Amaravati: Senior advocates Nagamuthu and Dammalapati Srinivas argued in the High Court on behalf of the Margadarshi Chitfund Company stating that the Chitfund Act empowers the foreman to rectify any errors in chit management. He said that if the assistant registrar, who conducted the inspections in the Chitfund branches found any errors, he should give a 'notice' to the foreman to correct them as per the provisions of Section 46 (3) of the Chit Act.
He said that only if the defects are not rectified, steps can be taken to stop the chit group under Section 48 (H). But, the assistant registrar did not give notice to the foreman. In this context, there is no question of receiving objections on the suspension of chit groups from the chit registrar/deputy registrar. The public notice issued by the Registrar of Chits inviting objections is invalid. According to the Chit Fund Act, assistant registrar and deputy registrar also come under the definition of 'Registrar'.
Only the checking officer (Assistant Registrar) should give notice to the foreman to rectify the defects. In contrast, the Chits Registrar has stated in a public notice that objections are being invited regarding the suspension of chit groups as per the recommendation of the assistant registrar.
They said that the Registrar had no jurisdiction to issue the notice and it was invalid. They said that the law does not provide the authority to make 'recommendations'. It was brought to the notice of the court that public notices were issued with malicious intent to stop the chit groups and harm the Margadarsi.
They sought to suspend the execution of the public notice and issue an interim order restraining the authorities from taking further action. The hearing was adjourned to Tuesday for arguments by AG Sriram on behalf of the state government as the arguments of the senior advocates ended in the hearing held on Monday. High Court judge Justice N. Jayasuriya gave an order to this effect on Monday.
The authorised representative of Margadsari Chit Fund Company P Rajaji approached the High Court challenging the suspension of chit groups based on the public notice issued by the Registrar of Chits on July 30 this year asking the subscribers to raise objections regarding the chit groups placed on the government website. Three separate lawsuits were filed challenging the public notice issued in the case of chit groups of Guntur, Krishna and Prakasam districts. In the hearing held on Monday, senior advocates heard arguments in the cases filed in the chit groups of Krishna and Prakasam districts.
100% security for subscribers' money
Senior advocate Nagamuthu argued that there are provisions of the Chit Fund Act to protect the interests of the subscribers. "Section 46 (3) of the Chit Fund Act provides for the rectification of chit groups with the intention of not suspending them on the ground that minor errors have occurred. The chits registrars are responsible for issuing notices to correct errors if they are found. Here the assistant registrar, who conducted the inspections, did not issue a notice to correct the errors. According to law, 100% security is being provided to the subscribers' money. Therefore, there will be no problem with their interests, he said.
Suspension orders before serving notice
Another senior advocate Dhammalapati Srinivas said that the officials had given orders to stop some groups before giving public notice regarding chit groups in the Prakasam district. After that objections are invited. It was brought to the notice of the court that it was against the provisions of the law.
"Orders were issued in a stereotyped manner with the same type of allegations. The chit officials, who conducted the inspection, if they found any errors, should issue another notice to rectify the errors stating the details. By not following that policy, they acted contrary to the principles of natural justice. The issue of retention of chit groups has become very serious. The rules make it clear that notice must be given to the foremen before taking such action. The Supreme Court ruled that direct action should not be taken without giving notice in financial matters. Taking these factors into consideration, stop the actions to be taken by the authorities based on public notice."
