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Substitution of new subscriber for defaulting subscriber who has not purchased any chit fund amount

Chit Funds Act 1971

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—(1) Where default in the payment of any contribution is made by any subscriber who has not purchased a chit fund amount, the chit fund company is entitled to remove the name of the defaulting subscriber from the register of subscribers kept under section 37 and to substitute in the register the name of a new subscriber.(2) The removal of the defaulting subscriber’s name from the register is not to be deemed to prejudice the right of the defaulting subscriber to a refund of the actual amount of any earlier contributions paid by him or her, at such time and with such deductions by way of penalty as may be prescribed by regulations made under this Act.(3) All the rights and liabilities that would under the agreement have accrued to or been incurred by the defaulting subscriber after the date of the substitution if he or she had not made default, are deemed to be transferred to the new subscriber.(4) No collateral undertaking, as to mutual rights and obligations entered into by the chit fund company and the new subscriber for the purposes of the substitution of the new subscriber, is deemed to affect in any respect the duties and liabilities of the new subscriber under the terms and conditions of the agreement.

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