The Andhra Pradesh High Court, in a significant ruling, has held that the Limitation Act, 1963, does not apply to appeals filed under Section 70 of the Chit Funds Act, 1982. The judgment was pronounced by Justice Ravi Nath Tilhari in Writ Petition No. 28392 of 2024, filed by Atmakuru Nirmalamma against the State of Andhra Pradesh, Department of Revenue (Registration & Stamps), and others.
Background of the Case
The case stemmed from a dispute involving M/s. Margadarsi Chit Fund Private Limited, which had initiated arbitration proceedings against six individuals, including the petitioner, for the recovery of Rs. 17,67,275. The dispute was adjudicated by the Deputy Registrar of Chits, Tenali, who passed an award on October 31, 2017, directing recovery with an 18% per annum interest on the principal amount of Rs. 15,63,040.
The petitioner, who was one of the guarantors, claimed that she had not received any notice regarding the dispute proceedings and only became aware of the award when execution proceedings were initiated in E.P. No. 245 of 2019 before the Principal Junior Civil Judge, Nellore in 2024. Following this, she filed an Arbitration Original Petition (AOP) before the District Judge, Nellore, which was returned as not maintainable. She then filed an appeal before the State Government under Section 70 of the Chit Funds Act, along with an application to condone the delay in filing the appeal. The appellate authority dismissed the appeal, citing that it was barred by limitation since it was filed beyond the statutory two-month period.
Legal Issues Involved
The central question before the High Court was:
1. Whether the appellate authority under Section 70 of the Chit Funds Act has the power to condone the delay in filing an appeal.
2. Whether the provisions of the Limitation Act, 1963, apply to appeals under the Chit Funds Act.
The petitioner’s counsel, Sri Mutyala Sobhanadri Naidu, argued that Section 29(2) of the Limitation Act makes its provisions applicable to appeals under the Chit Funds Act and that the appellate authority should have considered the request for condonation of delay. The respondent’s counsel, Sri Dilip Nayak, Assistant Government Pleader (AGP) for Revenue, contended that Section 70 of the Chit Funds Act does not provide for condonation of delay, and hence, the appeal was rightly dismissed as time-barred.
Court’s Decision
Justice Ravi Nath Tilhari upheld the dismissal of the appeal, ruling that the Chit Funds Act does not incorporate the Limitation Act for appeals under Section 70. The Court observed:
“Section 70 of the Chit Funds Act prescribes a limitation period of two months but does not confer any power on the appellate authority to condone delay. Unlike other statutes, such as the SARFAESI Act and RDDB Act, which expressly provide for condonation, the Chit Funds Act does not contain such a provision, thereby excluding the applicability of Section 29(2) of the Limitation Act.”
The judgment also referenced Supreme Court rulings, including Baleshwar Dayal Jaiswal v. Bank of India and Mukri Gopalan v. Cheppilat Puthanpurayil Aboobacker, emphasizing that a statute’s scheme determines whether the Limitation Act applies. The Court distinguished the Chit Funds Act from other financial statutes, stating that where the legislature intended to allow condonation of delay, it explicitly provided for it.
The Court concluded:
“Neither the provisions of the Limitation Act nor the power for condonation of delay are applicable under Section 70 of the Chit Funds Act. The legislative intent is clear that appeals must be filed within the prescribed period, and any delay renders them non-maintainable.”
