Section 29 of the Chit Funds Act, 1982 - Substitution of Subscribers

Section 29 regulates the substitution of a subscriber after a defaulting subscriber has been removed from the list under Section 28(1). It also requires the foreman to record the substitution and file a true copy of the entry with the Registrar within the prescribed fourteen-day period.

In brief: substitution under Section 29 follows removal under Section 28. The foreman may bring another person into the list as the substituted subscriber, but the substitution must be properly recorded and reported to the Registrar.

Text of Section 29 - Substitution of Subscribers

29. Substitution of subscribers.

(1) A foreman may substitute in the list of subscribers any person (thereafter in this Chapter referred to as the substituted subscriber) in place of the defaulting subscriber whose name has been removed under sub-section (1) of section 28.

(2) Every substitution referred to in sub-section (1) shall, with the date thereof, be entered in the relevant book maintained by the foreman and a true copy of every such entry shall be filed by the foreman with the Registrar within fourteen days from the date of substitution.

Meaning and Scope of Section 29

Section 29 is part of Chapter IV of the Chit Funds Act, 1982, dealing with the rights and duties of non-prized subscribers. It provides a statutory mechanism for maintaining the subscriber strength of a chit when a non-prized subscriber defaults and is removed in accordance with Section 28.

Who is a substituted subscriber?

For the purposes of this Chapter, the person placed in the list in place of the removed defaulting subscriber is referred to as the substituted subscriber. The power to make the substitution is given to the foreman and arises after removal of the defaulting subscriber under Section 28(1).

Record and filing requirement

The substitution is not merely an internal arrangement. Section 29(2) requires the foreman to enter the substitution, together with its date, in the relevant book maintained by the foreman. A true copy of that entry must then be filed with the Registrar within fourteen days from the date of substitution.

How Section 29 Works with Sections 28 and 30

Section 28: deals with removal of a defaulting non-prized subscriber, notice of removal, re-entry on payment within the statutory period, record of removal and the subscriber's right to refer the removal dispute to the Registrar for arbitration.
Section 29: permits substitution after the defaulting subscriber's name has been removed under Section 28(1) and imposes record-and-filing obligations.
Section 30: governs amounts due to defaulting subscribers, including the treatment of amounts realised from a substituted subscriber in relation to instalments before substitution.

Practical Compliance Points

A foreman relying on Section 29 should ensure that the preceding removal is referable to Section 28(1), the date of substitution is clearly recorded, the relevant statutory book is updated, and a true copy of the entry is filed with the Registrar within fourteen days. The chit agreement and applicable rules should also be checked for related procedural requirements.

Official Legal Source

The authoritative central-law text can be checked on India Code - The Chit Funds Act, 1982. The official Act PDF on India Code contains Sections 28, 29 and 30 together for context.

Note: This page is a general legal-information article. State-specific rules, notifications and administrative procedures may also be relevant to a particular chit or filing.