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1996 DIGILAW 429 (KER)

Thomas George v. Soudamini Manakkal

1996-10-08

K.G.BALAKRISHNAN, K.NARAYANA KURUP

body1996
Judgment :- Narayana Kurup, J. Plaintiff is the appellant. The appeal is directed against the order of the Court of the Subordinate Judge of Kozhikode in LA. No. 1750 of 1993 in O.S. No. 421 of 1993 disallowing attachment for a sum of Rs. 50.000/- being the Provident Fund contributions of one (late) Basil Manakkal (hereinafter referred to as the Subscriber) and held in deposit by the State Bank of India, Kozhikode where he was employed. 2. Facts:- The suit was laid against the respondents who arc the legal representatives of the subscriber who died on 12.6.1993 for recovery of a sum of Rs. 83,965/- with future interest and costs on the ground that the Subscriber, the predecessor of the respondents had borrowed from the appellant - plaintiff a sum of Rs. 70,000/- during his life time and had issued cheques for the said amount and the cheque were dishonoured for want of funds when the appellant presented them for encashment. Along with the suit, the appellant filed I.A.I 750 of 1993 praying for attachment of a sum of Rs, 50,000/- held by the State Bank of India, Kozhikode wherein the subscriber was employed, as amounts payable to the legal representatives from out of the Provident Fund of the subscriber and a sum of Rs, 45,000/- kept in the bank as National Savings Certificates purchased by the said subscriber. The application for attachment was opposed by the respondents and the court below passed an order of attachment for a sum of Rs, 45,000/- due as per the National Savings Certificate. As regards the sum of Rs. 50,000/- which was due as the Provident Fund dues of the subscriber to be paid over to the legal representatives, the court below negatived the claim for attachment on the ground that S.60,000 of the Code of Civil Procedure exempts for attachment all compulsory deposits and other sums in or derived from my fund to which the Provident Funds Act, 1925 for trie time being applies in so far as they are declared by the said Act not liable to attachment. It is that part of the order that is challenged by the plaintiff in this appeal 3. It is that part of the order that is challenged by the plaintiff in this appeal 3. When the appeal was initially heard, a learned single judge of this court, taking note of the decisions reported in Madhavan Nambiar v. Syndicate Bank (1991 (2) KLT 127) mA Sathyavathi v. bhargavi (1991 (1) KLT 866) took the view that a question of some importance arises in this case and the case requires authoritative pronouncement by a Division Bench and in that view adjourned the case for being heard by a Division Bench. It was under the above circumstances that this appeal has come up before us for hearing, 4. Heard counsel on both sides. The question that arises for consideration in this appeal is whether the order of the court below negativing the claim for attachment of a sum of Rs. 50,000/- being Provident Fund contribution of the subscriber and held in deposit by the State Bank of India where the subscriber was employed on the ground that the said sum was exempted from attachment under S.60(1)(k) of the Code of Civil Procedure is valid. The question has to be answered with reference to the relevant provisions of the Code of Civil Procedure, S.3(2) of the Provident Funds Act, 1925 (for short 'the act) and the relevant Rules and all other attendant facts and circumstances. 5. It is beyond the pale of any controversy that the amount sought to be attached represents the Provident Fund Contribution of the subscriber and payable under the Rules of the Fund namely; the State Bank of India Employee's Provident Fund Rules to the dependant of the subscriber. In this context, a reference to S.3(2) of the Act is necessary. S.3(2) of the Act reads as follows: "3(2). In this context, a reference to S.3(2) of the Act is necessary. S.3(2) of the Act reads as follows: "3(2). Any sum standing to the credit of any subscriber to, or depositor in, any such fund at the time of his decease and payable under 'the rules of the Fund to any dependant of the subscriber or depositor, or to such person as may be authorised by law to receive payment on his behalf, shall, subject to any deduction authorised by this Act and, save where the dependant is the widow or child of the subscriber or depositor, subject also to the rights of an assignee under an assignment made before the commencement of this Act, vest in the dependant„ and shall, subject as aforesaid, be free from any debt or other liability incurred by the deceased or incurred by the dependant before the death of the subscriber or depositor", (emphasis supplied) From an analysis of S.3(2) of the act, we find that any sum standing to the credit of the subscriber in any Provident Fund at the time of his death, subject to the deductions mentioned therein vests in the dependants), free from any debtor other liability incurred either by the deceased subscriber or by the dependants prior to the death of the subscriber. The appellant has no case that the respondents are not the dependants) of the late subscriber nor the money has not vested in them as per the Rules and once it is found that the respondents are the dependant(s) of the deceased subscriber as defined in S.2(c) of the Act, the benefit of exemption under S.3(2) of the Act is available and the amount becomes immune from any attachment. Thus, Provident Fund contributions vesting on the dependants) under S.3(2) of the Act is in every case free from any debt or liability incurred by the deceased subscriber or even by the dependant(s) before the death of the subscriber. In order to claim the benefit of S.3(2) of the Act, it is enough to show that under the Rules of the Provident Fund, the amount standing to the credit of the deceased subscriber under the Provident Fund is payable to the dependant(s) of the subscriber. In order to claim the benefit of S.3(2) of the Act, it is enough to show that under the Rules of the Provident Fund, the amount standing to the credit of the deceased subscriber under the Provident Fund is payable to the dependant(s) of the subscriber. Here, admittedly, the amount standing to the credit of the deceased subscriber is under the Rules of the Fund namely; the State Bank of India Employees' Provident Fund Rules is payable to the dependant(s) of the deceased - subscriber and being so the said amount is not attachable and the same shall vest on the dependant(s) of the subscriber free from any debt or liability incurred by the deceased subscriber. The result, therefore, is that there is a statutory vesting of the fund on the depend ant (s) after the death of the subscriber under S.3(2) of the Act which on such vesting becomes the absolute property of the dependant(s) and which cannot be held to have devolved upon the dependants) by inheritance and so cannot be regarded as assets of the deceased subscriber in the hands of the dependant(s). (See the decisions in TJiaj Mahomed v. Balaji Singh (AIR 1934 Mad. 173 at page 174-D.B.), Stimpson v. Bennett (AIR 1946 Oudh 73 at page 76) and Percy Wood v. Mrs. Samuel (AIR 1943 Nagpur 333). The protection afforded to the amount in deposit is that the amount of compulsory deposit payable to a dependant(s) was held to be free from any liability for being attached even by the creditor of the dependant(s) in execution of a decree against the dependant(s) for the debt incurred by the dependant(s) before the subscriber's death. (See the decision in Venkitalakshmi Animal v. Chakrapani Ayyangar (AIR 1947 Madras 317 at page 318). That being the sanctity of the fund, any other approach to the question will stultify the very object of the benevolent legislation under which the benefits are conferred on the dependant(s) on grounds of public policy that the subscriber in case of retirement should have something to live on, or in case of death have something to leave. (See the decision in Ellon Florence v. Edith Mary (AIR 1942 Rangoon 64 at page 66). (See the decision in Ellon Florence v. Edith Mary (AIR 1942 Rangoon 64 at page 66). Therefore, we are of the view that the provisions contained in S.60(1)(k) of the C.P.C. which exempts from attachment all compulsory deposits and other sums in or derived from any fund to which the Act for the time being applies in so far as they are declared by the Act not liable to attachment is one conceived in public interest and the refusal to order attachment of the sum standing to the credit of the deceased subscriber cannot be held to be invalid. This is a pointer of the legislative intent in S.3(2) of the Act that the amount in question is immune from attachment. The view we are taking is fortified by the decision of the Mysore High Court in Abdul Waheedkhan v. Mrs. Reny Charles (AIR 1965 Mysore 303) where the court after an exhaustive survey of the various decisions of the subject held that the Provident Fund contributions standing to the credit of the subscriber is immune from attachment. 6. For the aforesaid reasons, we have no hesitation in holding that the Provident Fund contributions of the deceased-subscriber so long as it stands vested on his dependant (s) enjoys complete immunity from attachment. 7. Since the Act was not applicable to certain class of workers, the Government of India on 15.11.1951 promulgated the Employees' Provident Funds Ordinance which came into force on that day. It was subsequently replaced by the Employees' Provident Funds and Miscellaneous Pro visions Act, 1952 on 4.3.1952. The working of the 1952 Act however brought out certain defects which were sought to be remedied by the Employees' Provident Funds (Amendment) Act, 1953 (37 of 1953). S.10(2) substituted by S.8 of the Act 37 of 1953 provided that any sum standing to The credit of a member of the Fund shall vest in the nominee and shall be free from any debt or other liability incurred by the deceased member of the Fund or the nominee. The Section as it originally stood in 1953 did not contain a provision affording protection from attachment under any decree or order of any court. The Section as it originally stood in 1953 did not contain a provision affording protection from attachment under any decree or order of any court. The legislature, however, has rectified the lacuna by adding at the end of sub-s.(2) of S.10 the words "and shall not be liable to attachment under any decree or order of any court" by S.15 of the Employees Provident Funds and Miscellaneous Provisions (Amendment) Act 1988 with effect from 1.8.1988. The legislative device of statutory vesting as originally introduced in the Act is still retained in S.10(2) of the 1952 Act the object of which is to afford protection against creditors of the members of the Fund or of the family members of the subscriber who are the nominees as in the instant case. Interpreting the amplitude of the word "vest" used in S.10(2) of the 1952 Act it has been held as a follows: in Lalitaben Bhanabhai v. Laliben Bhanabhai ((1992) 1 Cur L.R.164) relying on F. & V, Merchants Union v. Improvement Trust (AIR 1957 SC 344), "For finding out the correct meaning of the word "vest' used in sub-s.(2) of S.10, is would be necessary to refer to the object and reasons of enacting the Act as per the preamble. It provides for the institution of Provident Fund (Family Pension Fund) for employees of factories and other establishments. Further, the heading prefixed to S.10 is 'protection against attachment'. It clearly indicates that the only object of incorporating S.10 is to protect the provident fund amount against attachment. Sub-s.(1) Specifically provides that the member of the Provident Fund Scheme is not entitled to assign or charge the said amount. The purpose is to see that after the retirement he gets the said amount and that he docs not waste the said amount by assigning or by taking loan on the basis of the said amount. It further affords protection against the attachment under any decree or order of any court in respect of any debt or liability incurred by the member. The protection, which is afforded, is even given to the extent that the Official Assignee appointed under the Presidency Towns Insolvency Act or any receiver appointed under the Provincial Insolvency Act shall not be entided to have any claim on the Provident Fund amount. Similar protection is given to a nominee under sub-s.(2) of the Act. The protection, which is afforded, is even given to the extent that the Official Assignee appointed under the Presidency Towns Insolvency Act or any receiver appointed under the Provincial Insolvency Act shall not be entided to have any claim on the Provident Fund amount. Similar protection is given to a nominee under sub-s.(2) of the Act. Therefore, the sole purpose of S.10 seems to afford protection to the member of the Provident Fund Scheme against creation of any debt by the member so mat after retirement he gets something to survive or in case of his death his heirs get something to live on". Thus, the consensus of judicial opinion whether it be under the Act or under the 1952 Act as amended is dial the Provident Fund amount standing to the credit of the subscriber or member of the Fund is completely immune from attachment under any decree or order of civil court. 8. No doubt, learned counsel for the appellant would contend that the Provident Fund has ceased to be so after the death of the subscriber. Having bestowed our anxious consideration to the above argument, we are afraid that we cannot acceed to the contention, as it is not supported by any of the provisions of the Act or by any authority. On the contrary, the authorities are to the effect that the compulsory deposit of Provident Fund which stands vested in the legal representatives of the deceased subscriber is immune from attachment. It has to be noted that the sanctity attached by the Act to compulsory deposit as defined in the Act does not cease on the death of the subscriber. That apart, the definition of compulsory deposit in S.2(a) of the Act makes it clear that the Provident Fund amount not disbursed to the subscriber after the happening of the specified contingency is also a compulsory deposit and such a deposit cannot be assigned or charged and is not liable to attachment under S.3(1) of the Act and is also saved from attachment and sale under S.60(1)(k) of CPC. The contention which is more or less on the similar lines was considered and repelled by the decision of the Mysore High Court in AIR 1965 Mysore 303 supra. We do not find any reason to differ from the said decision negativing a similar plea as the one raised by the appellant in this appeal. The contention which is more or less on the similar lines was considered and repelled by the decision of the Mysore High Court in AIR 1965 Mysore 303 supra. We do not find any reason to differ from the said decision negativing a similar plea as the one raised by the appellant in this appeal. Accordingly, we reject the contention and hold that the amount standing-to the credit of the subscriber is not liable for attachment or sale, on the ground that it has ceased to be a Provident Fund after the death of the subscriber, 9. Learned counsel for the appellant also pressed into service the decisions reported mMadhavan Nambiar's case (1991 (2) KLT 127) and Sathyavalhi's case (1991 (1) KLT 866) to contend that the character of the fund would change either on it being paid to the employee on retirement or on his death. Having considered the said decisions we are afraid that they are of no assistance to the petitioner in advancing his case in the present proceedings. The decision of Division Bench in Sathyavathi's case (1991 (1) KLT 866) related to the exemption provided by S.60(1)(g) of the Code of Civil Procedure which exempted stipends and gratuity amounts to pensioners of the Government or payable out of any service family pension fund notified by the Government and political pensions. The Division Bench took the view that it was not sufficient if the money came out of the fund, it is also necessary that the money should have been held by the person holding the same in trust for the judgment debtor or in his behalf. The Division Bench pointed out that on the death of the person for whom the money was held it laid not be said that the money was being held in trust for a dead person. In that view, the Division Bench held that the amounts were liable to attachment on the death of the person on whose behalf they were being held. We do not think that, for the reasons already stated, the same test could be applied to the amounts held in deposit in the Provident Fund. As already noted, the amounts standing to the credit of the subscriber stands vested with his legal representatives and by virtue of of the statutory vesting, the amount in question is not available for attachment. As already noted, the amounts standing to the credit of the subscriber stands vested with his legal representatives and by virtue of of the statutory vesting, the amount in question is not available for attachment. A survey of the relevant provisions of the Act and the CPC and the relevant Rules applicable to the facts also indicate that the Provident Fund amounts standing to the credit of the subscriber and which remains vested in the legal representatives after his death are payable under the Rules of the Fund namely, the State Bank of India Employees' Provident Fund Rules to the dependant(s) of the subscriber and the said amount is not attachable and the same shall vest on the dependants) tree from any debt or other liability incurred by the deceased subscriber. The case in Madhavan Nambiar (1991 (2) KLT 127) was one where the Provident Fund amount had been paid over to the retired employees and it was in his hands when the amounts were sought to be attached. To that extent, the said decision differs from the case on hand. 10. For the aforesaid reasons, we hold that the Provident Fund amounts standing to the credit of the subscriber on Ms death gets vested on his dependants and the same is immune from any liability for attachment for the debt incurred by the subscriber. In the light of the aforesaid reasons, the appeal is devoid of any merit and the same is accordingly dismissed, however, with no order as to costs.