Section 36 of the Chit Funds Act, 1982 - Recognition of Transfer by Foreman

Section 36 forms part of Chapter VI of the Chit Funds Act, 1982, which deals with transfers. It governs the foreman's recognition of a transfer made by a non-prized subscriber under Section 35.

Text of Section 36 - Recognition of transfer by foreman

Meaning and effect of Section 36

Section 36 applies after a non-prized subscriber transfers rights in a chit in the manner contemplated by Section 35. Section 35 requires such a transfer to be in writing, duly attested by at least two witnesses, and filed with the foreman.

Once the foreman receives the proposal for transfer, Section 36 requires the foreman to deal with it within fourteen days. Recognition is the statutory rule, subject to the two grounds stated in the section for withholding recognition.

When can the foreman refuse recognition?

The foreman may decline to recognise a transfer under Section 35 where:

• the transferee is not solvent; or
• the transfer was effected with a view to defeating the provisions of any law, including the Chit Funds Act, 1982.

The provision also requires the foreman's decision, whether recognising or refusing to recognise the transfer, to be communicated forthwith to the parties concerned.

Four practical requirements under Section 36

• Underlying transfer: The transfer must be one falling under Section 35.
• Time limit: The foreman has fourteen days from receipt of the proposal for transfer to recognise it, subject to the statutory grounds for refusal.
• Limited statutory grounds: The section identifies insolvency of the transferee and a transfer intended to defeat the law as grounds on which recognition may be withheld.
• Communication: The decision must be communicated forthwith to the parties concerned.

Relationship with Sections 35 and 37

Section 35 deals with the form of a transfer by a non-prized subscriber. Section 36 deals with recognition of that transfer by the foreman. After a transfer under Section 34 or Section 35, Section 37 requires the foreman to enter the transfer in the books of the chit and to file a true copy of the entry with the Registrar within the period specified in that section.

Definition: Foreman

For the purposes of the Chit Funds Act, the expression "foreman" is defined in Section 2. In general terms, it refers to the person responsible for conducting the chit and includes persons performing the statutory functions described in the definition. For the precise statutory definition and any applicable amendments, the official text of the Act should be consulted.

Official legal source

Important note

This page is a general legal information resource. The application of Section 36 may depend on the facts, the chit agreement, applicable rules, notifications, and other provisions of law. For a specific dispute or transaction, the current official text and applicable State rules should be checked.