Chit Funds Act, 1982 | Section 16 | Updated: 15 September 2026

Section 16 of the Chit Funds Act, 1982: Date, Time and Place of Conducting Chits

Section 16 regulates how a draw in a registered chit is to be conducted. It links the draw to the date, time and place stated in the chit agreement, requires prescribed notice to subscribers, requires at least two subscribers to be present, and empowers the Registrar to supervise a draw when it could not otherwise be conducted.

What Section 16 requires

The provision is part of Chapter II of the Chit Funds Act, 1982, which deals with registration, commencement and conduct of chit business. In practical terms, Section 16 creates procedural safeguards around each draw so that the draw follows the registered chit agreement and has subscriber participation.

Section 16 - Date, time and place of conducting chits

(1) Every draw in a chit shall be held on the date, at the time and place mentioned in the chit agreement and a notice therefor in such form and in such manner as may be prescribed shall be issued by the foreman to all the subscribers.

(2) Every such draw shall be conducted in accordance with the provisions of the chit agreement and in the presence of not less than two subscribers present in person or through video conferencing duly recorded by the foreman.

(3) Where any draw was not conducted on the ground that two subscribers required to be present at a draw under sub-section (2) were not present or on any other ground, the Registrar may, on his own motion or on an application made by the foreman or any of the subscribers, direct that the draw shall be conducted in his presence or in the presence of any person deputed by him.

Amendment: Section 6 of the Chit Funds (Amendment) Act, 2019 inserted the words allowing the two subscribers required by Section 16(2) to be present either in person or through video conferencing duly recorded by the foreman. The amendment came into force on 1 January 2020.

Explanation of Section 16

Section 16(1): Date, time, place and notice

The draw must be held on the date, at the time and at the place specified in the chit agreement. The foreman must also issue notice to all subscribers in the form and manner prescribed under the applicable rules. The chit agreement therefore remains the primary document for identifying the scheduled particulars of the draw.

Section 16(2): Presence of at least two subscribers

The draw must comply with the chit agreement and must have not less than two subscribers present. After the 2019 amendment, this statutory presence may be physical or through video conferencing, provided the video conference is duly recorded by the foreman. This change facilitates remote participation while preserving a record of the required presence.

Section 16(3): Registrar's power when a draw is not conducted

If the draw cannot be held because the required two subscribers are not present, or for another ground, the Registrar may intervene. The Registrar may act on his own motion or on an application by the foreman or any subscriber and direct that the draw be conducted in the Registrar's presence or in the presence of a person deputed by the Registrar.

Important compliance points

  • Follow the date, time and place recorded in the chit agreement.
  • Issue the prescribed notice to all subscribers.
  • Conduct the draw strictly in accordance with the chit agreement.
  • Ensure the presence of at least two subscribers, either in person or through recorded video conferencing.
  • If a draw cannot be conducted, Section 16(3) provides a mechanism for supervision by the Registrar or the Registrar's nominee.
  • Where the two subscribers participate through video conferencing, Section 17 also becomes relevant to the signing of minutes.

Related provisions

Section 15 governs alteration of the chit agreement. Section 17 governs minutes of every draw, while Section 18 deals with filing a true copy of the minutes with the Registrar.

Official legal sources

For authoritative text, refer to the Chit Funds Act, 1982 on India Code and the Chit Funds (Amendment) Act, 2019. State rules and notifications may prescribe additional procedural requirements concerning notice and conduct of chits.