Chit Funds Act, 1982 | Chapter IV

Section 30 of the Chit Funds Act, 1982 - Amounts Due to Defaulting Subscribers

Section 30 protects money attributable to a defaulting subscriber after that subscriber is replaced, and also provides for repayment where no substitution takes place before termination of the chit. The provision places specific duties on the foreman regarding deposit, notice, custody and repayment of the amount.

In brief: where a substituted subscriber pays instalments relating to the period before substitution, the foreman must preserve the amount attributable to the defaulting subscriber, after deductions permitted by the chit agreement, in the manner required by Section 30.

Text of Section 30 - Amounts due to defaulting subscribers

(1) A foreman shall, out of the amounts payable by and realized from the substituted subscriber towards the instalments relatable to the period before the date of the substitution (including the arrears due from the defaulting subscriber), deposit, before the date of the next succeeding instalment, in a separate identifiable account in an approved bank mentioned in the chit agreement, an amount equal to the contributions made by the defaulting subscriber less such deductions as may be provided for in the chit agreement, and shall inform the defaulting subscriber as well as the Registrar of the fact of such deposit and shall not withdraw the amount so deposited except for payment to the defaulting subscriber.

(2) The amount so deposited under sub-section (1) shall be paid to the defaulting subscriber as and when he claims the amount and the amount so deposited shall not be withdrawn by the foreman for any purpose other than for such payment.

(3) The contributions of any defaulting subscriber who has not been substituted till the termination of the chit shall be paid to him within fifteen days from the date of termination of the chit subject to such deductions as may be provided for in the chit agreement.

What Section 30 means

The section operates after a subscriber defaults and the statutory process concerning removal and, where applicable, substitution is followed. Its central purpose is to keep the defaulting subscriber's refundable contribution identifiable and protected rather than allowing the foreman to use that money for an unrelated purpose.

Separate bank account: the relevant amount must be deposited in a separate identifiable account in an approved bank mentioned in the chit agreement.
Time for deposit: where substitution occurs, the deposit must be made before the date of the next succeeding instalment.
Permitted deductions: the amount is the contribution made by the defaulting subscriber less deductions that are validly provided for in the chit agreement.
Notice: the foreman must inform both the defaulting subscriber and the Registrar of the deposit.
Restricted withdrawal: the foreman cannot withdraw the deposited amount for another purpose; it is to be used for payment to the defaulting subscriber.
Payment on claim: an amount deposited under sub-section (1) is payable when the defaulting subscriber claims it.
No substitution before termination: if the defaulting subscriber is not substituted by the termination of the chit, the contribution must be paid within fifteen days from termination, subject to deductions allowed by the chit agreement.

Important terms used in Section 30

Foreman: broadly, the person responsible under the Act for conducting the chit and performing the statutory duties attached to that role. The precise statutory meaning is governed by Section 2 of the Chit Funds Act, 1982.

Defaulting subscriber: a subscriber who defaults in payment of subscriptions due under the chit and whose position is dealt with under the Act and the chit agreement.

Substituted subscriber: under Section 29, a person substituted in the list of subscribers in place of a defaulting subscriber whose name has been removed under Section 28(1).

Approved bank: a bank falling within the statutory definition in Section 2 of the Act. Section 30 additionally requires the separate identifiable account to be in an approved bank mentioned in the chit agreement.

Registrar: the Registrar of Chits appointed or authorised for administration of the Act in the relevant jurisdiction.

How Sections 28, 29 and 30 work together

Section 28 deals with removal of a defaulting subscriber. Section 29 permits substitution of another person in place of the removed defaulting subscriber and requires the substitution to be recorded and reported. Section 30 then regulates the money due to the defaulting subscriber and the foreman's duty to safeguard and repay it.

Practical compliance under Section 30

A foreman dealing with a substituted subscriber should identify the instalments relating to the pre-substitution period, calculate the defaulting subscriber's contribution after only those deductions permitted by the chit agreement, deposit the resulting amount within the statutory time, notify the defaulting subscriber and Registrar, and retain records proving the deposit and subsequent payment.

A defaulting subscriber seeking repayment should preserve the chit agreement, receipts or account statements, removal or substitution notices, correspondence with the foreman and any information relating to the separate deposit. The actual entitlement in a particular dispute will depend on the Act, applicable rules, the chit agreement and the facts of the case.

Official legal sources

India Code - Chit Funds Act, 1982 (official PDF)

Department of Financial Services, Ministry of Finance

Last reviewed: 15 September 2026. This page is intended as general legal information. For a specific chit dispute, the applicable State rules, chit agreement and current official notifications should also be checked.