The Chits Funds Act,1982

Be it enacted by Parliament in the Thirty-third Year of the Republic of India as follows:

STATEMENT OF OBJECTS AND REASONS

1-A „conventional chit‟ is an old indigenous financial institution involving regular periodical subscriptions by a group of persons. It is, in law, a contract between the subscribers and the foreman which provides that the subscribers shall subscribe a certain sum by periodical installments for a definite period. Each subscriber shall, in his turn, as determined by lot or by auction or in such other agreed manner be entitled to the prize amount. There will be as many periodical installments as there are members. As there is a mutuality of interest among the small number of subscriber to each chit fund, it constitutes a convenient instrument combining savings and borrowings.

2- In the wider context of examining in depth the activities of the non-banking financial
intermediaries (which term also includes institutions conducting chit fund or kuries) , the Banking Commission (1972) had recommended inter alia , that it is essential to have a uniform chit fund legislation applicable to the whole country and as such either an all India Chit Funds Act may be enacted or a model law may be prepared for adoption by all the states. The Commission also observed that it would be desirable to provide in the legislation that only public limited companies can run chit funds.

3- The recommendations of the Banking Commission were examined by Government. The Reserve Bank, at the instance of the Government, drafted a model Bill to regulate the conduct of chit funds for adoption by all the State Governments. The Reserve Bank also sent the draft Bill to the Study Group on non-Banking companies constituted by it in June, 1974 under the Chairmanship of late Shri James S. Raj, the then Chairman of the Unit Trust of India. The Study Group was unanimously of the view that the Bill should be enacted as a Central legislation, as such a step. Besides ensuring uniformity in the provisions applicable to chit fund institutions throughout the country, would also prevent such institutions from taking advantage either of the absence of any law governing chit funds in any State or exploit the benefit of any lacuna or relaxation in any State Government concerned which in turn could seek the advice and assistance of the Reserve Bank on policy matters. Further, there should be according to the Group no objection to chits being conducted by private limited companies also and on a limited scale even by unincorporated bodies, such as, individuals, sole proprietorships and partnership firms.

4- The Bill has been finalized after taking into account the views of all the State Governments to whom a Draft Bill was sent for comments. The scheme of the Bill and the provisions made therein largely follow the pattern of chit fund legislations in force in some of the States and includes certain new provisions, such as, minimum capital requirements for companies conducting chit business, prohibiting chit fund companies from doing any other business, placing a ceiling on the aggregate chit amounts of chits that are being conducted by

(2)Chit fund institutions, providing for a self-contained machinery for the settlement of disputes between a foreman and the subscribers by means of arbitration, etc. The repeal of the existing State legislations on the subject has also been provided for in the Bill.

5.The “Notes on Clauses” appended to the Bill explain in detail the provisions of the Bill.

Comments

Objects and reasons of the Act.-The objects and reasons of the Act are to be taken into consideration in interpreting the provisions of the statute and not the debates in Parliament on the Bill.

The law is well settled that it is permissible to look into the circumstances which prevailed at the time when the law was passed and which necessitated the passing of that law to determine the purpose or object of the legislation.

Penal Statute-Interpretation of – In order to interpret sections of the Indian Penal Code or any other penal statute the principal applicable is that the Penal Statute must be strictly construed in favour of the subject.

The maxim “contemporanea expositio”- Application of.– The maxim “contemporaneous ecpositio” as laid down by Coke is applied in construing ancient statutes but not to interpreting Acts which are comparatively modern.Further, it has been observed that in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made and, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them.

CHAPTER – 1
Preliminary

1- Short title and commencement.-(1) This Act may be called the Chit Funds Act, 1982.
2- It extends to the whole of the 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.
Constitutional validity of the Act.The Chit Funds Act, 1982, is within the legislative competence of the Parliament. It was declared that Secs.4 (3), 6(3), 7,8,12,16,(2), 17(1), 19,20,21,70,76,77 and 84 of the Act challenged through writ-petitions are constitutionally valid and are not violative of Arts. 14 and 19 (1) (g) of the Constitution.

2- Definitions – In this Act, unless the context otherwise requires,- (a) “ approved bank” means the State Bank of India constituted under Sec.3 of the State Bank of India Act, 1955 (23 of 1955), or a subsidiary bank constituted under Sec. 3 of the State Bank of India (Subsidiary Banks) Act, 1959.(38of 1959), or a corresponding new bank constituted under Sec.3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 ( 5 of 1970), or a Regional Rural Bank established under Sec. 3 of the Regional Rural Banks Acts, 1976 (21 of 1976), or a

(3) corresponding new bank constituted under Sec. 3 of the Banking Companies (Acquisition and Transfer of Under takings) Act.1980 (40 of 1980), or a banking company as defined under Cl.© of Sec.5 of the Banking Regulation Act. 1949 (10 of 1949) or a banking institution notified by the Central Government under Sec.51 of the 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, fund, chitty, kuri or by any other
name by 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.
Explanation- A transaction is not a chit within the meaning of this clause,if in such
transaction –
(i) some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions: or
(ii) all the subscribers get the chit amount by turns with a liability to pay future subscriptions;(a) “chit agreement” means the document containing the articles of agreement between the foreman and the subscribers relating to the chit;
(b) “chit amount” means the sum-total of the subscriptions payable by all the subscribers for any installments of a chit without any deduction of discount or otherwise;
(c) “chit business” means the business of conducting a chit;
(d) “defaulting subscriber” means the subscriber who has defaulted in the payment of
subscriptions due in accordance with the terms of the chit agreement.
(e) “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.
(f) “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 installment of the chit.
(g) “draw” means the manner specified in the chit agreement for the purpose of ascertaining the prized subscriber at any installment of the chit.
(h) “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;
(i)“non-prized subscriber” does not include a defaulting subscriber.
(j) “prescribed” means prescribed by rules made under this Act.
(l) “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;
(m) “prized subscriber” means a subscriber who has either received or is entitled to receive the prize amount.
(n)“Registrar” means the Registrar of Chits appointed under Sec.61, and includes an Additional, a Joint, Deputy or an Assistant Registrar appointed under that section;
(o)“Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India Act. 1934 (2 of 1934);
(p)“State Government”, in relation to a Union territory, means the administrator of that Union territory appointed by the President under Art.239 of the Constitution.;
(4)(q)“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;
(r)“ticket”, means the share of a subscriber in a chit.

Comments

Chit business.-If the transaction in question is a chit within the meaning of Cl.(b) of Sec.2 of the Act, then chit business refers to a transaction within the meaning of the word „chit‟ under Cl.(b) of Sec. 2 of the Act and it would be a chit business as definied Cl.(e) of Sec. 2 of the Act and that chit business is sought to be a regulated under Sec. 4 of the Act. Kuri transaction – If unconscionable.-The suit was based on a kuri trancaction (Chit Fund). The respondents were subscribers to the kuri. They committed default after they had prized it and realized the kuri amounts. Hence the suit was filed for realization of the principal sum with interest and balance kuri due. The suit was decreed by subordinate Judge by his judgement, dated 24th June. 1965. An appeal was
filed before the High Court. A Division Bench of the High Court heard the appeal and partly allowed it by modifying the decree of the Trial Court refixing the interest, largely influenced by the fact that the kuri and the subscribers (defaulters) burdened the subscribers with unconscionable interest and were unreasonable. The kuri system was in vogue in the erstwhile Travancore State and in the Cochin State, prior to the formation of the kerala State and they were governed in those two areas by the Travancore Chit Act of 1945 (Act 26 of 1120-M.E.) which came into force , on 20th June,1945 and the Cochn Kuries Act of 1106. There was no corresponding Act for Malabar area from which area the present appeal arises. After the formation of the Kerala State, kuri transactions in the State are governed by the Kelala Chitties Act,dddddddddddd 1975, as amended by Act 19 of 1978. The High Court after taking into account the interest stipulated observed that it was unconscionable and a full Bench of the Kerala High Court had occasion to consider the correctness of this view and in a decision reported in 1974 ker. L.T. 806. Such kuri transactions were upheld and the decision of the Division Bench was reserved. According to the Full Bench, there was nothing unconscionable about the contract. Before the full Bench it was contended that this stipulation in the agreement where a subscriber prized his chit, providing that on default the Kuri foreman would be entitled to recover the entire balance amount with 12 percent. Interest in a lump sum without giving credit to the subscribers, is penal in nature and held in terrorem for securing due performance of their promise and hence not enforceable. Eradi, J, as he then was, speaking for the Full Bench held q that a subscriber truly and really becomes a debtor for the Full Bench held that a subscriber truly and really becomes a debtor for the prized amount paid to him that the facility of
repayment in installments is only a concessional facility and that stipulation enabling the foreman to withdraw the concessional facility on default of punctual payment of the installments would not be penal or unconscionable.
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 be 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 null or be void, as the case may be.

CHAPTER II
Registration of Chits, Commencement and Conduct of Chit Business

4. Prohibition of chits not sanctioned or registered under the Act.-(1) No chit shall be
commenced or conducted without obtaining the previous sanction of the State Government within whose jurisdiction the chit is to be commenced or conducted or of such officer as may be empowered by that Government in this behalf, and unless the chit is registered in that State in accordance with the provisions of this Act;
Provided that a sanction obtained under this sub-section shall lapse if the chit is not registered within twelve months from the date of such sanction or within such further period or periods not exceeding six months in the aggregate as the State Government may, on application made to it in this behalf, allow.
(2) An application for the purpose of obtaining a sanction under sub-section (1) shall be made by the foreman in such form and in such manners as may be prescribed.
(3) The previous sanction referred to in sub-section (1) may be refused, if the foreman,-(a) had been convicted of any offence under this Act or under any other Act regulating chit business and sentenced to imprisonment for an such offence; or (b) had defaulted in the payment of fees or the filing of any statement or record required to be paid or filed under this Act or had violated any of the provisions of this Act or the rules made there under; or © had been convicted of any offence involving moral turpitude and sentenced to imprisonment for any such offence unless a period of five years has elapsed since his release;
Provided that before refusing any such sanction, the foreman shall be given a reasonable opportunity of being heard.
(4) The order of the State Government, and, subject to the provisions of sub-section (5), the order of the officer empowered under sub-section(1). Issuing or refusing previous sanction under this section shall be final.
(5) Any person aggrieved by the refusal to issue previous sanction by any officer empowered under sub-section (1). may appeal to the State Government within thirty days of the date of communication to him of such refusal and the decision of that Government on such appeal shall be final.

Comments

Validity of fee enhancement.-The enhanced fee, is justified on the legal as well as the factual anvil of quid pro quo. Apart from the appointment of the Registrar, staff and various other functionaries, the scheme of the Act .in its operation, involves huge expenditure which is entirely met out of the fee fund. The fees collected under the Act have, therefore, a live nexus with the expenditure incurred for the benefit of the “chit fund’ business.
Right of appeal.- A right of appeal is provided to a high authority like the State Government and, therefore, it cannot be said that right to appeal is illusory attracting the vice protected under Art.14 of the Constitution.

5.Prohibition of invitation for subscription except under certain conditions.-No person shall issue or cause to be issued any notice, circular, prospectus, proposal or other document inviting the public to subscribe for tickets in any chit unless such notice, circular, prospectus, proposal or document contains a statement that the previous sanction required under Sec. 4 has been obtained and the particulars of such sanction.

(6)6.form of chit agreement.-(1) Every chit agreement shall be in duplicate and shall be signed by each of the subscribers or by any persons authorised by him in writing and the foreman and attested by at least two witnesses a and it shall contain the following particulars, namely; (a) full name and residential address of every subscriber; (b) the number of tickets including the fraction of a ticket held by each subscriber;
(c) the number of installments, the amount payable for each ticket at every installments and the interest or penalty, if any, payable on any default in the payment of such installments;
(d) the probable date of commencement and the duration of the chit;
(e) the manner of ascertaining the prized subscriber at each installments;
(f) the maximum amount of discount which the prized subscriber has to forego at any installments;
(g) the mode and proportion in which the discount is distributable by way of dividend, foreman’s commission or remuneration or expenses for running the chit, as the case may be;
(h) the date, time and place at which the chit is to be drawn;
(i) the installments at which the foreman is to get the chit amount;
(j) the name of the approved bank in which chit moneys shall be deposited by the foreman under the foreman under the provisions of this Act;
(k) where the foreman is an individual, the manner in which a chit shall be continued when such individual dies or becomes of unsound mind or is otherwise incapacitated;
(l) the consequences to which a non-prized or prized subscriber or the foreman shall be liable in case of violation of any of the provisions of the chit agreement;
(m) the conditions under which a subscriber shall be treated as a defaulting subscriber;
(n) the nature and particulars of the security to be offered by the foreman;.
(o) the dates on which and time during which the foreman shall, subject to the provisions contained in Sec.44, allow inspection of chit records to non-prized and unpaid prized subscribers;
(p) the names of the nominees of each subscriber, that is to say, the name of the chit may be paid in the case of the death of the subscriber or when he is otherwise incapable of making an agreement;
(q) any other particulars that may, form time to time, be prescribed. Explanaiton;-For the purpose of this sub-section, it shall be sufficient if the signature of each subscriber is obtained in separate copies of the agreement.
(2) The duration of a chit shall not extend beyond a period of five years from the date of its commencement;
Provided that the State Government may permit the duration of a chit upto a period of ten years if it is satisfied that it is necessary so to do, having regard to,-
(a) the financial condition of the foreman;
(b) his methods of operation;
(c) the interests of prospective subscribers;
(d) the requirements as to security ;and
(e) such other factors as the circumstances of the case may require.
(3) The amount of discount referred to in Cl.(f) of sub-section (1) shall not exceed thirty percent. Of the chit amount.
(4) Where the prized subscriber at any installments of the chit is required to be determined by auction and more than one person offer the maximum discount, the prized subscriber shall be determined by lot.
7. Filling of chit agreement.-(1) every chit agreement shall be filed in duplicate by the foreman with Registrar. (2) The Registrar shall retain one copy of the chit agreement and return the duplicate to the foreman with an endorsement that the chit agreement has been registered; Provided that the Registrar may refuse to register the chit agreement on any one or more of the following grounds, namely;
(a) that the security offered by the foreman under Sec, 20 is insufficient;
(b) that the foreman had been convicted of any offence under this Act or under any other Act
regulating chit business and sentenced to imprisonment for any such offence;
(c) that the foreman had defaulted in the payment of fees or the filing of any statement or record required to be paid or filed under his Act or had violated any of the provisions of this Act or the rules made there under;
(d) that the foreman had been convicted of any offence involving moral turpitude and sentenced to imprisonment for any such offence unless a period of five years has elapsed since his release; Provided further that before refusing to registrar a chit under the first proviso, the foreman shall be given a reasonable opportunity of being heard.
(3) Every endorsement made under sub-section (2) shall be conclusive evidence that the chit is duly registered under this Act and the registration of a chit shall lapse if the declaration by the foreman under sub-section (1) of Sec.9 is not filed within three months from the date of such endorsement or within such further period or periods not exceeding three months in the aggregate as the Registrar may, on application made to him in this behalf, allow.
Shall.- It is settled law that when used in a statute, the word “shall” sometimes may be
enterpreted to mean, “may” and sometimes “may” is equivalent to “shall” depending upon the context .

8. Minimum capital requirements for the commencement, etc. of a chit, and creation of a reserve fund, by a company.- (1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), but subject to the provisions of this Act, a company shall not commence or carry on chit business unless it has a paid-up capital of not less than rupees one lakh.
(2) Every company having a paid-up capital of less than rupees one lakh and carrying on chit business on the commencement of this Act, shall, before the expiry of a period of three years from such commencement, increase its paid-up capital to not less than rupees one lakh; Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of three years in respect of any company by such further period or periods not exceeding two years in the aggregate; Provided further that no such company shall commence any new chit the duration of which would extend beyond the said period of three years or such extended period or periods under the first proviso unless it increases its paid-up capital to not less than rupees one lakh.
(3) Every company carrying on chit business shall create and maintain a reserve fund and shall,out of the balance of profit of each year as disclosed in its profit and loss account and before any dividend on its shares is declared, transfer to such reserve fund, a sum equal to not less than ten percent of such porofit.
(4) No company shall appropriate any sum or sums from the reserve fund except with the prior approval of the Registrar and, for the purpose of obtaining such approval it shall make an application in the prescribed from to the Registrar explaining the circumstances relating to such appropriation.

Comment

Proviso.-A proviso to a section has various functions. Sometimes a proviso may be simply an exception to what has been said before it in the substantive portion, sometimes it may be contrary to the substantive portion. At times a proviso may widen the scope of substantive part or it may narrow down the scope or it may clarify or quieten a doubt in the substantive portion.

(8)9.Commencement of chit.-(1) Every foreman shall, after all the tickets specified in the chit-agreement are fully subscribed, file a declaration to that effect with the Registrar.
(2) As soon as may be after a declaration is filed under sub-section (1), the Registrar shall, after satisfying himself that all the requirements relating to sanction, registration of chit and other matters have been duly complied with, grant a certificate of commencement to the foreman.
(3)No foreman shall commence any auction or the draw of any chit or appropriate any chit amount unless a certificate of commencement referred to in sub-section (2) is obtained by him. 10.Copies of chit agreement to be given to subscribers.-(1) A foreman shall, as soon as may be after he has obtained the certificate of commencement under sub-section (2) of Sec.9, but not later than the date of the first draw of the chit, furnish to every subscriber, a copy of the chit agreement certified to be a true copy.(2) A foreman shall, within fifteen days after the close of the month in which the draw for the first installment of the chit is held, file with the Registrar, a certificate to the effect that the
provisions of sub-section (1) have been complied with.
11. Use of the words “chit fund”, “chitty’ or “kuri”.- (1) No person shall carry on chit business unless he uses as part of his name any of the words “chit” ,”chit fund ” “chitty” or “kuri” and no person other than a person carrying on chit business shall use as part of his name any such word. (2) Where at the commencement of this Act,-
(a) any person carrying on chit business without using as part of his name any of the words specified in sub-section (1) ; or
(b) any person not carrying on chit business is using any such word as part of his name; he shall, within a period of one year from such commencement, add as part of his name any such word or, as the case may be, delete such words from his name;
Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of one year by such further period or periods not exceeding one year in the aggregate.

Comment

Chit fund transaction whether a debt:- Considering the intent of the legislation and the wording of Sec. 3 (b) and Secs. 4 and 8 of the Karnataka Debt Relief Act, it was held that the chit fund transaction in which the member- subscriber undertakes to repay the amount taken by him in installments is not a debt advanced within the meaning of Sec. 4 of the Act. These two things together constitute consideration for the purchase. From the chit fund. Subscribed to by subscribers, a subscriber could take the fund amount by mutual understanding of the subscribers on the date of “kuri” or on the auction date. It is a sort of a mutual benefit scheme. The subscriber also is a giver as well as a taker and the foreman acts for and on behalf of all subscribers including the taking subscription. Therefore, the transaction cannot be considered as loan. It does not partake of function of the foreman or stakeholder by whatever name he is called, in the chit fund scheme . is only to organise the chit fund transactions The money taken in the chit held by the subscriber is not the foreman’s money. The relationship that exists between the foreman and the subscriber is not of a creditor and debtor.

12. Prohibition of transacting business other than chit business by a company.- (1) Except with the general or special permission of the State Government, no company carrying on chit business shall conduct any other business.
(2) Where at the commencement of this Act, any company is carrying on any business in addition to chit business, it shall wind up such other business before the expiry of a period of three years from such commencement; Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of three years by such further period or periods not exceeding two years in the aggregate.
13. Aggregate amount of chits. (1) No foreman. Other than a firm or other
association of individuals or company or co-operative society, shall commence or conduct chits, the aggregate chit amount of which at any time exceeds twenty-five thousand rupees.
(2) Where the foreman is a firm or other association of invididuals, the aggregate chit amount of the chits conducted by the firm or other association shall not at any time exceed,(a) where the number of partners of the firm or the individuals constituting the association is not less than four, a sum of rupees one lakh:
(b) in any other case, a sum calculated on the basis of twenty-five thousand rupees with respect to each such partner or individual.
(3) Where the foreman is a company or co-operative society, the aggregate chit amount of the chits conducted by it shall not at any time exceed ten times the net-owned funds of the company or the co-operative society, as the case may be.
Explanation:- For the purpose of this sub-section ,”net-owned funds” shall mean the
aggregate of the paid-up capital and free reserves as disclosed in the last audited balance- sheet of the company or co-operative society, as reduced by the amount of accumulated balance of loss deferred revenue, expenditure and other intangible assets, if any, as disclosed in the said balance-sheet.

14.Utilisation of funds.-(1) No person carrying on chit business shall utilise the moneys collected in respect of such business (other than commission or remuneration payable to such person or interest or penalty, if any, received from a defaulting subscriber, except for- (a) carrying on chit business; or (b) giving loans and advances to non-prized subscribers on the security of subscriptions paid by them or; © investing in trustee securities within the meaning of Sec. 20 of the Indian Trusts Act,1882 (2 of1882) ; or (d) making deposits with approved banks mentioned in the chit agreement.

(2) Where any person carrying on chit business has utilised the moneys collected in respect of such business before the commencement of this Act, otherwise than for the purposes specified in subsection (1), he shall secure that so much of such moneys as have not been realized before such commencement are realised before the expiry of a period of three years from such commencement: Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of three years by such further period or periods not exceeding one year in the aggregate

15.Alternation of chit agreement- A chit agreement shall not be altered. Added to or cancelled except with the consent in writing of the foreman and all the subscribers to the chit.
16. Date, time and place of conducting chits.-(1) Every draw in a chit shall be held on the date, at the time and place mentioned in the chit agreement and notice therefore in such form and in such manner as may be prescribed shall be issued by the foreman to all the subscribers.(2) Every such draw shall be conducted in accordance with the provisions of the chit agreement and in the presence of not less than two subscribers,
(3) Where any draw was not conducted on the ground that two subscribers required to be present at a draw under sub-section (2) were not present or on any other ground, the Registrar may, on his own motion or on an application made by the foreman or any of the subscribers, direct that the draw shall be conducted in his presence or in the presence of any person deputed by him.
17. Minutes of proceedings,- (1) The minutes of the proceedings of every draw shall be prepared and entered in a book to be kept for that purpose immediately after the closure of the draw and shall be signed by the foreman, the prized subscribers, if present, or their authorised agents, and at least two other subscribers who are present, and where a direction has been made under sub-section (3) of Sec.16, also by the Registrar or the person deputed by him under that sub-section. (2) The minutes referred to in sub-section (1) shall state clearly- (a) the date and hour when proceedings began and ended and the place where the draw was held; (b) the number of the installments of the chit to which the proceedings relate; (c) the names of the subscribers present; (d) the person or persons who become entitled to the prize amount in the stalment; (e) the amount of discount;(f) full particulars regarding the disposal of the unpaid prize amount, if any, in respect of any previous installments; and (g) any other particulars that may be pescribed.

18.Copies of minutes to be filed with Registrar.-A true copy of the minutes of the proceedings of every draw certified as such by the foreman shall be filed by the foreman with the Registrar within twenty-one days from the date of the draw to which it relates.

19.Restriction on opening of new place of business.- (1) No person carrying on chit business shall open a new place of business without obtaining the prior approval of the Registrar within whose territorial jurisdiction his registered office or, as the case may be, the place or the principal place of business is situated . (2)Before granting approval under sub-section (1), the Registrar shall consult the Registrar of that State within whose territorial jurisdiction the new place of business is proposed to be opened and shall also keep in view the financial condition and methods of operation of the foreman, the extent to which public interest will be served by the opening of the new place of business and such other matters as may be prescribed. (3)Where a person carrying on chit business opens a new place of business in a State other than the State other than the State (hereinafter referred to as the State of origin) in which his registered office or the place or the principal place of his business is situated, the Registrar of the State in which such new place of business is opened may also exercise and perform any of the powers and functions which the Registrar of the State of origin may exercise and perform in respect of the chit business carried on at such new place of business.
(4)For the purposes of this section, “place of business” shall include any branch office, sub-office, or any place of business where the chit business may be conducted by such person.

Comment

Section 19 provides that no person carrying the business of chit fund shall open its business to other new place new place without the prior permission and approval of the Registrar within whose territorial jurisdiction his place of business is or principal place of business is situated. Before consenting the Registrar shall consult the Registrar shall consult the Registrar of the State. in whose jurisdiction the new place of business is proposed to be opened.

CHAPTER III

Rights and Duties of foreman
20. Security to be given by foreman,-(1) For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under Sec. 4,- (a) deposit in an approved bank an amount equal to the chit amount in the name of the Registrar,or (b) transfer Government securities of the face value or market value (whichever) of not less than one and a half times the chit amount in favour of the Registrar; or
(c) transfer in favour the Registrar such other securities, being securities in which a trustee may invest money under Sec. 20 of the Indian Trusts Act,1882( 2 of 1882) of such value, as may be prescribed by the State Government from time of time;
Provided that the value of the securities referred to in Cl © shall not in any case, be less than one and a half times the value of the chit amount. (2) Where a foreman conducts more than one chit, he shall furnish security in accordance with the provisions of sub-section (1) in respect of each chit. (3) The Registrar may, at any time during the currency of the chit, permit the substitution of the security:
Provided that the face value or market value (whichever is less) of the substituted security shall not be less than one and a half times the value of the chit amounts.
(2) Where a foreman, conducts more than one chit, he shall furnish security in accordance with the provisions of sub-section (1) in respect of each chit.
(3) The Registrar may, at any time during the currency of the chit , permit the substitution of the security: Provided that the face value or market value (whichever is less) of the substituted security shall not be less than the value of security given by the foreman under sub-section (1). (4) The security given by the foreman under sub-section(1), or any security substituted under subsection( 3), shall not be liable to be attached in execution of a decree or otherwise until the chit is terminated and the claims of all the subscribers are fully satisfied. (5) Where the chit is terminated and the Registrar has satisfied himself that the claims of all the subscribers have been fully satisfied, he shall order the release of the security furnished by the foreman under sub section(1), or the security substituted under sub-section (3), as the case may be, and in doing so, he shall follow such procedure as may be prescribed. (6) Notwithstanding anything to the contrary contained in any other law for the time being in force, the security furnished under this section shall not be dealt with by the foreman during the currency of the chit to which it relates and any dealing by the foreman with respect thereto by way of transfer or other encumbrances shall be null and void.

Comment

Validity of amendment requiring security to be furnished in cash by foreman,-Section 12 of the Tamil Nadu Chit Funds Act, 1961, as it stood before the amendment by Tamil Nadu Act 14 of 1975, required the foreman of the chit scheme to execute an indenture by mortgaging property in favor and to the satisfaction of the Registrar by way of security for the realization of the chit amount deposited in an approved bank. The said section . After amendment, required the foreman to deposit cash amount as security in such manner as prescribed .The conditions of depositing cash security were made more hazardous in the amended provisions of the section. The amended provision only varied the form of restriction which was already inherent in the original Act. Since the principal Act had the sanction of the President it was not necessary to obtain the sanction of the President for the amending Act.

21. Rights of foreman:- (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 installments 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 percent. of the chit amount as may be fixed in the chit agreement, by way of commission. Remuneration or for meeting the expenses of running 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 realize all subscriptions from the subscribers and to distribute the prize amounts to the prized 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 purpose 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 subscriber; and (g) to do all other act 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 Cl. (e) of sub-section (1), it shall be referred to the Registrar for arbitration under Sec.64.

22. Duties of foreman:- (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 installments , 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 installments, the foreman shall deposit the prize amount forth with in a separated 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 installments 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 installments. (3) Every payment of the prize amount or the amount of future subscriptions under subsection (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 Cl.(b) or Cl.(c) of sub-section (1) of Sec. 21 Provided that where the foreman is himself a prized subscriber, he shall be entitled to appropriated to himself the prize amount subject to his complying with provisions of Sec. 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, (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 installments, if any.

23. Books, records, etc to be kept by foreman.-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 recognized by the foreman:
(b) a book containing the minutes of the proceedings of each draw;
(c) a ledger containing-
(i) the amounts paid to 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.

24.Balance-sheet:- Without prejudice to the provisions of the Companies Act,1956 (1 of 1956), every foreman shall prepare and file with the Registrar within such time as may be prescribed, a balance- sheet as on the last date of each calendar year, or, as the case may be, the financial year of the foreman and a profit and loss account relating to the year of account, in the forms set out in Parts I and II of the Schedule, or as near thereto as circumstances admit, in respect of the chit business and audited by auditors qualified to act as auditors under the Companies Act, 1956, or by a chit auditor appointed under Sec. 61; Provided that where a balance- sheet is audited by an auditor qualified to act as auditor under the Companies Act,1956 ( 1 of 1956), a chit auditor appointed under Sec. 61 shall have the right to audit the balance-sheet at any time if so authorised by the Registrar in this behalf.

25. Liability of foreman to subscribers,-(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.

26. Withdrawal of foreman.- (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 with drawal 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 Sec. 41.
(2) The withdrawal from a chit of any one of the foreman shall not effect the security given by him under Sec.20 or Sec. 31.

CHAPTER IV

Rights and Duties of Non-prized Subscribers
27. Non-prized subscribers to pay subscriptions and obtain receipts;-Every non-prized subscriber shall pay his subscription due in respect of every installments on the dates and time and at the places mentioned in the chit agreement and shall, on such payment, be entitled to obtain a receipt from the foreman.

28. 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 installments 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 subscsribers.
(2) Every such removal under sub-section (1), shall with the date thereof, be 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.
(2) 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 Sec.64.

29. Substitution of subscribers.-(1) A foreman may substitute in the list of subscribers any person (hereinafter 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 Sec.28.
(2) Every substitution referred to in sub-section (1) shall, with the date thereof, 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.

30. Amounts due to defaulting subscribers.-(1) A foreman shall, out of the amounts payable by and realized from the substituted subscriber towards the installments relatable to the period before the date of the substitution (including the arrears due from the defaulting subscriber),deposit, before the date of the next succeeding installments, 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 of the defaulting subscriber.(2) The amount so deposited under sub-section (1) shall be paid to the defaulting subscriber 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 defalulting subscriber who has not been substituted till the
termination of the chit shall be paid to him within fifteen days from the date oftermination of the chit subject to such deduction as may be provided for in the chit agreement.

CHAPTER V
Rights and Duties of Prized Subscribers
31. Prized subscriber to furnish security.-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 prized subscriber, he shall give security for the due payment of all the future subscriptions to the satisfactions to the satisfaction of the Registrar.

32. Prized subscriber to pay subscriptions regularly,- 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.

33. 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 Sec. 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 prize 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 with standing 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 realize, 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 subsection
unless such promissory note expressly states that the amount due under the promissory not 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 payment 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 installments and the amount so deposited shall not be withdrawn except for payment of future subscriptions. (3) Where any property is obtained as security in lieu of the consolidated payment of future subscriptions, it shall remain as security for the due payment of future subscription.

Comments
Sub-section (4) prescribes the mode of depositing all consolidated payment of future subscription realised by a foreman in an approved bank mentioned in the chit agreement before the date of the succeeding installments and this amount shall only be withdrawn for the payment of future subscription.

Limitation for suit to recover installments.-On facts, the learned Judge has found that the suit was filed within three years from the date of first default committed by the prized subscriber. In such an event, there is no room for an assumption that the learned Judge has ruled that the suit can be filed within 3 years of the date of termination of the chit. Even assuming that there is a possibility of construing the judgment in that way. That judgment having been decided on facts, cannot be taken as laying down the law to the effect that suit can be filed within three years from the date of termination of the chit.

CHAPTER VI

Transfers
34. Restrictions on transfer of rights of foreman.-(1) No transfer of the rights of a foreman to receive subscriptions from the prized subscribers shall be made without the previous sanction in writing of Registrar
(2) Any transfer of the rights of a foreman to receive subscriptions form the prized subscribers shall, if it is likely to defeat or delay the interests of a non-prized or unpaid prized subscriber, be voidable at the instance of such subscriber .
(3) When under sub-section (2), a transfer is disputed by a subscriber, the burden of providing that the foreman was in solvent circumstances at the time of the transfer and that the transfer does not defeat or delay the interests of such subscriber is on the transferee.

35. Transfer of non-prized subscriber’s right to be in writing .-Every transfer by a non-prized subscriber of his rights in the chit shall be in writing duly attested by at least two witnesses and shall be filed with the foreman.

36. Recognition of transfer by foreman.- Every transfer under Sec. 35 shall, within a period of fourteen days from the date of receipt of the proposal for transfer by the foreman, be recognized by him unless the transferee is not solvent or the transfer was effected with a view to defeating the provisions of any law including this Act and the decision of the foreman to recognize the transfer or not shall fortwith be communicated to the parties concerned.

37. Entry of transferee’s name in the books.- Every transfer under Sec. 34 or Sec. 35 shall be entered by the foreman in the books of the chit forthwith and a true copy of such entry shall be filed by the foreman with the Registrar within fourteen days from the date of making such entry.
(18)
CHAPTER VII
Meetings of General Body of Subscribers
38. Meetings of general body of a subscribers.-(1) The foreman may, on his own motion, convene a special meeting of the general body of subscribers for considering any proposal to pass a special
resolution.
(2) The foreman shall convene such a meeting on the requisition in writing of not less than twentyfive
percent. of the number of non-prized and unpaid prized subscribers, and the meeting so convened
shall be held within thirty days of the date of receipt of the requisition and if the foreman refuses or fails
to call such a meeting within fourteen days of the date of receipt of such requisition, not less than
twenty- five percent. of the number of non-prized and unpaid prized subscribers may give notice of the
fact to the Registrar.
(3) The Registrar shall, within twenty-one days of the receipt of the notice under sub-section (2),
convene or direct the convening of a special meeting of the general body of the subscribers and on
receipt of such a direction, it shall be the duty of the foreman to comply with such direction.
(4)Notice of not less than fourteen days shall be given to all the subscribers of a meeting under this
section specifying the object, date, hour, and place of meeting and a copy of the special resolution
shall also be sent along with the notice of the meeting.
Explanation;-For the purpose of this section and Sec. 39, “Special resolution” means a resolution
which is passed at a meeting of the general body of the subscribers specially convened for the purpose
by a majority of not less than two-thirds of the subscribers to the chit present at the meeting in person
or by proxy and representing not less than three-fourths of the amount or, as the case may be, the value
of the grain, subscribed by all non-prized and unpaid prized subscribers, if any.
CHAPTER VIII

Termination of Chits
39. Provisions for continuation of chits in certain cases.-(1) Where a foreman dies or becomes
of unsound mind or is otherwise incapacitated, the chit may continue in accordance with the provisions
of the chit agreement.(2) Where a foreman is adjudicated an insolvent, or withdraws from the chit
under Sec. 26, or fails to conduct the chit at any installments or on any other date before the next
succeeding installments as may have been agreed upon by a special resolution, any one or more of such
subscribers authoreised by ssuch resolution may, in the absence of any provision in the chit agreement
for the future conduct of the chit, take the place of the foreman and continue the chit or make
other arrangements for the further conduct the chit.
40. Termination of chits.- A chit shall be deemed to have terminated,-
(a) when the period specified there for in the chit agreement has expired provided the payment
of dues to all the subscribers has been completed; or
(b) when all the non-prized and unpaid prized subscribers and the foreman consent in writing to
the termination of the chit and a copy of such consent is filed with the Registrar as required under
Sec.41; or
(c) where a foreman dies or becomes of unsound mind or is otherwise incapacitated and the chit
is not continued in accordance with the provisions of the chit agreement;
Provided that, in a case where the foreman is a firm, if a partner thereof dies or becomes of
unsound mind or is otherwise incapacitated, the chit shall not be deemed to have terminated and the
surviving partner or partners shall conduct the chit in the absence of any provision to the contrary in the
chit agreement.
(19)
41.Copy of assent or consent to be filed with Registrar.- A true copy of every assent referred to in Sec. 26 and of every consent referred to in Cl. (b) of Sec. 40 with their dates shall be filed by the foreman or by the surviving partner or partners, as the case may be, with the Registrar
within fourteen days from the date of such assent or consent.
42. Refund of non-prized subscriber’s subscriptions.-Except in the cases referred to in Cls.(a)
and (b) of Sec. 40,-
(a) every non-prized subscriber shall, unless otherwise provided for in this Act or in the chit
agreement, be entitled to get back his subscriptions at the termination of the chit without any
deduction for dividend, if any, earned by him:
Provided that, any person to whom the rights of a non-prized subscriber are transferred in
accordance with the provisions of Sec.35, shall, in addition to his own subscription, be entitled
to get back the subscriptions paid by such non-prized subscriber, subject to the conditions
specified in this section;
(b) if a chit terminates on a date earlier than the date originally fixed in the chit agreement, the
non –prized subscriber’s claim shall be deemed to have arisen on the date on which he has
notice thereof,
43.Subscriber’s dues to be first charge on chit assets.-Any amount due to the subscriber from a
foreman in relation to the chit business shall be a first charge on the chit assets.
CHAPTER IX
Inspection of Documents

44. Foreman to allow certain subscribers to inspect chit records.-Every foreman shall, on payment of such fee not exceeding five rupees as may be specified in the chit agreement, allow the non-prized subscribers and unpaid prized subscribers reasonable facilities on all the dates of draw or on such other dates and within such hours as may be provided for in the chit agreement, for the inspection of security bonds and documents, receipts and other records taken from the prized subscribers, or furnished by the foreman as a subscriber and all the chit records, including books of accounts, pass-books, balance-sheet and profit and loss accounts and such other records as may show the actual financial position of the chit.

45. Preservation of chit records by foreman.-All the records pertaining to a chit shall be kept by the foreman for a period of eight years from the date of termination of the chit.

46. Inspection of chit books and records by Registrar.-(1) Without prejudice to the provisions of Secs.209 and 209 –A of the Companies Act, 1956 (1 of 1956), the Registrar or an officer authorised by the State Government in this behalf may inspect chit books and all the records of a chit during working hours on any working day at the premises of the foreman with or without giving notice and it shall be the duty of every foreman to produce to the Registrar or the officer so authorised , all such books and records as are in his custody or power and to furnish him with any statement or information relating to the chits as he may require from the foreman within such time as he may specify. (2) The Registrar or an officer authorised by the State Government in this behalf may, after giving seven days notice in writing to the foreman, direct him to produce before him for inspection such chit books and records as he may require at the time and place mentioned in the notice.
(2) If on an inspection made under sub-section (1) or sub-section(2), any defects are found, the Registrar may bring such defects to the notice of the foreman and may also make an order directing the foreman to take such action as may be specified in the order to remedy the defects within the time specified therein.
(3) Every foreman shall be bound to comply with the directions contained in an order made under sub-siction(3).

47. Power of Reserve Bank to inspect chit books and records.- (1) Nothing in Sec. 46 shall be deemed to affect the power of the Reserve Bank to inspect the books and records of any foreman under the provisions of Sec. 45-N of the Reserve Bank of India Act, 1934(2 of 1934).(2) The Reserve Bank may, if it considers necessary, forward a copy of its repost or of any part of its report on the inspection of the books and records of a foreman to the foreman for taking necessary action.
(3) Every foreman shall, on receipt of the report or part thereof under sub-section(2), be bound to comply with the directions, if any, given by the Reserve Bank in this behalf and shall, if so required, submit periodical reports in regard to the action taken by him.
(4) The Reserve Bank may also forward a copy of the report on the inspection of the books and records of a foreman to the State Government within whose jurisdiction the registered office of the company, if the foreman is a company, or the place or the principal place of business of the foreman in any other case, is situated for such action as may be considered necessary.

CHAPTER X

Winding-up of Chits

48. Circumstances under which chits may be wound up.- A chit may be wound up the Registrar within whose territorial jurisdiction the chit has been registered, either on his own motion or on an application made by any non-prized or unpaid-prized  subscriber,-
(a)if the chit has terminated under Cl. (c) of Sec. 40; or
(b)if the foreman commits any such act in respect of the security specified in Sec.20 as is calculated to impair materially the nature of the security or the value thereof; or
© if he fails to deposit any amount required to be deposited under any of the provisions of this Act;or
(d)if it is proved to the satisfaction of the Registrar that the foreman is unable to pay the
amounts due to the ubscribers; or
(e)if the execution or other process issued on an order passed by the Registrar in favour of any subscriber in respect of amounts due to him from the foreman in relation to the chit business is returned unsatisfied in whole or in part; or
(b) if it is proved that there has been a fraud or collusion on the part of the foreman in the matter of taking securities from any prized subscriber; or
(c) if the foreman has appropriated the prize amount in his capacity as a subscriber without furnishing sufficient security for future subscriptions; or
(d) if the Registrar is satisfied that the affairs of the chit are being conducted in a manner prejudicial to the interests of the subscribers; or
(e) if it is just and equitable that the chit should be wound up.
Explanation;-For the purpose of Cl.(d), in determining whether the foreman is unable to pay the amount due to the subscribers, the Registrar shall take into account his contingent andfuture liabilities in respect of the chit.

49. Application for winding up.-An application for the winding-up of a chit shall be made by a petition presented by any non-prized or unpaid prized subscriber to the Registrar signed and verified in the manner laid down by the Code of Civil Procedure, 1908(5 of 1908), and shall contain such particulars as may be prescribed:
Provided that no application for the winding-up of a chit under Cl.(d) or Cl. of Sec.48 shall lie unless such application is presented,-
(a) by non-prized and unpaid prized subscribers representing not less than twenty-five percent. of the amount or, as the case may be, the value of the grain subscribed by all the non-prized and unpaid prized subscribers, if any; or
(b) with the previous sanction of the State Government within whose jurisdiction the chit is commenced or conducted.
Explanation;- For the purposes of Cl.(a) of the proviso, a subscriber of a fraction of a ticket shall be deemed to be a subscriber only to the extent of such fraction.

50. Bar to winding-up proceedings.- Notwithstanding anything contained in Secs. 48 and 49, no petition for the winding-up of a chit shall be entertained by the Registrar-
(a) if proceedings relating to insolvency are pending against the foreman; or
(b) where the foreman is a firm, is proceedings relating to insolvency are pending against all the partners or all the partners except one thereof, or proceedings for the dissolution of the firm are pending; or
(c) where the foreman is a company or co-operative society, if proceedings of the winding-up of such company or co-operative society are pending.

51.Commencement and effect of winding-up order.-An order for the winding –up of a chit shall operated in favour of all the subscribers to whom amounts are due from the foreman and it shall be deemed to have commenced from the date of the presentation of the application for the winding-up.

52.Injunction order.-The Registrar may, on the application of the foreman of any subscriber to whom amounts are due in respect of a chit, at any time after the presentation of the application for the winding up of the chit under this Act and before the making of an order for the appointment of an interim receiver or for the winding-up of the chit, restrain any other proceedings instituted against the foreman for the realisation of amounts due from him on such terms as the Registrar thinks fit.

53. Powers of Registrar.- The Registrar may, after hearing an application under this chapter, dismiss it with or without costs, or adjourn the hearing conditionally or unconditionally or make an interim or any other order that he deems fit.
54. Vesting of chit assets in Registrar or other person.-On the making of an order for the winding up of a chit, all the chit assets pertaining to such chit shall vest in the Registrar or in any person appointed by him for distribution amongst the subscribers to whom amounts are due in respect of the chit.

55. Suits, etc. to be stayed on winding –up order has been made or a receiver has been appointed, no suit or other legal proceedings shall be continued or commenced against the foreman by a subscriber for the realization of amounts due to him in respect of the chit except with the leave of the Registrar winding- up the chit and on such terms as he may impose.

56. Notification of winding-up order.-On the making of a winding-up order, the Registrar shall make an entry in his book relating to the chit and shall notify in the official Gazette that the order has been made.

57. Cessation of winding-up proceedings on insolvency of foreman, etc. or the winding-up of the company and transfer of such proceedings. Where during the pendency of the proceedings for the winding-up of a chit, the foreman is adjudicated an insolvent, or where the foreman is a firm, all the

58. partners or all the partners except one thereof are adjudicated insolvents, or where the foreman is a company, the company has been ordered to be wound up by the Court, the winding-up proceeding under this chapter shall cease and the distribution of the chit assets shall, subject of the provisions of Secs. 43 and 52, be made by all the insolvency Court or the Court winding – up the company, as the case may be.

59. Award of compensation to foreman.-(1) Where an application for the winding-up of a chit is dismissed and the Registrar is satisfied that the petition, is frivolous or vexatious, he may on the application of the foreman, award against the petitioner such amount, not exceeding one thousand rupees, as he deems reasonable as compensation to the foreman for the expenses or injury caused to him by the presentation of the application and the proceedings thereon, and such amount may be realised as if the award were a decree of a Civil Court.
(2) On the making of an award under sub-section (1), no suit for compensation in respect of an application for any winding up of the chit shall be entertained.

60. Right to appeal.- The foreman or any subscriber or any other person aggrieved by a decision or order of the Registrar in any proceedings for the winding-up a chit may, within sixty days from the date of such decision or order, appeal to the State Government.

61. Limitation.-(1) Where an order refusing to wind up a chit has been made under this Act, the chit shall be deemed to have been under suspension form the date of presentation of the application to the date of such order in respect of non-prized subscribers; and,notwithstanding anything contained in the chit agreement, no non-prized subscriber who was not a defaulter on the date of the presentation of the petition for winding-up, shall be deemed to be a defaulter on the date of such order.
(2) Where an order refusing to wind up a chit has been made under this Act, in computing a period of limitation prescribed for any suit or other legal proceedings (other than a suit or application in respect of which the leave of the Count had been obtained) which might have been brought or instituted, but for the presentation of the application for the winding-up of the chit, the period from the date of the presentation of the application to the date of the order refusing to wind up a chit shall be excluded.
(3) Nothing contained in this chapter shall effect the rights of a subscriber to proceed
against the foreman personally for the balance, if any, of the amount due to him after the declaration of the final dividend in the proceedings for the winding-up of the chit and in computing the period of limitation prescribed for any such proceedings, the period form the date of the presentation of the application for the winding- up the chit to the date of the declaration of the final dividend shall be excluded.

CHAPTER XI
Appointment of Officers and Levy of Fees

62. Appointment of Registrar and other officers.-(1) 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.
(2) The Registrar may appoint as many inspectors of chits and chit auditors as may be
necessary for the purpose of discharging the duties imposed on the inspectors of chits or chit auditors by or under this Act.
(3) All inspectors of chits and chit auditors shall discharge the duties imposed upon them by or under this Act under the general superintendence and control of the Registrar.
(4) If the Registrar is of opinion that the accounts of any chit are not properly maintained and that such accounts should be audited, by a chit auditor.
(5) It shall be the duty of the foreman of the chit whose accounts are to be audited by a chit auditor under sub-section (4) to produce before the chit auditor, all accounts, books and other records relating to the chit ,to furnish him with such information as may be required and afford him all such assistance and facilities as may be necessary and reasonable with regard to the audit of the accounts of the chit.
(6) The foreman shall pay to the chit auditor such fees as may be prescribed for the audit of accounts of the chit under sub-section(4);
Provided that different scales of fees may be prescribed for different chits depending on the quantum of the chit amount.

Comment
Section 61 (5) provides that the foreman is duty bound to produce before a chit auditor, all accounts,) books and other records relating to chit, to furnish him with all such information as may be required by the auditor, The foreman shall afford the auditor all such assistance and facilities as may be necessary and reasonable in respect to the audit of the accounts of the chit.

62.Inspection of documents in Registrar’s office;-The foreman of a chit or any subscriber in a chit or the heirs or legal representatives of any foreman or subscriber may, on payment of such fees as may be prescribed:
(a) inspect the documents of the concerned chit kept by the Registrar; or
(b) obtain a certified copy or an extract of any such document on record.

63.Levy of fees.-(1) There shall be paid to the Registrar such fees as the State Government may, from time to time, prescribe for,
(a) the issue of previous sanction under Sec.4;
(b) the filing of the chit agreement of the Registrar and the registration of the chit under Sec.7;
(c) the filling of a declaration with the Registrar and the grant of a certificate of commencement under Sec.9;
(d) the filling of copies of documents under any of the provisions of this Act;
(e) the audit of the accounts of the foreman under Sec.61;
(f) the inspection of documents under Sec.62.
(g) the obtaining of certified copies or extracts of documents and records under Sec. 62; and
(h) such other matters as may appear necessary to the State Government.
(2) A table of fees prescribed under sub-section (1) shall be exhibited on a notice-board in the office of the Registrar.

CHAPTER XII
Disputes and Arbitration

63. Disputes relating to chit business;-Notwithstanding anything contained in any other law for the time being in force, any dispute touching the management of chit business shall be referred by any of the parties to the dispute, to the Registrar for arbitration if each party thereto is one or the other of the following namely:
(a) a foreman, a prized subscriber or a non-prized subscriber, including a defaulting subscriber, past subscriber or a person claiming through a subscriber, or a deceased subscriber to a chit;
(c) a surety of a subscriber, past subscriber, or a deceased subscriber.
Explanation;-For the purpose of this sub-section, a dispute touching the management of a chit business shall include,-
(f) a claim by or against a foreman for any debt or demand due to him from a subscriber, or due from him to a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber whether such debt or demand is admitted or not; (ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a loan by a foreman and recovered from the surety owing to the default of the principal borrower, whether such sum or demand is admitted or not; and
(iii) a refusal or failure by a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber to deliver possession to a foreman of land or any other asset resumed by him for breach of conditions of the assignment.
(2) Where any question arises as to whether any matter referred to for the award of the
Registrar is a dispute or not for the purpose of sub-section (1), the same shall be decided by the Registrar whose decision thereon shall be final.
(3) No Civil Court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred t in sub-section (1)

65. Period of limitation;-(1) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963), but subject to the specific provisions contained in this Act, the period of limitation in the case of dispute referred to the Registrar under Sec. 64, shall, –
(a) if the dispute relates to the recovery of any sum, including interest thereon, due to a
foreman from a deceased subscriber, be three years, computed from the date on which
such subscriber dies or ceases to be a subscriber or (b) if the dispute is between a foreman and a subscriber or a past subscriber, or the nominee, heir or legal representative of a deceased subscriber, and the dispute relates to any act or
omission on the part of either party to the dispute, be three years from the date on which the act or omission with reference to which the dispute arose, took place.
(2) The period of limitation in the case of any dispute other than those referred to in sub-section (1) which are required to be referred to the Registrar under Sec. 64 shall be regulated by the provisions of the Limitation Act. 1963 (36 of 1963), as if the dispute were a suit, and the registrar, a Civil Court.
(3) Notwithstanding anything contained in sub-sections (1) and (2), the Registrar may admit a dispute after the expiry of the period of limitation specified therein. if the applicant satisfies the Registrar that he had sufficient cause for not referring the dispute within such period.

66. Settlement of disputes.- (1) If the Registrar is satisfied that any matter referred to him or brought tohis notice is a dispute within the meaning of Sec. 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 (hereafter in this chapter referred t as the nominee.)
(2) Where any dispute is referred under sub-section (1) for settlement of 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.

67. Procedure for settlement of disputes and powers of Registrar or nominee,- (1) The Registrar or the nominee hearing a dispute under Sec. 66, shall, in addition to the powers conferred on him under that section, have the same powers as are vested in a Civil Court while trying a suit under the Code of Civil Procedure, 1908 (5 of 1908) in respect of the following matters, namely:
(a) summoning and enforcing the attendance of persons and examining them on oath;
(b) requiring the discovery and inspection of documents;
(c) receiving evidence on affidavit;
(d) requisitioning any public record or copies thereof from any Court or office;
(e) issuing commissions for the examination of witnesses or document; and
(f) any other matter which may be prescribed.

(2) Except with the permission of the Registrar or the nominee, no party shall be represented at the hearing of a dispute by a legal practitioner.
(3)(a) If the Registrar or the nominee is satisfied that any person, whether he is a subscriber or not has acquired any interest in the property of a person who is a party to a dispute, he may order that the person who has acquired the interest in the property may be joined as a party to the dispute and any decision that may be given by the Registrar or the nominee on the dispute shall be binding on the party so joined, in the same manner as if he were an original party to the dispute.
(a) Where a dispute has been referred in the name of a wrong person ,or where all the
necessary parties have not been included, the Registrar or the nominee any, if he is satisfied that it was due to a genuine mistake, or order any other person to be substituted or added as parties to the dispute at any stage of hearing of the dispute on such terms as he thinks just.
(b) The Registrar or the nominee may, at any stage of the proceedings either upon or without the application of either party and on such terms as may appear to the Registrar or the nominee t be just, order that the name of any party improperly joined be struck off.
(d) Any person who is a party to the dispute and entitled to more than one relief in respect of the same cause of action may claim all or any such relief, but if he omits to claim any such relief, he shall not be entitled to claim that relief, except with the leave of the Registrar or the nominee.

68. Attachment before judgment and other interlocutory orders.-(1) Where a dispute has been referred under Sec.64 and the Registrar or the nominee hearing the dispute is satisfied on enquiry or otherwise that a party to such dispute, with intent to defeat or obstruct the execution of any award or the carrying out of any order that may be made,-
(a) is about to dispose of the whole or any part of his property; or
(b) is about to remove the whole or any part of the property form the jurisdiction of the
Registrar, he may, unless adequate security is furnished, direct conditional attachment of the said property, and such attachment shall have the same effect as if it is made by competent Civil Court.
(3) Where the Registrar or the nominee directs the attachment of any property under
sub-section (1), he shall issue a notice calling upon the person whose property is so
attached to furnish such security as he thinks adequate within a specified period, and if
the person fails to provide such security, the Registrar or the nominee may confirm the
order, and may, after the decision in the dispute, direct the disposal of the property
so attached towards the claim, if awarded.
(4) Any attachment made under this section shall not effect the rights, subsisting prior to the attachment of the property, of persons who are not parties to the dispute, or bar any person holding a decree against the person whose property is so attached from applying for the sale of the property under the attachment of such decree.
(5) The Registrar or the nominee may, in order to prevent the ends of justice being
defeated, make such interlocutory order pending the award in a dispute referred to in subsection (1) as may appear to be just and convenient.

69. Decision of Registrar or nominee.- When a dispute is referred to arbitration under this Chapter, the Registrar or the nominee, may after giving a reasonable opportunity to the parties to the dispute to be heard, make an award on the dispute, on the expenses incurred by the parties to the dispute in connection with the proceedings and the fees and expenses payable to the Registrar or the nominee, and such an award shall not be invalid merely on the ground that it was made after the expiry of the period, if any, fixed for deciding the dispute by the Registrar, and shall, subject to appeal under Sec. 70, be final and binding on the parties to the dispute.

70. Appeal against decision of Registrar or the nominee,-Any party aggrieved by any order passed by the Registrar or the nominee or the award of the Registrar or the nominee under Sec.69, may, within two months from the date of the order or award, appeal to the State Government.

71. Money how recovered.-Every order passed by the Registrar or the nominee under Sec. 68 or Sec. 69. and every order passed by the State Government in appeal under Sec. 70 for the 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 such 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 Cl. (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.

72. Private transfer of property made after issue of certificate void against foreman.- Any private transfer or delivery of, or encumbrance or charge on property made or created after the issue of the certificate by the Registrar under Sec.71 shall be null and void against the foreman on whose application the said certificate was issued.

CHAPTER XIII
Miscellaneous

73. Advisory role of Reserve Bank.-The Reserve Bank may tender to any State Government such advice on questions of policy with respect to this Act as it thinks fit either on its own motion or on a request made by the State Government.

74. Appeal.- (1) Any foreman aggrieved by the decision of the Registrar,-
(a) refusing to registrar the chit agreement under Sec.7;
(b) refusing to grant a certificate of commencement under subsection (2) of Sec. 9;
(c) refusing to accept any security under sub-section (1) of Sec. 20 or under Sec. 31; or-
(d) refusing to release the security charged under Sec. 20 or Sec.31; may, within thirty days of the communication to him of such decision, appeal to the  State Government or to such officer or authority as may be empowered by notification in the official Gazette by the State Government in that behalf. (2) Any foreman or other person aggrieved by the order of the Registrar sunder subsection (1) of Sec. 34 may, within thirty days of the communication to him of such decision, appeal to the State Government or to such officer or authority as may be empowered by notification in the official Gazette by the State Government in that behalf. (3) The State Government or such officer or authority aforesaid may, after giving the appellant an opportunity of making his representation, pass such order on the appeal as it or he thinks fit such order shall be final.

75. Powers of Registrar to give extension of time for filing documents.-The Registrar may, in his discretion and upon an application in writing by a foreman made within the period specified for the filing of documents, under sub-section (3) of Sec. 28, sub-section (2) of Sec.29,Sec.37 or Sec. 41, allow the foreman further time not  exceeding fifteen days to file copies of such documents.

76. Penalties.-(1) Whoever contravenes or abets the contravention of any of the provisions of Secs. 4,5,8,9,11,12,13,14,19,20,22,24,30,31, sub section (4) of Sec. 33, Secs. 46,47 or sub-section(5) of Sec.61 shall, on conviction be punishable with imprisonment for a term which may extend to two years or with fine which may extend to five thousand rupees or with both.
(2) Any foreman,-
(a) who fails to file any document required to be filed under this Act within the period
specified therefore or within such further time as may be allowed ;or
(b) who fails to comply with the requirements of the chit agreement regarding the date,
time and place at which the chit is to be drawn or who fails to comply with the
requirements of any direction given under sub-section (3) of Sec.38;or
(c) who contravenes or fails to comply with any other requirement under this Act,
shall on conviction, be punishable with fine which may extend to three thousand
rupees.
(4) Whoever willfully makes a statement in any document required to be filed under this
Act which is false in any material particular shall, on conviction, be punishable with
imprisonment for a term which may extend to two years or with fine which may
extend to five thousand rupees or with both.

Comment

Wilful default -Meaning of.- A consensus of the meaning of the words “willful default”
appears to indicate that default in order to be willful must be intentional, deliberate,
calculated and conscious, with full knowledge of legal consequences flowing there from.

77. Penalty for second and subsequent convictions, If any person convicted of an offence under sub-section (1) or sub-section (3) of Sec.76 is again convicted of an offence under any of the said sub-sections he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to two years and shall also be liable to fine.

78. Application of fine.-A Court imposing any fine under this Act may direct that the
whole or any part thereof shall be applied in, or towards payment of, the cost of the
proceedings.

79. Offences by Companies.-(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence, was committed was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this
Act has been committed with the consent or connivance of, or is attributable to, any
neglect on the part of , any director, manager, secretary or other officer shall also be
deemed to be guilty of that offence and shall be liable to be proceeded against and
punished accordingly.
Explanation;- For the purposes of this section,-
(a) “ company” means any body corporate and includes a firm or other association of individuals; and (b) “director” in relation to a firm means a partner in the firm.

80. Cognizance of offences.-(1) All offences under Sec. 11 shall be cognizable.
(2) No Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate
of the first class shall try an offence punishable under this Act.

Comment

The offences prescribed under Sec.11 are cognizable and are triable only by a
Metropolitan Magistrate or a Judicial Magistrate of the first class.
81. Power to compound offences.- (1) Subject to such conditions as may be prescribed, any officer empowered by the State Government in this behalf may, either before or after the institution of criminal proceedings under this Act .accept from the person who has committed or is reasonably suspected to have committed an offence under this Act,. By way of composition of such offence, a sum of money not exceeding such amount as may be prescribed.
(2) Where an offence has been compounded under sub-section (1) the offender, if in
custody, shall be discharged and no further proceedings shall be taken against him in
respect of such offence.

82. Power to enter and search any place and to seize any documents.- (1) If the Registrar or any other officer authorised by him in this behalf has reason to suspect that any person conducts, or is responsible for the conduct of a chit in any place in contravention of the provisions of this Act, he may, for reasons to be recorded in writing and at any reasonable time, enter into and search such place, and may seize such books, registers, accounts, or documents as may be necessary.
(2) The Registrar or officer authorised by him in this behalf, may apply for assistance to an officer in charge of a police station and take police officers to accompany and assist him in discharging his duties under sub-section(1)
(3) All searches under sub-section (1) shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974).

83. Officers to be public servants.- The Registrar and all officers appointed by the State Government to perform any function under this Act shall be deemed to be public servants within the meaning of Sec. 21 of the Indian Penal Code ( 45 of 1860).

Comment

According to the section the Registrar and all other officers appointed by the State
Government to perform their duties under this Act are public servants within the ambit of
Sec.21 of the Indian Penal Code.

84. Power to delegate.-The State Government may, by notification in the official Gazette, direct that any power (other than the power to hear appeals or to make rules) exercisable by it under this Act or the rules made thereunder may be exercised also by any officer of the State Government subject to such terms and conditions, if any, as may be specified therein.

85. Act not to apply to certain chits.- Nothing in this Act shall apply in respect of –
(a) any chit started before the commencement of this Act; or
(b) any chit the amount of which, or where two or more chits were started or conducted simultaneously by the same foreman, the aggregate amount of which does not
exceed one hundred rupees.

86. Banks not to conduct chit business.- (1) Notwithstanding anything contained in this Act, no bank shall commence or carry on chit business after the commencement of this Act, no bank shall commence or carry on chit business after the commencement of this Act.
(2) Where a chit had been started by any bank before such commencement, such chit
may be continued after such commencement until it is completed, and the provisions of
the chit agreement and such laws, if any, as were applicable to it immediately before the
commencement of this Act shall apply to such chit.
Explanation;-For the purposes of this section “bank” means an approved bank or a cooperative bank as defined in Cl.(b-ii) of Sec. 2 of the Reserve Bank of India Act.

87.Power to exempt. The State Government may, in consultation with the Reserve Bank, by notification in the official Gazette, and subject to such conditions as may be specified in the notification, exempt any person or class of persons or any chit or class of chits from all or any of the provisions of this Act.

88. Protection of action taken under the Act.-No suit, prosecution or other legal
proceedings shall lie against the State Government, the Registrar or other officer of the
State Government or of the Reserve Bank or any of its officers exercising any powers or
discharging any functions under this Act in respect of anything which is in good faith done or intended to be done in pursuance of this Act or the rules made thereunder.

89. Power to make rules.- (1) The State Government may, in consultation with the
Reserve Bank, by notification in the official Gazette, make rules for giving effect to the
provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power,
such rules may provide for all of the following matters, namely:
(b) the form and manner in which an application for obtaining the previous sanction may be made under sub-section (2) of Sec.4:
(c) the additional particulars that a chit agreement may contain under Cl. (q) of sub-section (1) of Sec.6;
(d) the particulars that may be included in the minutes of the proceedings of a draw under Sec.17;
(e) the method of valuation by the Registrar in a grain chit for the purpose of furnishing security under Sec. 20
(f) the procedure that may be followed by the Registrar in releasing the security furnished by the foreman under Sec.20 ;
(g) the registers and books and the form in which such registers and books may be maintained by the foreman under Sec, 23;
(h) the time within which the balance-sheet and the profit and loss account in respect of a chit business shall be filed under Sec. 24;
(i) the rate at which interest shall be payable on the defaulted installments by a defaulted subscriber under Sec.28;
(j) the particulars that may be included in an application for the winding-up of chits under
Sec.49;
(k) the procedure to be followed for the winding – up of chits under Chapter X;
(l) the fees payable under Sec.63;
(m) the auditing of balance-sheet and the profit and loss accounts of chit business and the issue of audit certificates;
(n) the form and manner in which a dispute shall be referred to the Registrar under Sec.64;
(o) the procedure to be followed by the Registrar or his nominee for settling the disputes
referred to him under Sec.64;
(p) the matters referred to in Cl.(f) of sub-section (1) of Sec.67;
(q) the conditions subject to which and the amount on the payment of which composition of offences may be made under Sec.81;
(r) the form and manner in which an appeal may be preferred under this Act and the fees payable for such appeal;
(s) the issue and service of notices or other process under this Act;
(t) the procedure for, and the manner of, receiving any sum payable under this Act;
(u) any other matter which is required to be or may be prescribed.
(3) Every rule made under this section shall be laid, as soon as may be after it is made,
before each House of the State Legislature where it consists of two Houses, or, where
such Legislature consists of one House, before that House.

90. Repeal and saving,- (1) The Andhra Pradesh Chit Funds Act, 1971(Act of 1971), the Kerala Chitties Act, 1975(Act 23 of 1975), the Maharashtra Chit Funds Act, 1974(Act 55 of 1974), the Tamil Nadu Chit Funds Act, 1961 (Act 24 of 1961),as in force in the State of Tamil Nadu and in the Union territories of Chandigarh and Delhi, the Uttar Pradesh Chit Funds Act, 1975(Act 53 of 1975), the Goa , Daman and Diu Chit funds Act, 1973(Act 16 of 1973), and the Pondicherry Chit Funds Act, 1966 (Act 18 of 1966), are hereby repealed and the provisions of Sec. 6 of the General Clauses Act, 1897 (10 of 1897), shall apply to such repeal as if each such Act so repealed were a Central Act.

(2) Notwithstanding such repeal, the Acts mentioned in sub-section (1) shall continue to
apply to chits in operation on the commencement of this Act, in the same manner as
they applied to such chits before such commencement.

Comment
Repeal by necessary imlplication.- It is well settled that when a competent authority
makes a new law which is totally inconsistent with the earlier law and that two cannot
stand together any longer it must be construed that the earlier law had been repealed by necessary implication by the later law.