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D.Balaraman vs The Commissioner And Secretary on 30 December, 2019 cites

M/S. Shriram Chits & Investment (P.) ... vs Union Of India And Others on 13 July, 1993

3.The question that now arises for consideration is whether the rights of the petitioner have been infringed or not. To answer this, it is necessary to have a look at the statutory scheme. The parliament enacted the Chit Funds Act, 1982 (Central Act 40 of 1982) to provide for the regulation of chit funds and for matters connected therewith. It repealed the earlier State legislations including the Tamil Nadu Chit Funds Act, 1961. The constitutional validity of the Act was upheld by the Hon'ble Supreme Court in Shriram Chits and Investment (P) Limited vs. Union of India, (1993) Supp 4 SCC 226.
Supreme Court of India Cites 47 - Cited by 79 - Y Dayal - Full Document

Devendra Kumar Jain vs G.N. Goyal on 14 October, 2005

http://www.judis.nic.in 13 “The word 'security' as used in Order XXXVIII of Code relates to the security of the amount. This word cannot be stretched to the extent that in garb of security, defendant may be directed to deposit the suit amount. (Devendra Kumar Jain vs. G.N.Goyal, AIR 2006 M.P.25, 28, para 8) (CPC (5 of 1908), O.XXXVIII)” I am of the view that the expression “security” found in Section 31 of the Act must receive a similar construction. The security can be in the form of a promissory note or an immovable property or a third party guarantee or any other thing of value. Of course, this must be to the satisfaction of the foreman. He can, on reasonable grounds, reject the security offered by the subscriber in toto or say that it is insufficient. In such a case, he must pay the portion of the prize money in proportion to the security and deposit the balance amount in an approved bank. He cannot retain it himself. Nor can he deposit the prize money or the portion thereof in a group company or sister concern as that would amount to an unfair chit practice. There cannot also be any delay in the disbursement of the prize amount. If there is delay, the Arbitrator/Chit Registrar will take that into account and scale down the liability of the subscriber by applying the terms of the chit agreement. If the chit agreement is http://www.judis.nic.in 14 silent, the general principles of law and equity shall be invoked. A careful reading of Clause VII of the model form VIII would show that a distinction has been drawn between furnishing security and depositing the amount. The subscriber after all is badly in need of funds. That is why, he is willing to forego a certain amount as discount and it can be as high as 30%. “Prize amount” means the difference between the chit amount and the discount. The foreman in the garb of taking security cannot make the subscriber to deposit a major portion of the prize money itself. “Security” in this context will only mean a non-monetary collateral security. The prize amount or a portion thereof cannot be retained or diverted when the subscriber furnishes non-monetary security to the satisfaction of the foreman. This alone can be the true import of Section 31 of the Act.
Madhya Pradesh High Court Cites 2 - Cited by 1 - Full Document
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