Chandigarh: The Punjab and Haryana High Court has clarified in a crucial case related to the alleged running of chit funds in Haryana that “chits” being run without legal permission are not entitled to any kind of legal protection. The court dismissed the petition challenging the order of attachment of property issued by the Fatehabad District Magistrate and declared the administrative action as completely legitimate.
What is the whole matter?
Petitioner Karambir Punia and others had challenged the order of November 4, 2025, under which the Fatehabad District Magistrate had attached their properties under the ‘Haryana Protection of Interest of Depositors in Financial Establishments Act-2013’.
An FIR has been registered against the petitioners on charges of cheating, criminal conspiracy and irregular deposit schemes. It is alleged that they ran a chit scheme by taking money from people, but later did not pay it. On this basis, the administration had attached their properties.
Petitioners’ arguments and court’s response
The petitioners had argued that “chit” has been excluded from the definition of “deposit” (deposits), therefore, it is wrong to take action under the 2013 law. They said that if there is any violation, then a separate ‘Chit Fund Act 1982’ exists for it.
The High Court rejected this argument out of hand, saying that a chit fund will get legal recognition only if it is registered under the 1982 Act and is being run with the prior permission of the state government. The petitioners had not taken any such permission, so they cannot get legal protection.
A chit being operated illegally cannot be included in the definition of the law and in such cases, the benefit of being excluded from “deposit” will not be availed.
Important observations of the court
The court said that the 2013 state law came into force after the assent of the President, hence its validity is fully established. Protection of the interests of investors is paramount. If the deposits of the people are put at risk through a scheme, the state has every right to take strict action. However, the high court clarified that the trial court will have the freedom to determine under which laws the charges will be framed, be it the Chit Funds Act of 1982 or other penal provisions. However, at this stage, no flaw was found in the attachment of the property.
The court also said in its judgment that protecting the interests of the investors is of the utmost importance and if the deposits of the people are put at risk through a scheme, the state has every right to take strict action. With these detailed observations, the High Court declared the petition as baseless.
