Bengaluru man pays ₹12,500 monthly for 40 months, gets ₹20,000 from chit fund: Consumer court orders ₹4.08 lakh payout

A Bengaluru consumer commission has directed Samith Chits Pvt Ltd to pay ₹4,07,940 to a subscriber who received only ₹20,000 after winning a bid in a ₹5 lakh chit fund scheme. The commission has also ordered the company to pay interest at 6.5% per annum on the outstanding amount and ₹3,000 towards proceedings costs, the Times of India reported.

The order was pronounced on September 28, 2026, by the Bangalore 1st Additional District Consumer Disputes Redressal Commission, comprising President Syed Anser Khaleem and two members. It followed a complaint filed by Vishnuprasad against the chit fund company.

Bengaluru man pays ₹12,500 monthly for 40 months

According to the complaint, Vishnuprasad subscribed to a ₹5 lakh chit scheme operated by Samith Chits. Under the scheme, he was required to pay ₹12,500 every month for 40 months.

The chit period ended in June 2025. Vishnuprasad had successfully bid for the chit in May 2025, making him eligible to receive the prize amount under the agreement.

However, the company did not pay him the full amount due. It subsequently issued two cheques towards the payment: one for ₹1 lakh, dated July 5, 2025, and another for ₹3,27,940, dated July 15, 2025.

Both cheques were drawn on a private bank's Rajajinagar branch in Bengaluru.

Both cheques bounced due to insufficient funds

Vishnuprasad presented the ₹1 lakh cheque through his bank account at the Ramamurthy Nagar branch on July 17, 2025. The cheque was returned unpaid with the endorsement "Funds Insufficient".

He presented the second cheque, worth ₹3,27,940, on July 24, 2025. That cheque was also dishonoured due to insufficient funds.

The commission's order records that Samith Chits eventually paid Vishnuprasad ₹20,000 after he followed up over the unpaid amount. However, the company did not clear the remaining dues of ₹4,07,940.

Vishnuprasad then issued a legal notice under Section 138 of the Negotiable Instruments Act, which deals with cheque dishonour. He also initiated proceedings before the Additional Chief Judicial Magistrate court in Bengaluru in two cases, numbered CC No. 72718/2025 and CC No. 72660/2025.

He subsequently approached the consumer commission seeking relief for the unpaid chit prize money.

Why the consumer commission ruled against Samith Chits

The documents submitted by Vishnuprasad included the company's brochure, a statement issued by Samith Chits, copies of both cheques, records showing their dishonour and proof of the ₹20,000 payment.

Samith Chits did not appear before the commission despite being issued notice. It was placed ex parte on July 24, 2026, leaving Vishnuprasad's allegations and supporting evidence undisputed in the consumer proceedings, the TOI reported.

Based on the material on record, the commission concluded that the company had failed to pay the amount due after the subscriber successfully bid for the chit. It held that the conduct amounted to deficiency in service as well as an unfair trade practice.

Can a chit fund subscriber approach a consumer commission after a cheque bounces?

The commission also considered the separate proceedings initiated under Section 138 of the Negotiable Instruments Act.

It observed that proceedings for cheque dishonour and a consumer complaint serve different purposes. The existence of the former did not prevent Vishnuprasad from pursuing a remedy under consumer protection law.

The commission relied on Section 100 of the Consumer Protection Act, 2019, which provides that remedies under the Act are in addition to, and not in derogation of, remedies available under other laws.

It also referred to the Supreme Court's decision in Shriram Chits (India) Private Limited v. Raghachand Associates (2024). The commission cited the ruling to support its position that a chit subscriber can qualify as a consumer and a chit fund operator as a service provider under consumer protection law.

On this basis, it held that Vishnuprasad was entitled to seek relief before the consumer commission despite the separate cheque-dishonour proceedings.

Company ordered to pay ₹4.08 lakh with 6.5% annual interest

The commission allowed the complaint and directed Samith Chits, through its managing director, to pay Vishnuprasad ₹4,07,940 with interest at 6.5% per annum. The interest will be calculated from the date of filing the consumer complaint until realisation.

The company must also pay ₹3,000 towards the cost of the proceedings.

The order directs Samith Chits to comply within 30 months from the date of receipt of the order and submit a compliance report to the commission within 45 days from the date of receipt.

The ruling provides relief to the subscriber for the unpaid chit amount while separately addressing the costs incurred in pursuing the consumer complaint.

About the Author

Anjali Thakur is a Senior Assistant Editor with Mint, reporting on trending news, entertainment and health, with a focus on stories driving digital conversations. Her work involves spotting early signals across news cycles and social media, sharpening stories for SEO and Google Discover, and mentoring young editors in digital-first newsroom practices. She is known for turning fast-moving developments—whether news-driven or culture-led—into clear, tightly edited journalism without compromising editorial rigour.<br><br> Before joining Mint, she was Deputy News Editor at NDTV.com, where she led the Trending section and covered viral news, breaking developments and human-interest stories. She has also worked as Chief Sub-Editor at India.com (Zee Media) and as Senior Correspondent with Exchange4media and Hindustan Times’ HT City, reporting on media, advertising, entertainment, health, lifestyle and popular culture.<br><br> Anjali holds a Bachelor of Arts degree from Miranda House, and is currently pursuing an MBA, strengthening her understanding of business strategy and digital media economics. Her writing balances newsroom discipline with a clear instinct for what resonates with readers.