Section 39 of The Chit Funds Act, 1982 in hindi — Provision for continuation of chits in certain cases
Bare section text
Official Legislative Text
- (1)Where a foreman dies or becomes of unsound mind or is otherwise incapacitated, the chit may continue in accordance with the provisions of the chit agreement.
- (2)Where a foreman is adjudicated an insolvent, or withdraws from the chit under section 26, or fails to conduct the chit at any instalment or on any other date before the next succeeding instalment as may have been agreed upon by a special resolution, any one or more of such subscribers authorised by such resolution may, in the absence of any provision in the chit agreement for the future conduct of the chit, take the place of the foreman and continue the chit or make other arrangements for the further conduct of the chit.
Educational Study Layer
Summary
- If a foreman (the chit manager) dies, becomes of unsound mind, or is otherwise incapacitated, the chit can continue in accordance with the provisions of the chit agreement.
- If a foreman is adjudicated an insolvent (officially declared bankrupt), withdraws from the chit under Section 26, or fails to conduct the chit at any instalment, the subscribers can take action.
- In those cases, the subscribers can pass a special resolution (a high-majority decision) to authorize one or more subscribers to take the place of the foreman and continue the chit, or make other arrangements.
- This subscriber takeover applies if there is no existing provision in the chit agreement detailing how the chit should be continued in such situations.
Practical examples
FAQ
1. What happens if a foreman dies or is incapacitated, but the chit agreement contains a continuation clause?
The chit will continue running in accordance with the specific provisions written in that chit agreement.
2. Under what circumstances can subscribers pass a special resolution to take over and run the chit themselves?
Subscribers can take over if the foreman is declared insolvent, withdraws from the chit, or fails to conduct the chit at any instalment, provided there is no continuation provision in the chit agreement.
3. Does a foreman's withdrawal from the chit affect the security deposit they previously gave under Section 20 or Section 31?
No, under Section 26(2), the withdrawal of a foreman does not affect the security they gave, which remains in place to protect the subscribers' interests.
4. Who is authorized to take the place of the foreman when a takeover resolution is passed?
Any one or more subscribers who are specifically authorized by the passed special resolution of the general body can take the foreman's place.
Practice Quiz
Q1.Under Section 39 of The Chit Funds Act, 1982, if a foreman becomes of unsound mind, how is the decision made on whether and how the chit continues in the first instance?
Q2.Under Section 39 of The Chit Funds Act, 1982, which of the following events allows subscribers to pass a special resolution to take the place of the foreman and run the chit?
Q3.Under Section 39 and Section 26 of The Chit Funds Act, 1982, what is required for a foreman to legally withdraw from a chit so that subscribers can proceed with a continuation resolution?
Q4.Under Section 39 of The Chit Funds Act, 1982, when can subscribers authorize one or more of themselves to take the foreman's place and continue the chit?