Secured Investment Company And Ors. vs Registrar Of Firms, Societies And Chits on 20 April, 1982
This scheme, in our opinion, is nothing but a prize chit as defined in Section 2(e) of the Prize Chits and Money Circulation Schemes ((Banning) Act, 1978. Leaving aside those parts of the definition which are not directly applicable, prize chit as defined in Section 2(e) includes an arrangement under which a person collects as a promoter monies in instalments by way of contributions or subscriptions or as a membership fees in respect of a scheme and utilises the monies so collect-ed for giving periodically to a specified number of subscribers as determined by lot, draw or in any other manner prizes in cash or in kind. The scheme is an arrangement between the petitioner and the applicants or account holders which enables the petitioner to receive as contribution Rs. 100/- from eack applicant and the collection so made and the income therefrom are used for giving or awarding periodically to a specified number of persons as determined by lot or draw prizes in kind. The learned counsel for the petitioner referred to us the judgment of the Allahabad High Court in Secured Investment Co. v. Registrar of Firms and Societies & Chits, U, P., Lucknow, W. P. No. 630 of 1982, decided on 20th Feb., 1982. The petitioner in that case used to receive Rs. 220/- from - every member and deposited Rs. 127.75 in a Nationalised Bank for obtaining a deposit receipt in favour of the member entitling him to get from the
bank Rs. 220/-. Rs. 92.25 retained by the petitioner in that case were utilised after it had enrolled 19,999 members for giving prizes on lots or draws. The Allahabad High Court held that there was no contribution or subscription made by the members and, therefore, the scheme operated by the petitioner in that case did not amount to a prize chit under Section 2(e) of the Act. With great respect we are unable to agree with the judgment in that case. The amount of Rs. 100/- out of Rs. 200/- retained by the petitioner is a contribution made by every applicant or account holder who is entitled to participate in the draw. The amount so collected from 99,999 account holders is used by the petitioner for giving prizes. As already stated by us, this is clearly a prize chit as defined in the Act.