Section 85 of the Chit Funds Act, 1982 - Act not to apply to certain chits
Section 85 identifies limited categories of chits to which the Chit Funds Act, 1982 does not apply. It covers certain pre-commencement chits and chits falling within a monetary threshold specified by the State Government.
Meaning and scope of Section 85
Section 85 is an exclusion provision. Where a chit falls within clause (a) or clause (b), the Act does not apply to that chit. Clause (a) concerns a chit started before the commencement of the Act. Clause (b) concerns the amount of a chit, or the aggregate amount of two or more chits started or conducted simultaneously by the same foreman.
Text of Section 85
85. Act not to apply to certain chits. - Nothing in this Act shall apply in respect of -
(a) any chit started before the commencement of this Act; or
(b) any chit the amount of which, or where two or more chits were started or conducted simultaneously by the same foreman, the aggregate amount of which does not exceed such amount as may be specified, by notification in the Official Gazette, by the State Government.
2019 amendment to Section 85
The Chit Funds (Amendment) Act, 2019 (Act 41 of 2019), section 9, substituted the former fixed words "one hundred rupees" in clause (b) with a State Government notification-based threshold. The amendment took effect from 1 January 2020.
Key terms
Chit: For the Act generally, the statutory definition is contained in section 2(b). In substance, it describes a transaction in which subscribers agree to pay periodical subscriptions for a definite period and each subscriber becomes entitled, in turn, to the prize amount determined by lot, auction, tender or another manner specified in the chit agreement.
Foreman: Section 2(j) defines the person responsible for conducting the chit and includes persons acting in the specified representative capacities where applicable.
State Government notification: For clause (b), the relevant monetary amount is the amount specified by the competent State Government through a notification in its Official Gazette.
How Section 85 operates
For a single chit, clause (b) looks to the amount of that chit. Where the same foreman starts or conducts two or more chits simultaneously, their aggregate amount is relevant. Therefore, the statutory exclusion should not be assessed by looking at each simultaneous chit in isolation.
The applicable State notification should be verified before relying on the exclusion because the amended provision delegates specification of the monetary threshold to the State Government.
Official legal source
The consolidated Central Act and the amendment history can be verified from the official India Code text. The 2019 amending Act records the substitution made in section 85(b).