//
you're reading...
INDIAN BARE ACTS

THE ANDHRA PRADESH CHIT FUNDS ACT, 1971

THE ANDHRA PRADESH CHIT FUNDS ACT, 1971

Seal of Andhra Pradesh

Seal of Andhra Pradesh (Photo credit: Wikipedia)

THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(Act No. 9 of 1971)
An act to provide for the regulation of chit funds in the State of Andhra Pradesh.
Be it enacted by the Legislature of the State of Andhra Pradesh in
Twenty-second dear of the Republic of India as follows :
CHAPTER 1
PRELIMINARY
1. Short title, extent and commencement: – (1) This Act may be called
the Andhra Pradesh Chit Funds Act, 1971.
(2) It extends to the whole of the State of Andhra Pradesh.
(3) It shall come into force on such date as the Government may, by
notification, appoint, and different dates may be appointed for different areas
and for different provisions of this Act.
2. Definitions :- In this Act, unless the context otherwise requires :-
(1) ”approved bank” means a bank approved by the
Government;
(2) “chit” means a transaction, whether called chit fund, chitty or by
any other name, by which its foreman enters into an agreement with a number
of subscribers that every one of them shall subscribe a certain sum of money or
a certain quantity of grain or other commodity, by installments for a definite
period and that each subscriber in his turn, as determined by lot or by auction
or by tender or in such other manner as may be provided for in the agreement,
shall be entitled to a prize amount, whether payable in cash, kind or any other
article of value.
Explanation :- A transaction is not a chit within the meaning of this clause,
if in such transaction, –
(a) some alone, not all, of the subscribers get the prize amount without
any liability to pay further subscription ; or
(b) all the subscribers get the prizes by turns with a liability to pay future
subscriptions if the prize winner is not entitled to get the prize amount.
http://www.igrs.ap.gov.in/ 1 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
ILLUSTRATIONS
(a) A starts a chit with 200 subscribers each of whom pays a monthly
installment of Rs. 10 for 124 instalments. One prize is drawn every month upto
the fortieth instalment and thereafter two prizes every month until all the sub-
scribers get their priz.es. Out of total monthly collection of Rs. 2,000, Rs. 200 is
set apart for discount and the prize winner is paid Rs. 1,000. The foreman is
allowed the use of the balance of Rs. 800 until the same is required for payment to the prize winners. The transaction is not a chit.
(b) There are 100 subscribers to a chit and the subscription by each of
them is Rs. 10. All the subscribers get by turns Rs. 1,000, being the whole of
the chit amount and are liable to pay future subscriptions. The transaction is
also not a chit.
(3) “chit agreement” means a document containing the articles of
agreement between the foreman and the subscribers relating to the chit and
filed under Section 6;
(4) “chit amount” means the sum total of the subscription payable by
all the subscribers for any installment of a chit without any deduction for
discount or otherwise;
(5) “defaulting subscriber” means a subscriber who have defaulted in
the payment of subscriptions due according to the terms of the chit
agreement;
(6) “discount” means the sum of money or the quantity of grain or
other commodity, which a prized subscriber has under the terms of the
chit agreement to forego and which is set apart under the said agreement
to meet the expenses of running the chit or for distribution among the
subscribers or both;
http://www.igrs.ap.gov.in/ 2 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(7) “dividend” means the share of a subscriber in the discount avail
able under the chit agreement for rateable distribution among the subscribers
at each installment of the chit;
(8) “drawing” means ascertaining of the person or persons entitled to
the prize amount at any installment of a chit;
(9) “firm” means a firm registered under the Indian Partnership
Act, 1932;
(10)”foreman” means the person who under the chit agreement is
responsible for the conduct of the chit and includes any other person
discharging the functions of the foreman under Section 30;
Provided that no firm shall be a foreman unless such firm is
registered under the Indian Partnership Act; 1932;
(11) “Government” means the State Government;
(12) “non-prized subscriber” does not include a defaulting subscriber;
(13) “notification” means a notification published in the Andhra Pradesh
Gazette ;
(14) “prescribed” means prescribed by rules made under this Act;
(15) “prize amount” means the difference between chit amount and the
discount, and, in the case of a fraction of a ticket means the difference
between the chit amount and the discount proportionate to the fraction of
the ticket; and when the prize amount is payable otherwise than in cash the
value of the prize amount shall be the value at the time it becomes payable
;
(16) “prized subscriber” means a subscriber who has either received or
entitled to the prized amount;
(17) “Registrar” means a Registrar appointed under sub-section ( I ) of
Section 51 ;
http://www.igrs.ap.gov.in/ 3 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(18) “subscriber” includes a person who holds a traction of a ticket and
also a transferee of a ticket or a fraction thereof by assignment in writing or by
operation of law.
(19) “ticket” means the share of a subscriber in a chit and the expression
“fraction of ticket” shall be construed accordingly.
CHAPTER II
CONSTITUTION AND REGISTRATION
3. Registration of bye-laws :- (1) Save as otherwise provided in this
Act, no person shall start or conduct any chit unless he has registered with the
Registrar the proposed bye laws of the chit.
(2) For the purpose of registration, there shall be filed with the Registrar
the bye laws of the chit in duplicate signed by the foreman and attested by at
least two witnesses.
(3) The Registrar, on being satisfied that the bye laws are not contrary
to this Act or to the rules made thereunder, shall issue to the foreman a
certificate of registration and such certificate shall be conclusive evidence that
bye laws of the chit therein mentioned are duly registered.
(4) The Registrar shall retain one copy of the bye laws of the chit and
return the duplicate of the bye laws to the foreman, with an endorsement that
the bye laws have been registered.
4. Prohibition of invitation for subscription to chit of which bye
laws have not been registered :- No person shall issue or publish any notice,
circular, prospectus or other document containing the terms and conditions of
any chit or inviting the public to subscribe for tickets in any chit unless such
notice, circular, prospectus or other document relates to a chit the bye laws of
http://www.igrs.ap.gov.in/ 4 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
which have been registered.
5. Form of chit agreement :- Every chit agreement shall be in duplicate
and shall be signed by the subscribers or by persons authorised in that
behalf in writing by the subscribers and the foreman and attested by at least
two witnesses and it shall contain the following particulars, namely :
(1) the full name and the permanent residential address of every subscriber ;
(2) the ticket held by each subscriber ;
(3) the number of installment and the amount payable in respect of each
ticket for each installment;
(4) the dates of commencement and termination of the chit;
Provided that no chit shall, except with the permission of the Government, extend in duration for a period of more than five years;
(5) the mode of ascertaining the prized subscriber;
(6) the amount of discount which the prized subscriber at any
installment has to forego;
(7) the mode and proportion in which the discount is distributable by
way of dividend, foreman’s commission or remuneration and other expenses,
if any ;
(8) the date, time and place at which the chit is to be drawn;
(9) if under the chit agreement the foreman is entitled to the chit amount,
the installment at which the foreman is to get the chit amount;
(10) the approved bank in which chit moneys shall be deposited by the
foreman under the provisions of this Act;
(11) the manner in which a chit shall be continued, where a foreman
who is an individual dies or becomes of unsound mind or is otherwise incapacitated; and
http://www.igrs.ap.gov.in/ 5 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(12)any other particular which may be prescribed.
Explanation: – It is sufficient to get the signature of each subscriber on
separate copies of the agreement.
6. Filing of chit agreement:- (1) Every chit agreement with its duplicate
shall be filed with the Registrar.
(2) The Registrar shall retain the chit agreement and return the duplicate
chit agreement to the foreman with an endorsement that the chit agreement is
filed.
7. Commencement of chit business :- (1) No person shall commence
any auction or drawing of any chit unless he has obtained a certificate of commencement from the Registrar.
(2) The Registrar shall, on being satisfied that the bye-laws of the chit
have been registered and the chit agreement has been filed and security required under Section 12 has been furnished by the foreman, grant a certificate
of commencement.
8. Copies of bye-laws and chit agreement to be given to subscribers
:- (1) The foreman shall, as soon as may be after he has obtained the certificate
of commencement referred to in Section 7, but not later than the date of the
first drawing of the chit, furnish to every subscriber a copy of the bye-laws of
the chit, and of the chit agreement certified by him to be a true copy.
(2) The foreman shall, within the fifteenth day of the month succeeding the
month in which the first installment of the chit is drawn, file with the Registrar
a certificate to the effect ; that he has complied with the provisions of subsection (1).
9. Alteration etc., of chit agreement: -(1) The chit agreement shall not
be altered, added to or cancelled except with the consent in writing of the
foreman and all the subscribers to the chit.
(2) Every such alteration, addition, or cancellation, shall be intimated to
http://www.igrs.ap.gov.in/ 6 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
the Registrar who shall record it in the copy of the chit agreement retained with
him.
10. Minutes of proceedings :- Minutes of the proceedings of every drawing
shall be prepared and entered in a book to be kept for that purpose and shall
be signed by the foreman and all the subscribers present. It shall also be
signed by the prized subscriber or his authorised agent.
(2) Such minutes shall state clearly,
(i) the date and hour when the proceedings began and ended
and the place where, the drawing was held;
(ii) the number of the particular installment of the chit of
which proceedings are recorded ;
(iii) the names of the subscribers present :
(iv) the person or persons who become entitled to the prize
amount in the particular installment ;
(v) the amount of discount ;
(vi) full particulars regarding the disposal of the prize amount
in respect of the preceding installment and disposal of unpaid prize
amount, if any, in respect of any previous installment ; and
(vii) any other particular which may be prescribed.
11.Copy of minutes to be filed with the Registrar: – Every foreman shall,
within the fifteenth day of the month succeeding the month in which one
or more installments of the same chit or one or more installments of any
other chit are drawn, file with Registrar a copy of the minutes, referred to
in Section10 in respect of the drawing at all such installments and
certified by the foreman to be a true copy.
http://www.igrs.ap.gov.in/ 7 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
CHAPTER III
FOREMAN
12. Security to be given by the foreman :- (1) For the proper conduct
of the chit, every foreman shall, before applying for the certificate of commencement under Section 7,
(a) execute an indenture of mortgage and trust in favour of the
Registrar as trustee charging by way of security property sufficient to the
satisfaction of the Registrar for the realisation of the chit amount; or
(b) (i) deposit in any approved bank an amount not less than half of
the chit amount ; or
(ii) invest in Government securities of the face value or market
value, whichever is less, of not less than half the chit amount, and transfer the
amount so deposited or the Government securities in favour of the Registrar to
be held in by him trust as security ;
Provided that, where movable property is charged by way of security,
only such kind of movable property as may be prescribed shall be so charged
and such movable property shall be deposited in such manner and with such
person or officer as may be prescribed.
(2) Where a foreman conducts more than one chit, he shall furnish security in accordance with the provision of sub-section (1) in respect of each
such chit.
(3) Subject to the provisions of Section 530 of the Companies At, 1956
the security given by the foreman under sub-section (1) shall not be liable to
be attached in execution of a decree or otherwise –
(i) until the chit is terminated and the claims of all the subscribers are
fully satisfied ;
(ii) until all dues payable by the foreman under this Act to the Registrar
or any other officer have been paid;
(iii) Where owing to the default of the prized subscriber the prize
http://www.igrs.ap.gov.in/ 8 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
amount due remains unpaid even after the termination of a chit, until the foreman deposits the prize amount in an approved bank mentioned in the chit
agreement and intimates in writing the fact of such deposit to the prized
subscriber.
(4) The Registrar shall, after the termination of a chit and after satisfying
himself that the requirements under clauses (i) to (iii) of sub-section (3)have
been complied with release the property charged by way of security ororder
the release of the cash security or the Government securities referred to in
sub-section (1) in such manner as may be prescribed.
(5) The Registrar may, on the application of any foreman, instead of
releasing the security under sub-section (4), accept the same as security in
respect of any other chit or chits conducted by the same foreman. If the value
or amount of the security so accepted is less than the value or amount specified
in sub-section (1), the Registrar shall require the foreman to furnish additional
security to make up the deficiency. If the value or amount of such security is in
excess of the value or amount required, the Registrar shall release such excess.
(6) Notwithstanding anything to the contrary contained in any other law,
the security furnished under this section shall not be alienated in any manner
by the foreman during the currency of the chit and any such alienation by way
of transfer, charge, mortgage, or other encumbrance shall be null and void.
13. Rights of the foreman :- (1) The foreman shall be entitled –
(a) in the absence of any provision in the chit agreement to the contrary,
to obtain, the chit amount at the instalment specified in the chit agreement;
(b) to such commission or remuneration not exceeding five per centum
of the chit amount as may be fixed in the chit agreement ;
(c) to receive and realize all subscriptions from the subscribers and to
distribute the prize amounts to the prized subscribers and the dividend among
http://www.igrs.ap.gov.in/ 9 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
the subscribers;
(d) to demand sufficient security from any prized subscriber for the due
payment of future subscriptions ;
Explanation :- A security is said to be sufficient for the purpose of the
clause, if its value exceeds by one – third, or if it consists of buildings, the value
exceeds by one half, the amount due from the prized subscriber ;
(e) to substitute subscribers in the place of defaulting subscribers ; and
(f) to do all other acts that may be necessary for the due and proper
conduct of the chit.
(2) In case of any dispute in regard to the value of the property offered as
security under clause (d) of sub-section (1) the mater shall be referred to the
Registrar, whose decision thereon shall be final.
14. Duties of the foreman :- {1) The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions be bound to pay him the prize amount ;
Provided that the prized subscriber shall be entitled to demand immediate
payment of the prize amount after deducting all future subscriptions without
any security whatsoever and in such case the foreman shall, before the date of
the next succeeding installment, deposit in an approved bank mentioned in the
chit agreement; the amount of future subscriptions deducted as aforesaid and he
shall not withdraw the amount so deposited except for payment of future subscriptions.
(2) If owing to the default of the prized subscriber the prize amount due
in respect of any drawing remains unpaid before the date of the next succeed
ing drawing the foreman shall deposit the same forthwith in an approved bank
mentioned in the chit agreement and intimate in writing the fact of such de
posit to the prized subscriber.
(3) Every payment of the prize amount, the deposit of the amount of the
future subscriptions under sub-section (1) and the deposit of the prize
http://www.igrs.ap.gov.in/ 10 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
amount under sub-section (2) shall be intimated to the subscribers at the
next succeeding drawing and particulars of such payment or deposit
entered in the minutes of the proceedings of that drawing.
(4) The foreman shall not appropriate for himself any amount in excess of
what he is entitled to under clause (b) of section 13 ;
Provided that where the foreman is himself a prized subscriber, he shall
be entitled to appropriate for himself the prize amount;
Provided further that the foreman may appropriate for himself the interest
accruing on the amount deposited under the provision to sub-section {1).
15. Registers and books of account :- The foreman shall keep such
registers and books of account, and in such form, as may be prescribed.
16. Balance sheet :- (1) Every foreman shall prepare and file with the
Registrar in such manner and within such time as may be prescribed a balance
sheet relating to the period of account audited either by qualified auditors
under the Companies Act, 1956, or by a chit auditor appointed under subsection
(2) of section 51.
(2) The balance sheet referred to in sub-section (1) shall,
(a) contain a summary of the assets and liabilities of the chit, and
(b) give such particulars as will disclose the nature of the assets
and liabilities and how the value of the assets has been arrived at.
17. Liability of the foreman to the subscribers :- (1) Every foreman
shall be liable to account to the subscribers for the amounts due to them.
(2) Where there are more than one foreman, each one of them jointly and
severally or if the foreman is a firm, each one of the partners thereof jointly and
severally and if the foreman is body corporate, the body corporate as such shall
be liable to the subscribers in respect of the obligation arising out of the chit.
17. Withdrawal of a foreman :- No foreman or where there are more
than one person as foreman in a chit none of them, shall withdraw from the chit
http://www.igrs.ap.gov.in/ 11 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
until termination of the chit unless such withdrawal is assented to by all the
non-prized subscribers and unpaid prized subscribers and a copy of such as
sent has been filed as required by Section 32. Such withdrawal shall not, how
ever, affect the security given under Section 12.
CHAPTER IV
NON-PRIZED SUBSCRIBERS
19. Non -prized subscriber to pay subscription and get receipt: –
Every non-prized subscriber shall pay his subscription at the time and place
mentioned in the chit agreement and shall on such payment be entitled to get
a receipt from the foreman.
20. Removal of defaulting subscribers :- A non-prized subscriber who
defaults in paying his subscription in accordance with the terms of the chit
agreement shall be liable to have his name removed from the list of
subscribers. Every such removal shall, with the date thereof, be entered in
the relevant book maintained by the foreman. A written notice of such
removal shall be given by the foreman to the defaulting subscriber within
fourteen days of such removal.
(2) A true copy of the entry referred to in sub-section (1) shall be filed
by the foreman with the Registrar within fourteen days from the date of such
removal.
(3) Any defaulting subscriber aggrieved by the removal of his name
from the list of subscribers may within seven days of the communication to
him of the notice of removal, appeal to the Registrar.
(4) The Registrar may, after giving the parties an opportunity of making
a representation pass such order on the appeal as he thinks fit and the decision
of the Registrar shall be final.
21. Substitution of subscribers :- (1) The foreman may substitute in
the list of subscribers any person in the place of a defaulting subscriber whose
http://www.igrs.ap.gov.in/ 12 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
name has been removed from such list under sub-section (1) of Section 20:
Provided that no such substitution shall be made until the expiry of the
period allowed for appeal under sub-section (3) of Section 20, or where any
such appeal has been preferred until the same has been disposed of.
(2) Every substitution referred to in sub-section (1) shall, with the date
thereof, be entered in the relevant book maintained by the foreman. A true
copy of every such entry shall be filed by the foreman with the Registrar within
fourteen da>s from the date of substitution.
(3) All arrears ol subscriptions realised from the substituted
subscribers, less any amount advanced by the foreman, shall before the date of
the next succeeding instalment, be deposited by the foreman in an approved
bank mentioned in the chit agreement. The foreman shall not withdraw the
amount so deposited except for payment to the defaulting subscriber.
Explanation :- For the purpose of sub-section (3), “arrears’1
of subscriptions shall mean all the previous instalments realised from the substituted
subscriber.
22. Amount due to defaulting subscriber how dealt with :- When ;i
subscriber draws the prize amount the defaulting subscriber shall be entitled to
recover from the foreman his contribution subject to such deduction as may be
provided for in the chit agreement. The foreman shall on demand made by the
defaulting subscriber and on his executing an acknowledgment duly signed be
bound to pay to the defaulting subscriber the amouni due to him before the
dale of the next succeeding instalment. If the defaulting subscriber fails to
furnish the acknowledgment as aforesaid, the foreman shall, before the date of
the next succeeding instalment deposit in ;jn approved bank the amount due to
the defaulting subscriber. The amount so deposited shall not be withdrawn by
the foreman for any purpose other than for payment to the defaulting sub
scriber.
http://www.igrs.ap.gov.in/ 13 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
CHAPTER V
PRIZED SUBSCRIBER
23. Prized subscriber to give security :- Before receiving the prize
amount without deducting all future subscriptions, every prized subscriber shall
furnish and the foreman shall take sufficient security for the due payment of
future subscriptions and if the foreman is the prized subscriber, he shall give
security for the due payment of future subscriptions to the satisfaction of the
Registrar.
24. Prized subscriber to pay the subscription regularly : Every prized
subscriber shall pay his subscriptions regularly at the time and place and on the
date mentioned in the chit agreement and on his failure to do so he shall be
liable to make a consolidated payment of all the future subscriptions at once.
25. Foreman to demand future subscriptions by written note : (1)
The foreman shall not be entitled to claim consolidated payment of all the
future subscriptions from a defaulting prized subscriber unless he shall have
demanded the same in writing.
(2) If in a suit by a foreman for consolidated payment of future subscriptions from a defaulting prized subscriber, the defendant pays into Court
on or before the date to which the suit is posted for hearing the arrears of
subscriptions till that date together with interest thereon at the rate provided
for in the chit agreement or at twelve per cent per annum simple interest whichever is lower, and the costs of the suit for payment to the plaintiff, then, notwithstanding any contract to the contrary, the Court shall pass a decree directing that the defendant shall deposit in Court for payment to the plaintiff, the
future subscriptions on or before the dates on which they fall due and that, in
default of payment by the defendant of any future subscription on or before the
due date, the plaintiff shall be at liberty to realize in execution all the future
subscriptions and interest thereon less the amount, if any, already deposited by
the defendant ;
http://www.igrs.ap.gov.in/ 14 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
Provided that if any such suit is upon a promissory note, no decree shall
be passed under this sub-section unless such promissory note expressly states
that the amount due under the promissory note is towards payment of subscriptions to the chit.
(3) Any person who holds an interest in the properly furnished as security
or any part thereof shall be entitled to make payment under sub-section (2).
(4) All consolidated payments of future subscriptions realized by a
foreman shall be deposited by him in an approved bank before the date of the
next
succeeding installment. The amount so deposited may be withdrawn only for
payment of future subscriptions. When any property is acquired in lieu of the
consolidated payment it shall remain as security for the due payment of future
subscriptions.
CHAPTER VI
TRANSFER
26. Restrictions on transfer of rights of foreman : – (1) No transfer of
the rights of a foreman to receive subscriptions from prized subscribers shall
be made without the previous sanction in writing of the Registrar.
(2) Any such transfer of the rights of a foreman to receive subscriptions
from a prized subscriber shall, orr application by the subscriber and if it is
likely to affect prejudicially the interest of any non-prized subscriber or unpaid
prized subscriber, be set aside by such officer as may be empowered by the
Government in this behalf.
(3) When under sub-section (2), a transfer is disputed by a subscriber,
the burden of proving that the foreman was in insolvent circumstances at the
time of the transfer and that the transfer is not likely to affect prejudicially the
interests of any such subscriber is upon the transferee.
http://www.igrs.ap.gov.in/ 15 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
27. Transfer of non-prized subscriber’s rights to be in writing: – Every
transfer by a non-prized subscriber of his rights in the chit shall be in writing
duly attested by at least two witnesses and shall be filed with the foreman.
28. Recognition of transfer by the foreman :- Every transfer under
Section 27 shall be recognized by the foreman unless the transferee is not solvent or the transfer was effected with a view to defeat the provisions of any
law.
29. Entry of transferee’s name in the books :- Every transfer made
under Section 26 or Section 27 shall be entered by the foreman in the books
of the chit forthwith and true copy of such entry shall be filed by the foreman
with the Registrar within fourteen days from the date of such entry.
CHAPTER VII
TERMINATION OF CHITS
30. Provisions for continuation of chits in certain cases: – Where the
foreman, who is an individual, dies or becomes of unsound mind or is other
wise incapacitated, the chit may be continued in accordance with the provisions of the chit agreement.
31. Termination of chit:- A chit shall be deemed lo have terminated
(a) when the period fixed in the chit agreement has expired provided
payment of dues to all the subscribers has been completed ; or
(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 is filed as
required by Section 32 ; or
(c) when a foreman, who is an individual, dies or becomes of unsound mind or is otherwise incapacitated and the chit is not continued in accordance with the provision of the chit agreement :
Provided that in the case of a foreman which is a firm, if a partner dies or
http://www.igrs.ap.gov.in/ 16 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
becomes of unsound mind or is otherwise incapacitated the chit shall not be
deemed to have terminated and surviving partner or partners shall conduct the
chit in the absence of any provision to the contrary in the chit agreement.
32. Copy of assent or consent to be filed with the Registrar : A true
copy of every assent mentioned in Section 18 and of every consent mentioned
in Section 31, with the date of such assent or consent shall be filed by the
foreman or by the surviving partner, as the case may be, with the Registrar
within fourteen days from the date of such assent or consent.
33. Refund of non-prized subscribers’ contribution: – Except in the
cases referred to in clauses (a) and (b) of Section 31
(a) every non-prized subscriber shall, unless otherwise provided
for in the chit agreement, be entitled to get back his contribution at the
termination of the chit without deduction for dividend, if any, received by
him.
Provided that any person to whom the rights of a non-prized subscriber are transferred under Section 27,28 and 29 shall, in addition to his
own contributions, be entitled to get back the contributions made by such
non-prized subscriber, subject to the conditions specified in this clause;
(b) if the chit terminates on a date earlier than the date originally
fixed in the chit agreement, the non-prized subscriber’s claim shall be
deemed
to have arisen on the date on which he has notice thereof.
34. Subscriber’s dues to be first charge on chit assets :- Where there
are debts due from the foreman of a chit in relation thereto and also other
debts due from such foreman, the chit debts due to the subscribers shall
be a first charge on the chit assets.
http://www.igrs.ap.gov.in/ 17 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
CHAPTER VIII
INSPECTION OF DOCUMENTS
35. Foreman to allow subscriber to examine chit records :- Every
foreman shall, on payment of such fee not exceeding five rupees as may be
specified in the chit agreement allow non-prized and unpaid prized subscribers
all reasonable facilities on all days of drawing of chit or on such days and
within such hours as may be provided for in the chit agreement for the
inspection of security bonds and documents, receipts and other records taken
from the prized subscribers or furnished by the foreman himself in his
capacity as a subscriber and all chit records including books of accounts and
pass books, the balance sheets and profit and loss accounts and such other
records as may show the actual financial position of the chit schemes.
36. Preservation of chit records by foreman: – All the records pertaining
to a chit shall be preserved in tact by the foreman and kept for a period of six
years from the date of the termination of the chit.
37. Inspection of chit books and records :- (1) The Registrar, or any
officer authorised by the Director of Chits in this behalf may inspect the chit
books and ail records after giving ordinarily seven days notice in writing to the
foreman.
Every foreman, shall be bound to produce the chit books and records
before the Registrar or the officer authorised under sub-section (1) at the time
and place mentioned in the notice and shall furnish such information to him as
he may require;
Provided that such inspection may be made at the premises of the foreman
if he pays in advance such fees as may be prescribed for the inspection:
Provided further that if the foreman is a banking company as defined in
the Banking Regulation Act, 1949, such inspection be made only at the premises of the company and only on a working day and the foreman shall pay
http://www.igrs.ap.gov.in/ 18 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
such fees as may be prescribed for the inspection.
CHAPTER IX
WINDING UP OF CHITS
38. When chit may be wound up :- The City Civil Court in respect of a
chit registered in the area comprised within the jurisdiction of the Municipal
Corporation of Hyderabad and the District Court having jurisdiction in respect
of a chit registered elsewhere may wind up a chit for all or any of the following
reasons, namely .-
(a) if the chit has terminated under clause (c) of Section 31 ;
(b) if the foreman fails to give the security specified in Section 12 or
if he commits any such act in respect thereto as is calculated to impair
materially the nature of the security or the value thereof, or
(c) if he fails to deposit the chit moneys in accordance with the
provisions of this Act, or
(d) if it is proved to the satisfaction of the court that the foreman is
unable to pay the amounts due to the subscriber, or
(e) if execution or other process issued on a decree or order of any
court in favour of any subscriber in respect of amounts due to him from the chit
is returned unsatisfied in whole or in part, or
(f) if it is proved that there has been fraud or collusion on the part of
the foreman in the matter of taking securities from prized subscriber, or
(g) if the foreman has appropriated the prize amount in his capacity as
a subscriber without furnishing sufficient security for future subscriptions, or
(h) if it is just and equitable that the chit should be wound up.
Explanation:- For the purposes of clause (d), in determining whether the
foreman is unable to pay the amounts due to the subscriber, the Court shall
take into account his contingent and prospective liabilities in respect of the
chit;
http://www.igrs.ap.gov.in/ 19 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
Provided that a chit conducted by a company within the meaning of
the Companies Act, 1956 shall be wound up only by the Court having
jurisdiction under that Act.
39. Application for winding up :- The application to the Court for the
winding up of a chit shall be by a petition presented by any non-prized sub
scriber or unpaid prized subscriber or by the Registrar, signed and verified in
the manner prescribed by the Code of Civil Procedure, 1908 and shall contain
such particulars as may be prescribed ;
Provided that no application for the winding up of a chit under clause
(d) or clause (h) of Section 38 shall lie unless such petition is presented –
(a) by those non-prized subscribers and those unpaid prized subscribers whose subscriptions to the chit funds in the aggregate be at least twentyfive percent of the amount contributed by the non-prized subscribers and unpaid prized subscribers : or
(b) with the previous sanction of the Government.
Explanation :- For the purposes of the above proviso, a subscriber of
fraction of a ticket shall be deemed to be a subscriber only to the extent of
such fraction.
40. Insolvency or liquidation a bar to winding up proceedings: – Not –
withstanding anything in Sections 38 and 39, no petition for the winding up of
a chit shall be entertained by a Court, if proceedings under the law relating to
insolvency for the time being in force are pending against the foreman for
adjudicating him an insolvent or when the foreman is a company, if proceedings for winding up the company are pending against such company in a court.
41. Commencement and effect of winding up order :- An order for the
winding up of a chit shall operate in favour of all the subscribers to whom
amounts are due from the chit and it shall be deemed to have commenced from
the time of the presentation of the application for the winding up.
42. Injunction order :- The court may, upon the application of the foreman
http://www.igrs.ap.gov.in/ 20 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
or of any subscriber to whom amounts are due in respect of the chit at any time
after the presentation of the application for the winding up of a chit under this
Act and before the making of an order for the appointment of an interim
Receiver or for winding-up the chit, restrain further proceedings in any suit or
proceeding instituted against the foreman for the realization of amounts due
from the chit upon such terms as the Court thinks fit.
43. Powers of Court on hearing the application :- On hearing the
application, Court may dismiss it with or without costs or adjourn the hearing
conditionally or unconditionally or make an interim order or any other order
that it deems fit.
44. Chit assets to vest in Court for distribution :- On the making of
an order for the winding up of a Chit, the entire chit assets shall vest in the
Court for distribution amongst the subscribers to whom amounts are due in
respect of the chit and the Court shall pass such orders in the matter including
the appointment of Receiver, as it deems fit.
45. Suits stayed on winding up orders :- When a winding up order has
been made by a Court, no suit or other legal proceedings shall be continued or
commenced against the foreman by a subscriber for the realization of amounts
due to him is respect of the chit except with the leave of the Court and on such
terms as the Court may impose.
46. Copy of winding up order to be filed with the Registrar :- (1) On
the making of a winding up order, it shall be the duly of the petitioner in the
winding up proceedings and of the Receiver to file with the Registrar a copy of
the order, within one month from the date of the making of the order;
Provided that the Registrar may, upon application in writing by such petitioner or Receiver, allow, in his discretion further time not exceeding fifteen days for the filing of any such copy.
(2) On the filing of a copy of the winding up order, the Registrar
shall make an entry thereof in his books relating to the chit and shall notify in
http://www.igrs.ap.gov.in/ 21 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
the District Gazette that such an order has been made.
47. Stay of winding up proceedings on insolvency of foreman and
transfer of insolvency proceedings: – When during the pendency of the
proceedings for the winding up of a chit, the foreman is adjudicated an
insolvent or when the foreman is a company, the company has been ordered to
be wound up by the court the winding up proceedings under this Act, shall
cease and the distribution of the chit assets, shall, subject to the provisions
contained in Section 34 and 42 be made by the insolvency Court or the Court
winding up the company, as the case may be. Where insolvency proceedings,
against the foreman are pending in different courts, the High Court may
transfer the proceedings from one Court to another as it may deem fit.
48. Compensation for frivolous or vexatious application :- (1) When
an application presented for winding up a chit is dismissed and the Court is
satisfied that the application is frivolous or vexatious the Court may award
against the applicant such amount, not exceeding five hundred rupees as it
deems reasonable as compensation to the foreman for the expense or injury
occasioned to him by the application and the proceedings thereon and such
amount may be realized as if the award were a decree.
(2) The award of any amount under sub-section (1) shall bar any suit for
compensation.
49. Right of appeal:- The foreman, any subscriber, the Receiver or any
other person aggrieved by a decision or order of the court in proceedings for
winding up a chit may, within two months from the date of such decision or
order, appeal to the High Court.
50. Limitation :- (1) Where an order refusing to wind up a chit has been
made under this Act, the chit shall be deemed to have been under suspension
from the date of the presentation of the application to the date of such order in
respect of non-prized subscribers, and notwithstanding anything in the chit
agreement no non-prized subscriber who was not a defaulter on the date of the
http://www.igrs.ap.gov.in/ 22 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
presentation of the application for 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 an application in respect of which the leave of
the Court has been obtained) which might have been brought or instituted, the
period from the date of the presentation of the application to the date of the
order refusing to wind up the chit shall be excluded.
(3) Nothing in this Act shall affect the right of the subscriber to proceed
by suit or application against the foreman personally for the balance, if any, of
the amount due to him after the declaration of the final dividend in
proceedings for winding up the chit and in computing the period of
limitation prescribed for any such suit or application, the period from the date
of the presentation of the application for winding up the chit to the
declaration of the final dividend shall be excluded.
CHAPTER X
OFFICER, INSPECTION AND FEES
51.Appointment of director of chits, Inspecting officer, Registrars and
chit Auditors :- (1) The Government may , by notification appoint a
Director of Chits and as many Inspecting Officers and Registrars as may
be necessary for the purpose of discharging the duties imposed upon the
Director of Chits, the Inspecting Officers and the Registrars by or under
this Act.
(2) the Director of Chits may appoint as may Chit Auditors as may
be necessary for the purpose of discharging the duties imposed upon the
chit auditors by or under this Act.
(3)All inspecting officer , Registrars and Chit Auditors shall discharge
http://www.igrs.ap.gov.in/ 23 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
the duties imposed upon them by or under this Act, under the general
superintendence and control of Director of Chits .
(4) If the Registrar is of the opinion that the accounts of any chit are
not properly maintained and that such account should be audited; it shall be
lawful for him to have such accounts audited by a Chit Auditor. It shall be
the duty of the foreman of the chit concerned to produce before the Chit
Auditor , all accounts , with books and other records relating the chit, to
furnish him such information as may be required and to afford him all such
assistance and facilities as may be necessary or reasonable and may be
required in regard to the audit of the accounts of the chit .
(5) The foreman shall pay to the Chit Auditors such fees as may be
prescribed for the audit of the accounts of a chit under Sub-section (4).
52.Inspection of documents in the Registrar’s Office: – Any person may
on payment of such fees as may be prescribed –
(i) inspect the documents kept by the Registrar; and
(ii) obtain in a copy or extract of any document to be certified by the
Registrar .
53. Levy of Fees:- (1) there shall be paid to the Registrar such fees as the
Government may, from time to time , prescribe for —
(a) the registration of the bye-laws of a chit under Section 3;
(b) the grant of a certificate of commencement under Section 7;
(c) filing with the Registrar of the Chit agreement and copies of
documents under Section 11, 20,21,29 and 32;
(d) the audit of the accounts of the foreman and the issue of an audit
certificate under section 51;
(e) the inspection of documents under Section 52;
(f) the certified copy or extract of document under section 52;
(g) such other matters as may appear to give effect to the purposes of
this Act.
http://www.igrs.ap.gov.in/ 24 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(2) A table of fees payable under sub-section (1) shall be exhibited in a
notice board at the office of the Registrar
CHAPTER XI
MISCELLANEOUS
54. Appeals :- (1) any foreman aggrieved by the decision of the Registrar –
(a) refusing to issue a certificate of registration of the bye-laws of chit
under section 3;
(b) refusing to grant a certificate of commencement under subsection (2) of Section 7;
(c) refusing to accept the security under clause (a) of sub-section (1)
of section 12 or under Section 23 ;or
(d) refusing to release the property charged by way of security or to
order the release of the cash security of the Government securities
under sub-section (4) or sub-section (5) of Section 12;
may within thirty days of the communication to him of such decision
appeal to the Director of Chits.
(2) Any foreman or any other person aggrieved by an order of the
Registrar under sub-section(1) of Section 26 or by an order of an
officer empowered by the Government under sub-section(2) of that
Section may, within thirty days of the communication to him of such
order, appeal to the Director of Chits.
(3) The Director of Chits my, after giving the appellant an
opportunity of making his representation pass such order on the
appeal under subsection (1) or sub-section(2) as he thinks fit.
55. Power of Registrar to condone delay in certain cases: – The Registrar
may, in his discretion and upon an application in writing by any foreman made
http://www.igrs.ap.gov.in/ 25 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
within the period of fourteen days specified in any of the provisions of sub
section (2) of Section 20, sub-section (2) of Section 21, Section 29 and
Section 32, allow to the foreman further time not exceeding fifteen days to file
a copy of any document under any of the provisions referred to above.
56.Penalties: – (I) Whoever contravenes or abets the contravention of any of
the provisions of sub-section (1) of Section 3 or Section 4, sub-section (I) of
Section 7 shall be punishable with imprisonment for a term which may extend
to one year or with fine which may extend to five hundred rupees or with
both.
(2) Any foreman-
(a) who does not file the chit agreement under Section 6 or a copy of
any document under section 11, sub-section 2 of Section 20, sub-section (2) of
Section 21, Section 29 or Section 32 within the period specified for such
filing or within the further time allowed under Section 55 for such filing ; or
(b) who contravenes any of the provisions of Section 8, sub-section
(1), (2) and (6) of Section 12, Section 14, Section 15, Section 16, Section 18,
Section 20, Section 21, Section 23, sub-section (4) of Section 25, Section 29,
Section 35, Section 36, Section 37 and sub-section (4) of Section 51 ; or
(c) 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 ;
shall be punishable with fine which may extend to one hundred rupees.
(3) Whoever in any document required by, or for purposes of, any of the
provisions of this Act, wilfully makes a statement false, in any material
particulars knowing it to be false, shall be punishable with imprisonment
for a term which may extend to one year or with fine which may extend to
five hundred rupees or with both.
57. Cognizance of offences: – No Court inferior to that of a salaried
magistrate of the First Class shall try any offence under this Act.
58. Application of fines: -The Court imposing any fine under this Act,
http://www.igrs.ap.gov.in/ 26 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
may direct that the whole or any part thereof be applied in or towards payment
of the costs of the proceedings.
59. Power to enter and search any place and to seize documents,
etc.:- (1) A Magistrate of the First Class may, on receiving a report from the
Registrar or the Inspecting Officer appointed under sub-section (1) of Section
51, that any person conducts, or is responsible for the conduct of a chit in any
place in contravention of the provisions of this Act, issue a warrant empowering
the Registrar or the Inspecting Officer to enter the place with such assistance as
he considers necessary and search or inspect the books, registers, accounts or
documents in such place. On receiving such warrant the Registrar or the
Inspecting Officer may enter the place with such assistance as he considers
necessary and search or inspect the books, registers, accounts or documents in
such place and may take to his office for further investigation such books,
registers, accounts and documents as he considers necessary:
Provided that if the Registrar or the Inspecting Officer removes from the
place any books, registers, accounts or documents he shall give to the person
in charge of the place, a receipt describing the book, register, account or document so removed by him.
Provided further that within twenty-four hours of the removal of the books
registers, accounts and documents from the place, the Registrar or the Inspecting Officer shall either return them to the person from whose custody they
were removed or produce them in the Court of the Magistrate who issued the
warrant ; and the Magistrate may return the books, registers, accounts and
documents or any of them to the person from whose custody they were removed by the Registrar or Inspecting Officer, after taking from that person
such security as the Magistrate considers necessary for the production of the
books, registers, accounts and documents when required whether by the Registrar or by the Inspecting Officer or by the Court, or may pass such other
orders as to their disposal as appear just and convenient to the Magistrate.
http://www.igrs.ap.gov.in/ 27 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(2) The Registrar or the Inspecting Officer shall have authority to require
any person whose testimony he may require regarding any chit agreement to
attend before him or to produce or cause to be produced any document and to
examine such person on oath.
(3} The Registrar or the Inspecting Officer may apply for assistance to an
officer in charge of police station and take police officer to accompany and
assist the Registrar or the Inspecting Officer in discharging his duties under
this Act.
(4) The provisions of Section 102 of the Code of Criminal Procedure,
1898, shall, so far as may be, apply to a search under this Section.
60. Payment to be evidenced by documents :- All payments in respect of
a chit whether by the foreman or by the subscriber shall be evidenced by
documents in writing.
61.Interest at more than twelve percent not be allowed: – No court
shall award interest on claim arising under this Act at more than twelve
percent per annum simple interest.
62.Power of court to grant relief in certain cases : – Nothing in the
foregoing provisions of this Act shall affect the power vested in a Court for
granting relief against any of the provisions contained in the chit agreement
if the same be unconscionable or opposed to the provisions of any law.
63. Power to make rules :- (1) The Government may, be notification,
make rules for carrying out all or any of the purposes of this Act.
(3) In particular, and without prejudices to the generality of the
foregoing power, such rules may provide for or regulate: –
(a) all matters expressly required or allowed by this Act to be prescribed.
(b) The matter in respect of which provision shall be made in the byelaws of a chit and the procedure to be followed in making, registering,
altering and abrogation;
http://www.igrs.ap.gov.in/ 28 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
(c) The particulars which every chit agreement shall contain;
(d) the method of valuation of grain or other commodity by the Registrar
in a grain chit, for the purposes of security under section 12;
(e) the restrictions and conditions subject to which and the manner in
which , any security given by a foreman under Section 12 may be
changed or substituted;
(f) the procedure to be followed by the Registrar for the release of
security given by the foreman under section 12;
(g) the maintenance of registers and books of accounts by the foreman,
the safe custody of books, papers and documents in the Registrar’s
office and also for the destruction of such books, papers and
documents as need no longer be kept;
(h) the procedure to be followed for the winding up a chit under Chapter
IX ; and
(i) the auditing of the balance sheets and profit and loss accounts and
the issue of audit certificates.
(4) Every rules made under this Act, shall immediately after its made be
laid before each House of the State Legislature if it is in session and if it is
not in session, in the session immediately following, for a total period of
fourteen days which may be comprised in one session or in two successive
sessions and if before the expiration of the session in which it is so laid
or the session immediately following , both Houses agree in making any
modification in the rule or in the annulment of the rule, the rule shall
form the date on which the modification or annulment is notified have
effect only is such modified form or shall stand annulled as the case may
be; so however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that
rule.
64.Recovery of amounts due from a foreman: – All amounts due from
http://www.igrs.ap.gov.in/ 29 of 30 THE ANDHRA PRADESH CHIT FUNDS ACT, 1971
http://www.igrs.ap.gov.in/ 30 of 30
a foremen to the Registrar or any other officer under this Act by way of any
fee shall be recoverable as arrears of land revenue .
65. Act not apply to certain Chits :- the provisions of this Act shall
not apply in respect of —
(1) any chit started and conducted before the commencement of
this Act, or
(2) any chit the chit amount of which or where two or more chits
are started or conducted simultaneously by the same foreman,
the aggregate chit amount of which does not exceed one
hundred rupees.
66. Power to exempt: – The Government may, by notification exempt
any person or class of persons to who or any chit or class of chits to which
this Act applies from all or any of its provisions, subject to such conditions as
they deem fit and may cancel or modify any such notification.
67. Amendment of Central Act 2 of 1899:- In Schedule 1-A to the
Indian Stamp Act, 1899 as amended by the Indian Stamp ( Andhra Pradesh
Amendment) Act, 1922, after entry 18, the following entry shall be inserted
namely:-
(1) (2)
“18-A. Chit agreement that is to say an agreement, relating
to a chit as defined in clause (2) of section 2 of the Andhra
Pradesh Chit Funds Act 1971 if, either such agreement is
executed or the chit is conducted in the State of Andhra
Pradesh.
One rupee”

Advertisements

About advocatemmmohan

ADVOCATE

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog Stats

  • 51,484 hits

advocatemmmohan

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 42 other followers

%d bloggers like this: