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THE CHIT FUNDS ACT, 1982 Act.
No. 40 of 1982 |
An Act to provide for the regulation of chit funds and for matters connected therewith
BE it enacted by Parliament in the Thirty-third Year of the Republic of India as follows -
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CHAPTER 1 - PRELIMINARY |
| 1. |
Short title, extent and
commencement - (1) This Act may be called the Chit Funds Act, 1982. |
| 2. |
It extends to the whole of India
except the State of Jammu and Kashmir. |
| 3. |
It shall come into force on such date as the
Central Government may, by notification in the Official Gazette, appoint, and different
dates may be appointed for different States.
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| 2.
Definitions - In this Act, unless the context otherwise requires |
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| (a) |
"approved
bank" means the State Bank of India constituted under section 3 of the State Bank of
India Act, 1955, or a subsidiary bank constituted under section 3 of the State Bank of
India (Subsidiary Banks) Act, 1959, or a corresponding new bank constituted under section
3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, or a
Regional Rural Bank established under section 3 of the Regional Rural Banks Act, 1976, or
a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1980, or a banking company as defined under clause (c)
of section 5 of the Banking Regulation Act 1949 or a banking institution notified by the
Central Government under section 51 of that Act or such other banking institution as the
State Government may, in consultation with the Reserve Bank, approve for the purposes of
this Act; |
| (b) |
"chit'
means a transaction whether called chit, chit fund, chitty, kury or by any other name or
under which a person enters into an agreement with a specified number of persons that
every one of them shall subscribe a certain sum of money (or a certain quantity of grain
instead) by way of periodical installments over a definite period and that each such
subscriber shall, in his turn, as determined by lot or by auction or by tender or in such
other manner as may be specified in the chit agreement, be entitled to the prize amount.
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| Explanation - A transaction is not a chit within the meaning of this
clause. if in such transaction, |
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| (a) |
some alone,
but not all, of the subscribers get the prize amount without any liability to pay future
subscription; or |
| (b) |
all the subscribers get the chit
amount by turns with a liability to pay future subscriptions; |
| (c) |
'chit
agreement ' means the document containing the articles of agreement between the foreman
and the subscribers relating to the chit; |
| (d) |
'chit amount'
means sum-total of the subscriptions payable by all the subscribers for any instalment of
a chit without any deduction of discount or otherwise; |
| (e) |
'chit business' means the
business of conducting a chit; |
| (f) |
'defaulting
subscriber' means a subscriber who has defaulted in the payment of subscriptions due in
accordance with the terms of the chit agreement; |
| (g) |
'discount'
means the sum of money or the quantity of grain which a prized subscriber is under the
terms of the chit agreement, required to forego and which is set apart under the said
agreement to meet the expenses of running the chit or for distribution among the
subscribers or for both; |
| (h) |
"dividend'
means the share of the subscriber in the amount of discount available under the chit
agreement for rateable distribution among the subscribers at each instalment of the chit; |
| (i) |
"draw"
means the manner specified in the chit agreement for the purpose of ascertaining the
prized subscriber at any instalment of the chit; |
| (j) |
"foreman'
means the person who under the chit agreement is responsible for the conduct of the chit
and includes any person discharging the functions of the foreman under section 39; |
| (k) |
'non-prized
subscriber' does not include a defaulting subscriber; |
| (l) |
"prescribed" means
prescribed by rules made under this Act; |
| (m) |
"prize
amount" means the difference between the chit amount and the discount, and in the
case of a fraction of a ticket means the difference between the chit amount and the
discount proportionate to the fraction of the ticket, and when the prize amount is payable
otherwise than in cash, the value of the prize amount shall be the value at the time when
it becomes payable; |
| (n) |
"prized
subscriber" means a subscriber who has either received or is entitled to receive the
prize amount; |
| (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; |
| (p) |
"Reserve
Bank' means the Reserve Bank of India constituted under the Reserve Bank of India Act,
1934; |
| (q) |
"State
Government", in relation to a Union territory, means the administrator of the Union
territory appointed by the President under article 239 of the Constitution; |
| (r) |
"subscriber"
includes a person who holds a fraction of a ticket and also a transferee of a ticket or
fraction thereof by assignment in writing or by operation of law; |
| (s) |
"ticket" means the
share of a subscriber in a chit. |
3. Act to override other
laws, memorandum, articles, etc. - Save as otherwise expressly provided in this Act, - |
| (a) |
the
provisions of this Act shall have effect notwithstanding anything to the contrary
contained in any other law for the time being in force or in the memorandum or articles of
association or bye-laws or in any agreement or resolution whether the same he registered,
executed or passed, as the case may be, before or after the 'commencement of this Act; and |
| (b) |
any provision
contained in the memorandum articles, bye-laws, agreement or resolution aforesaid, shall,
to the extent to which it is repugnant to the provisions of this Act become or be void, as
the case may be.
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| CHAPTER
IV - RIGHTS AND DUTIES OF NON-PRIZED SUBSCRIBERS |
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Non-prized
subscribers to pay subscriptions and obtain receipts
Every non-prized subscriber shall pay his subscription due in respect of every instalment
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. |
| Removal of defaulting
subscribers - |
| (1) |
A non-prized
subscriber who defaults in paying his subscription in accordance with the terms of the
chit agreement shall be liable to have his name removed from the list of subscribers and a
written notice of such removal shall be given by the foreman to the defaulting subscriber
within fourteen days of the date of such removal:
Provided that if the defaulter pays the defaulted instalment with interest at such rate as
may be prescribed within seven days of the date of receipt of such notice, his name shall
be re-entered in the list of such subscribers. |
| (2) |
Every such
removal under sub-section (1) shall within the date thereof by entered in the relevant
book maintained by the foreman. |
| (3) |
A true copy
of the entry referred to in sub-section (2) shall be filed by the foreman with the
Registrar within fourteen days from the date of removal. |
| (4) |
Any defaulting subscriber
aggrieved by the removal of his name from the list of subscribers may within seven days of
the date of receipt of the notice of removal refer the matter to the Registrar for
arbitration under section 64. |
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| Substitution of
subscribers |
| (1) |
A foreman may
substitute in the list of subscribers any person (hereafter in this Chapter referred to as
the substituted subscriber) in place of the defaulting subscriber whose name has been
removed under sub-section (1) of section 28. |
| (2) |
Every
substitution referred to in sub-section (1) shall, with the date therefor, be entered in
the relevant book maintained by the foreman and a true copy of every such entry shall be
filed by the foreman with the Registrar within fourteen days from the date of
substitution. |
| Amounts due to
defaulting subscribers |
| (1) |
A foreman
shall, out of the amounts payable by and realized from the substituted subscriber towards
the instalments relatable to the period before the date of substitution (including the
arrears due from the defaulting subscriber), deposit before the date of the next
succeeding instalment in a separate identifiable account in an approved bank mentioned in
the chit agreement, an amount equal to the contributions made by the defaulting subscriber
less such deductions as may be provided for in the chit agreement, and shall inform the
defaulting subscriber as well as the Registrar of the fact of such deposit and shall not
withdraw the amount so deposited except for payment to the defaulting subscriber. |
| (2) |
The amount so
deposited under sub-section (1) shall be paid to the defaulting subscribers as and when he
claims the amount and the amount so deposited shall not be withdrawn by the foreman for
any purpose other than for such payment. |
| (3) |
The
contributions of any defaulting subscriber who has been substituted till the termination
of the chit shall be paid to him within fifteen days from the date of termination of the
chit subject to such deductions as may be provided for in the chit agreement.
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| CHAPTER
V RIGHTS AND DUTIES OF PRIZED SUBSCRIBERS |
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| Prized
subscriber to furnish security |
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Every prized
subscriber shall, if he has not offered, to deduct the amount of all future subscriptions
from the prize amount due to him, furnish, and a foreman shall take, sufficient security
for the due payment of all future subscriptions and, if the foreman is a prized
subscriber, he shall give security for the due payment of all the future subscriptions to
the satisfaction of the Registrar. |
| Prized
subscriber to pay subscriptions regularly |
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Every prized
subscriber shall pay his subscriptions regularly on the dates and times and at the place
mentioned in the chit agreement and, on his failure to do so, he shall be liable to make a
consolidated payment of all the future subscriptions forthwith. |
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Foreman to
demand future subscriptions by written notice |
| (1) |
A foreman
shall not be entitled to claim a consolidated payment from a defaulting prized subscriber
under section 32 unless he makes a demand to that effect in writing. |
| (2) |
Where a
dispute is raised under this Act by a 'foreman for a consolidated payment of future
subscriptions from a defaulting prized subscriber and if the subscriber pays to the
foreman on or before the date to which the dispute is posted for hearing the arrears of
subscriptions till that date together with the interest thereon at the rate provided for
in the chit agreement and the cost of adjudication of the dispute, the Registrar or his
nominee hearing the dispute shall, not withstanding any contract to the contrary, make an
order directing the subscriber to pay to the foreman the future subscriptions on or before
the dates on which they fall due, and that, in case of any default of such payments by the
subscriber, the foreman shall be at liberty to realise, in execution of that order, all
future subscriptions and interest together with the costs, if any, less the amount if any,
already paid by the subscriber in respect thereof:
Provided that if any such dispute is on a
promissory note, no order shall be passed under this sub-section unless such promissory
note expressly states that the amount due under the promissory note is towards the payment
of subscriptions to the chit. |
| (3) |
Any person
who holds any interest in the property furnished as security or part thereof, shall be
entitled to make the payment under sub-section (2). |
| (4) |
All consolidated payments of future subscriptions realised by a foreman
shall be deposited by him in an approved bank mentioned in the chit agreement before the
date of the succeeding instalment and the amount so deposited shall not be withdrawn
except for payment of future subscriptions. |
| (5) |
Where any
property is obtained as security is lieu of the consolidated payment of future
subscriptions, it shall remain as security for the due payment of future subscriptions. |
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Balusserys |
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