Chit Funds Act, 1982 - Section 15

Section 15 of the Chit Funds Act, 1982: Alteration of Chit Agreement

Section 15 protects the agreed terms of a chit by requiring written consent before a chit agreement is altered, added to or cancelled.

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Text of Section 15 - Alteration of chit agreement

A chit agreement shall not be altered, added to or cancelled except with the consent in writing of the foreman and all the subscribers to the chit.

Meaning and legal effect of Section 15

Section 15 of the Chit Funds Act, 1982 restricts unilateral changes to a chit agreement. The provision covers three kinds of change: an alteration of an existing term, an addition to the agreement, and cancellation of the agreement or its terms. The statutory safeguard is written consent.

The consent must come from both sides identified by the section: the foreman and all subscribers to the chit. Accordingly, the section does not permit the foreman, a majority of subscribers, or an individual subscriber to change the chit agreement on their own.

Requirements for alteration, addition or cancellation

For the purpose of Section 15, a proposed change should therefore be documented clearly and supported by the written consent of the foreman and every subscriber. The terms foreman, subscriber and chit agreement should be read with the definitions and agreement requirements contained in the Chit Funds Act, 1982.

Practical point: State rules made under the Act may prescribe filing, registration, forms or procedural requirements relating to an alteration. The applicable State rules and directions of the competent Registrar should therefore also be checked before acting on a proposed change.

Section 15 forms part of Chapter II dealing with registration, commencement and conduct of chit business. It should be read in context with provisions governing the form and filing of chit agreements and the conduct of draws.

For the official Central Act, see the Chit Funds Act, 1982 on India Code.

Quick summary

A chit agreement cannot be altered, supplemented or cancelled merely by a unilateral decision. Section 15 requires written consent of the foreman and every subscriber to the chit. Applicable procedural requirements under State rules should also be complied with.