Section 35 of the Chit Funds Act, 1982: Transfer of Non-Prized Subscriber's Rights to Be in Writing
Section 35 lays down the mandatory form for a transfer by a non-prized subscriber of his or her rights in a chit. The transfer must be written, properly attested and filed with the foreman.
Text and meaning of Section 35
Every transfer by a non-prized subscriber of his rights in the chit shall be in writing duly attested by at least two witnesses and shall be filed with the foreman.
What Section 35 requires
The provision applies when a non-prized subscriber transfers his or her rights in a chit. Section 35 prescribes three essential formalities:
- the transfer must be in writing;
- it must be attested by at least two witnesses; and
- the written transfer must be filed with the foreman.
Who is a non-prized subscriber?
For the purpose of the Chit Funds Act, the expression should be read with the statutory definitions in Section 2. In practical terms, a non-prized subscriber is a subscriber who has not received the prize amount in the chit. The statutory definitions and the chit agreement should be checked in every individual case.
Why the written-transfer requirement matters
Section 35 creates a documented procedure for changing the person who holds a non-prized subscriber's rights. Written execution, witness attestation and filing with the foreman provide a record of the proposed transfer and enable the foreman to deal with it under the following provisions of the Act.
Sections 35, 36 and 37 operate together
Section 35 deals with the form and filing of the transfer. Section 36 deals with recognition of a transfer by the foreman. It requires the foreman, within fourteen days from receipt of the proposal for transfer, to recognise it unless the statutory grounds for refusal apply, and the decision must be communicated to the parties.
Section 37 then requires a transfer under Section 34 or Section 35 to be entered in the books of the chit and requires a true copy of the entry to be filed with the Registrar within the prescribed fourteen-day period.
Practical compliance checklist
Before relying on a transfer under Section 35, ensure that the transfer instrument clearly identifies the chit, transferor and transferee; records the rights being transferred; carries the signatures required for execution; is attested by at least two witnesses; and is filed with the foreman. The parties should also retain proof of filing or delivery.
Current legal position
The Chit Funds Act, 1982 is Act No. 40 of 1982. The Chit Funds (Amendment) Act, 2019 amended several provisions of the principal Act. Section 35 itself continues to state the written-transfer, two-witness attestation and filing requirements described above.
Legal note: This page provides general statutory information. Chit regulation can also involve applicable rules, notifications and State or Union Territory administration. For a transaction or dispute, verify the current law and local procedural requirements.