Section 9 of the Chit Funds Act, 1982 - Commencement of Chit
Section 9 lays down the statutory steps that must be completed before a foreman can commence the auction or draw of a chit or appropriate the gross chit amount.
What Section 9 requires
The provision creates a commencement-control mechanism. After all tickets mentioned in the chit agreement are fully subscribed, the foreman must file a declaration with the Registrar. The Registrar then verifies compliance with the requirements relating to sanction, registration of the chit and other applicable matters before granting the certificate of commencement.
Section 9 - Commencement of chit
Sub-section (1): Every foreman shall, after all the tickets specified in the chit agreement are fully subscribed, file a declaration to that effect with the Registrar.
Sub-section (2): As soon as may be after the declaration is filed, the Registrar must satisfy himself that the requirements relating to sanction, registration of the chit and other matters have been duly complied with and then grant a certificate of commencement to the foreman.
Sub-section (3): A foreman cannot commence an auction or draw of the chit, or appropriate any gross chit amount, until the certificate of commencement referred to in sub-section (2) has been obtained.
Meaning and legal effect
In practical terms, registration of the chit agreement by itself does not authorise the foreman to start the auction or draw. Section 9 requires a further certificate of commencement. This certificate is issued only after the Registrar is satisfied that the statutory pre-commencement requirements have been complied with.
Meaning of "gross chit amount"
The Chit Funds (Amendment) Act, 2019 introduced the expression "gross chit amount" and substituted it for "chit amount" throughout the principal Act. The expression broadly refers to the total subscriptions payable by all subscribers for an instalment of a chit without deduction of discount or otherwise. The substitution took effect from 1 January 2020.
Related provision - Section 7
Section 7 deals with filing and registration of the chit agreement. Its sub-section (3) also links registration with Section 9 by providing for lapse of registration if the declaration under Section 9(1) is not filed within the prescribed period, subject to the statutory extension mechanism.
Official legal source
For the authoritative text and amendments, refer to the Government of India's India Code version of the Chit Funds Act, 1982 and the Chit Funds (Amendment) Act, 2019.