WP(C) NO. 3507 OF 2025 1 2025:KER:28649 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 3RD DAY OF APRIL 2025 / 13TH CHAITHRA, 1947 WP(C) NO. 3507 OF 2025 PETITIONER/S: M/S MUTHOOT PAPPACHAN CHITS (INDIA) PRIVATE LIMITED REGISTERED COMPANY HAVING REGISTERED OFFICE AT MUTHOOT CENTER, PUNNAM ROAD, TRIVANDRUM REPRESENTED BY ITS DEPUTY VICE PRESIDENT, SABU ZACHARIAS. K., AGED 64, S/O KUNCHERIA, RESIDING AT VADAKARA, U R A -18, NALACHIRA P O, THIRUVANANTHAPURAM P O, THIRUVANANTHAPURAM DISTRICT, PIN - 695015 BY ADV G.SREEKUMAR (CHELUR) RESPONDENT/S: 1 THE STATE OF KERALA , REPRESENTED BY THE SECRETARY TO THE GOVERNMENT, DEPARTMENT OF TAXES, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM P O, THIRUVANANTHAPURAM DISTRICT -, PIN - 695001 2 THE INSPECTOR GENERAL OF REGISTRATION, OFFICE OF THE INSPECTOR GENERAL OF REGISTRATION, VANCHIYOOR P O, THIRUVANANTHAPURAM DISTRICT -, PIN - 695035 3 DEPUTY REGISTRAR OF CHITS , OFFICE OF THE DEPUTY REGISTRAR OF CHITS , III FLOOR, PERIMBILLY BUILDINGS. M G ROAD, SHENOYS, , ERNAKULAM,, PIN - 682011 4 ASSISTANT REGISTRAR OF CHITS OFFICE OF THE SUB REGISTRAR, III FLOOR, PERIMBILLY BUILDINGS. M G ROAD, SHENOYS, ERNAKULAM, PIN - 682011 BY ADV ADVOCATE GENERAL OFFICE KERALA GP SMT.VIDYA KURIAKOSE THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 3507 OF 2025 2 2025:KER:28649 C.S.DIAS, J. --------------------------------------- WP(C) No. 3507 OF 2025 ----------------------------------------- Dated this the 3rd day of April, 2025 JUDGMENT The writ petition is filed to direct the respondents 1 to 4 to consider the compounding application submitted by the petitioner expeditiously. 2. The petitioner is a private limited company doing business under the Chit Funds Act, 1982. The petitioner decided to start five chits. The petitioner's erstwhile Branch Manager made the petitioner believe that he had obtained the registration to start the five chits under Section 4 of the Act. However, it turned out that the Manager had cheated the petitioner. Accordingly, the petitioner got Ext.P6 crime registered. The petitioner learnt that the Manager after getting the sufficiency certificate, started enrolling subscribers and executing agreements, without getting registration. Consequently, the respondents initiated action against the petitioner. The petitioner has admitted that they had not obtained prior registration before commencement of WP(C) NO. 3507 OF 2025 3 2025:KER:28649 the chits. But, actually the petitioner was cheated by the Manager. The 4th respondent had sent Ext.P8 communication to the petitioner stating that the five chits were commenced without obtaining registration. Aggrieved by Ext.P8 communication, the petitioner has preferred Ext.P9 appeal. At that juncture, by Ext.P10 communication, the 3rd respondent informed the 4th respondent that the matter can be compounded under Section 81 of the Act. However, the respondents are not permitting the petitioner to compound the matter. Hence, the writ petition. 3. The 2nd respondent has filed a counter affidavit stating that the petitioner had started the five chits without following the preliminary procedure contemplated under the Act. Since no approval was obtained from the Deputy Registrar of Chits to commence the chits, the chits are unauthorised. Compounding of unauthorised chits is permissible only to compound the lapses that occurred during lawful conduct of chits and not to offences relating to entirely illegal chits. Therefore, the compounding application cannot be considered. WP(C) NO. 3507 OF 2025 4 2025:KER:28649 4. Heard; the learned counsel for the petitioner and the learned Government Pleader. Section 81 of the Chit Funds Act reads as follows: “81. Power to compound offences.—(1) Subject to such conditions as may be prescribed, any officer empowered by the State Government in this behalf may, either before or after the institution of criminal proceedings under this Act, accept from the person who has committed or is reasonably suspected to have committed an offence under this Act, by way of composition of such offence, a sum of money not exceeding such amount as may be prescribed. (2) Where an offence has been compounded under sub-section (1), the offender, if in custody, shall be discharged and no further proceedings shall be taken against him in respect of such offence”. 5. A plain reading of the above provision demonstrates that it is the competent officer of the State Government who has to taken a decision whether the composition can be permitted. 6. On a consideration of the facts and materials on record, particularly that the petitioner's application for compounding the offences is pending consideration before the 2nd respondent, without expressing anything on the merits of the matter, I deem it appropriate to direct the 2nd respondent to consider and dispose of the petitioner's WP(C) NO. 3507 OF 2025 5 2025:KER:28649 application for compounding. In the aforesaid circumstances, I direct the 2nd respondent to consider and dispose of the application submitted by the petitioner to compound the offences allegedly committed by them, in accordance with law and as expeditiously as possible, at any rate, within 60 days from the date of production of a copy of this judgment, after affording the petitioner an opportunity of being heard. The writ petition is ordered accordingly. Sd/- C.S.DIAS, JUDGE rkc/03.04.25 WP(C) NO. 3507 OF 2025 6 2025:KER:28649 APPENDIX OF WP(C) 3507/2025 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE CERTIFICATE OF SUFFICIENCY OF SECURITY ISSUED BY THE 4TH RESPONDENT IN THE CASE OF THE PETITIONER FOR ONE AMONG THE DISPUTED FIVE CHITS DATED 26.7.2023 BEARING NO 724/2023 Exhibit P2 TRUE COPY OF THE CERTIFICATE OF SUFFICIENCY OF SECURITY ISSUED BY THE 4TH RESPONDENT IN THE CASE OF THE PETITIONER FOR ONE AMONG THE DISPUTED FIVE CHITS DATED 18.8.2023 BEARING NO 817/2023 Exhibit P3 TRUE COPY OF THE CERTIFICATE OF SUFFICIENCY OF SECURITY ISSUED BY THE 4TH RESPONDENT IN THE CASE OF THE PETITIONER FOR ONE AMONG THE DISPUTED FIVE CHITS DATED 11.9.2023 BEARING NO 892/2023 Exhibit P4 TRUE COPY OF THE CERTIFICATE OF SUFFICIENCY OF SECURITY ISSUED BY THE 4TH RESPONDENT IN THE CASE OF THE PETITIONER FOR ONE AMONG THE DISPUTED FIVE CHITS DATED 20.9.2023 BEARING NO 931/2023 Exhibit P5 TRUE COPY OF THE CERTIFICATE OF SUFFICIENCY OF SECURITY ISSUED BY THE 4TH RESPONDENT IN THE CASE OF THE PETITIONER FOR ONE AMONG THE DISPUTED FIVE CHITS DATED 18.10.2023 BEARING NO 1152/2023 Exhibit P6 TRUE COPY OF THE FIR AND CONNECTED RECORDS IN CRIME NO 409 OF 24 DATED 15.3.24 OF THE ERNAKULAM TOWN NORTH POLICE STATION Exhibit P7 TRUE COPY OF THE APPLICATION OF THE PETITIONER DATED 24.5.2024 BEFORE THE 4THRESPONDENT Exhibit P8 TRUE COPY OF THE COMMUNICATION RECEIVED BY THE PETITIONER COMPANY DATED 7.6.24 FROM THE 4TH RESPONDENT Exhibit P9 TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE DEPUTY REGISTRAR OF WP(C) NO. 3507 OF 2025 7 2025:KER:28649 CHITS, ERNAKULAM DATED 14.8.24 Exhibit P10 TRUE COPY OF THE COMMUNICATION BY THE DEPUTY REGISTRAR OF CHITS, ERNAKULAM DATED 1.11.24 Exhibit P11 TRUE COPY OF THE JUDGMENT DELIVERED IN W P (C) NO 22642 OF 14 DATED 2.9.14 RESPONDENT EXHIBITS Exhibit R2(a) True copy of the letter No. TAXES -C3/19/2025 dated 13-02-2025 from Additional Chief Secretary ,Taxes (C) to Second respondent.