Chit Funds Act 1971 · 2020 Revised Edition · Part 4 · Chit Funds — General Provisions
40. Termination of chit fund
Feedback & supportA chit fund is deemed to terminate upon the occurrence of any of the following events:
chit fund
“chit fund” means a scheme or an arrangement based wholly on the terms and conditions set out in section 24 or the regulations made under this Act or any scheme or arrangement that is deemed to be a chit fund under section 19 but does not include any scheme or arrangement which only partakes of the nature of a chit fund within the meaning of section 20;
on the expiry of the chit fund period as specified in the agreement or where it is curtailed by reason of any voluntary reduction of membership duly effected under section 33;
on the failure of the chit fund company to conduct the chit fund in accordance with the provisions of this Act, the regulations made under this Act or the terms and conditions of the agreement;
on the chit fund company going into liquidation or being wound up, whether voluntarily or involuntarily or otherwise being dissolved;
on steps being taken for the winding up of the company either voluntarily or by order of the Authority or the Minister;
on the licence being revoked by the Authority under section 14.
Upon the termination of a chit fund otherwise than by the expiry of the chit fund period as specified in the agreement or by a voluntary reduction of a chit fund under section 33, every subscriber who has not purchased a chit fund amount is entitled —
agreement
“agreement” means the document which contains the terms and conditions agreed to and adopted by the subscribers and the chit fund company;
to recover from the chit fund company the aggregate of the actual amounts contributed by each subscriber as contributions under the agreement prior to the termination of the chit fund; or
to apply to a court of competent jurisdiction for an order —
directing each subscriber who has drawn a prize amount in that chit fund to deposit in court upon the due dates the several contributions which, if the chit fund had not terminated, would have been payable by the subscriber to the chit fund company, until the aggregate of the amounts paid to the chit fund company by that subscriber before the termination of the chit fund and of the amounts so deposited in court become equal to the chit fund amount at the time of the sale at which that subscriber was declared the purchaser; and
declaring that all amounts so deposited in court are to be divided rateably among the subscribers who have not drawn a prize amount in that chit fund, and setting out for that purpose any scheme of distribution that may be necessary.
Where any action is instituted by a subscriber for the enforcement of a claim under subsection (2)(a), the chit fund company may apply for an order of court under subsection (2)(b) in like manner as a subscriber and any sum of money that may be received under such an order by the subscriber instituting the action, is to be set off against the amount claimed in the action.
subscriber
“subscriber” includes any person who has agreed to participate in a chit fund or has signed the agreement in token thereof.