Unregistered chit fund - fraud - options?
Kanagaraj
(Querist) 25 September 2024
This query is : Resolved
I was subscribed for a chit fund which comprises of 20 members. Its 10 Lakhs chit and is auction based. Everyone has to make 50K minus the commision. I was paying the first 14 chits without fail (through UPI). I was the successful bidder in the 15th chit. The person who is running the Chit is not paying the amount (10L minus the auction amount 331,000). This is the unregistered chit fund.
The only proof I have is, all the amounts are paid through UPI and whatsapp chats. Every month the person sends the chit details like commission and the remaining amount we need to pay through whatsapp. He also acknowledgs that the amount is credited to their account. Only now I learnt the pitfalls of unregistered chit and I came to know that the amount may not be recoverable.
Even if the the amount is not recoverable, I don't want the person got off scot-free. Is there any option where I can file a case against the person and get him punished.
Kanagaraj
(Querist) 25 September 2024
Just to add, I belongs to Tamil Nadu
kavksatyanarayana
(Expert) 25 September 2024
An unregistered Chit-fund business is an offence. Hence file a complaint against the person running unauthorized chits to the Registrar of Chits of your district and the police.
T. Kalaiselvan, Advocate
(Expert) 25 September 2024
You can issue legal notice to the Chit Fund through your advocate by claiming your amount which you invested and and you are liable to get the interest as per the plan. Mention the details which the chit fund is binding to pay you as per the policy and terms and conditions which they have explained to you
If any person contravenes or abets the contravention of the provisions of the Chit Funds Act, shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to Rs. 5,000/- or with both (as per section 76 of the Act).
running an unregistered chit fund is illegal in India, including in Tamil Nadu.
Unregistered chit funds are illegal: Running an unregistered chit fund is a legal offense
Participating in an unregistered chit fund can lead to legal trouble and severe punishments like fines or imprisonment.
Unregistered chit funds are not legally bound to pay the amount deposited to its members. Hence, they pose a maximum risk of fraud.
Hence you may take action as per law whether to recover or lodge a criminal complaint
Kanagaraj
(Querist) 25 September 2024
Hello kavksatyanarayana Sir/ KalaiSelvan Sir
Thank you for your time and respond my question. its really helpful.
Regarding this sentance "Hence you may take action as per law whether to recover or lodge a criminal complaint", does it mean, either I can go to court or go to police? Or Police complaint is a must, before going to court? I would like to deal in court instead of police.
kavksatyanarayana
(Expert) 26 September 2024
In 2008 more states, the Deputy Registrar of Chits was empowered to launch prosecution against the Foreman/Branch Manager and subscribers. So, file a complaint before the Registrar of Chits against the person running unauthorized chits by registered post.
P. Venu
(Expert) 22 October 2024
Whatever the status of the Chit fund, the money paid could be recovered in a civil action.
Further, the Forman could be prosecuted for not registering the chit fund,
The punishment could be severe if the scheme happens to be prized chit or a money circulation scheme.
