 statement of objects and reasonsthe chit funds act, 1982 was enacted to provide for the regulation of chit funds and for matters connected therewith sub-section (3) of section 1 of the act, inter alia, confers powers upon the central government to appoint different dates for commencement of the said act for different states the act has so far been brought into force in sixteen states and six union territories 2 the provisions contained in sub-section (3) of section 6 of the act, provide that the maximum amount of discount, which the prized subscriber has to forego at any instalment to any chit, shall not exceed thirty per cent of the chit amount that is, the sum-total of subscriptions payable by all the subscribers for any instalment of a chit without any deduction for discount or otherwise 3 clause (j ) of section 2 of the chit funds act, 1982 defines "foreman" which 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 of the act under the existing provisions contained in section 13 of the act, no foreman other than a firm or other association of individuals or a company can commence or conduct chits, the aggregate amount of which at any time exceeds twenty-five thousand rupees where the foreman is a firm or other association of individuals, the aggregate chit amount shall not exceed twenty-five thousand rupees for every partner or individual, or as the case may be, subject to a maximum of one lakh rupees where the foreman is a company, 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 defined in the explanation to that section 4, the constitutional validity of, inter alia, sections 6 and 13 of the chit funds act, 1982, came up for consideration of the supreme court of india in shriram chits and investments (p) limited vs union of india and others, (ajr 1993 sc 2063) the court held that the restriction in sub-section (3) of section 6 was neither arbitrary nor unreasonable and also upheld the constitutional validity of the act and dismissed civil appeal no 448 of 1989 the supreme court, did not find that the limits put in section 13 of the act were violative of article 19(1)(g) of the constitution they further observed that in any case, such limits were in the interests of the subscribers and in view of the inflation in the country, the appropriate authorities, in case a demand was so raised, from time to time increase the limits however, they did not find it necessary to give any direction in this behalf 5 in the light of the judgment of the supreme court in the aforesaid case, the central government invited suggestions from the concerned state governments and union erritories and from the all india association of chit funds on the proposal, inter alia, to amend sections 6 and 13 of the chit funds act, 1982 after having considered the suggestions and in consultation with the reserve bank of india, it is proposed to— (a) enhance the ceiling on discount to be foregone by a prized subscriber from thirty per cent specified in sub-section (3) of section 6 of the act to forty per cent; (b) amend sub-sections (1) and (2) of section 13 of the act to enhance,— (i) the aggregate chit amount commenced or conducted by a foreman other than a firm or other association of individuals or a company or co-operative society, from twenty-five thousand rupees to one lakh rupees; and (ii) the ceiling of aggregate chit amount of the chits conducted by the firm or other association where the number of partners of the firm or the individuals is not less than four, from one lakh rupees to six lakhs rupees and in any other case from ceiling of twenty-five thousand rupees calculated with respect to each partner or individual to one lakh rupees6 section 20 of the chit funds act, 1982 provides for security to be given by a foreman clause (a) of sub-section (1) of the said act, provides that every foreman shall, for proper conduct of the chit, deposit in an approved bank an amount equal to the chit amount in the name of the registrar it is proposed to substitute said clause (a) of sub-section (1) of section 20 so as to provide that the said deposit in the name of the registrar shall be an amount equal to fifty per cent of the chit amount in cash in an approved bank and balance fifty per cent of the chit amount in the form of bank guarantee 7 the bill seeks to achieve the above objects yashwant sinha new delhi; the 21st november, 2000