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THE CHIT FUNDS ACT, 1982

Title : THE CHIT FUNDS ACT, 1982

Year : 1982



(1) The foreman shall be entitled,-

(a) In the absence of any provision in the chit agreement to the contrary, to obtain the chit amount at the first installment without deduction of the discount specified in the chit agreement, subject to the condition that he shall subscribe to a ticket in the chit:

Provided that in a case where the foreman has subscribed to more than one ticket, he shall not be eligible to obtain more than one chit amount in a chit without discount;

(b) To such amount not exceeding five per cent, of the chit amount as may be fixed in the chit agreement, by way of commission, remuneration or for meeting the expenses of running of the chit;

(c) To interest and penalty, if any, payable on any default in the payment of installments and to such other amounts as may be payable to him under the provisions of the chit agreement;
 
(d) To receive and realise all subscriptions from the subscribers and to distribute the prize amounts to the prized subscribers;

(e) To demand sufficient security from any prized subscriber for the due payment of future subscriptions payable by him.

Explanation.-A security shall be deemed to be sufficient for the purposes of this clause if its value exceeds by one-third, or if it consists of immoveable properties, the value of which exceeds by one-half, of the amount due from prized subscriber;

(f) To substitute subscribers in place of defaulting subscribers; and

(g) To do all other acts that may be necessary for the due and proper conduct of the chit.

(2) Where any dispute arises with regard to the value of the property offered as security under clause (e) of sub-section (1), it shall be referred to the Registrar for arbitration under section 64.



(1) The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions, be bound to pay him the prize amount:

Provided
that the prized subscriber shall be entitled to the payment of the prize amount without any security whatsoever if he agrees to the deduction therefrom of the amount of all future subscriptions and in such a case, the foreman shall pay the prize amount to the prized subscriber within seven days after the date of the draw or before the date of the next succeeding installment, whichever is earlier:

Provided further that where the prize amount has been paid to the prized subscriber under the first proviso, the amount deducted shall be deposited by the foreman in an approved bank mentioned in the chit agreement and he shall not withdraw the amount so deposited except for the payment of future subscriptions.

(2) If, owing to the default of the prized subscriber, the prize amount due in respect of any draw remains unpaid until the date of the next succeeding installment, the foreman shall deposit the prize amount forthwith in a separate account in an approved bank mentioned in the chit agreement and intimate in writing the fact of such deposit and the reasons therefore to the prized subscriber and the Registrar:

Provided that where any prized subscriber does not collect the prize amount in respect of any installment of a chit within a period of two months from the date of the draw, it shall be open to the foreman to hold another draw in respect of such installment.

(3) Every payment of the prize amount or the amount of future subscriptions under sub-section (1), and the deposit of the prize amount under sub-section (2), shall be intimated to the subscribers at the next succeeding draw and the particulars of such payment or deposit shall be entered in the minutes of the proceedings of that draw.

(4) The foreman shall not appropriate to himself any amount in excess of what he is entitled to under clause (b) or clause (c) of sub-section (1) of section 21:

Provided
that where the foreman is himself a prized subscriber, he shall be entitled to appropriate to himself the prize amount subject to his complying with provisions of section 31:

Provided further
that the foreman may appropriate to himself the interest accruing on the amount deposited under the second proviso to sub-section (1).
 
(5) The foreman shall not admit any person as a subscriber to a chit, if, by such admission, the total number of tickets mentioned in the chit agreement is increased.

(6) The foreman shall distribute among the subscribers in accordance with the chit agreement, the dividend either in cash, grain or by way of adjustment towards the subscriptions payable for the next installment, if any.



The foreman shall maintain in the registered office, or, as the case may be, in the place or the principal place of his business, or, where the foreman has any branch office, sub-office or any place of business for the conduct of chit business in a State other than the State in which his registered office or the principal place of his business is situated, in such branch office, sub-office or place of business in respect of the business conducted in that State-

(a) A register containing-

(i) The names and full particulars of the subscribers in each chit together with the number of tickets held by each subscriber;

(ii) The dates on which the subscribers signed the chit agreement; and

(iii) In the case of an assignment of a ticket by a subscriber, the name and full address of the assignee with the date of assignment and the date on which the assignment had been recognised by the foreman;

(b) A book containing the minutes of the proceedings of each draw;

(c) A ledger containing -

(i) The amounts paid by the prized subscribers in each chit and the dates of such payments;

(ii) The amounts paid to the prized subscribers and the dates of such payments; and

(iii) In the case of any deposit in an approved bank mentioned in the chit agreement, the date and the amount of such deposit;

(d) A register in the prescribed form showing the amounts deposited in approved banks as required under the provisions of this Act in respect of all chits conducted by the foreman at his office; and

(e) Such other registers and books in such form as may be prescribed by the State Government within whose jurisdiction the chit is conducted.



The foreman shall maintain in the registered office, or, as the case may be, in the place or the principal place of his business, or, where the foreman has any branch office, sub-office or any place of business for the conduct of chit business in a State other than the State in which his registered office or the principal place of his business is situated, in such branch office, sub-office or place of business in respect of the business conducted in that State-

(a) A register containing-

(i) The names and full particulars of the subscribers in each chit together with the number of tickets held by each subscriber;
 
(ii) The dates on which the subscribers signed the chit agreement; and

(iii) In the case of an assignment of a ticket by a subscriber, the name and full address of the assignee with the date of assignment and the date on which the assignment had been recognised by the foreman;

(b) A book containing the minutes of the proceedings of each draw;

(c) A ledger containing -

(i) The amounts paid by the prized subscribers in each chit and the dates of such payments;

(ii) The amounts paid to the prized subscribers and the dates of such payments; and

(iii) In the case of any deposit in an approved bank mentioned in the chit agreement, the date and the amount of such deposit;

(d) A register in the prescribed form showing the amounts deposited in approved banks as required under the provisions of this Act in respect of all chits conducted by the foreman at his office; and

(e) Such other registers and books in such form as may be prescribed by the State Government within whose jurisdiction the chit is conducted.



(1) Every foreman shall be liable to account to the subscribers for the amounts due to them.

(2) Where there are more than one foreman in a chit, each one of them jointly and severally and, if the foreman is a firm or other association of individuals, each one of the partners or individuals thereof jointly and severally and, if the foreman is a company, the company as such, shall be liable to the subscribers in respect of the obligations arising out of the chit.



(1) No foreman, or where there are more than one foreman in a chit, none of them shall withdraw from the chit until its termination unless such withdrawal is assented to in writing by all the non- prized and unpaid prized subscribers and a copy of such assent has been filed with the Registrar under section 41.

(2) The withdrawal from a chit of any one of the foreman shall not effect the security given by him under section 20 or section 31.



Every non-prized subscriber shall pay his subscription due in respect of every installment on the dates and times and at the places mentioned in the chit agreement and shall, on such payment, be entitled to obtain a receipt from the foreman.

Last updated on August, 2016

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