 tiw; chii' i'lli\ds ~)ill, 1979 l-1o be/as intrqdkced in lok sabhn 71 page 6, lirit=j 4,-[ql:' "anaorsecnen t ii ra ad "end0r semen t" 2 p~:~·e 10,::"n tn(} ';1~g·inc31 he:lcln(' tj clause 20,-o!llit"the 1i ' 3 page ~2,' linr 2,-!ql: "re'ls)n ii ~ "reasons" i ,-4 page 1~, line 36,-'~' ill "contribut)n s" ntad "contributions" 5 pa['3 15"~ llne ,oj  " !q1: !'he !l ~ "the '! 6 :t)uge 1 ("'; l'ide ; 1 ,-f)r "filjjs" ~ r~filed ii 7 paee 1c, 112;94-9,-( for ''in spert on" r~ "in3pection"-'-': ~ "regstrarh maq i1reg1str~i'n 9 f'lg;; 2'() , in ti'll illacginal h(":3,ding to clause 57,-f:) :' i! ,vi n " re ad "winding " 10 page 24, lines ~'\4 and 35,-ru "pr~lcti--disrute" ~ "practitioner" 12 page 30 ~ l:~ne '10 ~-after "winding 11 j,p sert ''up , 13 page 30, in the marginal heading to clause 89,-add at the end -"1 a 0 f 1 89 7 - " '14 page 31, line 6, under the heading "assets",-fqr "balances with banks:" lluld "2 balances with banks:" 15 page 42, line 10,-after "five" insert "union" 16 page 42, line 19,-for "50, 000" read " rs 50,000 " new delhi; february 20, 1979 phalguna 1, 1900 ( saka)  the chit funds bill, 1979 arrangement of clauses chapter i prelimdfaby clauses1 short title, extent and commencement 2 definitions 3 act to override other laws, memorandum, articles, etc chapter ii rrmstration of cwts, commencement and conduct of chit business 4 prohibition of chits not sanctioned or registered under the act 5 prohibition of invitation for subscriptions except under -certain conditions 6 form of chit agreement 7 filing of chit agreement 8 minimum capital requirements for the commencement, etc, o~ a chit and creation of a reserve fund, by a company 9 commencement of chit 10 copies of chit agreement to be given to subscribers 11 prohibition of the use of the words "chit", "chit fund", '~hitty" or "kuri" 12 prohibition of transacting business other than chit business by a company 13 aggregate amount of chits 14 utilisation of funds 15 alteration of chit agreement 16 date, time and place of conducting chit i? minutes of proceedings 18 copy of minutes to be filed with registrar 19 restriction on opening o~ new place of business chapter iii  rights and dutil's of foreman20 security to be given by foreman 21 rights of foreman 22 duties of foreman 23 books, records, etc, to be kept by foreman 24 balance-sheet 25 liability of foreman to subscribers 28 withdrawal of for~m~  chapter iv hights and duties of non-prized subscribersclatm:s 27 non-prized subscriber ·to pay subscriptions and obta~n receipts 28 removal of defaulting subsc ribers 29 substitution of subscribers 30 amounts due to the defaulting subscriber  chapter v rights and duties of prized sub3criders31 prized subscriber to furnish security 32 prized subscriber to pay subscriptions regularly 33 foreman to demand future subscriptions by written notice  chapter vitransfers »t  :lrestrictions on transfer of rights of foreman 35 transfer of non-prized subscriber's rights to be in writing 36 recognition of transfer by foreman 37 entry of transferee's name in the books ,  chapter vii meetings of general eody of subscribirs38 meetings of general body ·!jf subscribers  chapter viii termination of chits39 provision for continuation of chits ion certain cases 40 termination of chits 41 copy of assent or consent to be filed with registrar 42 refund of non-prized subscribers' subscriptions 43 subscribers' dues to be first charge on chit assets  chapter ix inspection of documents44 foreman to allow certain subscribers to inspect chit records 45 preservation of chit records by foreman 46 inspection of chit books and records by registrar 47 power of reserve bank to inspect chit books and records  chapter x winding up of chits48 circumstances under which chits may be wound up 4q application for winding up ~o ~r to windin!{ u~ proceedings,  tuttlll al commencement and e!ect ot winding \11) at ••~2 injunction order 53 powers of registrar 54 vesting of chit assets in registrar or other person 55 suits, etc, to be stayed on winding up order 56 notification of winding up order 57 cessation of winding up proceedings on insolvency of foreman, etc, or the winding up of the company and transfer of such proceedings 58 award of compensation to foreman  59 right to appeal 60 limitation  chapter xi appointment of officers and levy of fej!s61 appointment of registrar and other officers 62 inspection of documents in registrar's office 63 levy of fees  chapter xii disputes and arbitration\1 64 disputes relating to chit business 65 period of limitation 66 settlement of disputes 67 procedure for settlement of disputes and powers of registrar or nominee 68 attachment before judgment and other interlocutory orders 69 decision of registrar or nominee 70 appeal against decision of registrar or nominee 71 money how recovered 72 private transfer of property made after issue of certificate '\laid against foreman  chapter xiii, , !  miscellaneous73 advisory role of reserve bank 74 appeals 75 power of regjstrar to give extension of time for filing documents 76 penalties 77 application of fine 78 offences by companies 79 cognizance of offences 80 power to compound offences 81 power to enter and search any place and to seize any documentl 82 officers to be public servants   &a  u powif to dellpt 84 act dot to apply to certain chit • 85 certain banks not to conduct chit busiile§8 86 power to exempt 87 protecti·()n of action taken under the act 88 power to make ruies 89 repeal and saving tin: schedule  a billto provide fot the 1'egulation of chit funds and tot matte1's connected therewlilth be it enacted by parliament in the thirtieth year of the republic of india as follows:- chapter i preliminary1 (1) this act may be called the chit funds act, 1979 short title, extent nnd (2) it extends to the whole of india except the state of jammu and commence-kashmir - ment (3) it shall come into force on such date as the central government may, by notification in the official gazette, appoint, and difterent dates 10 may be appointed for different states z in this act, unless the context otherwise requires,-definitions 23 of 1955 38 ot 1959 is (a) "approved bank" means the state bank of india constituted under section 3 of the state bank of india act, 1955, or a subsidiary bank constituted under section 3 of the state bank of india (subsidiary banks) act, 1959, or a corresponding new bank constituted under section 3 of the banking companies (acquisition and transfer of undertakings) act, 1970, or a regional rural bank established under sectior 3 of the regional rural banks act, 1976, 5 of 1970 21 of 1976 01' a bankins company as defined under clause (c) of section 5 of the banking regulation act, 1949, or a banking idatitution notified by the central government under section 51 of that act or such other banking w1stitution as the state government may, in consultation with the reserve bank, approve for the purposes of this act; 5 (b) "chit" means a transaction whether called chit, 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 everyone of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments 10 over a definite period and that each such subscriber shall, in his turn, as determined by lot qr 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 is of this i!lause, 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 20 a liability to pay future subscriptions; (c) "chit agreement" means the document containing the articles of agreement between the foreman and the subscribers relating to the chit; (d) "chit amount" means the sum-total of the subscr;'ptions 25 payable by all the subscribers for any instalment of a chit without any deduction of discount or otherwise; (e) "chit business" means the business of conducting a chit; <i> "defaulting subscriber" means a subscriber who has defaulted in the payment of subscriptions due in accordance w1th the 3 ' terms of the chit agreement: (g) "discount" means the sum of money or the quantity of grain which a prized subscriber is, under the terms of the chit agreement, required to forego and which is set apart under the said agreement to meet the expenses of running the chit or for distr1bu- 35 tion among the subsccibers or for both: (h) "dividend" means the share of the subscriber in the amount of discount available under the chit agreement for rateable dilrtribution among the subscribers at each instalment of the chit; (i) "draw" means the manner specified in the chit agreement 40 for the purpoae of ascertaining the prized subscriber at any instalment of the cbu; (j) ''foreman'' mean i'! the person who under the chit agreement is responsi~le for the conduct of the chit and includes any person discharging the functions of the foreman under section 39; 45 (k) "non-prized subscriber" does not mclude a defaulting sllb-ic:riberi ll) "prescribed" means prescribed by rules made under tbja act; (m) "prize amount" means the d!fference between the chit amount and the discount, and in the case of a fraction of a ticket s means the difference between the chit amount and the discount proportionate to the fracti:m of the ticket, and when the prize amount is payable otherwise than in cash, the value of the prize amount shall be the value at the time when it becomes payable; (n) "prized subscriber" means a subscriber who has either re-10 ceived or is entitled to receive the prize amount; (0) "registrar" means the registrar of chits appointed tinder section 61, and includes an additional, a joint, deputy or an assistant registrar appointed under that section; (p) "reserve bank" means the reserve bank of india constituted under the reserve bank of india act, 1934; hush is (q) "state government", in relation to a union territory, means the administrator of that union territory appointed by the preside~lt under article 239 of the constitution; (r) "subscriber" includes a person who holds a fraction of a 20 ticket and also a transferee of a ticket or fraction thereof by assignment in writing or by operation of law; (8) "ticket" means the share of a subscriber in a chit  3 save as otherwise expressly provided in this act,-act to over ride other laws, memorandum, articles, etc (a) the provisions of this act shall have effect notwithstanding anything to the contrary contained in any other law for tpe time being in force or in the memorandum or articles of association or bye-laws or in any agreement or resolution whether the samp hp registered, execu ted or passed, as the case may be, before or after the commencement of this act; and 30 (b) any provision contained in the memorandum, articles, byelaws, agreement or resolution aforesaid, shall, t:> the extent to which it is repugnant to the provisions of this act, become or be void, as the case may be  chapter ii 35 registration of chits, commencement and conduct of chit businessprohibition of 4 (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 regis-40 tered in that state in accordance with the provisions of this act: ,~bits not sanctioned or regi-tered under the act provided that a sanction obtained under this sub-section shall lapse ~f the chit is not registered within six months from the date of such sanction (2) an application for the purpose of obtaining a sanction under sub-4s section (1) shall be made by the foreman in such form and ion s~c~ ~~~r as may be ~rescrib~q \ \ (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; or ' (b) had defaulted in the payment of fees or the filing of any s statement or record required to be paid or filed under this act or had violated any of the provisi::ms of this act or the rules made thereunder; or (e) had been convicted of any offence involving moral turpitude and sentenced to imprisonment for any such offence unless a period 10 of five years has elapsed since his release: provided that before refusing any such sanction, the foreman shall be given a reasonable opportunity of betng 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 15 (1) issuing or refusing previous sanction under this section shall be final (5) any person aggrieved by the refusal to issue previous aanction by an 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 20 final 5 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 ,"anction required under 25 section 4 has been obtained and the particulars of such sanction prohibition of invitation for subscriptiors except under certain conditions form of chit agreement 6 (1) every chit agreement shall be in duplicate and shall be signed by the subscribers or by any person authorised by them in wr~ting and the foreman and attested by at least two witnesses and it shall contain the 30 following plrticulars, namely:-(a) full name and residential dddress of every subscriber; (b) the number of tickets including the fraction of n ticket held by each subscriber; (e) the number of instalments and the amount payable for each 35 ticket at every instalment; (d) the date of commencement and the duration of the chit; (e) the manner of ascertaining the prized subscriber at each instalment; (f) the nmount of discount which the prized subscriber has to forego at any instalment; 40 (g) the mode and proportion in which the discount is distributable by way of dividend, foreman's commission or remul)eratfon qr ,~n8e8 for running the cllit, _ tile case may b,,; (h) the date, time and place at which the chit is to be drawn; (i) the instalment 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 provisions of this act; s (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; (1) 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; 10 (m) the conditions under which a subscriber shall be treated as a defaulting subscriber; (n) the nature and partif!ulars of the security to be offered by the· foreman; 15 (0) the days on which and time during which the foreman shall, subject to the provisions contained in section 44, anow inspection of chit records to non-prized and unpaid prized subscribers; 20 (p) the names of the nominees of each subscriber, that is to say, the names of the persons to whom the benefits accruing to ·the subscriber under 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, from time to time, be prescribed 25 explanation-for the purposes 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: 30 provided that the state governm~nt may perm~t the duration of a chit up to 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; 35 (d) the requirements as to security; and (e) such other factors as the circumstances of the case may require (3) the amount of discount in a chit referred to in clause <f) of sub-40 section (1) shall not exceed thirty per cent of the chit amount (4)' where the prized subscriber at any instalment 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 (1) every chit agreement shall be filed in duplicate by the for man with the registrar  !'ilin, of chit ,reement (2) the registrar shall retain one copy of the chit agreement and return the duplicate to the foreman with an andorsement that the chit agreement has been registered: s provided that the registrar may refuse to register the chit agreement on anyone or more of the following grounds, namely:-(a) that the security offered by the foreman under section 20 is insufticient; (b) that the foreman had been convicted of any offence uad  10 this act or under any other act regulating chit businesl; (c) that the foreman had defaulted in the payment of fees or the filing of any statement or record required to be paid or flied under this act or had violated any of the provisions of this act or the rules made thereunder: is provided further that before refusing to register 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 21 8, (1) notwithstanding anything contained in the companies act, 1956, but subject to the provisions of this act, a company shall not commence or carry on chit business wlless 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 2s lakh and carrying on chit business on the commencement of this act, shall, before the expiry of a period of three years from such commence-  ment, increase its paid-up capital to not less than rupees one lakh: minimum capital requirement for the commencement, etc, of a chit, and ereationofa reserve fund, by a company provided that the state government may, if it considers it necetl881')" in the public interest or for avoiding any hal'dship, extend the said period 30 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 unlesa it in- 3s creases iots 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 fa declared, transfer to such reserve fund, a sum equal to not len than twenty 40 per cent of such proftt (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 ion the prescribed form to the registrar explaining the circumstances relatini to such ap- 45 propriatlon t (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 commencement ot chit (2) as soon as may be ailter a declaration is filed under sub-section 5 (l), 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 10 or appropriate any chit amount unless a certificate ot commencement referred to in sub-section (2) is obtained by him 10 (1) a foreman shall, as soon as may be after he has obtained the certificate of commencement under sub-section (2)' of section 9, but not later than the date of the first draw of the chit, furnish to every sub-15 scriber, a copy of the chit agreement certified to be a true copy copies of chit agreement to be given to subscribers (2) a foreman shall, within fifteen days after the close of the month in which the draw for the first instalment of the chit is held, fue with the registrar, a certijicate to the effect that the provisions of sub-section (1) halve been complied with 20 11 no person shall carry on chit business unless he uses as part of his name any of the words "chit", "chit fund", "ch~tty" or "kuri" and no person other than a person carryine on chit bu:iiness shall use as part of his name any such word 12 (1) except with the general or special permission of the state 2,5 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 commence-30 ment: prohibition of the use ot the words "chit" "chit fund", "chitty" or "kuri" prohibition ot transactin& business other than chit busineu by a company provided that the state government may, if it considers it necell8ry 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 35 13 (1) no foreman, other than a firm or other association of indivi-agrreduals or a company, shall start or conduct chits, the aggregate chit ,ate amount of which at any time exceeds ten thousand rupees amount ot chjt • (2) where the foreman is a firm or other association of individuals, the aggregate chit amount of the chits conducted by the firm or other fo all8ociation ,hall 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 forty thousand rupees; (b) in any other case, a sum calculated on the basis of ten thousand rupees with respect to eacl! such partner or individual (3) 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 ~5ets of the company utilisation of funds explanation-for the purposes of this sub-section, "net assets" shall mean the total assets of a company less the total outside liabilities, bad 5 ana doubtful debts as certified by the auditors for which no provision has been made and other intangible assets such as deferred revenueexpend~ ture as disclosed by the la3t audited balance sheet of the company 14 (1) no person carrying on chit business shall utilise the moneys collected in respect o,f such business except for-10 (a) carrying on chit business; or (b) giving loans and advances to non-prized subscribers on the security of subscriptions paid by the~; or (c) investing in trustee securities within the meaning of section 20 of the indian trusts act, 1882; or is 2f 1881 (d) making deposits with approved banks mentioned in the chit agreement (2) where any person carrying on chit business has utilised ute moneys collected in respect of such business before the commencement of this act, otherwise than for the purposes specified in sub-section (1), 20 he shall secure that so much o~ such moneys as have not been realised 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 qi' for avoiding any hardship, extend the said period 25 of three years by such further period or periods not exceeding two years in the aggregate 15 (1) subject to the provisions of this act and of the chit agreement, the subscribers to a chit may, by a special resolution,- alteration of chit a,reemenl(a) alter or add to the chit agreement such provisions as may be 30 necessary in respeot ~ all or any of the following matters, namely:-(i) the date on which, or the time at which, or the place where, the chit is to be conducted; (ii) the reduction of the chit amount; (iii) the continuance of the chit in ae<:orqapce with the pro-35 visions of section 39; (iv) the suspension or the prolongation of the chit; (v) the termination of the chit;' (b) omit the name of any approved bank mentioned in the chit agreement or add the name of any approved bank; or 40 (c) alter any of the articles of the chit agreement that may be found to be inconsistent with any of the provisions of this act or 'the rules made thereunder (2) any alteration, addition or omission made under sub-section (1) shall be valid as if it is originally contained in the chit agreement and 45 shall be subject, in like manner, to alteration, addition or omission by a special resolution (3) a true copy of every special resolution passed under sub-secholl (1) or sub-section (2) shall be filed by the foreman with the registrar wlthin twenty-one days from the date o'f such resolution (4) the foreman shall-5 (a) supply to every subscriber, by registered post or qtheiwise, a copy of every special resolution passed wl4ier sub-section (1) or subsection (2) within seven days from the date of such resolution; and (b) file with 'the registrar along with a copy of such resolution the aclmowledgements given by the subscribers of the receipt by them of the copies of such resolution 10 explanation-for the purposes of th,is section and section 38, "special ~illjtion" means a resolutioll which is passed at a meeting of the general body of subscribefs specially convened for the purpose, by a majority of not less than two-thirds of the subscribers to the chit present at the meet-is ing 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 the non-prized and unpaid prized subscribers, jf any 16 (1) every draw in a chit shall be conducted on the date, at the time and place mentioned in the chit agreement and in accordance with the 20 provisions contained therein ollie, tim anc:l : pltce of conductin, chit (2) the registrar may, if he considers it necessary, direct that the draw shall be conducted in his presence or in the presence of any person deputed by him minute of proceeci-inis, 17 (1) the minutes of the proceedings of every draw shall be :prepar-25 ed 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 (2) of section 16, also by the registrar or the person 30 deputed by him under that sub-section (2) the minutes j;'eferred to in sub-section (1) shall state clearly-(a) the darte and hour when proceedings began and ended and the pi,ct where t~ draw was held; (b) the number of the instalm~t of the chit to which the pro-35 ceedings relate; (c) the names of the sutseribers present; (d) the person or persons who become entitled to the prize amount in the instalment; (e) the amount of discount; (/> full particulars regarding the disposal of the unpaid prize 40 blnount, if ~y, in respect of any prewus instalment; and (g) any other particulars that may be prescribed 18 a true copy of the minutes of the proceedings of every draw certified as su~h by ,the foreman shall be filed by the foreman with the re~~rar 4s withjn fourteen days from the date of the draw to which i1: relates or be-fort the date of the next succ;:eeding draw, whichever is earlier minutes 10 be flied with re,liuii' 19 (1) no pe~ carrying on chit business shall open 11 new place of business without obtaining the prior approval of the registrar within whose territorial jurisdiction its registered office or, as the case may be the place or the principal place of business is situated restriction in opening of new place of buaineu (2) before granting approval under sub-aection (1), the registrar s shall consult the registrar of the state within whose ,territqrial 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 exterrt to which public interest will be served by the opening of the new place of business and such other matters as may be preecribed 10 (3) for the purposes of this section, "place of business" shall include any branch office, sub-otfice or any place of business where the chit business may be conducted by such person  chapter iii r1ghts and duties of foremanis 20 (1) for the proper conduct of the chit, every foreman shall, before filing a declaration under section 9,-security to be liven by the foreman (a) deposit in an approved bank mentioned in the chft agreement, an amount equal to the chit amount in the name of the reejstrar; or (b) transfer government securities of the face value or market 20 value (whichever is less) of not less than ~ and a half times the chit amount in favour of the registrar; or (c) transfer in favour of the registrar such other securities, being securities in which a trustee may invest money under section 20 of the indian trusts act, 1882, of such value, as may be prescribed 2s 2 at ism by the state government from time to time: provided that the value of the securities referred to in alause (c) 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 30 ~curity in accordance with the provisions of sub-section (1) in respect of each chit (3) the regj8trar may, at any time during the currency of the chdt, permit the subllutution of the security: provided tha1 the face value or market value (whichever is less) of the 35 substituted sewrity shall nqt be less than the value of the security given by the foreman under sub-sec!tion (1) (4) the security given by the foreman under sub-section '(1), or any security substituted under sub-section (3), shall not be liable to be attached in execution cit a decree or otherwise until the chit is terminated 4 i  0 and the c alms 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, the registrar shall order the release of the security furnished by the foremq under &ub·section (1), or the security substituted under 8ubsection (3), 8s 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 s law for the time being in force, the security furnished under this section bhall 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 cd transfer or other encumbrances 9hall be null and void 21 (1) the foreman shall be entitledru8hts of foreman 10 (a) in the a·bsence o't any provision in the chit sgrecment to the contrary, to obtain the chit amount at thc first ins1:tlment without deduction of the discount specified in the chit agreement, subject to the condition that he shall subscribe to a ticket to 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 ('hit amount in a chu; (b) to such amount not f'xc£'eding five per cent as may b(' fixed in the chit agreement by way of commission, remunerat;on or for meeting the expense!'! of running the chit; 20 (c) to receive and realise all subscriptions froul the subscriberj and to distribute the prize amounts to the prized subscribers; (d) to demand suftlcient security from any prized subscriber for the due payment of future subscription!'! payable by bim explatultion-a security shall be deemed to be sufficient for the purposes of this clause if its value exceeds by one-third, or if it consists of immovable properties, the value of which exceeds by one-half, of the amount due 'from the prized subscriber; (e) to substitute subscribers in place of defaulting subficribers; and (f) to do all dther acts tha1 may be necessary for the due nnd proper conduct of the chit  (2) where any dispute arises with regard to the value of the propertv offered as security under'clause (d) of sub-section (1), it shall be referred to the regfgtrar tor arbitration under section 64 35 22 (1) the foreman shall, on the prized sub!lc:riber furnishing sum·· dulin ot dent security for the due payment of future subscriptions, be bound to foreman 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 40 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 instalment, whichever is earlier: provided further that where the prize amount has been paid to thp 45 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 sub9criptions -(2) if, owing to the default of the prized subscriber; the prize amount due in respect of any draw remains unpaid until the next succeeding 5 draw, the foreman shall deposit the prize amount forthwith in an approved bank mentioned in the chit agreement and intimate in writing the fact of such deposit and the reason therefor to the prized subscriber and the l'tegistrar i ft~!·,1 (3) every payment of the prize amount or the amount of future sub- 10 i!jcriptions under sub-section (1), and the deposit of the priv:e 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) 'nle foreman shall not appropriate to himself any amount in excess is of what he is entitled to under clause (b) of sub-section (1) of section 21: provided that where the foreman is himself a prized subscriber, he shall be entitled to appropriate to himself the prize amount subject to his complying with the provisions of section 31: provided further that the foreman may appropriate to himself the in- 20 terest accruing on the amount deposited 'under the second proviso to subsection (1) (5) the foreman shall not admit any person as a subscrihitt to a chit if, by such admission, the total number of tickets mentioned in the chit agreement is increased ~s (6) the foreman shall distribute among the subscribers, in accotdance with the chit agreement, the dividend either in cash or by way of adju9tment towards the subscriptions payable for the next instalment, if any  23 the foreman shall maintain-(a) a register containing- 30 ·ooka, records, etc, tob kept by ~emn (i) the names and full particulars of the subscribers in each chit together with the number of tickets held by each sub9criber; (ii) the dates on which the 9ubscribers signed the chit agreement; and  - " , (iii) in the case of an assignment of a ticket by a subscribel', 3s the name and full address of the assignee wtth the dllte of assignment and the date on which the assignment had been recognited by the foreman; (b) a book containing the minutes 'of the proceedings of each chit; (e) a ledger contaihing-(i) the amounts paid by subscribers in each chit and the dates of such payments; (ii) the amounts paid to the prized subscribers and the dates 45 of such payments; and (iii) in the case ot any deposit in an approved bank mentioned in the chit agreement, the date and the amount of auah depoait; (d) a register in the prescribed form showing the amounts deposit-s ed in approved banks as required under the provisions of this act in re8pect 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 10 z& without prejudice to the provisions of section 211 of the compan-balance-1 of 1958 ies act, 1956, every 1ioreman shall prepare and file with the registrar heet within such time as may be prescribed, a balance-sheet as on the last date 01 each calendar year, or, as the case may be, the financial year ot the foreman, and a profit and 108& account relating to the year of accowit, in is the forms set out in parts i and ii of the schedule or as near thereto as circumstancea 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 section 61: t of 1958 provided that where a balance-sheet is audited by an auditor qualified 20 to act as auditor under the companies act, 1956, a chit auditor appointed under section 61 shall have the right to audit the balance-sheet at any tim(" if so autborilled by the registrar in this behalf 25 (1) every foreman shall be lia:ble t account to the subscribers 'truthe amounts due to them liability of foreman to subscribera 25  (2) where there are more than one foreman in a chit, each one of them jomuy and severally and if the foreman is a firm or other association of individuals, eacll 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 arisine out of the chit with· drawal of foreman 28 (1) no fomnan, or where there are more than one foreman in a 30 chit, none of them shall withdraw frqm ,the chit until its termination unless such withdrawal is assented to in writing by all the non-prized and unpaid prized subscribers and a copy of such anent has been filed with the registrar under section 41 (2) the withdrawal from a chit of anyone of the foremen shall not 35 aj!edt the security given 1ii1der section 20  chapter iv rights and duties ol" non-prized sujjscribbrsz1 every non-prized subscriber shall pay his subscription on the 410 dates and times and at the places mentioned in the chit agreement and shall, on such payment, be entitled to obtain a receipt from the- forl-i ii '~~ mar , nonprized ublcriber to pay n,criptions and obtain recei,tl defaultiill subscribers substitution of iub&-cribers "(tilidsii r:sm!nol ~o -j,:>2du2 oj n9d nam amounts due to the defaulting subscriber -notl1 bjmq 19dinadu2 '{q~ -qh:>l!due 2liou bne niatdo dqi9~"t 211oltqrl:>e<iul! 9v19:>9'i ot llbm~mj\ffi1m~i1 srlt 10 u12ilsli vna ($) sdt '{s19b 10 ti8lakt8t a_1gfr'ljilsi <ii ~ __ 1icildas bssi"iq 9dt m011 d3ise'j~i~¥i:ari ·sa~~, iftiil~if1ftil\yai'htw_~nt8 ~cm,~ amount of all future subscriptions from the ~:>~!u!je> t?~ ! 'fdmw,aaad'{1 ~ stiat1j~ s8ffiti'nba8oa2'i~if<m" ~)mt pri:t;ed subscri berto furnish security df'3_~itml'ripiiclhrucqiiii4b1! fdtemaft ~wquimd csltbiatilhfr, ,sf sliittf:gllfe t"'~cf~ ·diarrp;ybdmtsdf ahstlsel  etbl'"ipti, ttb the satisfaction of the hllgbb - -;rt 9dt flo 2l '(9dil~adua d,)u2 10 et2919tni 9d1 9ctazrtie"~ i'pard 1 eu blldfatd rou61l:s:plrllbg; liu~riptiobi~ reguiirl;t on prlzlfab1t jert~c\i~ ~_ qiilft tat9t}8 rtiidt9i1am&i~e6 pithlwcwt9cieuttrb 8ubaefm~'o and, on his failure to do so, he shall be liable tosmaw arltcdnltlwleci:f to ~lq payment of all the future subscriptions forthwith :~ns 2'19;t relulatffai 1 33 (1) a foreman shall not be ent~tled to <;laim a ~onso1idated pay-fore~a~l~ i s 1"'1~o8b~ijitrcd»wz~'~~~~92u"u~-di\mire ~eman1p~h ~1bp~~ iticunhtelmctbmlqwftt1jlft·lo tqi9~9'( 10 91sb 9dt m01} 2~sb future'louia ·(s~wlhwe"utmipu_ ~tra1sed:lumtwrt11lat~1bjj anfdr"~a:>gcjllkf subsc~tj:l- 10 ;_ ,miam ""ytmatl!6f2fo~·~imlt-itcig,lfb>df  ufaulftir« plllit1jsft~l\arw tions'lllfb1! sepimauit ifdtbt2~l:1tt tpfijw~ utw torsjliait>9in9di befl)j'eltbli~at wri~~l~~ to which th4p~~ ilsp~ttrlbdj~ngtitbrrrxadregrsuwc6tjbkfiplio"ll notl  20 till that date together with the interest thereon at the rate provided fdfdisflltp~l1t' ~twtiftoafttlli! ~ ~§jli8f9'~~'t~i9apc, 10 '{ltn:!i -2i1blt tttpjre~ttfi'~,1jfttssn8ml~~mgie9dfs~tp_ll?rijowr""'ngft 1'~~191 ai ~mbrr !xood 9nt :;~fi99cfjffl}amrlf~~"%t_ir1,rlfndlijy;affsnrdwl dtdfct4dgbijii tdbbdbe~1ta9 pay b tife foreman the future s,,ti~_'" _~  mm  2qab 2s which they fall due, and that'itt ~ct'a~ def-ault of such payments by the subscriber~j~: foreman shall be 8;t liberty to realise, in execution of that order, all rtrttij~:>mi/lcr1~tr6wh a\mwr~k't'tioiimjwwith the costs, jfiab,qliels ~1iijlf)uqdrp1foany ,~a<brtpjrid ,~nthasbi","i \witiil ~j)ict clihheqfnq '{ns ~nh9bi2nc~ 101 ,!1sdinadua io ~bod ia19ns~ sri:t 10 811ij99n1 30 provided that if any such dispute is on a ~i"aza etc! s4ft111t~i~!hf}cim; yh!!nlr-1if'it~m 9hw~ mhf~ ni"s~fm' ~~ &!ttu99m 10 ialsli98 10 '{bod -2du< elaw~l¥toff'tw~9tfntbj~ftt ~~'1~f9~9~ellsm~mib!8fy,jl§h\tl-fw 1j!jn~h~ta~f~fhjwnlpm!p!bhl ~~c:fi%~due b9si1q bisqilu blls 0e: li (b)isaii,up&up&l wfib lbojqts, lintaldt sift ~ ~diumiftimd m%ri 35 sell:lplityrgellhpahn~iidmhr tle!rlonii1llm  cljjlltetot1ma~;mi!l(!t s~ee~t(il)n:t llsd,t 2291 :toll ,ilo'ti2iup91 rl:>u2 10 tqi9:>91 '0 9:tsb 9th 10 '{"'" ~!pi~atqhfi<mm(jp~s bep mtwte-hlmo\qp  d"uttta"~cflcbyt lip~ foreman shall be deposited by himbih2iwsl~~cfwj1ic'un"n~ !tmi~ c~hwrltlti jril!eaneatt aef~fthm~"'thfi cwote;ediitg 1ep~rfij\ct~e 40 arfki~ lid 1  oshllllt tmtriberc:m!ulbd-nae'q (~lmjlhfpf uapmfrmlll§, (ffm fuftln bliltq;rrqtioldl blls 219di1:>aduc! sri:t 10 '{bod is191198 9th io ~1lit99m rl~ rwlierei~:>propearhyn;s~bidlntd ~su~t'diili_tp~~~"- s solidated payment of future subscriptions, it shall remain as m6u~b ojf§ h~ jlf~trrfrif~tf1~rw~s"'{ng 10 1s1t2il:\9h ~dt (") 4s ,(s) noihs2-du2 10 (1) noi:t:gh~_llli1lsn9vno:> blli:t99m isb9q2 -;:1'j'l9 !sb9q2 £ 22sq ot isaoqolq '{ils~""o:> '101 bsilsvno:> 2i ~nu99m 9dt ti 34 (1) no transfer of the rijh~lb'owwt~1f~~' ~estric­f'l ta t'itmi8jwr11ari8 qau besftlbd~ jiii"'owaj;ltbfijlyw~cmn~n ~:a':sf:: ~jn9w1u_bfotltlffr_trtq2 iloit:>s2 airlt 1sbllu ~ilu99m s 10 21,dh:>2du2 of rights ods hstfe 1l0itui0291 isb9q2 9rlt 10 ~qo:> & bns ~llit99m 10 9:>siq blib '1ljon of ~llit9'3m ~tft 10 s:>itoll 9dt dtiw 81101s tn~2 !(1 foreman (2) any transfer of the rights of a foreman to receive subscriptions from the prized subscribers shall, it it is likely to defeat or delay the idtej'tlsta of a non-prized or unpaid prized subscriber, be voidable a't the inltance of such subscriber (3) when under sub-section (2), a transfer is disputed by a subtcr1-s ber, the burden of proving 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 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 10 be files with the foreman transfer of nonprized jubetrlber's rights to be in writin, recetnition ot transfer by foreman • bwry transfer under section 35 shall, within a period of fourteen days from the date of receipt of the proposal for transfer by the foreman, be recognised by him unless the transferee is not solvent or the transfer was effected with a view to defeating the provisions of any law includ- i) ing this act and the decision of th£ foreman to 'recognise the transfer or  not shall forthwith be communicated to the parties concerned 37 every transfer under section 34 or section 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 20 days from the date of making ruch entry z entry of transferee'll name in the books  chapter vii meetings of general body of subscribers38 (1) the foreman may, on his own motion, convene a special meeting of the general body of subscribers for considering any proposal 2s to pass a special resolution meetings of geaeral body of subscribers (z) the foreman shall convene such a meeting on the requisitior in writing of not less than twenty-five per cent 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 i'equisition and if 30 the foreman refuses or fails to call such a meeting within fourteen days of the &te of receipt of such requisit;on, not less than twenty-five per cent of the number of non-prized and unpaid prized subacribers may ~ive notice of the fact to the registrar (3) the registrar shall, within twenty-one days of the receipt of the 3s not;ce 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) the registrar or any officer deputed by him shall be present at 40 every sfecial meeting convened under sub-section (1) or sub-section (z), if the meeting is convened for considering any proposal to pass 9 special resojutioll for amending the chit agreement (5) notice of not less than fourteen days shall be given to all the subscribers of a meeting under this section specifying the object, date, 4s hour and place of meeting and a copy of the special resolution shall also be sent along with the notice of the meeting  chapter viii termination of chits39 (1) where a foreman dies or becomes of unsound mind or is otherwise incapacitated" the chit may continue in accordance with the 5 provisions of the chit agreement provision tor continuation of chits in certain cues (2) where a foreman is adjudicated an insolvent, or withdraws from the chit under section 26, or fails to conduct the chit at any instalment or on any other date before the next succeeding instalment as may have bl'en agreed upon by a special resolution passed at a meeting of the non-10 prized and unpaid prized subscribers held in that behalf in accordance with the provisions of section 38, anyone or more of such subscribers authorised by such 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 ch:t or make other arrangements for the is further conduct of the chit 40 a chit shall be deemed to have terminated,-termination of chits (a) when the period specified therefor in the chit agreement has expired provided the payment of dues to all the subscribers has been completed; or 20 (b) when all the non-prized and unpaid prized subscribers consent in writing to the termination of the chit and a copy of such consent i~ filed with the registrar as required under section 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 provi-30 sion to the contrary in the chit agreement 41 a true copy of every assent referred to in section 26 and of every consent referred to in clause (b) of section 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 f('om the date of such 35 assent or consent copy of assent or consent to be tiled with registrar 42 except in the cases referred to in clauses (a) and (b) of section 40,-retund of nonprized subscribers' subscriptions (a) every non-prized subscriber shall, unless otherwise provided for in the chit agreement, be entitled to get back his subscriptions 40 at the termination of the chit without any deduction for dividend, if any, received by him: provided thllt, any person to whom the rights of a non-prized subscriber are transferred in accordance with the provisions of section 35, shall, in addition to his own subscriptions, be entitled to 4s get back the subscriptions paid by such non-prized subscriber, subject to the conditions specified in this clause; ft>jiaivolq subscri"roi beajdlhfib to ~fin&h chlpft~ chitdlwit,'i, 2928:> foreman to allow certain subscribers to inspect chit records -snimlst pr"~ii t iotl ol!1ith chit records by foremall inspection of chit books and records by registrar \0 ~o:) ')0 tlls228 ,tllsano!) sd oj tuiw })sift ul,faiash powinw1sh of -non to reser+esi1q banwwdjja inspect '21sd cbitqh~2dm books linoit and records ot us ljllibntw -o"lq qu  i! 3 llibss!) circumstances under which chits may be wound up -mo:> -9:)li~m hnatmla 10 t:>s'ft9 anibaiw :19b'io qu noihllutai "lsb'lo 10 b1swo'i "lb'itaii9$! illitesv titf:> to ni au9188 'i8'itaii9h 'istuo 10 noll1sq ,i!tiu2 oj ,~j9 b9'{aja 9d -bniw no qu llnl 1sb'io applicatlon8!iwok wln~i'ojt upiiifwniw 'lsb10 qu owtsu'l:;) linibniwo -o'iq i"j no 2inibs9' ,!:>£tsvlop fl f -s"lolln ,:>1s ncm grit 10 niw !lrij 10 all ,(ftsqmo') img 10 'i9h:nau -0'10 if  "" winding up proceedings subscriber of a fraction of a ticket shall be deemed to be a subscriber only to the extent of such fraction 50 notwithstanding anything contained in sections 48 and 49, no petition for the winding up of a chit shall be entertained by the registrar,-(a) if proceedines relating to insolvency are pending against the fjoreman; or (b) where the foreman is a firm, if 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 10 are pending; or (c) where the foreman is a company, if proceedings for the winding up of· such company are pending 51 an order for the winding up of a chit shall operate 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 is of the application for the winding up commencementand effect of wineting lip order lnjnction order 52 the registrar may, on the application of the foreman or 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 20 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, remain any other proceedings instituted against the foreman for the realisation of amounts due from him on such terms as the regstrar thinks fit powers of reptrar 53 the registrar may, on hearing an application, dismiss it witd or without costs, or adjourn the hearing conditionally or unconditionally 25 or make an interim or any other order that he deems fit 54 on the making of an order for the winding up of a chit, all the chit assets shall vest in the registrar or in any person appointed by him for distribution amongst the subscribers to whom amounts are due in respect or; the chit 30 55 when a 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 far the realisation of amounts due to him in respect of the chit except with the leave of the registrar 35 winding up the chit and on such terms as he may impose vesting of chit  ta in registrar or other person suits, etc, to be stayed on wind-ini up order 58 on the making of a winding up order, the registrar shall make an entry in rus book relating to the chit and shall notify in the oftlcial gazette that the order has been made notification of winding up order chsauon o·r winding 57 where during the pendency of the proceedings {,or the winding 40 up of a chit, the foreman is adjudicated an insolvent, or where the foreman is a firm, all the 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 proceedings under this chapter shall ceue and the distribution of the 4s chit assets shall, subject to the provisions of aections 43 and 52, be made by the insolvency court '01' the court winding up the company, as the case may be ~ proceedinlson insolvency ct foreman, etc, or the win' up of the company and transfer of auch 1)roceoedin,l | award     ||-----------|| compensa· || tion      || to        || foreman  |a  {1) where an application for the winding up ot a emt is msnussea and the registrar is satisfied that the petition is frivolous or vexatious, be may, on the application o~ the foreman award against the petitioner such amount, not exceeding one thousand rupees, as he deems reason-s able 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 (2) on the making of an award under sub-section (1), no suit for compensation in respect of an application for any winding up o~ the chit 10 shall be entertained rilht to appeal 59 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 ot a chit may, wfthin sixty days from the date of such decision or order, appeal to the state government limitation is 60  (1) where an order musing to wind up a chit has been made under this act, the chit shall be deemed to have been under suspenson from the date of presentation of the application to the date of such order in respect of non-prized subscribers; and, notwithstanding anything contalned in the chit agreement, no non-ptized subscriber who was not 8 20 defaulter on the date of the presentation of the petition ror winding up, shall be deemed to be a defaulter on the date of its dismissal (2) where an order refusing to wind up a chit has been made under this act, in computing the period of limitation prescribed for any suit or other legal proceedings (other than a suit or application in respect 2,5 o! which the leave of the court has been obtained) which might have been brought or instituted, but for the presentation of the application for the wincung up of the chit, the period from the date of the presentation of the application to the date of the order re~using to wind up a chit shall be excluded 30 (3) nothing contained in this chapter shall affect 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 proceeddngs for the winding up of the chit and in computing the period of limitation prescribed for any such proceedings, the period from 3s the date of the presentation of, the application for the winding up of the chit to the date of the declaration of the final div1dend shall be excluded  chapter xi  - , appoin'l'mdt of officers and levy of feesii (1) the state govemment may, by notification in the official 40 gazette, appoint a registrar of chits and a8 many additional, joint, appomt mentof registrar and other ofticera dep~ty an- assistant registrars as may be necessary for the purpose of discharging the duties imposed upon the registrar by or under this ad (2) fte registrar may appoint as many inspectors of chits and chit 8~ditors as may be necessary for the purpose of discharging the duties 45 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 genet'al supedntendence and control of the registrar (4) if the registrar is ot the opinion that the accounts ot any chit ars! not properly maintained and that sut:h accounts should be audited, it~ shall be lawful for him to have such accounts 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 s before the chit auditor, all accounts, books and other records relating: to the chit, to furnish him with such inf-ormation as may be required and afford him all such assistance and facilities as may be necessary and reasonable in regard to the audit of the accounts of the chit (6) the foreman shall pay to the ch:t auditor such fees as may be 10 prescribed for the audit of the accounts o£ 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 62 the foreman of a chit or any subscriber in a chit or the heirs or legal representatves of any foreman or subscriber may, on payment of i~ such fees as may be prescribed,-inspection of documenta in registrar'_ office (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 or record - '~20 levy of fce& 63 (1) there shall he paid to the registrar such fees as the state government may, from time to time, prescribe for,-(a) the issue of previous sanction under seetion 4; \ (b) the filing of the chit agreement with the registrar and the registration of the chit under section 7; 25 (e) the filing of a declaration with the registrar and the grant of, a certificate of commencement under section 9; (d) the filing of copies of documents under any of the provisions of this act; (e) the audit of the accounts of the foreman under section 61; 30 (f) the inspection of docume'lts under section 62; (g) the obtaining of certified copies or extracts of documents and records under section 62; and (h) such other matters as may appear necessary to the state government 35 (2) a table of fees prescribed under sub-section (1) shall be exhibited on a notice board in the office o~ the registrar  chapter xii disputes and arbitrationdispute relating to chit bulinell8'  m (1) notwithstanding anything 'conta:ned in any other law for the 40 time being in £orce, any dispute touching the management of a 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~ q foreman, a prized subscriber or a non-prized subscriber, 45 mcluding a defaulting subscriber, past subscriber or a person claiming through a subscriber, or a deceased subscriber to a chit; (b) a surety at a suhs(!riber, past subscriber, or a deceased subicriber ej'planaltion-for the purposes of this sub-section, a dispute touching the management of a chit business shall include-s (i) a claim by or against a foreman for any debt or demand due to him kom a subscriber, or due from him to a subscriber, past subscriber or the nominee, heir or legal representative of a deceased lubscriber whether such debt or demand is admitted or not; 10 (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 is (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 relumed by him for breach of conditions of €he 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 purposes of subsection (1), the same shall be decided by the registrar whose decision 20 thereon shae be final (3) save as otherwise provided in sub-section (3) of section 66, no civll court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub-section (1) 86 of 1963 period of limitation 65 (1) notwithstand:ng anything contained in the limitation act, 2s 1963, but subject to the specific provisions contained in this act, the period of limitation in the case of a dispute referred to the registrar under section 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 30 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 subscr1ber, or the nominee, heir or legal representative of a deceased subscriber, and the dispute relates to any act or omission 3s 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 limitalon in the case of any dispute other than those referred to in sub-section (1) which are required to be referred to 40 the registrar under section 64 shall be regulated by the provisions at 36 of 1963 the limitation act, 1963, as if the dispute were a suit, and the registrar, a civil court (~) notwithstanding anything contained in sub-sections (1) and (2), the registrar may admit a dispute after the exp;ryof the period of 45 lijilitation, if the applicant satisfies the registrar that he had sufficient cause for not referring the dispute within such period settlement of disputes 86 (1) if the registrar is satisfied that any matter referred to him or brought to his notice is a dispute within the meaning of sectiod 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 bim (hereafter in this chapter referred to as the nominee) s (2) where any dispute is referred under sub-section (1) for settlement to the dominee, 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 10 (3) notwithstanding anything contained in section 64, the registrar may, if he thinks fit, ::llspend the proceedings in regard to any dispute, if the question at issue between a foreman and a subscriber or between different subscribers, is one involving complicated questions of law and ifact, until the question has been decided in a regular suit instituted by is anyone of the parties to the dispute and if any such suit is not instituted within two months from the order of the registrar suspending the proceedings, the registrar shall take action under sub-section (1) 6t (1) the registrar or the nominee hearing a dispute under section 66, shall in addition to the powers conferred on him under that section, 20 have the same powers as are vested in a civil court while trylnga suit wlder the code of civil procedure, 1908, in respect ofi the following matters, namely:-(4) summoning and enforcing the attendance of persons and examining them on oath; 25 procedure for settlement of disputes and powers of registrar or nominee (b) requiring the discovery and inspection of documents; (c) receiving evidence on affidavits; (d) requisitioning any public record or copies th~reof from any court or office; " (e) issuing commissions for the examination of witnesses or 30 documents; and (f) any other matter which may be prescribed (2) except with the pennission of the registrar or the nominee, no party shall be represented at the hearing of a dispute by'8 legal pract1-dispute 35 (3) (4) 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 40 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, (b) where a dispute has been referred in the name of a wrong person, or where all the necessary parties have not been included, the reglmar 45 or the nominee may, if he is satisfied that it was due to a genuine mistake, order any other person to be substituted or added as a platn'tfff or a defendant at any stage of hearing of the dispute on such terms aa he thinks just t~) the registrar or the nominee may, at any stage of the proceedingt, either upon or without the application of either party and on such tenns as may appear to the registrar or the nominee to be just, order that the name of any party improperly joined be struck off s (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 reliefs, 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 10 68 (1) where a dispute has been referred under section 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 (jbstruct the execution of any award or the carrying out of any order that may be made,-attachment before judg ment and other interlocutory orders 15 (4) is about to dispoie of the whole or any part of his property; or (b) is about to remove the whole or any part of the property from the jurisdiction of the registrar, he may, unless adequate security is furnished, direct conditional attach-20 ment of the said property, and such attachment shall have the same effect as if it is made by a competent civil court (2) 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 25 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 (3) any attachment made under this section shall not aftect the 30 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 ofi the property under the attachment of such decree , (4) the registrar or the nominee may, in order to prevent the ends 35 of justice being defeated, make such interlocutory orders pending the award in a dispute referred to in sub-section (1) as may appear to be just and convenient decision of registrar or nominee 69 when a dispute is referred to arbitration under this chapter, the registrar or the nominee, may, after giving a reasonable opportunity to 40 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 45 the dispute by the registrar, and shall, subject to appeal under section 70, be hal and binding on the parties to the dispute, '18 any party aggrieved by any order passed by the registrar or the nominee or the award of the registrar or the nominee under section 69, may, within two months from the date of the or4ier or award, appeal to the state government appeal qa1nat decj8ion ofrepatrar or nomi-dee 1\(one7 how' recovered 71 every order passed by the registrar or the nominee under sec-5 tion 68 or section 69 and every order passed by the state government in appeal under section 70 for payment of any money shall, if not carried out,-  ,;  " • , ~r~ ,li (4) on a certificate signed by the registrar, be deemed to be a decree of a civil court, and shall be executed in the same manner as 10 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 under clause (b) shall be made is 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 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 section 71 shall be null and void against the foreman on 20 whose application the said certificate was issued   1 i·' , chapter xiii private tr&nrer of pr0-perty made after is8ue ot cerwicate void apjnjt foreman  miscellaneous73 the tleserve bank may tender to any state government such advice on questions of policy with respect to this act as it thinks fit ~s either on its own motion or on a request made by the state government advisgry role of reserve bank appe'lj" 74 (1) any foreman aggrieved by the decision of the regjstrar,-(4) refusing to issue a certificate of registration of the chit agreement under section 7; ~ (b) refusing to grant a certificate of commencement under sub- 30 section (2) of section 9; (e) refusing to accept any security under sub-section (1) nf section 20 or under section 31; or (d) refusing to release the security charged under section 31, may, within thirty days of the communication to him of such decision, 35 appeal to the state government or to such officer or authority as may be empowered by notfication in the official gazette by the state government in that behalf (2) any foreman or other person aggrieved by the order of, the registrar under sub-section (1) of section 34 may, within thirty days of 40 the communication to him of such decision, appeal to the state govem--ment or to such officer or authority as may be empowerea dy notificatlol 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 represenstation, pass such order on the appeal as it or he thinks tit and such order shall be final 75 the registrar may, in his discretbn and upon an application in writing by a foreman made within the period specified for the filing of documents, under sub-section (3) of section 28, sub-section (2) of 10 section 29, section 37 or section 41, allow the foreman further time not exceeding fifteen days to file copies of such oocuments  power of registrar to live extenaioll of time for fllina documents penalties76 (1) whoever contravenes or abets the contravention of any of the provisions of sections 4, 5, 8, 9, 11, 12, 13, 14, 19, 20, 22, 24, subsection (3) of section 29, sections 30, 31, sub-section (4) of section 33, sub-is section (2) of section 46 or sub-sectbn (5) of section 61 shall, on conviction, be punishable with imprisonment for a term which may exteno to two years or with fine which may extend to five thousand rupees or with both (2) any foreman,-20 (4) who fails to file any document required to be filed under this act within the period specified therefor 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 section 38; or (c) who contravenes or fails to comply with any other requirement under this act, 30 shall, on conviction, be punishable with fine which may extend to three thousand rupees (3) whoever wilfully 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 35 may extend to two years or with fine which may extend to five thousand rupees or with both application - of fine 77 a eourt imposing any fine under this act may direct that the whole or any part taereo! shall be appjied in, or towards payment of, the cost of the proceedings o1!encea by companies 40 78 (1) where an offence under this act has been committe<i 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 4s 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 hi's knowledge or that he exercised all due diligence to prevent the commission of such offence (2) notwithstanding anythlng contained in sub-section (1), w?e~ an offence under this act has been committed by a company and it 18 proved that the offence 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 ef the company, such dlrec- s tor, manager, secretary er ether efficer shall also be deemed to be guilty ef that offence and shall be liable too be proceeded against and punished accordingly ezplamtion-fer the purpeses of, this sectidn,-(a) "cempany" means any body corporate and includes a firm 10 dr other association df individuals; and (b) "directer" in relaren to a firm means a partner in the firm 79 (1) all offences under section 11 shall be cognizable cognizance of offences (2) noo coourt inferioor too that of a metropolitan magistrate or a judicial magistrate of the first class shall try an ooffence punishable under is this act power to compc;und offences 80 (1) subject to such conditions as may be prescribed, any oftlcer empowered by the state government in this behalf may, either befere or after the institution of criminal proceedings under this act, accept irom the person who has committed or is reasonably suspected too have 300 committed an offence under this act, by way of cemposition 00£ such offence, a sum of, money not exceeding such amount as may be prescribed (2) where an offence has been eompounded under sub-sectien (1), the effender, if in custody, shall be discharged and no further proceedings shall be taken against him in respect ef such effence 25 powe~ to enter and search any place and to seize i'ny documents 81 (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 centravention of the provisions of this act, he may, for reasens too be recorded in writing and at any reasonable time, enter into and search such place, and may seize such 30 books, registers, acceunts er documents as may be necessary (2) the registrar er officer autherised by him in this behalf, may avply for assistance too an officer incharge of a police station and take police officers to accompany and assist him in discharging his duties under sub-section (1) 3s (3) all searches under sub-section (1) shall be made in accordance with the provisions of the code of criminal procedure, 1973 2 of 1874 82 the registrar and all oftlcers appointed by the state government to perform any functions under this act shall be deemed to be public servants within the meaning of section 21 of the indian penal code 40 f5 of officer3, to be public servants 1860 power to delegate 83 the state government may, by notificatien in the oftlcial gazette, direct that any power (other than the power to hear appeals or to make rules) exercisable by it under thib act or the rules made thereunder may be exercised also by any efficer of the state government subject to such terms and conditions, if any, as may be specified therein 4s 84 nothing in this act shall apply in respect of,-(a) any chit started before the commencement of this act; or act not to apply to certain chit, (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 5 85 (1) notwithstanding anything contained in this act, no bank shall commence or carry on chit business after the commencement of this act certain banka not to conduct chit business (2) where a chit had been started by any bank before such commencement, such chit may be continued after such commencement until 10 it is completed, and subject to the other provisions of this act and 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 2 of 1934 explanation-for the purposes of, this section "bank" means an ap-15 proved bank or a co-operative bank as defined in clause (bii) of section 2 of the reserve bank of india act, 1934 power to exempt 86 the state government may, in consultatio~ with the reserve bank, by notification in the official gazette, and subject to such condi-tions as may be specified in the notification exempt any person or class 20 of persons or any chit or class of chits from all or any of the provisions of this act protection of action taken under the act 87 no suit, prosecution or other legal proceedings shall lie against the state government, the registrar or other officers of the state government or of the reserve bank or any of its officers exercising any powers 25 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 88 (1) the state government may, by notification in the official gazette, make rules for giving effect to the provisions of this act powe!' to make ruidfl 30 (2) in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the followine matters, namely:-(a) the form and manner in which an application for obtaining the previous sanction may be made under sub-section (2) of section 4; 3:s (b) the additional particulars that a chit agreement may contain under clause(q) of sub-section (1) of section 6; " (c) the particulars that may be included in the minutes of the proceedings of a draw under section 17; (d) the method of valuation by the registrar in a grain chit for the purpose of furnishing security under section 20: (e) the procedure that may be followed by the registrar in releasing the security furnished by the foreman under section 20; (1) the registers and books and the form in which such registers and bo()ks may be maintained by the foreman under section 23; (g) the time within which the balance-sheet and the profit and loss account in respect of a chit business shall be filed under section ~; s (h) the rate at lvhich interest shall be payable on the defaulted instalments by a defa·ulted subscriber under section 28; (i) the particulars that may be included in an application for the win,ding up of chits under section 49; (j) the procedure to be followed for the winding of chits under 10 chapter x; (k) the rees payable under section 63; (l) the auditing of balance-sheets and the profit and loss ac-:ounts of chit business and the issue of audit certificates; (m) the form and manner in which a dispute shall be referred is to the registrar under section 64; (no) the procedure  be followed by the registrar or his nominee for settling the disputes referred to him under section 64; repeal and savinf (0) the matters referred to in clause (i) of sub-section (1) ot section 67; 20 (p) the conditions subject to which and the amount on the payment of which composition of offences may be made under section 80; (q) the form and manner in which an appeal may be preferted under this act and the fees payable f()r such appeal; ls (r) the issue and service of notices or other process under this act; (8) the procedure for, and the manner of receiving, any sum payable under this act; (t) any other matter which is required to be or may be pres- 30 cribed 89 (1) the andhra pradesh chit funds act, 1971, the keraia andhra chitties act, 1975, the maharashtra chit funds act, 1974, the tamil ~~ nadu chit funds act, 1961, as in force in the state of tamil nadu and 1971 in the union territories of chandigarh and delhi, the uttar pradesh 3s keraia chit funds act, 1975, the goa, daman and diu chit funds act, 1973 act 28 and tbe pondicherry chit funds act, 1966, are he!"eby repealed and the ot 19711 prclvisions of section 6 of the general clauses art, 1897, shall apply to mat haar~slhv-  n l such repeal as if each such act so repealed were a central act of 1974-ramll  i (2) notwithstanding such repeal, but subject to the other provisions 40 ~~~4 of of this act, the acts mentioned in sub-secion (1) shall continue to apply 1961 to chits in operation on the commencement of this act, in the same uttar manner as they applied to such chits before such commencement pradel'" act ~3 of 197g goa, daman and diu act 16 of 1978 poddicherr)' act 18 oj 1888  particujars to be specified in respect of amounts ihown against 4, 5 and 6jhpeoditure 1'1 to baiallcc ofpr<lfit ,1'\ to stationery, printing and advertiaemeat i' to othet espeodibue i to in:~rest paid on deposi  bohowblp, etc i to ulari~, ailowagces boous and provident fund 3 to directon' sittln~ fes + rj r; )( ta'(!;, ins,jr l'lce,1igbting 5  to law c:harps 6 r" p)iu!~~ l~e!tl"&(lu ~dd stamps 7 to auditors' r~ -l8 to filing &:es-1 r j lb;lreciltio3 1n j repain a 'conventional chit' is an old indigenoua 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 instalments 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 wili be as many periodi-cal instalments as there are members as there is a mutuality of interest among the small number of, subscribers 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 funds or kll'rks), the banking commission (1972) had recommended mter alia, that it is essential to have a uniform chit fund legislation applicable to the whole country and as such either an all  india chi t 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 commissi'on 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, 11974, under the chairmanship of 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 law by extending their activities to such states the group further recommended that the admintstration of the law should be lett to the state government concerned which in turn could seek the advice and assistance of the reserve bank on policy matter~ further, there should be, according to the group, no objection to chi~s being conducted by private limited companies also and on a limited sca1,e even by unincorporated bodies such as, individuals, sale' proprietorshi;:>s and partnership firms 4 the bill has been finalised 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 foljow the pattern of chit fund legislations in force in some of the states and includes certain new provisions, such as, minimum capital requirements for compani~ 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 chit fund i'nstitutions, providing fur a self-contained machinery for the settlement of disputes between a foreman and the subscribers by means of arbitration, etc the repeal of the exjsting 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 ny;w delhi; charan singh the 6th february, 1979 czause 2-this clause defines the various expressions commonly used in th~ bill sub-clause (a) defines "approved banks" as referring to commercial banks and such other banking institutions as the state government may, in consultation with the reserve bank, approve for the purposes of the bill sub-clause (0) defines the term "chit" this definition is on the same lines as the definition of the expression "conventionalchit" in the prized chits and money circulation schemes (banning) act, 1978 (43 of 1978) su~clause (g) defines "discount" as the sum of money which a prized subscriber is required to forego under the terms of the cl:lit agreement sub-clause (h) defines "dividend" to mean the share of the subscriber in the amount of discount available under the chit agreement for rateable distribution amona the subscribers at each instalment of the chit clause 3-this clause provides that the provisions of the bill shall have effect notwithstanding anything to the contrary contained in the provisions of any other law in force or in the memorandum and articles of association, or bye-laws, etc, and if any such provision is repugnant to the provisions of the bill, it shall, to the extent of the repugnancy become or be void clause 4-this clause provides that no chit shall be commenced or conducted without obtaining the previous sanction of the state government within whose jurisdiction the chit is to be conducted and unless the chit is registered under the provisions of the bill it has also been provided that such sanction shall lapse if the chit is not registered before the expiry of six months from the date of such sanction sub-clause (3) of this clause specifies the cases in which previous sanction may be referred clause 5-this clause prohibits the invitation for subscriptions to a chit by issuing a circular, prospectus or otherwise unless such notice, circular or prospectus contains a statement that the previous sanction referred to in clause 4 has been obtained and also the particulars of such sanction clause 6-while the various particulars which are required to be specified in every chit agreement and the other formalities to be complied with have been specified in sub-clause (1) of this clause, it has been provided in sub-clause (2) that the duration of a chit shall not extend beyond a period of five years from the date of its commencement however, the state government concerned has been empowered to permit the duration of a chit up to a period of ten years on the existence of certain conditions s~cifled in that sul>-clause sub-clause (3) provides that the amount of discount in any chit shall not exceed th~rty per cent of the chit amount (that is, the sum-total of subscriptions payable by all the subscribers {or any instalment of a chit without any deduction for discount or otherwise) clause 7-su})';clause (1) of this clause provides for the chit agreement being filed in duplicate by the foreman with the registrar sub-clause (2) empowers the registrar to retain one copy of the chit agreement and return the duplicate to the foreman with an endorsement thattb~ chit agreement bas been registered by him; and such an endorsement shall be conclusive evidence that the chit is duly registered under the provisions of  the bill clause a-sub-clause (1) of this clause provides that a company shall not conduct any chit or carryon any chit business unless its paid-up capital is not less than rupees one lakh sub-clause (2) requires the existing companies having a share capital of less than rupees one lakh to increase its paid up capital to not less than rupees one lakh within a period of three years from the commencement of the proposed legislation the state government has however, been empowered to extend the period of three years in respect 01 any company for such further period not exceeding two years in the aggregate sub-clause (3) provides that every company carrying on chit business shall create a reserve fund and transfer to such reserve fund a sum not less than twenty per cent of the balance of profit for each year as disclosed in its profit and loss account before declaring any dividend on its shares czuse 9-this clause provides that every foreman shall, after all the tickets specified in the chit agreement are fully subscribed, file a declaration to that effect with the registrar   sub-clause (2) empowers the registrar to issue a certificate of com~ mencement after the filing of such declaration and no foreman can com· mence any auction or draw unless such certificate is granted clause lo-this clause requires every foreman to furnish a copy of the chit agreement to every subscriber after the foreman has obtained the certificate of commencement under clause 9 and before the first draw clause n-this clause prohibits the use of the word "chit", "chit fund" "chitty" or "kuri" by any person other than a person carrying on chit business and makes it obligatory on a per,son carrying on chit businesa to use as -part of· his name anyone of su<!hwords clause 12-sub-clause (1) provides that no company carrying on chit business shall conduct any other business except with the general or special permission of the state government·  sub-clause (2) proviqes for the winding up of such ouler busin(tbs before· the expiry of" a peri9d of three years from the commencement of the proposed legislation or such extended period not exceeding two years clause la-under this clause, no foreman other than a firm or other a~sociation ~f indlviduals or a company can ,start orcol)ductchit,  t1;le aggregate amount of which at any time exceeds ten thousand rupees where the foreman is a firm or other association of individuals, lie ~ggregate chit adlowlt shall not ejl:ceed rupees ten thou-and for every partner or individual, as the case may· 00, subject to a maximum of rupees forty thousand 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 assets of the company (that is the total assets of the company less its total liabilities, bad and doubtful debts as also other intangible assets as disclosed by its last audited balance-sheet) clause 14-this clause prohibits a person carryiong on chit business from utilising the moneys collected in respect of such business except for the pw-poses mentioned therein, namely, for carrying on chit bwriness, givil\g loans and advances to non-iprized subscribers, etc, on the security of the subscriptions paid by them, investment in trustee securities, etc cl4ube 16-this clause lays down the prooedure to be foll()wed for making any alteration in the chit agrt>ement clau,es 16 to 18-these clauses provide for the conduct of the draw, maintenance of minutes of the proceedings of every draw and the filing of minutes of such proceedings with the registrar clcwbe 19-this clause prohibits the opening of new places of business without obtaining the approval of the registrar clauses 20 to!2-i'hese clauses specify the rights aad ,duties of the foreman of a chit clause 20 specifies the various securities to be given by a foreman for the proper conduct of the chit they are as follows:-(a) deposit in an approved bank of an amount equal to the chit amount in the name of the registrar; {b) transrer government securities or other securities referred to in section 20 of the indian trusts act, 1882, ill·favour ·of the registrar the value of the government securities :;hould be not less than one-anda-half times the value of the chit amount and the value of other securities would be specified by the state government by rules whioch shall not be less than one-and-a-half times the value of the chit amount thesecurity given may be substituted by another security of the same value and the security so furnished or slilbstituted would not be released to the foreman until the chit is terminated and the daims of all the subseribersare fully satisfied a foreman's rights include the rj,ght to take the chit amount at the first i-aetalment without deduction of discount, to receive and realise all subscriptions from the subscribers and to, distrihut: the prize amounts to ~be prized subscribers the duties include t~e ~b~sement of the pnze amounts to the prized suhscriberson their fumishing suffictent security -for the due ,payment of futuresnbflcriptions, deposit the undisbursed prize nmount in app~oved battks befare the next sl1cceeding draw, etc clau~e 23-this clause enumerates the various books and records to be maintained by a foreman clause 24-this clause enjoins every forenlan to prepare and file with the registrar within such time as may be prescribed by rules a balancesheet and proflt and loss account in the 'fonns set out in the schedule tq the bill clause 25 and 26-while clause 25 lays down that 'the foreman hall be liable to account to the subscribers for the amounts due to them, clause 26 prohibits a foreman from withdrawing from the chit until its termination unless such withdrawal is assented to in writing by all the non-prized and unpaid prized subscribers clause 27-this clause provides for payment of subscriptions by every non-prized subscriber on the date, time and place mentioned in the chit agreement clause 28-this clause provides for the removal of a non-prized subscriber if he defaults in the payment of the subscriptions clauses 29 and 30-these clauses provide for the substitution of a new subscriber in place of a defaulting subscriber and the amounts payable to the defaulting subscriber clames 31 to 33-these clauses provide for the rights and duties of prized subscribers the prized subscriber has to furnish security for payment of the prize amount and he has to pay the future subscriptions regularly if he defaults in the payment of subscriptions, the foreman is entitled to a consolidated payment of all future subscriptions by following the procedure spedfied in clause 33 clause 34-this clause prohibits the transfer of the rights of the foreman 10 receive subscrip,tions from the prized subscribers without the previous sanction in writing of the registrar clauses 35 to 37-these clauses provide for the procedure to be followed for the transfer of rights of non-prized subscribers such transfer shall be in writing and shall be filed with the foreman who shall recognise it if the transferee is solvent clause 38-this clause lays down the procedure for convening a special meeting of the general body of the subscribers for passing a special resolution clause 39-this clause provides for the manner in which a chit has to be conducted if the foreman dies or becomes of unsound mind or is declared an insolvent, etc it provides for the conduct of the chit by any one or more subscribers authorised by a special resolution in accordance with the provisions of the chit agreement clauses 40 and 41-these clauses lay down the circumstances in which a chit shall be deemed to have terminated the expiration of the period specified in the chit agreement, death or unsound mind of the foreman and the consent of all the subscrihers to terminate the chit are some of the circumstances under which a chit shall be terminated the consent of the subscribers is required to be filed with the registrar under clause 41 clame 42-this claure rpecifies the circumc;tanr~s in which a nonprized subscriber is entitled to the refund of the ';llhscriptions paid by him clause 43-ttnder this clause the amount nne to the subscriber from a foreman in relation to the chit business shall be a first charge on the chit assets tzause 44-this clause entitles a non-prized or unpaid prized tubscriber to inspect the books and records of the foreman on payment of the prescribed fee not exceeding five rupees clause 45-this clause requires every foreman to preserve all records pertaining to a chit for a period of eight years from the date of termination of the chit clause 46-this clause, inter azia, empowers the registrar or an officer authorised by the state government to inspect the chit books or records maintained by a foreman and also authorises the registrar to direct the foreman to remedy any defects noticed within the speciofied time clause 47-this clause saves the power of the reserve bank under section 45n of the reserve bank of india act to inspect the books and records of any foreman it also, inter alia, empowers; the reserve bank to give appropriate directions to the foreman on the basis of the inspection report cwu8es 48 to 59-these clauses provide for the winding up of chits and other connected matters clause 48 specifies the circumstances in which a chit may be wound up and clause 49 lays down the manner in which an applicauon for the purpose may be presented by any non-prized or unpaid prized subscriber clause 50 prohibits the entertainment of the winding up petition of a chit by the registrar if insolvency proceedings, or, as the case may be, proceeding, for dissolution or witnding up, are pending against the foreman clause 53 empowers the registrar to pass appropriate orders in the proceedings for the winding up of a chit and clause 54 provides for the vesting of all chit assets in the registrar or a person appointed by him clause 56 requires the registrar to make an entry in his book on the passing of an order of winding up of a chit and to notify in the official gazette that the winding up order has been made clause 58 empowers the registrar to award compensation to the foreman where he is satisfied that the petition for winding up is frivolous or vexatious clause 59 empowers any party aggrieved by the decision or order (if the registrar to prefer an appeal to the state government within sixty days from the date of receipt of the order clause 60-this clause provides for computation of the limitation periods where an ord~r refusing to wind up a chit is made clau8e 61-this clause empowers the state government to appoint a registrar of chits and other officers for discharging the functions conferred on the registrar by or under the provisions of the bill clause 62-this clause provides for the inspection of the documents kept by the registrar and obtain certified copies thereof clause 63-this clause empowers the state government to specify by rules the fees payable under the provisions of the bill cla1i8es 64 to 72-these clauses provide for a self-contained machindry for the settlement of disputes arising between the foreman and the subscribers, etc, to a chit the mtention is to provide for a· machinery for the settlement of disputes which is cheap and expeditious the provisions made in these clauses are on the lines of the machinery provided in the state co-operative laws for the settlement of disputes between a society and its members by arbitration clause 64 provides for the reference of any dispute touching the management of a chit business to the award of the registrar clause 65 provides for special periods of limitation in respect of disputes and empowers the registrar to condone delay in referring the dispulte within the prescribed period clause 66 enables the registrar to settle the dispute himself or to refer it for disposal to his nominee this clause also empowers the registrar to suspend the proceedings in regard to any dispute if the question at issue between the parties is one involving complicated questions of law and fact to be decided in a regular suit instituted by any one·of the parties to the dispute but if no suit is instituted within a period of two months ~ the order suspending the proceedings, the regiattar shall settle the dispute himself clause 67 seeks to confer on the registrar certain powers of a civil court clause 68 empowers the registrar or his nominee to order oonditional attachment of the property of a party to the dispute and any attachment so made shall have the same effect as an attachment made by a competent civil court clause 69 enables the registrar to make an award after giving a reasonable opportunity to the parties of the dispute of being heard he is also empowered to give his award on the expenses incurred by the parties or fees and expenses payable to the registrar or his nmninee it has also been provided that the award of the registrar or his nominee shall be final and binding on the parties to the dispute subject to an appeal being made to the state government under clause 70 clause 70 provides for the appeal to the state government against an award of the registrar or his nominee clause 7l-this clause provides that where any order passed by the registrar or his nominee is for payment of money, such order, on the issue qf a certificate by the registrar, be deemed to be a decree of a civil court and executable as such or where no such certificate is given, the moneys specitfied therein win be recoverable as arrears of land revenue clause 73-this clause confers an advisory role on the reserve bank of tendering advice to the statte governments on its own motion or on a request madre by a staifle government on questiqns of policy regulating the business of chits czawe 76-this clause provides for the penalties for codtravention of certain provisionl of the bill clause 79-tbis clause provides that offences under clause 11 ahal11m§ bognizab1e and no court inferior ~ that of a metropolitan magistrate or a judicial magistrate of the first class shall try an offence punishable under this act clause so-this clause authorises any officer empowered by the state government to compound an offence punishable under this act on payment of such sums of money as may be specified by the state gc!vemment in the rules (;taube 81-this clause empowers the registrar or any officer authorised by him to enter and semch any place and to seize any documents where he has reasons to suspect that any person conducts a chit in contravention of the provisions of the bill c14use 83-this clause empowers the state governmeirt to delegate any powers exercisable by it (except the power to make rules) to any officer of the stalte government subject to such terms and conditions as may be specified therein clause 84-this clause makes the provisions of the bill inapplicable to any chit started befc\te the commencement of the proposed legislation or to any chit the aggregate amount of which does not exceed one hundred rupees clause 85-this clause prohibits commercial and co-operative banks from commencing or conducting chit business after the commencement of the proposed legislation and a1$) provides that any chit started by any bank /before such commencement may be continued till its completion subject to the provisions of the chit agreement and the state laws applicable to it ctau8e 86-this clause empowers the state government, in consultation with the reserve bank, to exempt any person or class at persons or any chit or class of chits from all or any o~ the provisions of the proposed legislation ctaube ss-this clause empowers the state government to make mel to give effect to the provisions of the bill ctause 89-this clause repeals certain state enactments regulating chit business and provides for the continued application of those enactments to the chits in force on the commencement of the proposed legislation  financial memorandumclause 61 (1) of the bill provides for the appointment of a registrar of chits and as many additio'1l8i, joint, deputy or assistant registrars as may be necessary by the state gqvernment sub-clause (2) of this clause provides for the appointment of inspectors of chits and chit auditors in :respect of the union territories of the andaman and nicobar islands, chandigarh, dadra and nagar haveli, delhi and lakshadweep, any additional expenditure on this account will be met from qut of the consolidated fund of india 2 out of these five territories, budget for the union territory of delhi alone provides at present separate expenditure for the enforcement of the tamil n adu chit funds act, as extended tq delhi this is of the order of rs 175 lakhs annually after the proposed legislation comes into joree in that union territory, it is estimated that there may not be any significant addition to the recurring expenditure for the purpose of discharging the duties imposed by this act in relatiqll to the union territory of delhi for the remaining four union territories, the additional recurring expenditure is estimated as follows:-1 the andaman and nicobar islands 2 cbandigarh 3 dadra and nagar haveli 4 lakshadweep 50,000 75,000 50,000 25,000 total : 2,00,000 thus, the 6dditional recurring expenditure that is likely to be involved is estimated to be of the qt'der of rupees two lakhs per annum no additional non-recurring expenditure is expected the provisions of this bill do not involve any other expenditure of a !recurring or non-recurring nature  memorandum regarding delegated legislationsub-clause (1) of clause 88 of the bill confers on the state governments the power to make rules to give effect to the provisions of the bill sub-clause (2) of that clause specifies the matters in respect of which rules may be made under this clause these i'ilclude, among other things, the form and manner in which an application may be made for obtaining the previous sanction of the state government for the commencement of a chit, the particulars that a chit agreement shall contain, the procedure to be followed by the registrar for the release of the security furnished by the foreman for the proper conduct of the chits, the fees payable under the provisions of the bill and the procedure to be fiollowed for the winding up of chits and for the settlement of disputes 2 the matters with respect to which rules may be made are matters of procedure or detail the delegation of legislative power is thus normal in character  i billto provide for the regulation of chit ~unds and for matters connected therewith (shti cha1'an singh, deputy prime ministe1' and ministe1' of finance) 