what is the legal position?

As per the Chit Fund Act of 1982 Se3. Act to override other laws, memorandium ,articles ,etc.- Save as otherwise expressly provided in this Act,- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force or in the memorandum or articles of association or bye-laws or in any agreement or resolution whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, bye-laws, agreement or resolution aforesaid, shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

I am of the view that there is a need to amend the Chit funds act of 1982.

Assumi  Sir, Even it is having over riding effect, Consumer Protection Act is also a special Act.

So the litigant, whom feels he will get quicker relief can go way he deems fit

Any person proving himself a consumer can move the consumer forum for any defective service on the part of the service provide u/s 2 of the consumer protection act. If Chit Fund falls under the definition of "service", then although a special act, the consumer can file a complaint in the Consumer Forum.

Dear Assumi Saab

If the Act overirdes evrything the business of chits has to be run as per the Act and the Chit Business can not have independent provisions like guarentors.This is a very contentious matter what with your friends,relations and collegues have you as Guarentor and on many occassions they were a pain in default and ruined the relationships.The Guarentor concept is wrong for he has no interest whatsoever unlike the Foreman,subscriber and the Registarr.They all derive income which the Guarentor has to guarentee with absolutely no participation.