Andhra Pradesh High Court – Amravati
Kambala Venkata Rama Rao vs Margadarshi Chit Fund Pvt. Limited on 28 April, 2026
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APHC010628222025
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3332]
(Special Original Jurisdiction)
PRESENT:THE
THE HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI
CIVIL REVISION PETITION NO: 3456/2025
Between:
1. KAMBALA VENKATA RAMA RAO, S/O LAKSHMI NARAYANA AGED
ABOUT 39 YEARS. EMPLOYEE, R/O D.NO. 10 10-15
15-65/A, 10 TH
WARD, INDIRA NAGAR, REPALLE, GUNTUR DISTRICT.
...PETITIONER
AND
1. KAPIL CHIT KOSTA PT LTD, ARUNDELPET BRANCH, GUNTUR,
REP. BY IT'S ASSISTANT DIVISIONAL MANAGER, T. SRINIVAS.
RESPONDENT/DHR/DISPUTANT
2. VADDE VENKATESWARA RAO, S/O RAGHAVA RAO, AGED ABOUT
55 YEARS. EMPLOYEE, R/O D.NO.10
D.NO.10-15-75,
75, GARIKAVARIPATI
STREET, 10TH WARD, REPALLE, GUNTUR DISTRICT.
3. ARAVA SANKARA RAO, , S/O KOTESWARA RAO, AGED ABOUT 58
YEARS. EMPLOYEE,
YEE, R/O D.NO. 4 4-17,
17, KUNCHANAPUDI POST,
PILLAVARIPALEM, GUNTUR DISTRICT.
4. BHAVIREDDY NAGESWARA RAO, S/O VENKATA RAMAIAH, AGED
ABOUT 57 YEARS. EMPLOYEE, R/O D.NO. 3
3-108,
108, YELETI PALEM,
BORA MAYDIGAPALLI NAGARAM MANDAL, GUNTUR DISTRICT.
5. BOPPA VENKATESWARA RAO, S/O RADHA KRISHNA MURTHY,
AGED ABOUT 56 YEARS. EMPLOYEE, R/O D.NO. 1 1-17/6, LST
WARD, CHERUKUPALLI POST AND MANDAL, GUNTUR DISTRICT.
6. VEMULAPALLI KUTUMBA RAO, , S/O NAGESWARA RAO, AGED
ABOUT 58 YEARS, FINANCE BUSINESS, R/O D.NO. 7 7-12-11/A,
GANGADHAR VARI STREET, REPALLE, GUNTUR DISTRICT.
7. MOPARTHY RAMESH KUMAR, S/O CHANDRA PAUL, AGED ABOUT
49 YEARS. EMPLOYEE, R/O D.NO. 20
20-651,
651, DONEPUDI ROAD,
KOLLURU GUNTUR DISTRICT.
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8. THE ASSISTANT ACCOUNTS OFFICER, ELECTRICITY REVENUE
OFFICER VENGALA REDDY NAGAR, SATTENPALLI (PO,MD)
PALANADU DISTRICT
...RESPONDENT(S):
Petition under Article 227 of the Constitution of India,praying that in the
circumstances stated in the grounds filed herein,the High Court may be
pleased to aggrieved by the issuance of warrant of attachment of salaries
dated 29.10.2025 passed in E.P No. 216 of 2025 in Dispute No. 41 of 2018
on the file of the Court of Learned I Additional Junior Civil Judge (Junior
Division), Guntur,
IA NO: 1 OF 2025
Petition under Section 151 CPC praying that in the circumstances stated
in the affidavit filed in support of the petition, the High Court may be pleased
to dispense with the filing of the Certified Copy of the salary attachment
warrant Dt. 29.10.2025 passed in E.P No. 216 of 2025 in Dispute No. 41 of
2018 on the file of the Court of Learned I Additional Junior Civil Judge /Junior
Division), Guntur, and pass
IA NO: 2 OF 2025
Petition under Section 151 CPC praying that in the circumstances stated
in the affidavit filed in support of the petition, the High Court may be pleased
to grant stay of operation of salary attachment warrant Dt. 29.10.2025 passed
in E.P No. 216 of 2025 in Dispute No. 41 of 2018 on the file of the Court of
Learned I Additional Junior Civil Judge /Junior Division), Guntur, pending
disposal of the main CRP and to pass
Counsel for the Petitioner:
1. KOLLURI ARJUN CHOWDARY
Counsel for the Respondent(S):
1. SIREESHA RANI VALLABHANENI
RESERVED ON 23.03.2026
PRONOUNCED ON 28.04.2026
UPLOADED ON 28.04.2026
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ORDER
This Civil Revision Petition is filed questioning the legality and
correctness of the warrant of attachment of the salary dated 29.10.2025
issued in E.P.No.216 of 2025 in Dispute No.41 of 2018 by learned I Additional
Civil Judge (Junior Division), Guntur.
2. The petitioner is award-debtor No.7; respondent no.1 is the Award-
Holder, respondent nos. 2 to 7 are award-debtor Nos.1 to 6 in E.P.No.216 of
2015 whereas respondent no.8 is the garnishee.
3. The facts that led to filing of this Civil Revision Petition, in brief, are
that respondent no.1 filed Dispute Case No.41 of 2018 before the Registrar of
Chits, Guntur, under Section 64 of the Chit Fund Act, 1982 for recovery of
Rs.6,09,555/- and the Deputy Registrar of Chits, Guntur passed award
21.03.2025. On the ground that the award amount was not paid, the
respondent no.1/award-holder filed E.P.No.216 of 2015 for attachment of the
salary of the petitioner. The executing court issued warrant of attachment of
the salary of the petitioner and the said order has been assailed before this
Court.
4. Heard Sri Kolluri Arjun Chowdary, learned counsel for the petitioner,
Sri N.Krishna Sai, learned counsel, representing Ms. Sireesha Rani
Vallabhaneni, learned counsel for respondent no.1.
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5. Sri Kolluri Arjun Chowdary, learned counsel for the petitioner, while
reiterating the grounds of the Civil Revision Petition would contend that
though the principal debtor is solvent and available, the decree holder without
making any effort to recover the decretal due and without exhausting the
remedies available against him, had straightaway proceeded against the
surety, and hence the warrant of attachment of salary is premature and
therefore is liable to be set aside. He would further contend that as per
Sections 128 to 145 of the Indian Contract Act, 1872, the liability of the surety
is co-extensive but not primary and hence without proceeding against the
principal debtor initiation of execution proceedings against the surety,
bypassing the principal debtor, is abuse of process. He would further contend
that Section 71 of the Chit Fund Act, read with Rule-55 of the A.P.Chit Fund
Rules, 2008, clearly states that it is only the Registrar who has to issue the
certificate referred to in the above provisions, even though the dispute has
been decided by Deputy Registrar, however, in the instant case, the Deputy
Registrar issued the certificate instead of Registrar and on the ground also
issuance of warrant of attachment of salary based on the certificate issued by
the Deputy Registrar is untenable and the same has to be set aside. He would
further contend that the petitioner being a surety only but not the prized
subscriber and as the provisions of the Chit Fund Act, 1982 and the Andhra
Pradesh Chit Fund Rules, do not provide any safeguards to the surety at the
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time of contesting the award as well as execution proceedings and as the Act
nowhere envisages as to securing of the chit fund amount from the collateral
other than the prized subscriber, and permitting the chit fund company to
proceed against the surety without making efforts to recover the amount from
the prized subscriber would lead to collusion between the Chit Fund Company
and prized subscriber to the detriment of the surety.Accordingly, prayed to
allow the Civil Revision Petition.
In support of his contentions, the learned counsel for the petitioner relied
on the decision in Punyamurthula Venkata Viswa Sundara Rao v.
Margadarsi Chit Fund Pvt. Ltd., and others 1 and the docket proceedings
dated 19.04.2022 of a Division Bench of this Court in Civil Revision Petition
No.604 of 2022.
6. On the other hand, Sri N.Krishna Sai, learned counsel, representing
Ms.Sireesha Rani Vallabhaneni, learned counsel for respondent no.1 while
reiterating the contents of the affidavit filed in support of the Execution
Petition before the executing Court would contend that it is fairly settled that
the liability of the guarantor/surety is coextensive with that of the debtor and
that the liability of a surety is immediate and is not deferred until the credit
exhausts his remedies against the principal debtor, the contentions raised by
1
. 2017(3) ALD 387
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the learned counsel for the petitioner that the award-holder cannot proceed
against the surety until he exhausts all the remedies available against the
prized subscriber is untenable and is liable to be rejected. She would further
contend that the State Government vide G.O.Ms.No.1472, Revenue (Reg.II)
dated 10.12.2008 by exercising powers conferred by Section 61(1) of the Chit
Fund Act, 1982 appointing Deputy Registrars for the purpose of discharging
the duties imposed upon the Registrar by or under the said Act, therefore,
since section 2(o) of the Act which defines ‘Registrar’ also includes Deputy
Registrar appointed under Section 61, the Deputy Registrar is empowered to
issue certificate as envisaged under clause (a) of Section 71 of the Act. She
would further contend that a harmonious reading of section 2(o) and clause
(a) of Section 71 of the Act would make the things clear that since the
Government by exercise of powers conferred under Section 61(1) of the Act
appointed Deputy Registrars for the purpose of discharging all the duties of
the Registrar imposed under the Act, such Deputy Registrar is empowered to
issue certificate and such a certificate be deemed to be a decree of civil Court.
She would further contend that the word ‘Registrar’ appearing in Rule 55(3) of
the Rules, 2008 has to be interpreted in the same manner as defined in
Section 2(o) of the Act, which include Deputy Registrar also and therefore,
deputy Registrar to whom a delegation has been made under section 61(1) of
the Act will be entitled under Rule 55(3) to issue a certificate of recovery. She
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would further contend in view of issuance of G.O.Ms.No.1472, dated
10.12.2008 by the Government appointing Deputy Registrars of the chit; a
combined reading of Sections 2(o), 61(1), 71(a) of the Act and Rule 55(3) of
the Rules make it evident that the Deputy Registrar to whom a delegation has
been made under Section 61(1) of the Act can issue recovery certificate,
which is deemed to be a decree of a civil Court, as specified in Section 71(a)
of the Act and Rule 55(3) of the Rules. She would further contend that there
is neither infirmity nor jurisdictional error as sought to be projected by the
learned counsel for the petitioner in issuing warrant for attachment of salary
of the award-debtor and the Civil Revision Petition being lack of merit
deserves dismissal. Accordingly, prayed to dismiss the Civil Revision Petition.
In support of her contentions, the learned counsel relied upon the
decision of Division Bench of unified state of Andhra Pradesh in Madamanchi
Anil Kumar vs. Margadarshi Chit fund Pvt. Limited, represented by
its Managing-cum-Foreman, Robertsonpet and others2.
7. In reply, learned counsel for the petitioner would contend that in the
decision relied on by the respondent, the division bench refused to follow the
earlier division bench decision relied on by the petitioner of equal strength
and in such a situation this Court should follow the earlier decision and
2
.2018 SCC OnLine Hyd 2210
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therefore, the view expressed in the decision relied on by the petitioner that
Deputy Registrar is incompetent to issue Certificate and consequently the
execution petition filed based on such invalid certificate has to be set aside.
In support of his contentions, the learned counsel for the petitioner
relief on the decisions in National Insurance Company Limited vs.
Pranay Sethi and others3 and Union Territory of Ladakh and others
vs. Jammu and Kashmir National Conference, through its General
Secretary and another4.
8. Perused the material available on record and considered the
submissions made by learned counsel for the parties.
9. In the instant case, the Deputy Registrar of Chits, Guntur decided the
dispute and has also issued recovery certificate. The competence of the
Deputy Registrar to issue recovery certificate is under severe challenge in the
instant case.
10. The provisions of the Chit Funds Act, 1982 and the Andhra Pradesh
Chit Fund Rules, 2008 that germane for consideration are extracted
hereunder:
3
. (2017) 16 SCC 680
4
(2024) 18 SCC 643
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66. Settlement of disputes.–(1) If the Registrar is satisfied that any
matter referred to him or brought to his notice is a dispute within the
meaning of section 64, he shall, subject to such rules as maybe
prescribed, settle the dispute himself, or refer it for disposal to a person
appointed by him (hereafter in this Chapter referred to as the nominee).
(2) Where any dispute is referred under sub-section (1) for settlement to
the nominee, the Registrar may, at any time for reasons to be recorded
in writing, withdraw such dispute from the nominee and may settle the
dispute himself, or refer it again for settlement to any other nominee
appointed by him.
71. Money how recovered.–Every order passed by the Registrar or
the nominee under section 68 or section 69 and every order passed by
the State Government in appeal under section 70 for payment of any
money shall, if not carried out,–
(a) on a certificate issued by the Registrar, be deemed to be a decree of
a Civil Court, and shall be executed in the same manner as a decree of
such Court, or
(b) be executed in accordance with the provisions of any law for the time
being in force for the recovery of amounts as arrears of land revenue:
Provided that no application for execution under clause (b) shall be made
after the expiry of three years from the date fixed in the order, and if no
such date is fixed, from the date of the order.
11. As per section 66 of the Act, the Registrar can settle the dispute
himself, or refer it for disposal to a person appointed by him. As per Section
71(a) of the Act, every order passed by the Registrar or the nominee shall, if
not carried out, on a certificate issued by the Registrar, be deemed to be a
decree of a Civil Court, and shall be executed in the same manner as a decree
of such Court.
12. Section 2(o) which defines Registrar reads thus:
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“(o) “Registrar” means the Registrar of Chits appointed under section
61, and includes an Additional, a Joint, Deputy or an Assistant Registrar
appointed under that section.”
13. Therefore, Additional, Joint, Deputy or an Assistant Registrar
appointed under Section 61 come within the sweep of the word ‘Registrar’ for
the purpose of this Act.
14. Reading of Sections 66 and 71 of the Act in light of the definition of
Registrar given in section 2(o) of the Act would indicate that Additional, Joint,
Deputy or an Assistant Registrar appointed under Section 61 of the Act are
empowered to issue certificate as envisaged under Section 71(a) of the Act.
Further there is a difference between the expanded term of Registrar by
inclusion of Joint, Assistant and Deputy Registrar and a nominee appointed by
a Registrar for settlement of dispute as per section 66 of the Act. A nominee
appointed by Registrar for settlement of dispute not being a Registrar, the
award passed by him is inexecutable unless upon the certificate issued by the
Registrar as required under section 71(a) of the Act.
15. In Punyamurthula Venkata Viswa Sundara Rao (supra 1)
relied on by the learned counsel for the petitioner, a division bench of this
Court held thus:
“17. There is another aspect which needs to be clarified. Though no
argument was advanced in that regard, it would be better for us to
clarify the said aspect, so as not to leave scope of another round of
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litigation, at any later point of time. The dispute in this case was
dealt with by the Deputy Registrar. Though the proceedings do not
spell any nomination made by the Registrar, it has to be assumed
that the registrar nominated the Deputy Registrar to settle the
dispute, by invoking the power given to him under Section 66 of the
Act, which permits the registrar to appoint a person to settle the
dispute which is referred to him. But such powers are not conferred
on him in respect of the certificate that has to be issued, for the
purpose of execution of the award. The wording of Section 71 and
also Rule 55 makes it clear that it is only the Registrar who has to
issue the certificate referred in the above provisions. Though the
opening part of Section 71 says that the registrar or his nominee
can pass the award, clause (a) of Section 71 specifies the Registrar
as the person who has to issue the certificate. But in this case the
Deputy Registrar, apart from deciding the dispute has also issued
the certificate, that is supposed to be issued by the Registrar, which
shall not be accepted by the executing Court.”
16. In view of the above observations, though the Deputy Registrar
decides the dispute, the Executing Court shall not accept the certificate
issued by the Deputy Registrar, but for the certificate issued by Registrar.
17. In the decision relied on by the learned counsel for the respondent
in Madamanchi Anil Kumar (supra 4), a Division Bench of this Court while
dealing with the contention regarding maintainability of the execution petition
on the certificate issued by the Deputy Registrar raised placing reliance on
Punyamurthula Venkata Viswa Sundara Rao (supra 1) held thus:
“13. We have two difficulties in accepting the contention of the learned
counsel for the petitioner. The first is that the ratio decidendi of any judgment
is to be found from what it lays down and not from what follows out of it. We
have seen the two points that arose for consideration in
PunyamurthulaVenkataViswaSundara Rao. Those two points formulated in
paragraph 9 of the decision, do not cover and do not even extend to the
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conclusion that the Division Bench reached in paragraph 18. In fact, it was
made clear in paragraph 18 that no argument was advanced in that regard.
Therefore, what was laid down in paragraph 18 of the judgment of the Division
Bench, cannot be taken as ratio decidendi of the said decision.
14. The second difficulty that we have is that certain statutory provisions and
certain Government Orders were not placed before the Division Bench in
PunyamurthulaVenkataViswaSundara Rao. Section 2(o) of the Chit Funds Act,
1982 defines the word “Registrar to mean the Registrar of Chits appointed
under Section 61. Section 2(o) goes further to say that the word “Registrar
would also include an Additional, a Joint, a Deputy or an Assistant Registrar
appointed under Section 61. This definition was not noted by the Division
Bench in PunyamurthulaVenkataViswaSundara Rao. Section 61 of the Act
speaks about the appointment of the Registrar and other officers. Sub-section
(1) of Section 61 reads as follows:
“The State Government may, by notification in the Official Gazette, appoint a
Registrar of Chits and as many Additional, Joint, Deputy and Assistant
Registrars as may be necessary for the purpose of discharging the duties
imposed upon the Registrar by or under this Act.”
15. Section 61(1) has two limbs. Under the first limb, the State Government is
empowered to appoint a Registrar of Chits by a notification in the Official
Gazette. By the second limb, the State Government is empowered to appoint
as many Additional, Joint, Deputy and Assistant Registrars, for the purpose of
discharging the duties imposed upon the Registrar by or under the Act.
Therefore, it is clear that there was power of delegation available for the State
Government to appoint Additional, Joint, Deputy and Assistant Registrars for
the purpose of discharging the duties imposed upon the Registrar by or under
the Act.
16. Section 66 of the Act speaks about the settlement of disputes. Under sub-
section (1) of Section 66, the Registrar is entitled to settle any dispute either
by himself or refer the dispute for disposal to a person appointed by him. The
person to whom the Registrar refers the dispute for disposal is called as “the
nominee”. Sub-section (1) of Section 66 reads as follows:
“If the Registrar is satisfied that any matter referred to him or brought to his
notice is a dispute within the meaning of section 64, he shall, subject to such
rules as may be prescribed, settle the dispute himself, or refer it for disposal to
a person appointed by him (hereinafter in this Chapter referred to as the
nominee.)”
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17. Where the petitioner has actually fallen into a trap is to mix up the power
of delegation available under Section 61(1) with the power of nomination
available under Section 66(1). The power of delegation under Section 61(1) is
available only with the Government, whereas the power of nomination merely
to decide a dispute, is with the Registrar under Section 66(1). Secondly, the
delegation under Section 61(1) is only upon Additional, Joint, Deputy or
Assistant Registrars. But a nomination under Section 66(1) could be upon any
person. Thirdly, the delegation under Section 61(1) is of all the duties imposed
upon the Registrar. On the contrary, the nomination under Section 66(1) is
only for settling a dispute. Fourthly, the delegation under Section 61(1) can be
ordered only by a notification issued in the Official Gazette. But the nomination
under Section 66(1) cannot be and need not be by publication in the Official
Gazette.
18. Unfortunately, the Division Bench in paragraph 18 of the report in
PunyamurthulaVenkataViswaSundara Rao has mistaken the power of
nomination available to the Registrar under Section 66(1) to be a power of
delegation. The meaning to be assigned to the word “Registrar appearing in
Rule 55(3), was not considered by the Division Bench in
PunyamurthulaVenkataViswaSundara Rao.
19. Rule 55(3) of the Rules reads as follows:
“(3) On receipt of such application for execution, the Registrar shall forward
the same to the proper authority for execution along with a certificate issued
by him under section 71 of the said Act and a proclamation issued under rule
54 in the manner prescribed therein.”
20. The Chit Fund Rules, 2008 do not define the word “Registrar. The
definition part of the Rules contains only five words and expressions. After
defining five words and expressions in Rule 2, it is stated in Rule 2 itself that
the words and expressions not defined in the Rules shall have the same
meaning as assigned to them in the Act. Therefore, the word “Registrar
appearing in Rule 55(3) has to be interpreted in the same manner as is defined
in Section 2(o) of the Chit Funds Act, 1982. If this is done, it will be clear that
any Additional, Joint, Deputy or Assistant Registrar to whom a delegation has
been made under Section 61(1) will be entitled under Rule 55(3) to issue a
certificate of recovery. If the Government, by a notification in the official
Gazette, issued under section 61(1), can appoint a Deputy Registrar or
Assistant Registrar to perform all the duties of the post of Registrar, he
becomes empowered automatically to issue a certificate of recovery under rule
55 also. The expression used in section 61(1) is “all the duties”.
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18. Upon the above analysis of various provisions of the Act, the Division
Bench further held thus:
“21.Unfortunately,-
(i) the distinction between delegation under Section 61(1) and nomination
under Section 66(1);
(ii) the definition of the expression “Registrar under Section 2(o);
(iii) the interpretation to be given to the word “Registrar in Rule 55(3) read
with the definition clause in Rule 2 of the Rules; and
(iv) the availability of the Gazette notifications containing delegation of
powers, were all not placed before the Division Bench, which decided
PunyamurthulaVenkataViswaSundara Rao. Hence, the decision in
PunyamurthulaVenkataViswaSundara Rao cannot be taken to be an
authoritative pronouncement on the question as to who is competent to issue
a certificate of recovery.
19. It is further held in later part of the order after extracting section
71 of the Act in the following terms:
“23. Clause (a) of Section 71 speaks about a certificate issued by the
Registrar. The word “Registrar appearing in Section 71(a) has also to be given
the same meaning as found in Section 2(o). Therefore, we hold that if any
Additional, Joint, Deputy or Assistant Registrar has been appointed by the
State Government, by a notification in the official gazette, to perform all the
duties dischargeable by the Registrar under the Act, then such a delegate will
be competent to issue a certificate of recovery. It is not correct to say that
the Registrar of Chits alone is competent to issue a certificate of recovery.
20. The above decision further states that G.O.Ms. No. 1472, Revenue
(Regn.II), dated 10-12-2008 issued by the State of Andhra Pradesh in
exercise of the powers conferred by Section 61(1) of the Chit Funds Act,
1982. reads as follows:
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“In exercise of the powers conferred by sub-section (1) of Section 61 of
the Chit Funds Act, 1982 (Central Act 40 of 1982) the Governor of
Andhra Pradesh hereby appoints the Commissioner and Inspector
General of Registration and Stamps, A.P., Hyderabad as Registrar of
Chits, the Additional Inspector General-I, Office of the Commissioner and
Inspector General of Registration and Stamps, A.P., Hyderabad as
Additional Registrar of Chits, the Joint Inspector General-I, Office of the
Commissioner and Inspector General of Registration and Stamps, and
the Deputy Inspector General of their respective zones as Joint
Registrars of Chits, the Assistant Inspector General (Chits) Office of the
Commissioner and Inspector General of Registration and Stamps and the
District Registrars of Registration Districts in the State of Andhra Pradesh
as Deputy Registrars of Chits and the Chit Registrars as Assistant
Registrars of Chits within the limits of their respective jurisdiction for the
purpose of discharging the duties imposed upon the Registrar by or
under the said Act as the case may be.”
21. It is further held thus:
“26. It must be noted that Section 61(1) carefully uses the phrase “the duties
imposed upon the Registrar by or under the said Act”. The duties
enumerated in the Act are those imposed by the Act. The duties
enumerated in the Rules are those imposed under the Act. Therefore,
Rule 55(3) has to be read only in this manner and not in any other manner.
27. Thus, it is clear that the only contention raised by the petitioner based
upon the judgment of this Court in PunyamurthulaVenkataViswaSundara Rao is
bound to fail. Accordingly, it fails, and the Civil Revision Petition is
dismissed……..”
22. In the above decision the Division Bench held that there is a
distinction between delegation under section 61(1) and nomination under
Section 66(1) of the Act; that the definition Registrar under section 2(o)
includes Assistant, Joint and Deputy Registrars appointed under Section 61(1)
of the Act for discharging the duties imposed under the Act, since issuance of
certificate under section 71(a) of the Act is also one of the duties imposed
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under the Act, the Deputy Registrar is empowered to issue Certificate of
Recovery as per Section 71(a) of the Act.
23. In view of the observations made in the aforementioned decision,
the Deputy Registrar having been delegated to discharge the duties of the
Registrar by the Government under Section 61(1) of the Act and not being a
nominee as referred to under section 66 of the Act is empowered to issue
certificate for recovery, which is deemed to be a decree of a civil Court.
24. In the decision relied on by the learned counsel for the petitioner in
Union Territory of Ladakh and others (supra 4), the Hon’ble Supreme
Court held thus:
“35. We are seeing before us judgments and orders by the High Courts not
deciding cases on the ground that the leading judgment of this Court on this
subject is either referred to a larger bench or a review petition relating
thereto is pending. We have also come across examples of High Court
refusing deference to the judgments of this Court on the score that a later
coordinate Bench has doubted its correctness. In this regard, we lay down the
position in law. We make it absolutely clear that the High Courts will proceed
to decide matters on the basis of the law as it stands. It is not open, unless
specifically directed by this Court, to await an outcome of a reference or a
review petition, as the case may be. It is also not open to a High Court to
refuse to follow a judgment by stating that it has been doubted by a larger
coordinate Bench. In any case, when faced with conflicting judgments of
Benches of equal strength of this Court, it is the earlier one which is to be
followed by the High Courts, as held by a 5-Judge Bench in National
Insurance Co.Ltd. v. PranaySethi. The High Courts, of course, will do so with
careful regard to the facts and circumstances of the case before it.”
25. The ratio decidendi (reason for deciding) of a judgment is the
binding legal principle applied to the material facts, not the final order, obiter
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dicta, or logical deductions following from it. It is the essential legal rationale
directly deciding the dispute, distinguished from mere observations or
extended consequences.
26. In Para 17 of the decision relied on by the learned counsel for the
petitioner, clearly states that the Division Bench itself had taken up the issue
and reached to the conclusion that Deputy Registrar cannot issue Certificate,
even though no argument was advanced in that regard. Therefore, the same
cannot be taken as ratio decidendi of the said decision.
27. The proposition that an issue must be clearly argued and brought to
the notice of the court for the resulting decision to constitute ratio decidendi
is a fundamental principle of the law of precedents. A decision that is not
based on a reasoned argument on a contested legal issue is generally
considered obiter dicta or made per incuriam (through lack of care), and thus
lacks binding authority.
28. Further, the ratio decidendi is the binding legal principle established
only when a specific issue is actively argued, analyzed, and necessary for the
court’s ruling. Without focused arguments and hearing, a court lacks the
insight to establish binding precedent, leaving observations as non-binding
obiter dicta. As already stated that since the decision was reached without
there being any argument in that regard, the Division Bench in the decision
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CRP No.3456 of 2025
18
relied on by the learned counsel for the petitioner did not have the
opportunity of knowing all the insights of the scheme of the Act and the
Government Order issued by the State Government appointing Deputy
Registrar by exercising the power conferred upon it by Section 61(1) of the
Act for the purpose of discharging the duties imposed upon the Registrar by
or under the Act. Therefore, the observations made by the Division Bench in
the earlier decision cannot be taken as ratio decidendi. Therefore, the
observations made in the decisions relied on by the learned counsel for the
petitioner on this aspect cannot be made applicable to the facts of the case on
hand.
29. The next argument of the learned counsel for the petitioner that the
award-holder ought not to have proceeded against surety without first
exhausting remedies against the prized subscriber, does not merit for
consideration in view of the catena of judgments of the Hon’ble Supreme
Court including in State Bank of India v. Saksaria Sugar Mills Limited and
others5 that the liability of the surety is immediate and is not deferred until
the creditor exhausts his remedies against the principal debtor.
30. The further contention that the Chit Funds Act, 1982 and the
A.P.Chit Fund Rules, 2008 did not provide enough safeguards to the sureties
5
. AIR 1986 SC 868
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CRP No.3456 of 2025
19
and further the Act does not envisage securing of money from the sureties
but for against the prized subscriber, also do not merit consideration, since
the prized subscriber was permitted to withdraw the amount only on the
guarantee given by the sureties. The tentative view expressed by a division
bench of this Court in CRP No.604 of 2022 regarding lack of safeguards to
sureties in the original as well as execution proceedings and that the Act does
not provide for securing the chit fund amount by any collateral from the
person i.e. prized subscriber, cannot be taken into consideration till it was
decided on merits.
31. In view of the observations made in the decisions referred to above
and the discussion made supra, the Civil Revision Petition being meritless
deserves dismissal.
32. Accordingly, the Civil Revision Petition is dismissed. There shall be
no order as to costs.
Pending miscellaneous petitions, if any, shall stand closed.
_________________________
JUSTICE RAVI CHEEMALAPATI
28th April, 2026. RR
