CONTENTS
Sections
Sections
1.Short title and extent. 8. Forfeiture of newspaper and
2.Definitions. publication containing prize chit or money circulation scheme.
3.Banning of prize chits and money circulation 9. Power to try offences.
therein. 10.Offences under this Act to be cognizable.
4.Penalty for
contravening the provisions of Section 3
11.Act
not to apply to certain prize chits or money circulation
schemes.
5.Penalty for other offences in connection with prize chits .
Or money circulation schemes. 12.Transitional provisions .
6.Offences by companies. 13. Power to make rules.
7.Power to enter, search and seize. 14. Repeals and saving.
An Act to ban the promotion or conduct of prize chits and money circulation schemes and
for matters connected
therewith or incidental thereto.
1.
Short title and extent ;-(1) This Act may be called the Prize Chits and
Money Circulation Schemes
(Banning) Act,
1978.
(2) It extends to the whole of India expect the State of Jammu and Kashmir.
2. Definitions:- In this Act, unless the context otherwise requires,-
(a) conventional
chit” means a transaction whether called chit, chit fund, Kuri
or by any other name by or under
which a person responsible for the conduct of the chit enters into an agreement with a
specified number of persons
that every one of them shall subscribe a certain sum of money(or certain quantity of grain
instead)by way of
periodical instalments for a definite period and that each such subscriber shall, in his
turn, as determined by lot
or by auction or by tender or in such other manner as may be provided for in the chit
agreement, be entitled to
a prize amount.
Explanation:- In this clause “prize amount” shall
mean the amount, by whatever name called, arrived at by
deducting from out of the total amount paid or payable at each instalment by all the
subscribers,
(i)
the commission charged as service charges as a
promoter or a foreman or an agent; and
(2)
(ii )any sum which a subscriber agrees to forego, from out
of the total subscriptions of each instalment, in
consideration of the balance being paid to him;
(b) “money”includes
a cheque, postal order,demand draft,telegraphic transfer or money order; (c)money
circulation scheme” means any scheme, by whatever name called, for making of quick or
easy money, or
for the receipt of any money, or valuable thing as the consideration for a promise to pay
money,on any
event or contingency relative or applicable to the enrolment
of members into the scheme, wheather or not
such money or thing is derived from the entrance money of the members of such scheme or
periodical
subscriptions;
(d)“prescribed”means prescribed by rules made under this Act;
(e)“prize
chit” includes any transaction or arrangement by whatever name called under which a
person collects
whether as a promoter, foreman, agent or in any other capacity,monies in one lump sum or
in instalments by
way of contributions or subscriptions or by sale of units, certificates or other
instruments or in any other manner
or as membership fees or admission fees or service or service charges to or in respect of
any savings, mutual
benefit, thrift, or any other scheme or arrangement by whatever or the income accruing
from investment or other
use of such monies for all or any of the following purposes, namely:-
(i)
giving or awarding periodically or otherwise to a specified number of subscribers as
determined by lot, draw
or in any other manner, prizes or gifts in cash or in hand, whether or not the recipient
of the prize or gift is under
a liability to make any further payment in respect of
such scheme or arrangement ;
(ii)
refunding to the subscribers or such of them as have not won any prize or gift, the whole
part of the
subscriptions, contributions or other monies collected, with or without any bonus, premium
interest or other
advantage by whatever name called, on the termination of the scheme or arrangement, or on
or after the
expiry of the period stipulated therein,
but does not include a conventional chit;
(f)“Reserve
Bank” means the Reserve Bank of India constituted under the Reserve Bank of India
Act, 1934
(2 of 1934).
3.
Banning of prize chits and money circulation schemes or enrolment as members or
participation
therein.-No person shall promote or conduct any prize chit or money circulation
scheme, or enroll as a member
to any such chit or scheme, or participate in it otherwise, or receive or remit any money
in pursuance of such
chit or scheme.
4.
Penalty for contravening the provisions of Section 3.- Who ever contravenes
the provisions of Section 3
shall be punishable with imprisonment for a term which may extend to three years, or with
fine which may extend
to five thousand rupees, or with both ;
(3)
judgment of the court, the imprisonment shall not be less than one year and the fine shall
not be less than
one thousand rupees.
with a view to the promotion or conduct of any prize chit or money circulation scheme in
contravention of the
provisions of this Act or in connection with any chit or scheme promoted or conducted as
aforesaid,-
(
a ) prints or publishes any ticket, coupon or other document for use in the prize chit or
money circulation scheme;
or
(
b ) sells or distributes or offers or
advertises for sale or distribution, or has in his possession for the purpose
of sale or distribution any ticket, coupon or other document for use in the prize chit or
money circulation scheme ;
or
( c ) prints, publishes or distributes, or has in his possession for the purpose of publication or distribution-
(i) any advertisement of the prize chit or money circulation scheme; or
(ii) any list, whether complete or not, of members in the prize chit or money circulation scheme ; or
(iii)
any
such matter descriptive of, or otherwise relating to the prize chit or money circulation
scheme, as is
calculated to act as an inducement to persons
to participate in that prize chit or money circulation scheme
or any other prize chit or money circulation scheme; or
(d) brings, or invites any person to send, for the purpose of sale of distribution, any ticket
coupon or other document for use in a prize chit or money circulation
scheme or any advertisement of
such prize chit or money circulation scheme; or
(e)
uses
any premises, or causes or knowingly permits any premises to be used, for purposes
connected
with the promotion or conduct of the prize chit or money circulation scheme; or
(f) causes or procures or attempts to procure any person to do any of the above-mentioned acts,
shall
be punishable with imprisonment for a term which may extend to two years, or with fine
which may
extend to three thousand rupees, or with both:
Provided that in the absence of special and adequate reasons to the
contrary to be mentioned in
the judgment of the court, the imprisonment shall not be less than one year and the fine
shall not be less
than one thousand rupees.
6.
Offences by companies –(1) Where an offence under this Act has been
committed by a company, every
person who, at the time the offence was committed, was in charge of, and was responsible
to, the company
for the conduct of the business of the company, as well as the company, shall be
deemed to be guilty of
the offence and shall be liable to be proceed against and punished accordingly : Provided that nothing
contained in this sub-section shall render any such person liable to any punishment
provided in this Act, if
he proves that the offence .
(4)
was committed without his knowledge or that he exercised all due diligence
to prevent the commission
of such offence.
(2)Not withstanding anything contained in sub-section (1),where an
offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any director, manager,
secretary or
other officer of the company, such director, manager, secretary or other officer shall
also be deemed
to be guilty of that offence and shall be liable to be proceeded against and punished
accordingly .
Explanation ;_-For the purposes of this section –
(a)
“company” means any body corporate and includes a firm or other
association of individuals ;
and
(b) “director”, in relation to a firm, means a partner in the firm.
7.
Power
to enter, search and seize-(1) It shall be lawful for any police officer not
below the rank of an
officer in charge of a police station,
(a) to
enter, if necessary by force, whether by day or night with such assistance as he considers
necessary,
any premises which he has reason to suspect, are being used for purposes connected with
the promotion or
conduct of any prize chit or money circulation scheme in contravention of the provisions
of this Act ;
(b) to search the said premises and the persons whom he may find therein;
(c)
to take into custody and produce before any Judicial Magistrate
all such persons as are concerned or
against whom a complaint has been made or credible information has been received or a
reasonable
suspicion exists of their having been concerned with the use of the said premises for
purpose connected
with, or with the promotion or conduct of , any such prize chit or money circulation
scheme as a foresaid;
(d) to
seize all things found in the said premises which are intended to be used, or reasonably
suspected
to have been used in connection with any such prize chit or money circulation scheme as
aforesaid.
(2) Any officer authorised by the State Government in this behalf may-
(a)
at all reasonable times,
enter into and search any premises which he has reason to suspect ,are being
used for the purpose connected with , or conduct of, any prize chit or money circulation
scheme in
contravention of the provisions of this Act;
(b) examine any person having the control of ,or employed in connection with, any such prize chit or money circulation scheme;
(c)
order the production of any
documents, books or records in the possession or power of any person having
the control of, or employed in connection with, any such prize chit or money circulation
scheme; and inspect
and seize any register, books of accounts, documents or any other literature found in the
said Premises.(3)
All searches under this section shall be made in accordance with the provisions of
the code of Criminal
Procedure, 1973(2 of 1974).
(5)
8.
Forfeiture of newspaper and publication and publication containing prize chit or
money
circulation scheme.-Where any newspaper or other publication contains any material
connected with
any prize chit or money circulation scheme promoted or conducted in contravention of the
provisions of
this Act or any advertisement in relation thereto, the State Government may, by
notification in the Official
Gazette, declare every copy of the newspaper and every copy of the publication containing
such material
or the advertisement to be forfeited to the State Government.
9.
Power to try offences.- No court inferior to that of a Chief Metropolitan
magistrate, or as the case
may be,Chief Judicial Magistrate, shall try any offence punishable under this Act.
10. Offences under this Act to be cognizable.-All offences punishable under this Act shall be cognizable.
11.
Act not to apply to certain
prize chits or money circulation schemes.-Nothing contained in this Act
shall apply to any prize chit or money circulation scheme promoted by-
(a) a State Government or any officer or authority on its behalf; or
(b)
a company wholly owned by a State
Government which does not carry on any business other than
the conducting of a prize chit or money circulation scheme whether it is in the nature of
a conventional chit
or otherwise; or
(c)
a banking company as
defined in clause ( c ) of section 5 of the Banking Regulation Act, 1949
(10 of 1949), or a banking institution notified by the Central Government under Section 51
of that Act
or the State Bank of India constituted under Section 3 of the State Bank of India Act,
1955 (23 of 1955),
or a subsidiary bank constituted under section 3 of the Banking Companies(Acquisition and
Transfer of Undertakings)Act, 1970 (5 of 1970),or a Regional Rural Bank established under
Section 3 of the Regional
Rural Banks Act, 1976 (21 of 1976) or a co-operative bank as defined in clause (bii) of
Section 2 of the
Reserve Bank of India Act, 1934 ( 2 of 1934);or
(d) any charitable or educational institution notified in this behalf by
the state Government, in consultation
with the Reserve Bank.
12.
Transitional provisions .- (1) Notwithstanding anything contained in this
Act, a person conducting a prize
chit or money circulation scheme at the
commencement of this Act may continue to
conduct such chit or
scheme for such period as may be necessary for the winding up of the business relating to
such chit or
scheme, so however that such period shall not in any case extend beyond a period of two
years from
such commencement:Provided that the said person shall furnish to the State Government or
to such officer
as may be authorised by it in this behalf and
to such office of the Reserve bank as may be prescribed,
in such form and within such period as may be prescribed, full information regarding the
chit or scheme
along with a winding up plan prepared in accordance with the provisions of any rules that
may be made
by the State Government in this behalf under this Act:
(6)
Provided further that if the State Government is satisfied, on an application made
by the person conducting the prize chit or money circulation scheme, that the chit or
scheme cannot
be wound up within the period fixed in the winding up plan furnished to the State
Government under
the foregoing proviso, it may , in consultation with the Reserve Bank, permit such person
to continue
to conduct the business relating to the said chit or scheme for such further period as may
be
considered necessary having regard to the circumstances
of the case and the interests of the
members of the said chit or scheme.
(2)The State Government may, in consultation with the Reserve Bank,
approve the winding up plan
furnished under sub-section (1) with or with out modifications or reject the same and may
grant- or
refuse to grant permission to continue to conduct that chit or scheme:
Provided that no such winding up plan shall be modified or rejected
without giving an opportunity of
being heard to the person who conducts such prize chit or money circulation scheme.
(3)If any person fails to furnish full information regarding the said chit
or scheme along with its winding
up plan in the form and within the period prescribed, he shall forfeit his right to
continue the business
relating to the said chit or scheme on the expiry of such period.
(4) Notwithstanding anything to the
contrary contained in any agreement or arrangement entered into between any person
conducting any such chit or scheme and the subscriber, the person conducting the
chit or scheme shall, within such period as
may be prescribed, refund the monies or the subscriptions collected till the date of
default referred to in sub-section (3)
(5) If any person fails to
comply with the provisions of sub-section (4), he shall be punishable with imprisonment
for a term which may extend to two years, or with fine which may extend to three
thousand rupees, or with both:
Provided that in the absence of special and adequate reasons to the contrary to be
mentioned
in the judgment of the court, the imprisonment shall not be less than one year and the
fine shall not be
less than one thousand rupees..Power to make rules,- (1) The State Government may,
by notification
he Official Gazette and in consultation with the Reserve Bank, make rules for the purpose
of carrying
out the provisions of this Act.
(2)In Particular and without prejudice to the generality of the foregoing
power, such rules may provide
for-
(a)
the office of the Reserve Bank to whom full information
regarding any prize chit or money
circulation scheme may be furnished under the first proviso to sub-section (1)of Section
12, and
the form in which and the period within which such information may be furnished;
(b) the particulars relating to the winding up plan of the business relating to prize chits or
money circulation schemes.
14. Repeals
and saving.-(1) The Andhra Pradesh Money circulation Scheme (Prohibition) Act,
1965 (Andhra Pradesh Act 30 of 1965), as in
force in the State of Andhra Pradesh , and in the
Union territory of Chandigarh and the Madhya
Pradesh Dhan Parichalan Skeem (Pratishedh)
Adhiniyam, 1975 (Madhya Pradesh Act of 19 of 1975) , are hereby repealed.
(2) Notwithstanding the repeal of
any Act referred to in sub-section (1) , anything done or any
action taken under the provisions of any such Act shall, in so far as such thing or action
is not inconsistent with the provisions of this Act, be deemed to have been done or taken
under the
provisions of this Act as if the said provisions were in force when such thing was done or
such
action was taken and shall continue in force accordingly until superseded by anything done
or
any action taken under this Act.
