Section 22 of The Chit Funds Act, 1982
- (1)The foreman shall, on the prized subscriber furnishing sufficient security for the due payment of future subscriptions, be bound to pay him the 1[net chit amount]:: Provided that the prized subscriber shall be entitled to the payment of the 1[net chit amount] without any security whatsoever if he agrees to the deduction therefrom of the amount of all future subscriptions and in such a case, the foreman shall pay the 1[net chit amount] to the prized subscriber within seven days after the date of the draw or before the date of the next succeeding instalment, whichever is earlier: Provided further that where the 1[net chit amount] has been paid to the prized subscriber under the first proviso, the amount deducted shall be deposited by the foreman in an approved bank mentioned in the chit agreement and he shall not withdraw the amount so deposited except for the payment of future subscriptions.
- (2)If, owing to the default of the prized subscriber, the 1[net chit amount] due in respect of any draw remains unpaid until the date of the next succeeding instalment, the foreman shall deposit the prize amount forthwith in a separate account in an approved bank mentioned in the chit agreement and intimate in writing the fact of such deposit and the reasons therefor to the prized subscriber and the Registrar: Provided that where any prized subscriber does not collect the 1[net chit amount] in respect of any instalment of a chit within a period of two months from the date of the draw, it shall be open to the foreman to hold another draw in respect of such instalment.
- (3)Every payment of the 1[net chit amount] or the amount of future subscriptions under sub-section (1), and the deposit of the 1[net chit amount] under sub-section (2), shall be intimated to the subscribers at the next succeeding draw and the particulars of such payment or deposit shall be entered in the minutes of the proceedings of that draw.
- (4)The foreman shall not appropriate to himself any amount in excess of what he is entitled to under clause (b) or clause (c) of sub-section (1) of section 21: Provided that where the foreman is himself a prized subscriber, he shall be entitled to appropriate to himself the 1[net chit amount] subject to his complying with the provisions of section 31: Provided further that the foreman may appropriate to himself the interest accruing on the amount deposited under the second proviso to sub-section (1).
- (5)The foreman shall not admit any person as a subscriber to a chit, if, by such admission, the total number of tickets mentioned in the chit agreement is increased.
- (6)The foreman shall distribute among the subscribers, in accordance with the chit agreement, the 2[share of discount] either in cash, grain or by way of adjustment towards the subscriptions payable for the next instalment, if any.
Summary
- Once a prized subscriber provides sufficient security, the foreman is legally bound to pay them the net chit amount.
- A prized subscriber can choose to receive the net chit amount without security by allowing the foreman to deduct all future subscriptions from it, which must then be deposited in an approved bank.
- If a prized subscriber defaults or fails to collect their net chit amount before the next instalment, the foreman must deposit it in a separate approved bank account and notify both the subscriber and the Registrar.
- If a prized subscriber does not collect their net chit amount within two months of the draw, the foreman is allowed to conduct a new draw for that instalment.
- The foreman cannot increase the number of tickets by admitting more subscribers than specified in the chit agreement, and they must distribute the share of discount among the subscribers.
Practical examples
FAQ
1. Can a prized subscriber get their money without providing any security?
Yes, if the prized subscriber agrees to have all future subscriptions deducted from the net chit amount, they do not need to provide security.
2. Within what timeframe must the foreman pay the money if future subscriptions are deducted?
The foreman must pay the remaining net chit amount within seven days after the draw or before the next instalment date, whichever comes first.
3. What happens if a prized subscriber fails to collect their prize within two months?
If the prize remains uncollected for two months from the draw date, the foreman has the right to hold another draw for that instalment.
4. Who gets the interest on future subscription amounts that the foreman deducts and deposits?
The foreman is entitled to keep any interest that accrues on the deducted future subscriptions deposited in the approved bank.
Test yourself
Q1.Under Section 22 of The Chit Funds Act, 1982, if a prized subscriber decides to receive their net chit amount without giving security by deducting all future subscriptions, within what time must the foreman pay them?
Q2.Under Section 22 of The Chit Funds Act, 1982, what must the foreman do with the future subscriptions deducted from a prized subscriber's net chit amount?
Q3.Under Section 22 of The Chit Funds Act, 1982, if a prized subscriber does not collect their net chit amount, how long must the foreman wait before they are permitted to hold another draw for that instalment?
Q4.Under Section 22 of The Chit Funds Act, 1982, if the foreman is himself a prized subscriber and wants to appropriate the net chit amount, what must he do?
Q5.Under Section 22 of The Chit Funds Act, 1982, can a foreman admit a new subscriber to an active chit?