Security to be given by foreman
Section 20 of the Chit Funds Act, 1982 deals with security to be given by foreman. For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under section 4, [(a) deposit in the name of the Registrar, an amount equal to,-- (i) fifty per cent. The Act came into force on 02 Apr 1984.
(1) For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under section 4,
1[(a) deposit in the name of the Registrar, an amount equal to,--
(i) fifty per cent. of the 2[gross chit amount] in cash in an approved bank; and
(ii) fifty per cent. of the 2[gross chit amount] in the form of bank guarantee from an approved bank; 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 2[gross 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 times the value of the 2[gross 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 of 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.
Section 20, The Chit Funds Act, 1982 (Act 40 of 1982).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… to dispose of this petition making it clear that the impugned circular shall not be construed or treated compelling and insisting upon the petitioner to invest / deposit in an Apex Bank or DCC Bank and that the petitioner shall be free to make investment / deposit in any approved / scheduled bank in terms of Section 20 of the Chit Funds Act. Subject to the aforesaid directions, petition stands disposed of. > Sd/- JUDGE DHA List No.: 1 Sl No.: 50 …
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… The writ petition is filed aggrieved by the delay on the part of the 5th respondent in releasing the security deposits. 2. Learned counsel for the petitioner contended that as per Section 20 of the Chit Funds Act the Registrar can refuse to release security deposit only when the chit is not terminated or when claims with respect to the chit are remaining to be settled. 3. Learned Government Pleader submitted that the 5th respondent has received numerous complaints regarding the manner in which the …
Made under this section, and citing it
1 instrument names this provision in its title or its text without being made under it.
Questions about Section 20
What does Section 20 of the Chit Funds Act deal with?
Section 20 of the Chit Funds Act is headed "Security to be given by foreman". For the proper conduct of the chit, every foreman shall, before applying for a previous sanction under section 4, [(a) deposit in the name of the Registrar, an amount equal to,-- (i) fifty per cent.
How do I find court cases under Section 20 of the Chit Funds Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Chit Funds Act 1982 20, section 20 Chit Funds Act 1982, section 20 of the Chit Funds Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.
What should I read with Section 20 of the Chit Funds Act, and has it changed?
Its own text turns on section 4 (Prohibition of chits not sanctioned or registered under the Act), Indian Trusts Act 20 (Investment of trust-money), so none of them can safely be read on its own. 6 other provisions in this corpus refer back to it. One instrument names it without being made under it, most recently The Tamil Nadu Chit Funds Rules, 1984 (1984).
When did Section 20 of the Chit Funds Act come into force?
Section 20 of the Chit Funds Act, cited as Chit Funds Act 1982 20, came into force on 02 Apr 1984, having been enacted on 19 Aug 1982. It is in force as at the date shown on this page.
Other sections of this Act
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.