A.M. Shaffique, J.This Writ Petition is filed challenging Ext. P11 and for a direction to the 2nd respondent to issue a certificate/clarification as prayed for in Ext. P10. Ext. P11 is a communication issued by the 2nd respondent, Deputy Registrar of Chits informing the petitioner that all their offices which deals, with the subscribers should obtain registration in terms of S. 19(1) of the Chit Funds Act, 1982 (for short the Act).

2. The facts involved in this case would disclose that the petitioner is a company conducting chit business. It has sanction to conduct Chit business in terms with S. 4(1) of the Act and is, conducting the business after complying with the provisions of the Act and is maintaining all necessary records relating to the same. The petitioner submits that they have subscribers all over Kerala and they have a sister concern by name PNY Sabha Finance Ltd., which is anon-banking finance company. In order to facilitate easy payment of chit installments, a facility is provided to the subscribers of the petitioner to remit the monthly installments of the chit at the various branches of PNY Sabha Finance Ltd. According to the petitioner, certain authorities have indicated that me petitioner is conducting Chit business without registration and First Information Report has already been registered with the Karunagappally Police Station on the allegation that the petitioner is conducting Chit business without approval of the office at Karunagappally. Petitioner therefore sought for clarification and/or permission to carry on with the collection of installments at the branches of the sister concern of the petitioner company. Ext. P10 is the said application. Ext. P10 came to be rejected by the 2nd respondent holding that S. 19(1) of the Act does not permit the same and Ext. P11 is the said order. It is inter alia contended by the petitioner that provisions of the Act does not indicate that chit amount should be collected only from approved place of business. Sanction and registration of Chit is mandatory only for conducting Chit business, collection of monthly installments from the subscribers does not amount to conduct of Chit business.

3. According to the petitioner, the petitioner is conducting Chit business in accordance with the procedure prescribed. In so far as S. 19(4) of the Act clearly indicates that place of business shall include any branch office, sub office or any place of business where chit business may be conducted, since the petitioner is not doing any such activity in the office of the sister concern, no approval as contemplated under S. 19(1) is required.

4. The above Writ Petition is heard and disposed at the admission stage itself, after hearing the learned counsel for petitioner and the learned Special Government Pleader Sri. Tom. K. Thomas.

5. The only question that requires to be considered in the above Writ Petition is whether the petitioner is under obligation to obtain approval from the Registrar for offices used as collection centers, in terms of S. 19(1) of the Act.

6. The restriction imposed under the Act with reference to the conducting of Chit business in different offices is regulated by S. 19 of the Act. Before proceeding further, a reference to the definition of Chit and Chit business and S. 19 of the Act would be useful, which reads as under:

"2. Definitions:- In this Act, unless the context otherwise requires, -

(a) xx xx xx

(b) "chit" means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.

xx xx xx

(e) "chit business" means the business of conducting a chit

xx xx xx"

"19. Restriction on opening of new place of business:- (1) No person carrying on chit business shall open a new place of business without obtaining the prior approval of the Registrar within whose territorial jurisdiction his registered office or, as the case may be, the place or the principal place of business is situated.

(2) Before granting approval under sub-section (1), the Registrar shall consult the Registrar of that State within whose territorial jurisdiction the new place of business is proposed to be opened and shall also keep in view the financial condition and methods of operation of the foreman, the extent to which public interest will be served by the opening of the new place of business and such other matters as may be prescribed.

(3) Where a person carrying on chit business opens a new place of business in a State other than the State (hereinafter referred to as the State of origin) in which his registered office or the place or the principal place of his business is situated, the Registrar of the State in which such new place of business is opened may also exercise and perform any of the powers and functions which the Registrar of the State of origin may exercise and perform in respect of the chit business carried on at such new place of business.

(4) For the purposes of this section, "place of business" shall include any branch office, sub-office, or any place of business where the chit business may be conducted by such person."

The restriction imposed under S. 19 indicates that no person carrying on Chit business shall open a new place of business without obtaining prior approval of the Registrar. The place of business is defined as including any branch office, sub office or any place of business where Chit business may be conducted by such person.

7. Chit business is defined as the business of conducting a chit. The meaning of Chit is defined as a "transaction by which a person enters into an agreement" with a specified number of persons that every one of them shall subscribe a certain sum of money by way of periodical instalments over a definite period "and that each such subscriber shall, in its term, as determined by lot, or by auction or by tender " or any such other manner as may be specified in chit agreement "be entitled to the prize amount". From the aforesaid definition, two things are clear. Firstly the transaction by which a person entering into an agreement with certain specified persons amounts to conducting of chit. In the said agreement, the specified persons agree to pay periodical instalments over a definite period of time. Secondly, a lot, auction, tender or any other mode as specified in the agreement is conducted to find out the prized subscriber for payment of prize amount.

8. Section 4(1) of the Act indicates that no chit shall be commenced or conducted without obtaining previous sanction of the State Government within whose jurisdiction the chit is to be commenced or conducted. Therefore, what is prescribed is the commencement or conducting of the Chit business without sanction of the Government. Section 19 is the restriction imposed in opening a new place of business for carrying on Chit business without obtaining approval of the Registrar.

9. The above statutory provisions clearly indicate that carrying on chit business apparently means a place which is specified for entering into agreement with the subscriber, and for the purpose of taking lot, conducting auction or tender to determine the prized subscriber for payment of the prize amount.

10. Therefore in order to treat a place as the "place of business" the place should be used for two purposes. Either it should be a place where the agreement is executed or it should be a place where the lot, auction or tender takes place and the prized subscriber is determined.

11. The petitioner has a case that they had only collected the subscription amount from the subscribers through their sister concern viz., PNY Sabha Finance Ltd. Therefore the finding in Ext. P11 that all the offices of the petitioners where they collect the amount also, is required to take approval in terms of S. 19(1) is not contemplated by the provisions of the Act. The collection of the subscription amount can be in different modes. It might be an instance where the subscriber pays the amount through bank, by way of cheque, by way of demand draft or any other source of payment. All records relating to the same will have to be maintained in the office where the Chit business is being conducted. If the petitioner is not getting any agreement executed or conducting any lot, auction or tender to determine the prized subscriber, the so called collection centers maintained by them in PNY Sabha Finance Ltd., cannot be termed as "place of business" and they are liable to get approval in terms of S. 19(1).

In the above circumstances, the Writ Petition is allowed. Ext. P11 is quashed. It is declared that the obligation to get approval in terms of S. 19(1) is not required for a place of business used only to collect subscription of the amounts from subscribers.

However, if it is found that the petitioner is conducting Chit business as stated above in any such premises, it shall be open for the respondent authorities to take appropriate action in accordance with law.