S S K Sadhu (BCA) 22 June 2013

Unauthorized chit fund company

Namaste India,

I request our members valuable guidance reagrading an incidence in our family.

One of my brother-in-laws used to run an unauthorized chitfund firm since 2007 and reached a 1 crore rotation firm.

Recently, he had escaped from the village filing an IP for 1.6 crores attaching a property of 20 lakhs and attaching a list of depositors who has to pay him for rupees 46 lakhs.

Now one person who has deposited rupees 1.8 lakhs in the firm filed a case under IPC section 420 r/w 34 and Andhra pradesh protection of depositors and financial establishments act 1999 sections 3 & 5.

My query is that can this depositor file a case under protection of depositors act 1999 despite its a chit fund firm.

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2 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 ) 22 June 2013

Section 4 imposes a certain amount of administrative burden on the promoters of the Chit Fund in that they have to approach the State Govt. every time they float a Chit for prior sanction but that by itself would not amount to unreasonable restriction which would come in their way of carrying on their legitimate business.

S S K Sadhu (BCA) 23 June 2013

Thanks for your reply sir,

Will the definitions of "Depositor" and "Financial establishments" satisfy its criteria w.r.t this case?

The complainant mentioned that he was active in some chits of the firm and lent the accused some amount in the meanwhile. He quoted that accused used to run unauthorised chits in his complaint w/o his knowledge. How come this narration attract AP PDFE act 1999 sections 3 & 5?