Chapter III FOREMAN

Security to be given by the foreman :-

1. (1) For the proper conduct of the chit, every foreman shall, before applying for the certificate of com- mencement under Section 7,
   • (a) execute an indenture of mortgage and trust in favour of the Registrar as trustee charging by way of security property sufficient to the satisfaction of the Registrar for the realisation of the chit amount; or (b)
     • (i) deposit in any approved bank an amount not less than half of the chit amount ; or
     • (ii) invest in Government securities of the face value or market value, whichever is less, of not less than half the chit amount, and transfer the amount so deposited or the Government securities in favour of the Registrar to be held in by him trust as security ; Provided that, where movable property is charged by way of security, only such kind of movable property as may be prescribed shall be so charged and such movable property shall be deposited in such manner and with such person or officer as may be prescribed.
2. (2) Where a foreman conducts more than one chit, he shall furnish se- curity in accordance with the provision of sub-section
3. (1) in respect of each such chit.
4. (3) Subject to the provisions of Section 530 of the Companies At, 1956 the security given by the foreman under sub-section
5. (1) shall not be liable to be attached in execution of a decree or otherwise -
   • (i) until the chit is terminated and the claims of all the subscribers are fully satisfied ;
   • (ii) until all dues payable by the foreman under this Act to the Registrar or any other officer have been paid;
   • (iii) Where owing to the default of the prized subscriber the prize amount due remains unpaid even after the termination of a chit, until the fore- man deposits the prize amount in an approved bank mentioned in the chit agreement and intimates in writing the fact of such deposit to the prized subscriber.
6. (4) The Registrar shall, after the termination of a chit and after satisfying himself that the requirements under clauses
   • (i) to
   • (iii) of sub-section
7. (3) have been complied with release the property charged by way of security ororder the release of the cash security or the Government securities referred to in sub-section
8. (1) in such manner as may be prescribed.
9. (5) The Registrar may, on the application of any foreman, instead of releasing the security under sub-section (4), accept the same as security in respect of any other chit or chits conducted by the same foreman. If the value or amount of the security so accepted is less than the value or amount specified in sub-section (1), the Registrar shall require the foreman to furnish additional security to make up the deficiency. If the value or amount of such security is in excess of the value or amount required, the Registrar shall release such excess.
10. (6) Notwithstanding anything to the contrary contained in any other law, the security furnished under this section shall not be alienated in any manner by the foreman during the currency of the chit and any such alienation by way of transfer, charge, mortgage, or other encumbrance shall be null and void.

Rights of the foreman :-

1. (1) The foreman shall be entitled -
   • (a) in the absence of any provision in the chit agreement to the contrary, to obtain, the chit amount at the instalment specified in the chit agreement;
   • (b) to such commission or remuneration not exceeding five per centum of the chit amount as may be fixed in the chit agreement ;
   • (c) to receive and realize all subscriptions from the subscribers and to distribute the prize amounts to the prized subscribers and the dividend among the subscribers;
   • (d) to demand sufficient security from any prized subscriber for the due payment of future subscriptions ; Explanation :- A security is said to be sufficient for the purpose of the clause, if its value exceeds by one - third, or if it consists of buildings, the value exceeds by one half, the amount due from the prized subscriber ;
   • (e) to substitute subscribers in the place of defaulting subscribers ; and
   • (f) to do all other acts that may be necessary for the due and proper conduct of the chit.
2. (2) In case of any dispute in regard to the value of the property offered as security under clause
   • (d) of sub-section
3. (1) the mater shall be referred to the

Duties of the foreman Duties of the foreman :- {1) The foreman shall, on the prized sub- scriber furnishing sufficient security for the due payment of future subscrip- tions be bound to pay him the prize amount ;

Provided that the prized subscriber shall be entitled to demand immediate payment of the prize amount after deducting all future subscriptions without any security whatsoever and in such case the foreman shall, before the date of the next succeeding installment, deposit in an approved bank mentioned in the chit agreement; the amount of future subscriptions deducted as aforesaid and he shall not withdraw the amount so deposited except for payment of future sub- scriptions.

1. (2) If owing to the default of the prized subscriber the prize amount due in respect of any drawing remains unpaid before the date of the next succeed ing drawing the foreman shall deposit the same forthwith in an approved bank mentioned in the chit agreement and intimate in writing the fact of such de posit to the prized subscriber.
2. (3) Every payment of the prize amount, the deposit of the amount of the future subscriptions under sub-section
3. (1) and the deposit of the prize amount under sub-section
4. (2) shall be intimated to the subscribers at the next succeeding drawing and particulars of such payment or deposit entered in the minutes of the proceedings of that drawing.
5. (4) The foreman shall not appropriate for himself any amount in excess of what he is entitled to under clause
   • (b) of section 13 ; Provided that where the foreman is himself a prized subscriber, he shall be entitled to appropriate for himself the prize amount;

Registers and books of account Registers and books of account :- The foreman shall keep such registers and books of account, and in such form, as may be prescribed.

Balance sheet :-

1. (1) Every foreman shall prepare and file with the Registrar in such manner and within such time as may be prescribed a balance sheet relating to the period of account audited either by qualified auditors under the Companies Act, 1956, or by a chit auditor appointed under sub- section
2. (2) of section 51.
3. (2) The balance sheet referred to in sub-section
4. (1) shall,
   • (a) contain a summary of the assets and liabilities of the chit, and
   • (b) give such particulars as will disclose the nature of the assets and liabilities and how the value of the assets has been arrived at.

Liability of the foreman to the subscribers :-

1. (1) Every foreman shall be liable to account to the subscribers for the amounts due to them.
2. (2) Where there are more than one foreman, each one of them jointly and severally or if the foreman is a firm, each one of the partners thereof jointly and severally and if the foreman is body corporate, the body corporate as such shall be liable to the subscribers in respect of the obligation arising out of the chit.

Withdrawal of a foreman :- No foreman or where there are more than one person as foreman in a chit none of them, shall withdraw from the chit until termination of the chit unless such withdrawal is assented to by all the non-prized subscribers and unpaid prized subscribers and a copy of such assent has been filed as required by Section 32. Such withdrawal shall not, however, affect the security given under Section 12.