Rights and Duties of Foreman
20.Security to be given by foreman.- (1) For the proper conduct of the chit, every
foremanshall, before applying for a previous sanction under section 4,-
(a) deposit in an approved bank an amount equal to the chit amount in the name of the
Registrar;or
(b)transfer Government securities of the face value or market value (whichever is less) of
not less than one and a half times the chit amount in favour of the Registrar; or
(c)transfer in favour of the Registrar such other securities, being securities in which a
trustee may invest money under section 20 of the Indian Trusts Act, 1882 (2 of 1882)., of
such value, as may be prescribed by the State Government from time to time.
Provided that the value of the securities referred to in clause (c) shall not, in any case, be
less than one and a half timetimes the value of the chit amount.
(2) Where a foreman conducts more than one chit, he shall furnish security in accordance
with the provisions of sub-section (1) in respect of each chit.
(3)The Registrar may, at any time during the currency of the chit, permit the substitution ofthesecurity:
the security:
Provided that the face value or market value (whichever is less) of the substituted security
shall not be less than the value of the security given by the foreman under sub-section (1).
(4)The security given by the foreman under sub-section (1), or any security substituted
under sub-section (3), shall not be liable to be attached in execution of a decree or
otherwise until the chit is terminated and the claims of all the subscribers are fully satisfied.
(5)Where the chit is terminated and the Registrar has satisfied himself that the claims of all
the subscribers have been fully satisfied, he shall order the release of the security
furnished by the foreman under sub-section (1), or the security substituted under
sub-section (3), as the case may be, and in doing so, he shall follow such procedure as may
be prescribed.
(6)Notwithstanding anything to the contrary contained in any other law for the time being
in force, the security furnished under this section shall not be dealt with by the foreman
during the currency of the chit to which it relates and any dealing by the foreman with
respect thereto by way of transfer or other encumbrances shall be null and void.
21. Rights of foreman.-
(1) The foreman shall be entitled,-
(a) in the absence of any provision in the chit agreement to the contrary to obtain the chitamountat amount at the first installment without deduction of the discount specified in the chit
agreement, subject totheto the condition that he shall subscribe to a ticket in the chit:
Provided that in a case where the foreman has subscribed to more than one ticket, he shall
not be eligible to obtain more than one chit amount in a chit without discount;
(b)to such amount not exceeding five per cent of the chit amount as may be fixed in the
chit agreement, by way of commission, remuneration or for meeting the expenses of
running the chit;
(c)to interest and penalty, if any, payable on any default in the payment of installments and
to such other amounts as may be payable to him under the provisions of the chit
agreement;
(d)to receive and realise all subscriptions from the subscribers and to distribute the
prize amounts to the prized subscribers;
(e)to demand sufficient security from and prized subscriber for the due payment of
future subscriptions payable by him.
Explanation.- A security shall be deemed to be sufficient for the purposes of this clause if
its value exceeds by one-third, or if it consists of immovable properties, the value of
exceeds by one-half, of the amount due from the prized subscriber;
(f)to substitute subscribers in place of defaulting subscribers; and
(g)to do all other acts that may be necessary for the due and proper conduct of the chit.
(2) Where any dispute arises with regard to the value of the property offered as security
under clause (e) of sub-section (1), it shall be referred to the Registrar for arbitration under
section 64.