Chit Funds Act, 1982- Sections 44 to 90

Chapter IX

INSPECTION OF DOCUMENTS

44. Foreman to allow certain subscribers to inspect chit records.

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

Other Contents of Chit Funds Act, 1982​
Sections 1 to 19 Sections 20 to 43 Sections 44 to 90 Schedule

45. Preservation of chit records by foreman.

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

46. Inspection of chit books and records by Registrar.

46. Inspection of chit books and records by Registrar.—(1) Without prejudice to the provisions of Sections 209 and 209A of the Companies Act, 1956 (1 of 1956), the Registrar or an officer authorised by the State Government in this behalf may inspect chit books and all the records of a chit during working hours on any working day at the premises of the foreman with or without giving notice and it shall be the duty of every foreman to produce to the Registrar or the officer so authorised, all such books and records as are in his custody or power and to furnish him with any statement or information relating to the chits as he may require from the foreman within such time as he may specify.

(2) The Registrar or an officer authorised by the State Government in this behalf may, after giving seven days' notice in writing to the foreman, direct him to produce before him for inspection such chit books and records as he may require at the time and place mentioned in the notice.

(3) If on an inspection made under sub-section (1) or sub-section (2), any defects are found, the Registrar may bring such defects to the notice of the foreman and may also make an order directing the foreman to take such action as may be specified in the order to remedy the defects with the time specified therein.

(4) Every foreman shall be bound to comply with the directions contained in an order made under sub-section (3).

47. Power of Reserve Bank to inspect chit books and records.

47. Power of Reserve Bank to inspect chit books and records.—(1) Nothing in Section 46 shall be deemed to affect the power of the Reserve Bank to inspect the books and records of any foreman under the provisions of Section 45N of the Reserve Bank of India Act, 1934 (2 of 1934).

(2) The Reserve Bank may, if it considers necessary, forward a copy of its report or of any part of its report on the inspection of the books and records of a foreman to the foreman for taking necessary action.

(3) Every foreman shall, on receipt of the report or part thereof under sub-section (2), be bound to comply with the directions, if any, given by the Reserve Bank in this behalf and shall, if so required, submit periodical reports in regard to the action taken by him.

(4) The Reserve Bank may also forward a copy of the report on the inspection of the books and records of a foreman to the State Government within whose jurisdiction the registered office of the company, if the foreman is a company, or the place or the principal place of business of the foreman in any other case, is situated for such action as may be considered necessary.

Chapter X

WINDING UP OF CHITS

48. Circumstances under which chits may be wound up.

48. Circumstances under which chits may be wound up.—A chit may be wound up by the Registrar within whose territorial jurisdiction the chit has been registered, either on his own motion or on an application made by any non-prized or unpaid prized subscriber,—

(a) if the chit has terminated under clause (c) of Section 40; or

(b) if the foreman commits any such act in respect of the security specified in Section 20 as is calculated to impair materially the nature of the security or the value thereof; or

(c) if he fails to deposit any amount required to be deposited under any of the provisions of this Act; or

(d) if it is proved to the satisfaction of the Registrar that the foreman is unable to pay the amounts due to the subscribers; or

(e) if the execution or other process issued on an order passed by the Registrar in favour of any subscriber in respect of amounts due to him from the foreman in relation to the chit business is returned unsatisfied in whole or in part; or

(f) if it is proved that there has been a fraud or collusion on the part of the foreman in the matter of taking securities from any prized subscriber; or

(g) if the foreman has appropriated the [i][net chit amount] in his capacity as a subscriber without furnishing sufficient security for future subscriptions; or

(h) if the Registrar is satisfied that the affairs of the chit are being conducted in a manner prejudicial to the interests of the subscribers; or

(i) 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 subscribers, the Registrar shall take into account his contingent and future liabilities in respect of the chit.

49. Application for winding up.

49. Application for winding up.—An application for the winding up of a chit shall be made by petition presented by any non-prized or unpaid prized subscriber to the Registrar signed and verified in the manner laid down by the Code of Civil Procedure, 1908 (5 of 1908), and shall contain such particulars as may be prescribed :

Provided that no application for the winding up of a chit under clause (d) or clause (i) of Section 48 shall lie unless such application is presented,—

(a) by non-prized and unpaid prized subscribers representing not less than twenty-five per cent of the amount or, as the case may be, the value of the grain subscribed by all the non-prized and unpaid prized subscribers, if any; or

(b) with the previous sanction of the State Government within whose jurisdiction the chit is commenced or conducted.

Explanation.—For the purposes of clause (a) of the proviso, a subscriber of a fraction of a ticket shall be deemed to be a subscriber only to the extent of such fraction.

50. Bar to winding up proceedings.

50. Bar to winding up proceedings.—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 proceedings relating to insolvency are pending against the foreman; 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 are pending; or

(c) where the foreman is a company or co-operative society, if proceedings for the winding up of such company or co-operative society are pending.

51. Commencement and effect of winding up order.

51. 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 foreman and it shall be deemed to have commenced from the date of the presentation of the application for the winding up.

52. Injunction order.

52. Injunction order.—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 under this Act and before the making of an order for the appointment of an interim receiver or for the winding up of the chit, restrain any other proceedings instituted against the foreman for the realisation of amounts due from him on such terms as the Registrar thinks fit.

53. Powers of Registrar.

53. Powers of Registrar.—The Registrar may, after hearing an application under this Chapter, dismiss it with or without costs, or adjourn the hearing conditionally or unconditionally or make an interim or any other order that he deems fit.

54. Vesting of chit assets in Registrar or other person.

54. Vesting of chit assets in Registrar or other person.—On the making of an order for the winding up of a chit, all the chit assets pertaining to such chit shall vest in the Registrar or in any person appointed by him for distribution amongst the subscribers to whom amounts are due in respect of the chit.

55. Suits, etc., to be stayed on winding up order.

55. Suits, etc., to be stayed on winding up order.—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 for the realisation of amounts due to him in respect of the chit except with the leave of the Registrar winding up the chit and on such terms as he may impose.

56. Notification of winding up order.

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

57. Cessation of winding up proceedings on insolvency of foreman etc., or the winding up of the company and transfer of such proceedings.

57. Cessation of winding up proceedings on insolvency of foreman etc., or the winding up of the company and transfer of such proceedings.—Where during the pendency of the proceedings for the winding up of a chit, the foreman is adjudicated an insolvent, or where the foreman is a firm, all the 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 cease and the distribution of the chit assets shall, subject to the provisions of Sections 43 and 52, be made by the insolvency court or the court winding up the company, as the case may be.

58. Award of compensation to foreman.

58. Award of compensation to foreman.—(1) Where an application for the winding up of a chit is dismissed and the Registrar is satisfied that the petition is frivolous or vexatious, he may, on the application of the foreman, award against the petitioner, such amount, not exceeding one thousand rupees, as he deems reasonable as compensation to the foreman for the expenses or injury caused to him by the presentation of the application and the proceedings thereon, and such amount may be realised as if the award were a decree of a Civil Court.

(2) On the making of an award under sub-section (1), no suit for compensation in respect of an application for any winding up of the chit shall be entertained.

59. Right to appeal.

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

60. Limitation.

60. 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 presentation of the application to the date of such order in respect of non-prized subscribers; and, notwithstanding anything contained in the chit agreement, no non-prized subscriber who was not a defaulter on the date of the presentation of the petition for winding up, shall be deemed to be a defaulter on the date of such order.

(2) Where an order refusing to wind up a chit has been made under this Act, in computing the period of limitation prescribed for any suit or other legal proceedings (other than a suit or application in respect of which the leave of the court has been obtained) which might have been brought or instituted, but for the presentation of the application for the winding up of the chit, the period from the date of the presentation of the application to the date of the order refusing to wind up a chit shall be excluded.

(3) Nothing contained in this Chapter shall 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 [ii][share of discount] in the proceedings for the winding up of the chit and in computing the period of limitation prescribed for any such proceedings, the period from the date of the presentation of the application for the winding up of the chit to the date of the declaration of the final [iii][share of discount] shall be excluded.

Chapter XI

APPOINTMENT OF OFFICERS AND LEVY OF FEES

61. Appointment of Registrar and other officers.

61. Appointment of Registrar and other officers.—(1) The State Government may, by notification in the Official Gazette, appoint a Registrar of Chits and as many Additional, Joint, Deputy and Assistant Registrars as may be necessary for the purpose of discharging the duties imposed upon the Registrar by or under this Act.

(2) The Registrar may appoint as many inspectors of chits and chit auditors as may be necessary for the purpose of discharging the duties imposed on the inspectors of chits or chit auditors by or under this Act.

(3) All inspectors of chits and chit auditors shall discharge the duties imposed upon them by or under this Act under the general superintendence and control of the Registrar.

(4) If the Registrar is of the opinion that the accounts of any chit are not properly maintained and that such 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 before the chit auditor, all accounts, books and other records relating to the chit, to furnish him with such information as may be required and afford him all such assistance and facilities as may be necessary and reasonable in regard to the audit of the accounts of the chit.

(6) The foreman shall pay to the chit auditor such fees as may be prescribed for the audit of the accounts of the chit under sub-section (4) :

Provided that different scales of fees may be prescribed for different chits depending on the quantum of the [iv][gross chit amount].

62. Inspection of documents in Registrar's office.

62. Inspection of documents in Registrar's office.—The foreman of a chit or any subscriber in a chit or the heirs or legal representatives of any foreman or subscriber may, on payment of such fees as may be prescribed,—

(a) inspect the documents of the concerned chit kept by the Registrar; or

(b) obtain a certified copy or on extract of any such document or record.

63. Levy of fees.

63. Levy of fees.—(1) There shall be paid to the Registrar such fees as the State Government may, from time to time, prescribe for,—

(a) the issue of previous sanction under Section 4;

(b) the filing of the chit agreement with the Registrar and the registration of the chit under Section 7.

(c) 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;

(f) the inspection of documents 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.

(2) A table of fees prescribed under sub-section (1) shall be exhibited on a notice board in the office of the Registrar.

Chapter XII

DISPUTES AND ARBITRATION

64. Disputes relating to chit business.

64. Disputes relating to chit business.—(1) Notwithstanding anything contained in any other law for the time being in force, 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) a foreman, prized subscriber or a non-prized subscriber, including a defaulting subscriber, past subscriber or a person claiming through a subscriber, or a deceased subscriber to a chit;

(b) a surety of a subscriber, past subscriber, or a deceased subscriber.

Explanation.—For the purposes of this sub-section, a dispute touching the management of a chit business shall include—

(i) a claim by or against a foreman for any debt or demand due to him from a subscriber, or due from him to a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber whether such debt or demand is admitted or not;

(ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a loan by a foreman and recovered from the surety owing to the default of the principal borrower, whether such sum or demand is admitted or not; and

(iii) a refusal or failure by a subscriber, past subscriber or the nominee, heir or legal representative of a deceased subscriber to deliver possession to a foreman of land or any other asset resumed by him for breach of conditions of the assignment.

(2) Where any question arises as to whether any matter referred to for the award of the Registrar is a dispute or not for the purposes of sub-section (1), the same shall be decided by the Registrar whose decision thereon shall be final.

(3) No Civil Court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in sub-section (1).

65. Period of limitation.

65. Period of limitation.—(1) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963), but subject to the specific provisions contained in this Act, the period of limitation in the case of 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 three years, computed from the date on which such subscriber dies or ceases to be a subscriber; or

(b) if the dispute is between a foreman and a subscriber or a past subscriber, or the nominee, heir or legal representative of a deceased subscriber, and the dispute relates to any act or omission on the part of either party to the dispute, be three years from the date on which the act or omission with reference to which the dispute arose, took place.

(2) The period of limitation in the case of any dispute other than those referred to in sub-section (1) which are required to be referred to the Registrar under Section 64 shall be regulated by the provisions of the Limitation Act, 1963 (36 of 1963), as if the dispute were a suit, and the Registrar, a Civil Court.

(3) Notwithstanding anything contained in sub-sections (1) and (2), the Registrar may admit a dispute after the expiry of the period of limitation specified therein, if the applicant satisfies the Registrar that he had sufficient cause for not referring the dispute within such period.

66. Settlement of disputes.

66. Settlement of disputes.—(1) If the Registrar is satisfied that any matter referred to him or brought to his notice is a dispute within the meaning of Section 64, he shall, subject to such rules as may be prescribed, settle the dispute himself, or refer it for disposal to a person appointed by him (hereafter in this Chapter referred to as the nominee).

(2) Where any dispute is referred under sub-section (1) for settlement to the nominee, the Registrar may, at any time for reasons to be recorded in writing, withdraw such dispute from the nominee and may settle the dispute himself, or refer it again for settlement to any other nominee appointed by him.

67. Procedure for settlement of disputes and powers of Registrar or nominee.

67. Procedure for settlement of disputes and powers of Registrar or nominee.—(1) The Registrar or the nominee hearing a dispute under Section 66, shall, in addition to the powers conferred on him under that section, have the same powers as are vested in a Civil Court while trying a suit under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely :—

(a) summoning and enforcing the attendance of persons and examining them on oath;

(b) requiring the discovery and inspection of documents;

(c) receiving evidence on affidavits;

(d) requisitioning any public record or copies thereof from any court or office;

(e) issuing commissions for the examination of witnesses or documents; and

(f) any other matter which may be prescribed.

(2) Except with the permission of the Registrar or the nominee, no party shall be represented at the hearing of a dispute by a legal practitioner.

(3) (a) If the Registrar or the nominee is satisfied that any person, whether he is a subscriber or not, has acquired any interest in the property of a person who is a party to a dispute, he may order that the person who has acquired the interest in the property may be joined as a party to the dispute, and any decision that may be given by the Registrar or the nominee on the dispute shall be binding on the party so joined, in the same manner as if he were an original party to the dispute.

(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 Registrar 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 parties to the dispute at any stage of hearing of the dispute on such terms as he thinks just.

(c) The Registrar or the nominee may, at any stage of the proceedings, either upon or without the application of either party and on such terms as may appear to the Registrar or the nominee to be just, order that the name of any party improperly joined be struck off.

(d) Any person who is a party to the dispute and entitled to more than one relief in respect of the same cause of action may claim all or any such 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.

68. Attachment before Judgment and other interlocutory orders.

68. Attachment before Judgment and other interlocutory orders.—(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 obstruct the execution of any award or the carrying out of any order that may be made,—

(a) is about to dispose of the whole or any part of his property; or

(b) is about to remove the whole or any part of the property from the jurisdiction of the Registrar,

he may, unless adequate security is furnished, direct conditional attachment of the said property, and such attachment shall have the same effect as if it is made by 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 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 affect the rights, subsisting prior to the attachment of the property, of persons who are not parties to the dispute, or bar any person holding a decree against the person whose property is so attached from applying for the sale of the property under the attachment of such decree.

(4) The Registrar or the nominee may, in order to prevent the ends 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.

69. Decision of Registrar or nominee.

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

70. Appeal against decision of Registrar or nominee.

70. Appeal against decision of Registrar or nominee.—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 order or award, appeal to the State Government.

71. Money how recovered.

71. Money how recovered.—Every order passed by the Registrar or the nominee under Section 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,—

(a) on a certificate issued by the Registrar, be deemed to be a decree of a Civil Court, and shall be executed in the same manner as a decree of such Court, or

(b) be executed in accordance with the provisions of any law for the time being in force for the recovery of amounts as arrears of land revenue :

Provided that no application for execution under clause (b) shall be made after the expiry of three years from the date fixed in the order, and if no such date is fixed, from the date of the order.

72. Private transfer of property made after issue of certificate void against foreman.

72. Private transfer of property made after issue of certificate void against foreman.—Any private transfer of 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 whose application the said certificate was issued.

Chapter XIII

MISCELLANEOUS

73. Advisory role of Reserve Bank.

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

74. Appeals.

74. Appeals.—(1) Any foreman aggrieved by the decision of the Registrar,—

(a) refusing to register the chit agreement under Section 7;

(b) refusing to grant a certificate of commencement under sub-section (2) of Section 9;

(c) refusing to accept any security under sub-section (1) of Section 20 or under Section 31; or

(d) refusing to release the security charged under Section 20 or Section 31,

may, within thirty days of the communication to him of such decision, appeal to the State Government or to such officer or authority as may be empowered by notification in the Official Gazette by the State Government in that behalf.

(2) Any foreman or other person aggrieved by the order of the Registrar under sub-section (1) of Section 34 may, within thirty days of the communication to him of such decision, appeal to the State Government or to such officer or authority as may be empowered by notification in the Official Gazette by the State Government in that behalf.

(3) The State Government or such officer or authority aforesaid may, after giving the appellant an opportunity of making his representation, pass such order on the appeal as it or he thinks fit and such order shall be final.

75. Powers of Registrar to give extension of time for filing documents.

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

76. Penalties.

76. Penalties.—(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, 30, 31, sub-section (4) of Section 33, Sections 46, 47 or sub-section (5) of Section 61 shall, on conviction, be punishable with imprisonment for a term which may extend to two years or with fine which may extend to five thousand rupees or with both.

(2) Any foreman,—

(a) who fails to file any document required to be filed under this Act within the period specified 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,

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 may extend to two years or with fine which may extend to five thousand rupees or with both.

77. Penalty for second and subsequent convictions.

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

78. Application of fine.

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

79. Offences by companies.

79. Offences by companies.—(1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :

Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is 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 of the company such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.—For the purposes of this section,—

(a) “company” means any body corporate and includes a firm or other association of individuals; and

(b) “director” in relation to a firm means a partner in the firm.

80. Cognizance of offences.

80. Cognizance of offences.—(1) All offences under Section 11 shall be cognizable.

(2) No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try an offence punishable under this Act.

81. Power to compound offences.

81. Power to compound offences.—(1) Subject to such conditions as may be prescribed, any officer empowered by the State Government in this behalf may, either before or after the institution of criminal proceedings under this Act, accept from the person who has committed or is reasonably suspected to have committed an offence under this Act, by way of composition of such offence, a sum of money not exceeding such amount as may be prescribed.

(2) Where an offence has been compounded under sub-section (1), the offender, if in custody, shall be discharged and no further proceedings shall be taken against him in respect of such offence.

82. Power to enter and search any place and to seize any documents.

82. Power to enter and search any place and to seize any documents.— (1) If the Registrar or any other officer authorised by him in this behalf, has reason to suspect that any person conducts, or is responsible for the conduct of, a chit in any place in contravention of the provisions of this Act, he may, for reasons to be recorded in writing and at any reasonable time, enter into and search such place, and may seize such books, registers, accounts or documents as may be necessary.

(2) The Registrar or officer authorised by him in this behalf, may apply for assistance to an officer in charge of a police station and take police officers to accompany and assist him in discharging his duties under sub-section (1).

(3) All searches under sub-section (1) shall be made in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974).

83. Officers to be public servants.

83. Officers to be public servants.—The Registrar and all officers 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 (45 of 1850).

84. Power to delegate.

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

85. Act not to apply to certain chits.

85. Act not to apply to certain chits.—Nothing in this Act shall apply in respect of—

(a) any chit started before the commencement of this Act, or

(b) any chit the amount of which, or where two or more chits were started or conducted simultaneously by the same foreman, the aggregate amount of which does not exceed [v][such amount as may be specified, by notification in the Official Gazette, by the State Government].

86. Banks not to conduct chit business.

86. Banks not to conduct chit business.—(1) Notwithstanding anything contained in this Act, no bank shall commence or carry on chit business after the commencement of this Act.

(2) Where a chit had been started by any bank before such commencement, such chit may be continued after such commencement until it is completed, and the provisions of the chit agreement and such laws, if any, as were applicable to it immediately before the commencement of this Act shall apply to such chit.

Explanation.—For the purposes of this section “bank” means an approved bank or a co-operative bank as defined in clause (bii) of Section 2 of the Reserve Bank of India Act, 1934 (2 of 1934).

87. Power to exempt.

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

88. Protection of action taken under the Act.

88. Protection of action taken under the Act.—No suit, prosecution or other legal proceeding 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 or discharging any functions under this Act in respect of anything which is in good faith done or intended to be done in pursuance of this Act or the rules made thereunder.

89. Power to make rules.

89. Power to make rules.—(1) The State Government may, in consultation with the Reserve Bank, by notification in the Official Gazette, make rules for giving effect to the provisions of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following 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;

(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;

(f) the registers and books and the form in which such registers and books 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 24;

(h) the rate at which interest shall be payable on the defaulted instalments by a defaulted subscriber under Section 28;

(i) the particulars that may be included in an application for the winding up of chits under Section 49;

(j) the procedure to be followed for the winding up of chits under Chapter X;

(k) the fees payable under Section 63;

(l) the auditing of balance-sheets and the profit and loss accounts of chit business and the issue of audit certificates;

(m) the form and manner in which a dispute shall be referred to the Registrar under Section 64;

(n) the procedure to be followed by the Registrar or his nominee for settling the disputes referred to him under Section 64;

(o) the matters referred to in clause (f) of sub-section (1) of Section 67;

(p) the conditions subject to which and the amount on the payment of which composition of offences may be made under Section 81;

(q) the form and manner in which an appeal may be preferred under this Act and the fees payable for such appeal;

(r) the issue and service of notices or other process under this Act;

(s) 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 prescribed.

(3) Every rule made under this section shall be laid, as soon as may be after it is made, before each House of the State Legislature where it consists of two Houses, or, where such Legislature consists of one House before that House.

90. Repeal and saving.

90. Repeal and saving.—(1) The Andhra Pradesh Chit Funds Act, 1971 (Andhra Pradesh Act 9 of 1971), the Kerala Chitties Act, 1975 (Kerala Act 23 of 1975), the Maharashtra Chit Funds Act, 1974 (Maharashtra Act LV of 1974), the Tamil Nadu Chit Funds Act, 1961 (Tamil Nadu Act 24 of 1961), as in force in the State of Tamil Nadu and in the Union territories of Chandigarh and Delhi, the Uttar Pradesh Chit Funds Act, 1975 (Uttar Pradesh Act 53 of 1975), the Goa, Daman and Diu Chit Funds Act, 1973 (Goa, Daman and Diu Act 16 of 1973), and the Pondicherry Chit Funds Act, 1966 (Pondicherry Act 18 of 1966), are hereby repealed and the provisions of Section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply to such repeal as if each such Act so repealed were a Central Act.

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

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