64. Disputes relating to chit business.—(1) Notwithstanding anything contained in any other law for
the time being in force, any dispute touching the management of a chit business shall be referred by any
of the parties to the dispute, to the Registrar for arbitration if each party thereto is one or the other of the
following, namely:—
(a) a foreman, a prized subscriber or a non-prized subscriber, including a defaulting subscriber,
past subscriber or a person claiming through a subscriber, or a deceased subscriber to a chit;
(b) a surety of a subscriber, past subscriber, or a deceased subscriber.
Explanation.—For the purposes of this sub-section, a dispute touching the management of a chit
business shall include—
(i) a claim by or against a foreman for any debt or demand due to him from a subscriber, or due
from him to a subscriber, past subscriber or the nominee, heir or legal representative of a deceased
subscriber whether such debt or demand is admitted or not;
(ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect
of a loan by a foreman and recovered from the surety owing to the default of the principal borrower,
whether such sum or demand is admitted or not; and
1. Subs. by Act 41 of 2019, s. 3, for “chit amount” (w.e.f. 1-1-2020).
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(iii) a refusal or failure by a subscriber, past subscriber or the nominee, heir or legal
representative of a deceased subscriber to deliver possession to a foreman of land or any other asset
resumed by him for breach of conditions of the assignment.
(2) Where any question arises as to whether any matter referred to for the award of the Registrar is a
dispute or not for the purposes of sub-section (1), the same shall be decided by the Registrar whose
decision thereon shall be final.
(3) No Civil Court shall have jurisdiction to entertain any suit or other proceedings in respect of any
dispute referred to in sub-section (1).
65. Period of limitation.—(1) Notwithstanding anything contained in the Limitation
Act, 1963 (36 of 1963), but subject to the specific provisions contained in this Act, the period of
limitation in the case of a dispute referred to the Registrar under section 64, shall—
(a) if the dispute relates to the recovery of any sum, including interest thereon, due to a foreman
from a deceased subscriber, be three years, computed from the date on which such subscriber dies or
ceases to be a subscriber; or
(b) if the dispute is between a foreman and a subscriber or a past subscriber, or the nominee, heir
or legal representative of a deceased subscriber, and the dispute relates to any act or omission on the
part of either party to the dispute, be three years from the date on which the act or omission with
reference to which the dispute arose, took place.
(2) The period of limitation in the case of any dispute other than those referred to in sub-section (1)
which are required to be referred to the Registrar under section 64 shall be regulated by the provisions of
the Limitation Act, 1963 (36 of 1963), as if the dispute were a suit, and the Registrar, a Civil Court.
(3) Notwithstanding anything contained in sub-sections (1) and (2), the Registrar may admit a dispute
after the expiry of the period of limitation specified therein, if the applicant satisfies the Registrar that he
had sufficient cause for not referring the dispute within such period.
66. Settlement of disputes.—(1) If the Registrar is satisfied that any matter referred to him or
brought to his notice is a dispute within the meaning of section 64, he shall, subject to such rules as may
be prescribed, settle the dispute himself, or refer it for disposal to a person appointed by him (hereafter in
this Chapter referred to as the nominee).
(2) Where any dispute is referred under sub-section (1) for settlement to the nominee, the Registrar
may, at any time for reasons to be recorded in writing, withdraw such dispute from the nominee and may
settle the dispute himself, or refer it again for settlement to any other nominee appointed by him.
67. Procedure for settlement of disputes and powers of Registrar or nominee.—(1) The Registrar
or the nominee hearing a dispute under section 66, shall, in addition to the powers conferred on him under
that section, have the same powers as are vested in a Civil Court while trying a suit under the Code of
Civil Procedure, 1908 (5 of 1908), in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of persons and examining them on oath;
(b) requiring the discovery and inspection of documents;
(c) receiving evidence on affidavits;
(d) requisitioning any public record or copies thereof from any court or office;
(e) issuing commissions for the examination of witnesses or documents; and
(f) any other matter which may be prescribed.
(2) Except with the permission of the Registrar or the nominee, no party shall be represented at the
hearing of a dispute by a legal practitioner.
(3) (a) If the Registrar or the nominee is satisfied that any person, whether he is a subscriber or not,
has acquired any interest in the property of a person who is a party to a dispute, he may order that the
person who has acquired the interest in the property may be joined as a party to the dispute, and any
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decision that may be given by the Registrar or the nominee on the dispute shall be binding on the party so
joined, in the same manner as if he were an original party to the dispute.
(b) Where a dispute has been referred in the name of a wrong person, or where all the necessary
parties have not been included, the Registrar or the nominee may, if he is satisfied that it was due to a
genuine mistake, order any other person to be substituted or added as parties to the dispute at any stage of
hearing of the dispute on such terms as he thinks just.
(c) The Registrar or the nominee may, at any stage of the proceedings, either upon or without the
application of either party and on such terms as may appear to the Registrar or the nominee to be just,
order that the name of any party improperly joined be struck off.
(d) Any person who is a party to the dispute and entitled to more than one relief in respect of the same
cause of action may claim all or any such reliefs, but if he omits to claim any such relief, he shall not be
entitled to claim that relief, except with the leave of the Registrar or the nominee.
68. Attachment before judgment and other interlocutory orders.—(1) Where a dispute has been
referred under section 64 and the Registrar or the nominee hearing the dispute is satisfied on enquiry or
otherwise that a party to such dispute, with intent to defeat or obstruct the execution of any award or the
carrying out of any order that may be made,—
(a) is about to dispose of the whole or any part of his property; or
(b) is about to remove the whole or any part of the property from the jurisdiction of the Registrar,
he may, unless adequate security is furnished, direct conditional attachment of the said property, and such
attachment shall have the same effect as if it is made by a competent Civil Court.
(2) Where the Registrar or the nominee directs the attachment of any property under sub-section (1),
he shall issue a notice calling upon the person whose property is so attached to furnish such security as he
thinks adequate within a specified period, and if the person fails to provide such security, the Registrar or
the nominee may confirm the order, and may, after the decision in the dispute, direct the disposal of the
property so attached towards the claim, if awarded.
(3) Any attachment made under this section shall not affect the rights, subsisting prior to the
attachment of the property, of persons who are not parties to the dispute, or bar any person holding a
decree against the person whose property is so attached from applying for the sale of the property under
the attachment of such decree.
(4) The Registrar or the nominee may, in order to prevent the ends of justice being defeated, make
such interlocutory orders pending the award in a dispute referred to in sub-section (1) as may appear to be
just and convenient.
69. Decision of Registrar or nominee.—When a dispute is referred to arbitration under this Chapter,
the Registrar or the nominee, may, after giving a reasonable opportunity to the parties to the dispute to be
heard, make an award on the dispute, on the expenses incurred by the parties to the dispute in connection
with the proceedings and the fees and expenses payable to the Registrar or the nominee, and such an
award shall not be invalid merely on the ground that it was made after the expiry of the period, if any,
fixed for deciding the dispute by the Registrar, and shall, subject to appeal under section 70, be final and
binding on the parties to the dispute.
70. Appeal against decision of Registrar or nominee.—Any party aggrieved by any order passed
by the Registrar or the nominee or the award of the Registrar or the nominee under section 69, may,
within two months from the date of the order or award, appeal to the State Government.
STATE AMENDMENTS
[Karnataka
Amendment of section 70.—In the Chit Funds Act, 1982 (Central Act 40 of 1982) (hereinafter
referred to as the principal Act),—
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(i) section 70 shall be renumbered as sub-section (1) thereof and in sub-section (1) as so renumbered,
after the words “State Government”, the words “or to such officer or authority, as may be empowered by
notification by the State Government, in that behalf” shall be inserted;
(ii) after sub-section(1) as so renumbered, the following shall be inserted, namely:—
“(2) The State Government or such officer or authority aforesaid may, after giving the appellant
an opportunity of making his representation, pass such orders on the appeals as it or he thinks fit and
such order shall be final.
(3) All appeals pending before the State Government, on such date of notification empowering
such officer or authority, shall be transferred to such officer or authority and shall be disposed off as
if it has been filed before such authority.”
[Vide Karnataka Act 2 of 2008, s. 2.]
71. Money how recovered.—Every order passed by the Registrar or the nominee under section 68 or
section 69 and every order passed by the State Government in appeal under section 70 for payment of any
money shall, if not carried out,—
(a) on a certificate issued by the Registrar, be deemed to be a decree of a Civil Court, and shall be
executed in the same manner as a decree of such Court, or
(b) be executed in accordance with the provisions of any law for the time being in force for the
recovery of amounts as arrears of land revenue:
Provided that no application for execution under clause (b) shall be made after the expiry of three
years from the date fixed in the order, and if no such date is fixed, from the date of the order.
72. Private transfer of property made after issue of certificate void against foreman.—Any
private transfer of delivery of, or encumbrance or charge on, property made or created after the issue of
the certificate by the Registrar under section 71 shall be null and void against the foreman on whose
application the said certificate was issued.