Ernakulam, 24.11.2025 : The District Consumer Disputes Redressal Commission, Ernakulam, has held that the sudden closure of a chit fund company and its offices without any prior notice to subscribers amounts to deficiency in service and unfair trade practice under the Consumer Protection Act.
The Commission directed a Kodungallur-based chit fund company, Finisyer Kuries Pvt. Ltd., along with its Managing Director and Board of Directors, to refund ₹8.25 lakh collected from a subscriber over several years, along with interest, compensation and costs. The liability was fixed as joint and several.
The order was passed by a Bench comprising D.B. Binu (President), V. Ramachandran and Sreevidhia T.N. The opposite parties were directed to refund the instalments of ₹8.25 lakh with 12% interest, pay ₹25,000 as compensation for monetary loss, mental agony, hardship and harassment, and ₹5,000 towards litigation costs.
The complaint was filed by a senior citizen and professional drama artist who had joined a chitty scheme of the company in 2011 at the request of one of its directors. The kuri was for a total amount of ₹16.5 lakh and was scheduled to mature in 2030, with a monthly instalment of ₹7,500.
According to the complainant, he regularly remitted 110 instalments over nearly 11 years, amounting to ₹8.25 lakh, through the company’s bank account. In 2021, when he approached the bank to pay the 111th instalment, he was informed that the company’s account had been closed. Repeated attempts to contact the company and its directors failed, and he later learnt that all offices and branches had been shut down without any notice or explanation. A legal notice sent by him was returned unserved.
The complainant produced his passbook and other relevant documents and filed a proof affidavit. Despite service of notice, including substituted service through newspaper publication, the opposite parties did not appear before the Commission and were proceeded against ex parte.
Relying on the Supreme Court judgment in Shriram Chits (India) Pvt. Ltd. v. Raghachand Associates, the Commission reiterated that a chit subscriber is a “consumer” and a chit company is a “service provider” under the Consumer Protection Act. It held that the complainant had clearly proved payment of instalments and the abrupt closure of the company without settlement of accounts.
The Bench observed that shutting down operations and offices without informing subscribers constituted a clear deficiency in service and an unfair trade practice under Sections 2(11) and 2(47) of the Act. It noted that the conduct reflected a complete failure to perform the basic contractual obligation of conducting the kuri till maturity or settling the subscriber’s dues.
In a strongly worded observation, the Commission highlighted the human impact of the company’s actions, noting that the complainant was not a seasoned investor but an elderly drama artist who had entrusted his hard-earned savings with the expectation of financial security in later years. The sudden closure of offices, lack of communication and denial of promised benefits, it said, caused serious mental agony and hardship.
Holding that the complainant was entitled to a full refund with interest, compensation and costs, the Commission allowed the complaint in full and reaffirmed that chit fund companies are bound by standards of transparency, accountability and fair dealing towards their subscribers.
Cause Title: Sathish Sangamithra v. Finisyer Kuries Pvt. Ltd. and Ors.
Case No.: C.C. No. 496 of 2022
Coram: D.B. Binu (President), V. Ramachandran, Sreevidhia T.N.
