Chapter I -Preliminary

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The Madras Chit Funds Act, 1961    

The Madras Chit Funds Act, 1961
as Extended to the
Union Territory of Delhi
(Madras Act 24 of 1961)

An Act to provide for 6the regulation of chit funds
in the State of Madras

Whereas it is expedient to provide for the regulation of chit funds in the State of Madras:
Be it enacted in the Twelfth Year of the Republic of India as follows:-

Chapter 1

PRELIMINARY

1. Short title, extent, and commencement -

(1) This Act be called the Madras Chit Funds Act, 1961.
(2) It extends to the whole of the Union Territory of Delhi.
(3) It shall come into force on such date as the administrator 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) 'Administrator' means the administrator for the Union Territory of Delhi.
(1A) "Approved bank" means a bank approved by the Administrator:

(2) "Chit" means a transaction whether called chit fund, chit, kuri or, by any other name, by which its foreman enters into an agreement with a numbers of subscribers that every one of them shall subscribe a certain quantity of grain by instalments 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;

Explanation - A transaction is not a chit within the meaning of this clause, if in such transaction -

  1. Some alone but not all, of the subscribers get the prize amount without any liability to pay future subscribers; or
  2.  All the subscribers get whole of the chit amount by turns with a liability to pay future subscriptions.

Illustration - 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 falls within clause (b) of the above Explanation and is not a chit.


(3) "Chit agreement" means a document containing the atricals of agreement between the foreman and the subscribers relating to the chit;


(4) "Chit amount" means the sum total of the subscriptions payable by all the subscribers for any instalment of a chit without any deduction for discount or otherwise;


(5) "Defaulting subscriber" means a subscriber who has defaulted in the payment of subscriptions due according to the terms of the chit agreement;


(6) "Discount" means the sum of the quantity of grain, 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 for both.


(7) "Dividend" means the share of a subscriber in the discount available under the chit agreement for rateable distribution among the subscribers at each instalment of the chit;


(8) "Drawing" means ascertaining of the persons entitled to the prize amount at any instalment of a chit;


(9) "Firm" means a firm registered under the Indian partnership Act, 1932(Central Act IX of 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 O;Provided that no firm shall be foreman unless such firm is registered under the Indian Partnership Act, 1932 (Central Act IX of 1932);

(11) Omitted;

(12) "Non-prized subscriber" does not include a subscriber who has defaulted in the payment of subscriptions due according to the terms of the chit agreement;

(13) "Prize amount" means the difference between the chit amount and the discount, and, in the case of a fraction of a ticket means the difference between, the chit amount and the discount proportionate to the fraction of the ticket; and when the prize amount is payable otherwise than in cash, the value of prize amount shall be the value at the time it becomes payable;

(14) "Prized subscriber" means a subscriber who has either received or is entitled to the prize amount;

(15) "Registrar" means a registrar appointed under sub-section (1) of section 51;

(16) "Subscriber" includes a person who holds a fraction of a ticket also a transferor of a ticket or a fraction thereof by assignment in writing or by operation of law;

(17) "Ticket" means the share of a subscriber in a chit.

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