Chapter II CONSTITUTION AND REGISTRATION

Registration of bye-laws :-

1. (1) Save as otherwise provided in this Act, no person shall start or conduct any chit unless he has registered with the Registrar the proposed bye laws of the chit.
2. (2) For the purpose of registration, there shall be filed with the Registrar the bye laws of the chit in duplicate signed by the foreman and attested by at least two witnesses.
3. (3) The Registrar, on being satisfied that the bye laws are not contrary to this Act or to the rules made thereunder, shall issue to the foreman a certificate of registration and such certificate shall be conclusive evidence that bye laws of the chit therein mentioned are duly registered.
4. (4) The Registrar shall retain one copy of the bye laws of the chit and return the duplicate of the bye laws to the foreman, with an endorsement that the bye laws have been registered.

Prohibition of invitation for subscription to chit of which bye laws have not been registered :- No person shall issue or publish any notice, circular, prospectus or other document containing the terms and conditions of any chit or inviting the public to subscribe for tickets in any chit unless such notice, circular, prospectus or other document relates to a chit the bye laws of which have been registered.

Form of chit agreement :- Every chit agreement shall be in duplicate and shall be signed by the subscribers or by persons authorised in that behalf in writing by the subscribers and the foreman and attested by at least two witnesses and it shall contain the following particulars, namely :

1. (1) the full name and the permanent residential address of every sub- scriber ;
2. (2) the ticket held by each subscriber ;
3. (3) the number of installment and the amount payable in respect of each ticket for each installment;
4. (4) the dates of commencement and termination of the chit; Provided that no chit shall, except with the permission of the Govern- ment, extend in duration for a period of more than five years;
5. (5) the mode of ascertaining the prized subscriber;
6. (6) the amount of discount which the prized subscriber at any installment has to forego;
7. (7) the mode and proportion in which the discount is distributable by way of dividend, foreman's commission or remuneration and other expenses, if any ;
8. (8) the date, time and place at which the chit is to be drawn;
9. (9) if under the chit agreement the foreman is entitled to the chit amount, the installment at which the foreman is to get the chit amount;
10. (10) the approved bank in which chit moneys shall be deposited by the foreman under the provisions of this Act;
11. (11) the manner in which a chit shall be continued, where a foreman who is an individual dies or becomes of unsound mind or is otherwise inca- pacitated; and
12. (12) any other particular which may be prescribed.

Filing of chit agreement Filing of chit agreement:-

1. (1) Every chit agreement with its duplicate shall be filed with the Registrar.
2. (2) The Registrar shall retain the chit agreement and return the duplicate chit agreement to the foreman with an endorsement that the chit agreement is filed.

Commencement of chit business :-

1. (1) No person shall commence any auction or drawing of any chit unless he has obtained a certificate of com- mencement from the Registrar.
2. (2) The Registrar shall, on being satisfied that the bye-laws of the chit have been registered and the chit agreement has been filed and security re- quired under Section 12 has been furnished by the foreman, grant a certificate of commencement.

Copies of bye-laws and chit agreement to be given to subscribers :-

1. (1) The foreman shall, as soon as may be after he has obtained the certificate of commencement referred to in Section 7, but not later than the date of the first drawing of the chit, furnish to every subscriber a copy of the bye-laws of the chit, and of the chit agreement certified by him to be a true copy.
2. (2) The foreman shall, within the fifteenth day of the month succeeding the month in which the first installment of the chit is drawn, file with the Registrar a certificate to the effect ; that he has complied with the provisions of sub- section (1).

Alteration etc., of chit agreement: -

1. (1) The chit agreement shall not be altered, added to or cancelled except with the consent in writing of the foreman and all the subscribers to the chit.
2. (2) Every such alteration, addition, or cancellation, shall be intimated to the Registrar who shall record it in the copy of the chit agreement retained with him.

Minutes of proceedings :- Minutes of the proceedings of every drawing

shall be prepared and entered in a book to be kept for that purpose and shall

be signed by the foreman and all the subscribers present. It shall also be signed by the prized subscriber or his authorised agent.

1. (2) Such minutes shall state clearly,
   • (i) the date and hour when the proceedings began and ended and the place where, the drawing was held; ( i i ) the number of the particular installment of the chit of which proceedings are recorded ;
   • (iii) the names of the subscribers present :
   • (iv) the person or persons who become entitled to the prize amount in the particular installment ;
   • (v) the amount of discount ;

( v i ) full particulars regarding the disposal of the prize amount

in respect of the preceding installment and disposal of unpaid prize amount, if any, in respect of any previous installment ; and

1. (vii) any other particular which may be prescribed.

Copy of minutes to be filed with the Registrar: - Every foreman shall, within the fifteenth day of the month succeeding the month in which one or more installments of the same chit or one or more installments of any other chit are drawn, file with Registrar a copy of the minutes, referred to in Section10 in respect of the drawing at all such installments and certified by the foreman to be a true copy.