48. Circumstances under which chits may be wound up.—A chit may be wound up by the
Registrar within whose territorial jurisdiction the chit has been registered, either on his own motion or on
an application made by any non-prized or unpaid prized subscriber,—
(a) if the chit has terminated under clause (c) of section 40; or
(b) if the foreman commits any such act in respect of the security specified in section 20 as is
calculated to impair materially the nature of the security or the value thereof; or
(c) if he fails to deposit any amount required to be deposited under any of the provisions of this
Act; or
(d) if it is proved to the satisfaction of the Registrar that the foreman is unable to pay the amounts
due to the subscribers; or
(e) if the execution or other process issued on an order passed by the Registrar in favour of any
subscriber in respect of amounts due to him from the foreman in relation to the chit business is
returned unsatisfied in whole or in part; or
(f) if it is proved that there has been a fraud or collusion on the part of the foreman in the matter
of taking securities from any prized subscriber; or
(g) if the foreman has appropriated the 1
[net chit amount] in his capacity as a subscriber without
furnishing sufficient security for future subscriptions; or
(h) if the Registrar is satisfied that the affairs of the chit are being conducted in a manner
prejudicial to the interests of the subscribers; or
1. Subs. by Act 41 of 2019, s. 3, for “prize amount” (w.e.f. 1-1-2020).
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(i) if it is just and equitable that the chit should be wound up.
Explanation.—For the purposes of clause (d), in determining whether the foreman is unable to pay the
amounts due to the subscribers, the Registrar shall take into account his contingent and future liabilities in
respect of the chit.
49. Application for winding up.—An application for the winding up of a chit shall be made by a
petition presented by any non-prized or unpaid prized subscriber to the Registrar signed and verified in
the manner laid down by the Code of Civil Procedure, 1908 (5 of 1908), and shall contain such particulars
as may be prescribed:
Provided that no application for the winding up of a chit under clause (d) or clause (i) of section 48
shall lie unless such application is presented,—
(a) by non-prized and unpaid prized subscribers representing not less than twenty-five per cent. of
the amount or, as the case may be, the value of the grain subscribed by all the non-prized and unpaid
prized subscribers, if any; or
(b) with the previous sanction of the State Government within whose jurisdiction the chit is
commenced or conducted.
Explanation.—For the purposes of clause (a), of the proviso, a subscriber of a fraction of a ticket
shall be deemed to be a subscriber only to the extent of such fraction.
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.
51. Commencement and effect of winding up order.—An order for the winding up of a chit shall
operate in favour of all the subscribers to whom amounts are due from the foreman and it shall be deemed
to have commenced from the date of the presentation of the application for the winding up.
52. Injunction order.—The Registrar may, on the application of the foreman or of any subscriber to
whom amounts are due in respect of a chit, at any time after the presentation of the application for the
winding up of the chit under this Act and before the making of an order for the appointment of an interim
receiver or for the winding up of the chit, restrain any other proceedings instituted against the foreman for
the realisation of amounts due from him on such terms as the Registrar thinks fit.
53. Powers of Registrar.—The Registrar may, after hearing an application under this Chapter,
dismiss it with or without costs, or adjourn the hearing conditionally or unconditionally or make an
interim or any other order that he deems fit.
54. Vesting of chit assets in Registrar or other persons.—On the making of an order for the
winding up of a chit, all the chit assets pertaining to such chit shall vest in the Registrar or in any person
appointed by him for distribution amongst the subscribers to whom amounts are due in respect of the chit.
55. Suits, etc., to be stayed on winding up order.—When a winding up order has been made or a
receiver has been appointed, no suit or other legal proceedings shall be continued or commenced against
the foreman by a subscriber for the realisation of amounts due to him in respect of the chit except with the
leave of the Registrar winding up the chit and on such terms as he may impose.
56. Notification of winding up order.—On the making of a winding up order, the Registrar shall
make an entry in his book relating to the chit and shall notify in the Official Gazette that the order has
been made.
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57. Cessation of winding up proceedings on insolvency of foreman, etc., or the winding up of the
company and transfer of such proceedings.—Where during the pendency of the proceedings for the
winding up of a chit, the foreman is adjudicated an insolvent, or where the foreman is a firm, all the
partners or all the partners except one thereof are adjudicated insolvents, or where the foreman is a
company, the company has been ordered to be wound up by the Court, the winding up proceedings under
this Chapter shall cease and the distribution of the chit assets shall, subject to the provisions of
sections 43 and 52, be made by the insolvency court or the court winding up the company, as the case
may be.
58. Award of compensation to foreman.—(1) Where an application for the winding up of a chit is
dismissed and the Registrar is satisfied that the petition is frivolous or vexatious, he may, on the
application of the foreman, award against the petitioner such amount, not exceeding one thousand rupees,
as he deems reasonable as compensation to the foreman for the expenses or injury caused to him by the
presentation of the application and the proceedings thereon, and such amount may be realised as if the
award were a decree of a Civil Court.
(2) On the making of an award under sub-section (1), no suit for compensation in respect of an
application for any winding up of the chit shall be entertained.
59. Right to appeal.—The foreman or any subscriber or any other person aggrieved by a decision or
order of the Registrar in any proceedings for the winding up of a chit may, within sixty days from the date
of such decision or order, appeal to the State Government.
60. Limitation.—(1) Where an order refusing to wind up a chit has been made under this Act, the
chit shall be deemed to have been under suspension from the date of presentation of the application to the
date of such order in respect of non-prized subscribers; and, notwithstanding anything contained in the
chit agreement, no non-prized subscriber who was not a defaulter on the date of the presentation of the
petition for winding up, shall be deemed to be a defaulter on the date of such order.
(2) Where an order refusing to wind up a chit has been made under this Act, in computing the period
of limitation prescribed for any suit or other legal proceedings (other than a suit or application in respect
of which the leave of the court has been obtained) which might have been brought or instituted, but for
the presentation of the application for the winding up of the chit, the period from the date of the
presentation of the application to the date of the order refusing to wind up a chit shall be excluded.
(3) Nothing contained in this Chapter shall affect the rights of a subscriber to proceed against the
foreman personally for the balance, if any, of the amount due to him after the declaration of the final
1
[share of discount] in the proceedings for the winding up of the chit and in computing the period of
limitation prescribed for any such proceedings, the period from the date of the presentation of the
application for the winding up of the chit to the date of the declaration of the final 1
[share of discount]
shall be excluded.