Section 50 of the Chit Funds Act, 1982: Bar to Winding Up Proceedings
Section 50 places a specific procedural bar on the Registrar. Even where Sections 48 and 49 would otherwise permit a chit winding-up process to be initiated, the Registrar cannot entertain the petition while certain insolvency, dissolution or winding-up proceedings concerning the foreman are already pending.
Text of Section 50
50. Bar to winding up proceedings. - Notwithstanding anything contained in sections 48 and 49, no petition for the winding up of a chit shall be entertained by the Registrar, -
(a) if proceedings relating to insolvency are pending against the foreman; or
(b) where the foreman is a firm, if proceedings relating to insolvency are pending against all the partners or all the partners except one thereof, or proceedings for the dissolution of the firm are pending; or
(c) where the foreman is a company or co-operative society, if proceedings for the winding up of such company or co-operative society are pending.
Meaning and effect of Section 50
The opening words, "Notwithstanding anything contained in sections 48 and 49", give Section 50 overriding effect over those two provisions for the situations expressly listed in Section 50. In practical terms, the existence of a ground for winding up under Section 48, or the filing entitlement and procedure contemplated by Section 49, does not enable the Registrar to entertain the petition while a statutory bar under Section 50 operates.
| Situation | Effect under Section 50 |
|---|---|
| Individual foreman | If insolvency proceedings are pending against the foreman, a petition for winding up the chit cannot be entertained by the Registrar. |
| Foreman is a firm | The bar applies where insolvency proceedings are pending against all partners, or all partners except one, or where proceedings for dissolution of the firm are pending. |
| Foreman is a company or co-operative society | The bar applies if proceedings for winding up that company or co-operative society are pending. |
Relationship with Sections 48 and 49
Section 48 sets out the circumstances in which a chit may be wound up by the Registrar. Section 49 deals with an application for winding up. Section 50 then operates as an exception: in the pending proceedings specifically described in clauses (a), (b) and (c), the Registrar is barred from entertaining the chit winding-up petition.
Key terms used in Section 50
Foreman
The Chit Funds Act defines a "foreman" in Section 2 as the person who, under the chit agreement, is responsible for the conduct of the chit. Depending on the arrangement, the foreman may be an individual or a legal entity such as a firm, company or co-operative society.
Registrar
Under Section 2 of the Act, "Registrar" means the Registrar of Chits appointed under Section 61 and includes an Additional, Joint, Deputy or Assistant Registrar appointed under that section.
Winding up of a chit
For this chapter of the Act, winding up is the statutory process for bringing the chit to an end and administering its affairs under the supervision and procedure prescribed by the Act and applicable rules. Sections 48 to 60 contain the principal provisions dealing with winding up of chits.
Official legal source
The Chit Funds Act, 1982 is Central Act No. 40 of 1982. For the authoritative statutory text and amendments, refer to the India Code portal and the Department of Financial Services copy of the Chit Funds Act, 1982.
Page reviewed and updated: 16 September 2026.