CHEETU ORDINANCE

Arrangement of Sections

PART I

PRELIMINARY

1. Short title.

2. Interpretation.

PART II

"CHEETUS”

3. Essential terms and conditions of a cheat.

4. Schemes which only partake of the nature of a cheetu.

5. Prohibition of schemes which only partake of the nature of a cheetu.

6. Prohibition of Cheetus conducted in contravention of the Ordinance.

PART III

FORMATION AND REGISTRATION OF "CHEETUS”

7. Formation of cheetu.

8. Duty of manager to acknowledge subscriber's rights.

9. Duties of the Registrar.

10. Duty of manager to furnish copies of registered agreement to subscribers.

PART IV

CONDUCT OF "CHEETUS”

11. Conduct of Cheetus.

12. Meetings of subscribers.

13. Minutes of meetings.

14. Alteration of the agreement and registration of the alteration.

15. Receipts for the installments paid.

16. When first installment may be received.

17. Security to be given by managers.

18. Security to be given by purchaser of cheetu amount.

19. Prize amount to be deposited in bank if security is not given by purchaser.

20. Substitution of new subscriber for defaulting subscriber who has not purchased any cheetu amount.

21. Voluntary reduction of membership in lieu of substitution of new subscriber.

22. Liability of defaulting subscribers to pay future installments.

23. Transfer of subscriber's rights.

24. Transfer of manager's right to recover installments to be voidable.

25. Books to be kept by manager.

26. Manager's liability to subscribers.

27. Manager's liability and right as participant in cheetu.

28. Continuance of cheetu on manager's death or incapacity.

29. Termination of cheetu.

PART V

SPECIAL PROVISIONS RELATING TO COMPANIES, FIRMS AND INDIVIDUALS TRADING UNDER BUSINESS NAMES

30. Restrictions on operations of companies, firms, and individuals with business names.

31. Registration of companies, firms, and individuals with business names.

32. Cancellation of registration.

33. Certificate of registration.

34. Security.

35. Security to be a prerequisite to registration of agreement.

36. Financial limits to be observed.

37. Application of Parts III and IV.

38. Sale by tender as an alternative to auction.

39. Prohibition of bid or tender by promoters.

40. Disputes to be settled by Arbitration.

41. Termination, of a cheetu conducted by a company or firm or an individual with a business name.

42. Compulsory winding up of company in case of dishonesty, fraud, or gross mismanagement.

PART VI

MISCELLANEOUS

43. Fees payable to the registrar.

44. Regulations.

45. Offences and penalties.

PART VII

TRANSITORY PROVISIONS RELATING TO "CHEETUS” ACTUALLY CONDUCTED AT THE DATE OF THE COMMENCEMENT OF THE ORDINANCE

46. Statement to be furnished by manager.

SCHEDULE

61 of 1935,

18 of 1939,

54 of 1941,

12 of 1945,

55 of 1949,

22 of 1955,

34 of 1957.

AN ORDINANCE to provide for the registration and control of "Cheetus”.

[Date of Commencement: 1st April, 1937]

PART I

PRELIMINARY

1. Short title.

This Ordinance may be cited as the Cheetu Ordinance

2. Interpretation.

In this Ordinance, unless the context otherwise requires—

"agreement” means the document which contains the terms and conditions agreed to and adopted by the subscribers and the manager of a cheetu;

"cheetu” means a scheme or arrangement based wholly on the terms and conditions set out in section 3 but does not include any scheme or arrangement which only partakes of the nature of a cheetu within the meaning of section 4;

"cheetu amount” means the pool or the aggregate of the installments payable on any specified day or in respect of any specified interval;

"discount” means that portion of the cheetu amount which the subscriber who purchases it agrees to forego;

"dividend” means the share of the discount payable to each subscriber;

"installment” means the sum of money payable periodically by each subscriber under the agreement;

"manager” means the person who promotes the cheetu and who is responsible under the agreement for its management;

"prize” or "prize amount” means the difference between the cheetu amount and the discount;

"registrar” in relation to any cheetu, means the Registrar of Companies and includes any such officer of the department of the Registrar of Companies as may be authorised by the Registrar of Companies to exercise the powers and discharge the duties of the Registrar of Companies under this Ordinance;

[Subs by s 2 of Act 34 of 1957.]

"Registrar of Companies”.

[Omitted by s 2 of Act 34 of 1957.]

"subscriber” includes any person who has agreed to participate in a cheat or has signed the agreement in token thereof.

PART II

"CHEETUS”

3. Essential terms and conditions of a cheat.

(1) No scheme or arrangement purporting to be a cheetu shall be deemed to be a cheetu for the purposes of this Ordinance, unless at the time of the formation of that scheme or arrangement the persons joining as subscribers and the person acting as manager agree upon and adopt each of the following essential terms and conditions:

(a) that the cheat is to be for a specified amount and for a specified number of subscribers only;

(b) that the subscribers are to contribute equal portions of the amount;

(c) that the contribution of each subscriber is to be paid to the manager in money in equal installments of a specified value during a specified period not exceeding thirty months;

(d) that each installment is to be payable on a date specified therefor or within such number of days of grace after that date as may be specified;

(e) that on or after each date on which the installments are payable, the cheetu amount is to be put up for sale by the manager among the subscribers either by auction or by way of sealed tenders;

(f) that each of the subscribers is to be entitled to purchase the cheetu amount once and not oftener during the period of that cheetu, and that no subscriber who has been declared the purchaser at any such sale is to be entitled or permitted to bid or tender at any subsequent sale;

(g) that every bid or tender of a subscriber at a sale is to indicate the sum which he is willing to forego as discount for the privilege of obtaining the prize on that occasion;

(h) that of the subscribers entitled to bid at any sale, the subscriber who offers the highest discount is to be declared the purchaser;

(i) that the purchaser is to be entitled to receive the prize consisting of the cheetu amount less the discount offered by him, on giving security to the manager for the due payment of his future installments in respect of that cheetu;

(j) that out of the discount so secured at each sale, the manager is to appropriate for commission and working expenses a specified sum or a sum bearing a specified proportion to the prize at that sale;

(k) that the balance of the discount is to be distributed in equal proportion among all the subscribers.

(2) In every case where the manager of a cheetu desires to participate therein as a subscriber, it shall also be obligatory to adopt, in addition to the terms and conditions set out in subsection (1), the condition that he is not to be entitled to bid or tender as an ordinary subscriber at any sale held for the purposes of that cheetu, and that the final cheetu amount made up of the installments payable at the end of the cheetu period is to be appropriated by him for his share.

4. Schemes which only partake of the nature of a cheetu.

Every scheme or arrangement which, notwithstanding that it purports to be a cheetu, is not based wholly on the essential terms and conditions set out in section 3 or which is based on terms and conditions inconsistent wholly or in part with those essential terms and conditions, shall for the purposes of this Ordinance be deemed only to partake of the nature of a cheetu.

I.-A scheme or arrangement under which the right to a prize is determined by the drawing of lots is not a cheetu but only partakes of the nature of a cheetu.

II.-A scheme or arrangement under which all the subscribers are to get prizes in turn with a liability to pay future contributions but the prizes themselves are of fixed amounts and not ascertainable by the deduction of the discount offered from the cheetu amount in each case, is not a cheetu but only partakes of the nature of a cheetu.

5. Prohibition of schemes which only partake of the nature of a cheetu.

(1) No person shall promote or conduct, or aid, assist, or take any part in the promotion or con duct of, any scheme or arrangement which only partakes of the nature of a cheetu within the meaning of section 4.

(2) No right or claim under any scheme or arrangement which only partakes of the nature of a cheetu within the meaning of section 4, shall be enforceable by action in any court

6. Prohibition of Cheetus conducted in contravention of the Ordinance.

(1) No person shall promote or conduct, or aid, assist, or take any part in the promotion or conduct of, any cheetu otherwise than in accordance with the provisions of this Ordinance.

(2) Any scheme or arrangement which is based wholly on the essential terms and conditions set out in section 3 or has all the attributes and incidents of a cheetu within the scope and intent of that section, shall, notwithstanding that it is called by any other name, be deemed to be a cheetu for the purposes of this Ordinance.

(3) Nothing in this section shall affect any cheetu in which the cheetu amount does not exceed fifty rupees, if the person conducting that cheetu does not, during the period for which that cheetu continues, promote or conduct, or aid or assist or take any part in the promotion or conduct of any other cheetu whatsoever.

PART III

FORMATION AND REGISTRATION OF "CHEETUS”

7. Formation of cheetu.

(1) Subject to the provisions of Part V relating to the formation of Cheetus by companies or firms or by individuals trading under business names, every Cheetus shall be formed by the execution of a written agreement between the manager on the one part and the intending subscribers severally on the other part.

Requisites of the agreement.

(2) Every such agreement shall contain—

(a) all the essential terms and conditions set out in section 3 with the actual amounts, dates, and other particulars necessary in each case;

(b) the full name and address of the manager and of each of the subscribers, the business address of the manager or the exact situation of the place where the records of the cheetu are to be kept and its business is to be transacted,

and may in addition contain such other terms and conditions not inconsistent with the essential terms and conditions as may be agreed upon between the parties for the better management and control of the Cheetus.

(3) In respect of every cheetu, the agreement as aforesaid shall be signed in original and duplicate by the manager and the several intending subscribers, either in person or by duly authorised agent, and each signature shall be attested by not less than two witnesses present at the time of signing.

8. Duty of manager to acknowledge subscriber's rights.

(1) As soon as may be after the agreement has been signed by each intending subscriber, the manager shall give him a written acknowledgment that that subscriber is entitled to participate in the cheetu.

and to forward agreement for registration.

(2) Within twenty-one days, exclusive of Sundays and public holidays, after the formation of a cheetu under section 7, the manager of the cheetu shall deliver or transmit the agreement in original and duplicate to the registrar.

9. Duties of the Registrar.

The registrar shall, if the agreement is in accordance with the requirements of this Ordinance and the regulations made thereunder, forthwith—

(a) register the cheetu in a book kept by him for the purpose;

(b) endorse the fact of the registration and the registered number under his signature on each of the copies;

(c) return the original so endorsed to the manager; and

(d) file the duplicate so endorsed in his office.

10. Duty of manager to furnish copies of registered agreement to subscribers.

Within seven days of the receipt of the original endorsed by the registrar, the manager shall deliver or transmit to every subscriber a copy, certified under his signature as a true copy, of the agreement and of the endorsement made thereon by the registrar.

PART IV

CONDUCT OF "CHEETUS”

[Am by s 3 of Act 34 of 1957.]

11. Conduct of Cheetus.

Every cheetu shall be conducted in accordance with the provisions of this Ordinance and the regulations made thereunder and the terms and conditions of the agreement relating to that cheetu.

12. Meetings of subscribers.

(1) Where the provisions of the Ordinance or the regulations made thereunder or the terms and conditions of the agreement require any matter to be decided by a meeting of the subscribers, the manager shall convene a meeting for the purpose by written notice served on each of the subscribers not less than seven days before the date selected by him for the meeting.

This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.


Recent Updates

SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015


SRI LANKA SUSTAINABLE DEVELOPMENT ACT, NO. 19 OF 2017


MUNICIPAL COUNCILS (AMENDMENT) ACT, NO. 20 OF 2017


URBAN COUNCILS (AMENDMENT) ACT, NO. 21 OF 2017


REGULATION OF INSURANCE INDUSTRY(AMENDMENT) ACT, NO. 23 OF 2017


IMMIGRANTS AND EMIGRANTS (AMENDMENT) ACT, No. 7 OF 2015