(1)Every foreman shall, before applying for the certificate of commencement referred to in section 7 in respect of any chit series -(a)execute a bond in favour of or in trust for the other subscribers for the proper conduct of the chit, charging property sufficient to the satisfaction of the Registrar for the realisation of twice the chit amount; or(b)deposit in an approved bank an amount equal to the chit amount or invest in Government securities of the face value of not less than one and half time the chit, amount and transfer the amount so deposited or the Government securities in favour of the Registrar to be held in trust by him as security for the due conduct of the chit:Provided that, where moveable property is charged by way of security, only such kind of moveable property as may be prescribed shall be so charged and such moveable property shall be deposited in such manner and with such person or officer as may be prescribed.(2)Where a foreman conducts more than one chit, he shall furnish security in accordance with the provisions of sub-section (1) in respect of each chit.(3)Subject to the provisions of section 520 of the Companies Act, 1956, the security given by the foreman under sub-section (1) shall not be liable to be attached in execution of a decree or otherwise -(a)until the chit is terminated and the claims of all the subscribers are fully satisfied;(b)until all dues payable by the foreman under this Act to the, Registrar or any other officer have been paid;(c)where owing to the default of the prized subscriber the prize amount due remains unpaid even after the termination of a chit until the foreman deposits such amount in an approved bank mentioned in the chit agreement and intimates in writing the fact of such deposit to the prized subscriber.(4)The Registrar shall, after the termination of a chit and after satisfying himself that the requirement mentioned in clauses (i) to (iii) of sub-section (3) have been complied with, release the property charged by way of security or order the release of the cash security or the Government security referred to in sub-section (1), and in doing so, he shall follow such procedure as may be prescribed.(5)The Registrar may on the application of any foreman, instead of releasing the security under sub-section (4), accept the same as security in respect of any other chit conducted by the same foreman. If the value or amount of the security so accepted is less than the value or amount specified in sub-section (1), the Registrar shall require the foreman to furnish additional security to make up the deficiency, If the value or amount of such security is in excess of the value or amount required, the Registrar shall release such excess.(6)Notwithstanding anything to the contrary contained in any other law for the time being in force, the security furnished under this section shall not be dealt with by the foreman during the currency of the chit, and any dealing by the foreman with respect thereto, by way of transfer, charge, mortgage or other encumbrance, shall be void.
