M. Ranganayaki Ammal vs The Official Assignee of Madras and Another

Ramesam, J.—This is an appeal against the order of our brother Waller, J., in connection with the insolvency of one Venkataratnam Naidu.

The insolvent was employed in the Madras and Southern Mahratta Railway and was subscribing for a provident fund. By May, 1927, he got

deeply into debt, his lands and house were mortgaged to the extent of Rs. 8,000 and odd and he had unsecured debts to the extent of Rs. 3,900.

In May, 1927, a creditor obtained a decree and attached his salary, a notice being sent to the Railway Company. On this the Railway Company

put an end to his services and paid the amount lying to his credit in the provident fund into his hands. This amounted to Rs. 3,000 and he paid it to

his wife in June or July. On 10th August he was adjudicated insolvent on his own petition. After the wife got the Rs. 3,000, Rs. 600 out of this was

utilised by her for redeeming jewels of hers which were pledged by the husband with a creditor. The Official Assignee now prays for an order

against the wife directing her to pay down the Rs. 3,000 and also surrendering the jewels to him with a charge for Rs. 600. Our learned brother

made the order. The wife appeals.

The learned advocate for the appellant contended that even after the amount of the provident fund was paid into the insolvent''s hands, it is still

exempt from attachment or claims of the Official Assignee u/s 3 of the Provident Funds Act of 1925. It is true that it has been held in some cases

[for instance Hindley v. Joynarain Marwari ILR (1919) C. 962, Devi Prasad v. The Secretary of State for India ILR (1923) A. 554, The

Secretary of State'' for India v. Raj Kumar Mukherjee ILR (1922) C. 347, and The Secretary of State v. Har Charan (1929) 27 A.L.J. 670] that

so long as the money has not been paid to the subscriber but remained with the authority that constituted the Fund, the sum is not liable to

attachment of a creditor or to the claims of an Official Assignee. This question does not arise before us and we have nothing to say at present to

those cases. But in one of these cases, Devi Prasad v. The Secretary of State for India in Council ILR (1923) A. 554, Daniels, J. observed,

referring to a decision in Nagindas Bhukhandas v. Ghelabai Gulabdas (1925) 92 I.C. 673 that it is not necessary for him to go to the extent that

the Bombay Judges had gone. In the case in Nagindas Bhukhandas v. Ghelabai Gulabdas ILR (1919) B. 673 the question was whether the

insolvent was rightly convicted u/s 43(2) of the Insolvency Act (III of 1907) which corresponds to Section 69 (2) of the Provincial insolvency Act

of 1920. One of the grounds they gave was that he was not guilty of any fraudulent act in handing over the sum to his wife because he might well

have thought that the sum was not subject to any claims of the Official Assignee. To that extent we have nothing to say against that decision. But

another reason was also given in that judgment, namely, that even after the Fund was paid to the insolvent, it continues to retain its character of a

compulsory deposit and for this view the learned Judges relied on the decision in Official Assignee of Madras v. Mary Dalgairns ILR (1902) M.

We are unable to see how the decision in Official Assignee of Madras v. Mary Dalgairns ILR (1902) M. 440 supports the reasoning of the

learned Judges. In the decision in Official Assignee of Madras v. Mary Dalgairns ILR (1902) M. 440 the subscriber died and there was a nominee

mentioned when the Fund was opened and it was held under the new Act that the claim of the nominee prevails and the Official Assignee has no

right to any portion of the Fund. In that case the money was never paid into the hands of the subscriber for he died before it matured, and the only

person who was entitled to draw was the widow and under the Act her claims prevailed over those of the creditors or the Official Assignee. We

see that the decision in Nagindas Bhukhandas v. Ghelabai Gulabdas ILR (1929) B. 673 has been dissented from in Gauri Shankar v. DeCruse

(1925) 92 I.C. 673. In this decision it was observed that a compulsory deposit is only a"" deposit so long as it remains in the Fund and not after it

has been paid over to the person to whose credit it has hitherto stood. We agree with these observations and dissent from the decision in Nagindas

Bhukhandas v. Ghelabai Gulabdas ILR (1919) B. 673. That being so, we must agree with our learned brother that the payment of Rs. 3,000

which under the circumstances of the case amounted to a voluntary transfer cannot prevail against the Official Assignee and the Official Assignee is

entitled to the order against the wife that she would pay down the amount of Rs. 3,000; but the Official Assignee is not entitled to payment of Rs.

3,000 plus another sum of Rs. 600, for it does not appear that any part of the gratuity drawn by the insolvent was paid into the wife''s hands. The

Official Assignee is only entitled to the sum of Rs. 3,000. It is true that in respect of the amount of Rs. 600 out of this he is entitled to a charge over

the jewels. It will be open to the appellant to pay down Rs. 600 to the Official Assignee so as to avoid surrendering the jewels. If she so pays she

need not surrender the jewels and she will thus rank as a creditor to the extent of Rs. 600 against the insolvent''s estate along with other creditors.

As to the other Rs. 2,400 there will be merely an order against her to pay to the Official Assignee, but if she does not pay the Rs. 600, the Official

Assignee will be entitled to have the possession of the jewels until he realises his charge for Rs. 600 over it. Subject to this modification the appeal

is dismissed with costs. (Fee payable on Rs. 3,000 only.)