Section 7 of the Chit Funds Act, 1982: Filing of Chit Agreement
Section 7 deals with filing a chit agreement with the Registrar, registration of that agreement, the statutory grounds on which registration may be refused, the foreman's right to a reasonable opportunity of being heard, and the circumstances in which registration lapses.
Updated: 15 September 2026
Section 7 - Filing of chit agreement
Sub-section (1): Every chit agreement must be filed in duplicate by the foreman with the Registrar.
Sub-section (2): The Registrar retains one copy and returns the duplicate to the foreman with an endorsement that the chit agreement has been registered, subject to the statutory power to refuse registration on the grounds stated in the section.
Sub-section (3): The endorsement is conclusive evidence that the chit is duly registered. Registration may lapse if the declaration required by Section 9(1) is not filed within the prescribed period stated in Section 7(3).
Meaning and purpose of Section 7
The provision creates the filing and registration stage after a chit agreement has been prepared in accordance with the Act. The foreman is the person responsible under the chit arrangement for conducting the chit, subject to the statutory definition in Section 2. The Registrar is the authority appointed or empowered under the Act to perform registration and related regulatory functions.
Filing is not merely a private record-keeping step. The Registrar examines whether the statutory conditions for registration are satisfied. The returned duplicate carrying the Registrar's endorsement is important because Section 7(3) gives that endorsement conclusive evidentiary effect regarding due registration under the Act.
Grounds on which the Registrar may refuse registration
Under the first proviso to Section 7(2), the Registrar may refuse to register the chit agreement on one or more specified grounds. These include insufficiency of the security offered by the foreman under Section 20; specified convictions relating to chit business; default in payment of fees or filing of statements or records required under the Act; violation of the Act or rules; and a qualifying conviction involving moral turpitude, subject to the five-year period stated in the provision.
The refusal power is therefore tied to statutory grounds. The Registrar should consider the applicable facts and the requirements of the Act and the rules in force in the relevant State or Union Territory.
Reasonable opportunity of being heard
The second proviso to Section 7(2) expressly requires that, before refusing registration under the first proviso, the foreman must be given a reasonable opportunity of being heard. In practical terms, an adverse registration decision should not be made without giving the foreman an opportunity to address the proposed ground or grounds of refusal.
When registration of the chit lapses
Section 7(3) links registration with the next statutory stage under Section 9. If the foreman's declaration under Section 9(1) is not filed within three months from the date of the registration endorsement, registration lapses unless the Registrar allows further period or periods on application. The total further period allowed under Section 7(3) cannot exceed three months in the aggregate.
Related provisions of the Chit Funds Act
Section 6 - Form of chit agreement specifies the matters that a chit agreement must contain. Section 9 - Commencement of chit governs the declaration to be filed before commencement. Section 10 - Copies of chit agreement to subscribers deals with supply of copies. These provisions should be read together for the registration and commencement process.
Official legal sources
For the authoritative statutory text and subsequent updates, refer to the India Code database and the Department of Financial Services, Ministry of Finance. State-specific rules, forms, fees and filing procedures may also apply, so the portal or office of the competent State or Union Territory Registrar should be checked before filing.