Security to be given by the 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.