Thursday, 15 September 2011

Prize Chits and Money Circulation Schemes Banning Act 1978 - Indian Law

Legal
An Act to ban the promotion or conduct of prize 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 except 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 action 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 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
(ii) any sum which a subscriber agrees to forego, from out of the total subscriptions of each installment, 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 the 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 enrollment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such schemes 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 lumpsum or in installments 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 charges to or in respect of any savings, mutual benefit, thrift, or any other scheme or arrangement by whatever name called, and utilizes the monies so collected or any part thereof 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, prize or gifts in cash or in kind, whether or not the receipient of the prize or gifts is under a liability to make any futher 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 or 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 therin, but does not include a conventional chit;

3.  Banning of prize chit 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 enrol as a member to any such chit or scheme, or
4. Penalty for contravening the provisions of section 3. Whoever 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: 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.
5. Penalty for other offences in connection with prize chits or money circulation schemes. Whoever, 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 conductedas 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) circulation scheme; or
(ii) the prize chit or money circulation scheme; or
(iii) 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 or 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 promo- tion 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. 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 proceeded 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 was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) 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 conniv- ance 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 anybody corporate and includes a firm or other association of individuals; and
(b) " director", in relation to a firm, means a partner in the firm.
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