Section 64 of The Chit Funds Act, 1982
- (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, a 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).
Summary
- Any dispute regarding the management of a chit business must be referred to the Registrar for arbitration.
- This mandatory arbitration overrides any other law in force, and regular Civil Courts are completely blocked from hearing these cases.
- To qualify under this section, every party to the dispute must be a foreman, a prized or non-prized subscriber (including defaulting and past subscribers or heirs), or a guarantor (surety) of a subscriber.
- Covered disputes include debts or demands between a foreman and a subscriber, claims by a guarantor seeking recovery from a defaulting subscriber, and a subscriber's refusal to return land or assets seized by the foreman for breaking contract terms.
- The Registrar has the final power to decide if a referred matter qualifies as a valid dispute under this section.
Practical examples
FAQ
1. Can a subscriber file a regular lawsuit in a civil court against a foreman for unpaid prize money?
No, civil courts have no jurisdiction over these disputes. Any such conflict must be referred to the Registrar for arbitration.
2. Does a defaulting or past subscriber have the right to refer a dispute to the Registrar?
Yes, the term subscriber under this section explicitly includes defaulting subscribers, past subscribers, and persons claiming through a subscriber.
3. Who decides if a particular issue actually qualifies as a dispute that can be arbitrated?
If there is any question about whether an issue is a dispute, the Registrar's decision on the matter is final.
Test yourself
Q1.Under Section 64 of The Chit Funds Act, 1982, which of the following is true regarding the jurisdiction of Civil Courts over disputes touching the management of a chit business?
Q2.Under Section 64 of The Chit Funds Act, 1982, which party is NOT listed as an eligible participant whose disputes can be referred to the Registrar for arbitration?
Q3.Under Section 64 of The Chit Funds Act, 1982, if a surety has paid a debt to the foreman because the principal subscriber defaulted, how can the surety legally recover that money from the subscriber?
Q4.Under Section 64 of The Chit Funds Act, 1982, if there is a disagreement between the parties as to whether a specific matter actually qualifies as an arbitrable dispute, who has the final authority to decide this question?