VIJAYAWADA: The Andhra Pradesh High Court has issued an interim stay on all further proceedings pursuant to the impugned notice issued by the registrar of chits, asking subscribers to raise objections on the winding up of some chit groups belonging to the Margadarsi Chits Fund Pvt. Ltd.
A single judge bench headed by Justice N. Jayasurya heard a batch of petitions here on Friday.
It observed that orders of winding up some chit groups were already suspended in the writ petitions filed by the subscribers, inter alia keeping in view their commitments. Any further action pursuant to the impugned notice would affect the chit subscribers at large in various groups/branches, in addition to causing a cascading effect on the company.
The court directed the respondents to file their counters after four weeks.
Advocate-general S. Sriram submitted that the show cause notices were issued to various chit groups in relation to different branches for violation of regulatory provisions of the Chit Funds Act.
He submitted that Section 48 of Chit Funds Act provided for suo motu action and it was not a case of lack of jurisdiction. He contended that the absence of any complaint by any subscriber would not denude the deputy registrar of his power.
The A-G said a failure to deposit the amount that is required to be deposited would also enable the registrar to take action for winding up the chit groups and that the issuance of show cause notice was justified.
The court observed after hearing the arguments from both the parties that there were several contentious issues to be adjudicated in these cases, perhaps after filing the counter affidavits by the respondents.
Senior counsel Abhishek Manu Singhvi submitted that the writ petitioner company was carrying out chit transactions successfully and no single complaint by any subscriber about payment of chit amount or default, except for one, was induced at the instance of the state government.
