Section 72 of the Chit Funds Act, 1982: Private Transfer of Property Void Against Foreman
Section 72 protects the foreman after a certificate for recovery has been issued by the Registrar under Section 71 of the Chit Funds Act, 1982. A private transfer, delivery, encumbrance or charge concerning the relevant property, if made or created after the issue of that certificate, is ineffective against the foreman on whose application the certificate was issued.
Law reference: Chit Funds Act, 1982 (Act No. 40 of 1982), Section 72. Page reviewed on 16 September 2026.
Text and meaning of Section 72
Section 72 provides that any private transfer or delivery of, or encumbrance or charge on, property made or created after the Registrar issues a certificate under Section 71 is null and void against the foreman on whose application that certificate was issued.
The provision is aimed at preserving the effectiveness of recovery proceedings. Once the statutory certificate under Section 71 has been issued on the foreman's application, a subsequent private dealing with the property cannot be used to defeat that foreman's rights under the certificate.
How Section 72 operates
- A Section 71 certificate must first exist: Section 72 is triggered by the issue of a certificate by the Registrar under Section 71.
- The timing of the property transaction matters: the provision applies to a private transfer, delivery, encumbrance or charge made or created after the certificate is issued.
- The protection is in favour of the applicant foreman: the transaction is declared null and void against the foreman on whose application the certificate was issued.
- The provision concerns enforceability against the foreman: its wording does not say that every such transaction is void for every purpose or against every person.
Connection with Section 71: recovery of money
Section 72 must be read with Section 71 of the Chit Funds Act, 1982. Section 71 deals with enforcement of specified orders for payment of money. It provides, among other things, for execution on a certificate issued by the Registrar as a decree of a Civil Court, or recovery in accordance with the law governing arrears of land revenue, subject to the statutory conditions.
Practical effect: after the relevant Section 71 certificate has been issued, a person dealing privately with the property cannot rely on a later transfer, delivery, encumbrance or charge to defeat the rights of the foreman protected by Section 72.
Important expressions used in Section 72
| Expression | Meaning in context |
|---|---|
| Foreman | Under Section 2(j), the foreman is the person responsible under the chit agreement for conducting the chit and includes a person discharging the functions of the foreman under Section 39. |
| Registrar | Under Section 2(o), the Registrar means the Registrar of Chits appointed under Section 61 and includes the Additional, Joint, Deputy or Assistant Registrar appointed under that section. |
| Certificate under Section 71 | The statutory certificate connected with execution or recovery of an order for payment of money under Section 71. |
| Encumbrance or charge | A burden, security interest or charge created over property. Section 72 expressly covers such interests when created after the Section 71 certificate. |
When does a private transfer become ineffective against the foreman?
On the wording of Section 72, the critical point is the date on which the Registrar issues the certificate under Section 71. If the private transfer, delivery, encumbrance or charge is made or created after that event, Section 72 makes it null and void against the foreman who applied for the certificate.
Accordingly, the dates of the Section 71 certificate and the later property transaction are important when applying the provision to a particular case. The nature of the property dealing and the identity of the foreman protected by the certificate should also be verified from the relevant documents.
Official text of the Chit Funds Act, 1982
For the authoritative statutory text and current consolidated material, refer to the Government of India's India Code portal:
Official Chit Funds Act, 1982 - India Code PDF
Related provisions
Section 72 concludes the chapter dealing with disputes and arbitration-related recovery provisions. The next provision, Section 73, begins Chapter XIII and deals with the advisory role of the Reserve Bank.
This page is a general explanation of the statutory provision. Application of Section 72 to a particular transaction can depend on the certificate, dates, property records, the applicable State rules and the facts of the recovery proceedings.