The Chits Funds Act,1982
11. Use of the words “chit fund” , “chitty or “kuri” .
(1) No person shall carry on chit business unless he uses as part of his name any of the words “chit” ,” chit fund ” “chitty” or “kuri” and no person other than a person carrying on chit business shall use as part of his name any such word.
(2) Where at the commencement of this Act,-
(a) any person carrying on chit business without using as part of his name any of the words specified in sub-section (1) ; or
(b) any person not carrying on chit business is using any such word as part of his name; he shall, within a period of one year from such commencement, add as part of his name any such word or, as thecase may be, delete such words from his name;
Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of one year by such further period or periods not exceeding one year in the aggregate.
Comment
Chit fund transaction whether a debt:- Considering the intent of the legislation and the wording of Sec. 3 (b) and Secs. 4 and 8 of the Karnataka Debt Relief Act, it was held that the chit fund transaction in which the member- subscriber undertakes to repay the amount taken by him in installments is not a debt advanced within the meaning of Sec. 4 of the Act. These two things together constitute consideration for the purchase. From the chit fund. Subscribed to by subscribers, a subscriber could take the fund amount by mutual understanding of the subscribers on the date of “kuri” or on the auction date. It is a sort of a mutual benefit scheme. The subscriber also is a giver as well as a taker and the foreman acts for and on behalf of all subscribers including the taking subscription. Therefore, the transaction cannot be considered as loan. It does not partake of function of the foreman or stakeholder by whatever name he is called, in the chit fund scheme . is only to organise the chit fund transactions The money taken in the chit held by the subscriber is not the foremans money. The relationship that exists between the foreman and the subscriber is not of a creditor and debtor.
