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of <h1>Supreme Court upholds cash deposit over property mortgage in Chit Funds Act amendment</h1> <h3>Subodhaya Chit Fund (P) Ltd. Versus Director of Chits, Madras</h3> Subodhaya Chit Fund (P) Ltd. Versus Director of Chits, Madras - 1991 AIR 998, 1991 (2) Suppl. SCC 131 Issues:The validity of Section 12 of the Tamil Nadu Chit Funds Act, 1961 as amended by Amendment Act 14 of 1975.Summary:The appeals were made against the High Court's judgment upholding the validity of the amended Section 12 of the Tamil Nadu Chit Funds Act, 1961. Before the amendment, Section 12 required the foreman to mortgage property as security, while the amendment mandated a cash deposit as security. The challenge was based on the violation of Article 301 read with Article 304 of the Constitution of India, arguing that the amendment was beyond the Legislature's competence and lacked the President's required sanction.The High Court found the amended provision to be in public interest and necessary for regulating the chit fund trade. It emphasized the importance of proper security to protect the interests of subscribers and deemed the enhanced deposit requirement as prudent and essential for regulation, seeing no restrictiveness in the measure.Regarding the need for the President's sanction, the High Court referred to a previous judgment and concluded that since the original Act had presidential sanction, it was not necessary for the amending Act to obtain separate presidential approval. The Supreme Court reviewed the High Court's judgment and found no flaws, approving its reasoning and conclusions.Ultimately, the appeals were dismissed with no order as to costs.
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