 60/o p.a. from the date of suit till the date of realization and further dismissed the suit against the defendant No.1 as abated.
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after re-appreciatingthe entireevidence on record, dismissedthe appeal by confirming thejudgment and decree of the trial Court' Aggrieved by the same, the appellant/defendantNo.2 preferred this Second Appeal.
r1. The Second Appealis sought to be admitted on the following substantialquestionsof law:
12,Thelearnedcounselfortheappellant/defendantNo.2would contendthat the substantial questions,as indicatedabove'arise for determinationin this appeal'The defendant No lhad repaid the entire chit amount.In spite of the same, the subject suit was filed by theplaintiffCompany'The Court below did not considerthe payments madeby the defendant No land erroneouslydecreed the Suit forrecoveryof amount of Rs.2,84,850/- and Subsequent interest onan amountof Rs 2'45'850/-at 60/o per annum' The
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)
defendant No.2 was ineligible to stand asguarantor tothe subject chit amount. The trial Court is unjustified in decreeing the suit for recovery of amount, so also the first appellate Court in confirming the same and ultimately prayed to set aside the Judgment and decree under challenge and to allow the Second Appeal as prayed for.
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evidence;perverse findingare some of the questions,which involve substantialquestionsof law.
14, The oral and documentaryevidenceon recordrevealsthat the plaintiff is a ChitFund Companyregistered underthe Companies Act,1956, with registration No.01-13396 of l99l-92 and has beendoingchit Funds business,with its registered office at Karimnagar. Thedefendant No.1 joined as a member in a chit bearing seriesNo.LT2Fwith chit value of Rs'5,00,000/-with duration of 50monthlyinstalments @ Rs'10,000/-per month' on 26.01.1998 startedin the month of FebruarY '1997 and was allotted ticketNo.17 in his name' The defendantNo'1 agreedto subscribe @Rs.10,000/- per month, for 50 monthly subscriptions on or before1Sth of each calendar month continuously' The defendantNo.1 also executed an Agreementof Chit on 26'01'1998 with theplaintiffCompany, which containedthe rulesand regulationsof the Chit Funds Schemeby-law No'32U96-97for conduct ofchit by the plaintiff Company'The defendant No'1 participatedin the auction oo 22'02'!998 and became a successful bidderhavingagreedto forego Rs'2'25'OOO/- out of Rs'5'00'000/- which wasduly confirmedby the plaintiff Company' As per rules of theplaintiffCompany, the defendant No'1' to draw the prize amount,offered the defendantNos'2 to 4' as guarantors' who undertookto pay the future monthly instalmentsregularly in case of defaultby the defendantNo'1' and all of them jointly and severallyexecuted a demand promissory note for Rs'3'50'000/- representingthe future liability' on 22'04'1998' Thereafter'the plaintiff companypaid Rs'2'75'000/-to defendantNo'1 through chequesbearing Nos'0587481 '484' 485 and 829057 of State Bank
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of Hyderabad, Karimnagar branch, on 24.04.1998 afterdeducting verification charges and other deductions due from defendant No.1. The defendant No.1 acknowledged the receipt of amount by executing a cash voucher and defendant Nos.2 to 4 also executed an Agreement of Guarantee on the same day. The material on record further reveals that from 26th instalment onwards, i.e. from 19.05.1999, defendant No.1 committed default in payment of chit amount. In spite oF notice issued by the plaintiff company to all the defendants to pay the balance chit amount, they failed to do so. Ex.A.1 agreement of chit, dated 26.01.1998, reveals the terms and conditions of the chit fund company, ticket number, number of instalments, amount per ticket per instalment, chit number and chit amount etc. Ex.A.2 is the demand promissory note dated 22.04,7998, which reveals that it was executed by the defendant Nos. 1to 4 in favour of plaintiff Company and the Ex.A.3 Agreement of Guarantee, dated 22.O4.lggi, reveals that defendant Nos.2 to 4 executed Agreement of Guarantee in favour of the plaintiff company. Therefore, it cannot be said that he suffered from any disability and untit to stand as a guarantor. The appellant/defendant No.2/D.w.1 for the reasons best known to him, did not place any documentary evidence on record to demonstrate that he was ineligible to stand as a guarantor for the balance unpaid amount of the suit chit transaction. The appellant/defendant No.2 had not disputed the Ex.A.3 agreement of guarantee, dated 22.04.7998. The trial Court, having analysed the entire material on record, was pleased to decree the suit with interest thereon and also costs and the first apperate court righay confirmed the same. Therefore, the Courts below did not commit any material
8
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lrregurarity in appreciation of orar and docurnentary evidence on record and for this court, there is nothing to interfere with the concurrent findings of the Courts below. Moreover, the questions sought to be raised in this appeal as substantial questions of law are pure questions of fact, which cannot be dealt with in this appeal filed under section 100 of c.p.c. where the first appeilate court appears to have exercised its discretion in a judicial manner, it cannot be termed to be an error, either of law or of procedure, requiring interference in a Second Appeal. After careful examination of the pleadings, evidence and the contentions, this Court finds that no question of law, much less substantial question of law, is involved in this Second Appeal. The first appellate Court has neither overlooked the admissible evidence nor acted upon inadmissible evidence. Under these circumstances, the Second Appeal is liable to be dismissed.
Miscellaneous Petitions, if any,pending in this Second Appeal,
shall stand closed,
SDi.K.SRINIVASARAO DEPUTY RE ISTRAR
,TRUE COPY//
SECTION OFFICER
To,
1 The lAdditionalDistrict Judge, Karimnagar, KarimnagarDistrict' . i ff.," nOOitional SeniorCiviljirdge, Karimnagar, Karimnagar District' 3 One CC to Sri M. A.Raheem Advocate [OPUC] 4 Two CD Copies JR JIV 'Io\Y-
HIGHCOURT
DATED:0210312020
1 ilg 5 i4 l.i:
K"
15 r,lAY 2ili0
t<r!,
^ra<br>
ORDER
SA.No.63 of2020
DISMISSING THESECOND APPEAL AT THE STAGE OF ADMISSIONWITHOUTCOSTS
'X1"
3 issues framed by the court
Whether the Courts below were bound to examine the cause of action given different pleas by the plaintiff in regard to the dispute.
Whether the second appellate court should verify if the trial court decreed the suit considering all grounds when the plaintiff relied solely on the guarantee agreement.
Whether the second appeal involves a substantial question of law or merely questions of fact that are not amendable in appellate review.
1 provisions across 1 enactments
V. Ch. Nata Raju
Ottaat
1. Karimnagar Vipanchi Chit Funds Private Limited
Sri Sai Ram Enterprises
B. Sunder Sunith Kumar
R. David Raj
DR. JUSTICE SHAMEEM AKTHER
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
