Prize chit definition applied strictly: a disguised investment scheme remained banned despite its commercial form.

A scheme falls within the inclusive definition of "prize chit" under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 when participants are induced to part with money, or part of it, for a chance of prizes with refund of the balance to non-winners. The Court treated the scheme's commercial form as irrelevant because routing part of the amount through a bank deposit did not change its real character. On that reasoning, the arrangement was held to attract the statutory ban, and the Registrar's action was valid.

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Issues: Whether the respondent's investment scheme constituted a "prize chit" within the meaning of Section 2(e) of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978, so as to attract the statutory ban and justify the Registrar's action.

Analysis: The Act was enacted to prohibit schemes that collect money from participants and use it for awarding prizes or refunding amounts with or without premium, while excluding only conventional chits. The definition of "prize chit" is inclusive and is intended to cover schemes that operate under different names but share the essential features of collection of money, allotment of prizes by draw or otherwise, and refund of the balance to non-winning subscribers. The form adopted by the scheme, including routing part of the amount through a bank deposit, did not alter its real character. The company collected a lump sum from each member, deducted a portion for prizes and overheads, and induced subscribers to part with money in the hope of obtaining prizes, which brought the arrangement within the statutory mischief.

Conclusion: The scheme was a prize chit within Section 2(e) of the Act and the Registrar's action was valid.

Ratio Decidendi: A scheme falls within the inclusive definition of "prize chit" if participants are induced to part with money, or a part of it, in return for the chance of prizes and refund of the balance, even if the scheme is dressed in another commercial form.

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