Section 43 of the Chit Funds Act, 1982: Subscribers' Dues to Be First Charge on Chit Assets
Section 43 protects money due to a subscriber from a foreman in relation to the chit business by giving that amount a first charge on the chit assets.
Text of Section 43
Section 43 - Subscribers' dues to be first charge on chit assets.
Any amount due to the subscriber from a foreman in relation to the chit business shall be a first charge on the chit assets.
Meaning of Section 43
In simple terms, where a foreman owes an amount to a subscriber because of the chit business, Section 43 gives the subscriber a statutory first charge over the assets of that chit. The provision is intended to protect subscribers by attaching priority to amounts that are due to them from the foreman in connection with the chit.
What is a "first charge" on chit assets?
A charge is a legal security or encumbrance attached to property for payment of a debt or other monetary obligation. Section 43 expressly creates the first charge in favour of the subscriber when an amount is due from the foreman in relation to the chit business. The practical effect is that the subscriber's statutory claim is attached to the relevant chit assets, subject to the application of the Act and other applicable law in the facts of a particular case.
When Section 43 applies
The essential elements appearing from the provision are that an amount must be due to a subscriber, the amount must be due from the foreman, and the liability must arise in relation to the chit business. When those requirements are met, the Act states that the amount shall be a first charge on the chit assets.
Connection with termination and subscriber protection
Section 43 appears in Chapter VIII of the Chit Funds Act, 1982, dealing with termination of chits. It follows Section 42, concerning refund of non-prized subscribers' subscriptions, and is followed by Section 44, concerning inspection of chit records by certain subscribers.