Rajam alias Rukmini Ammal vs Parameswara Ayyar and Others

Kuppuswami Ayyar, J.—The appellant and petitioner in the civil revision petitions is the widow of one S. Venkatarama Aiyar and they arise

out of proceedings in execution of the decree against her in respect of debts due by her husband. Money paid into Court by an insurance company

in respect of a life policy taken up by the late Venkatarama Aiyar was sought to be attached by these creditors, and she contended that the money

was not assets which could be attached at the instance of her husband''s creditors. The said Venkatarama Aiyar was employed in the Forest

department under the Government and he was subscribing to the General Provident Fund. Later on he took out a life policy in the Asia Life

Insurance Co., Ltd., Bombay, in which he nominated his first wife, Lakshmi Ammal, as the beneficiary, if she should survive him. Subsequently he

was not able to pay the premium and as permitted by the rules framed by the Government in respect of the General Provident Fund he drew

money from the provident fund for paying the premium and mortgaged this insurance policy to the provident fund in respect of the amount so

drawn. Unfortuntately, as Lakshmi Ammal predeceased him he married the appellant as his second wife. He did not take effective steps to

constitute her a, beneficiary under the insurance policy with the result that before he could give effect to it he died. On his death the policy which

had been mortgaged to the Accounts Officer was re-assigned to the appellant, his widow and heir. The insurance company deposited the amount

into Court having been apprised of the claims of the creditors. The creditors attached the amount as belonging to their udgmentdebtor,

Venkatarama Aiyar. The appellant contended that the insurance amount deposited by the company represented the provident fund of the deceased

judgment-debtor, at any rate to the extent of the amount that was withdrawn, from the fund to pay the premia and that that part of the insurance

amount partook the same character as the provident fund and therefore it could not be attached in execution of the decree. Both the Courts have

held that no portion of the amount can be said to be provident fund so as to entitle the widow to resist the attachment. Hence, the appeal and the

petitions to revise that order.

The facts have been stated above and there is no''dispute about them. The beneficiary nominated by the deceased having died and the plaintiff

not having been effectively nominated as the beneficiary in respect of the policy the property in the policy was in Venkatarama Aiyar and on his

death the policy which was mortgaged to the Government was assigned over to the plaintiff because she happened to be the heir of her husband

and therefore entitled to the properties of her husband. Therefore there can be no dogfot that the amount paid by the insurance company in respect

of the policy was the amount of the deceased and as such was an asset of the deceased in the hands of the appellant.

What is urged, however, is that in respect of the money subscribed to the provident fund, it was the policy of the Government as is evident from

the rules and the Government Provident Funds Act that it was money intended for the benefit of the nominee in respect of the fund and not the

property of the subscriber if he happened to die before it matured and could be paid over. So far as the money in deposit in the fund to the credit

of the subscriber, Venkatarama Aiyar, was concerned, it was certainly money that cannot be said to be an asset of the deceased u/s 3(1) of the

Provident Funds Act, 1925, a compulsory deposit in any Government or railway provident fund shall not be liable to attachment under any decree

or order of any civil, revenue or criminal Court in respect of any debt or liability incurred by the subscriber or depositor. u/s 3(2) the 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

dependent subscriber or depositor or to such person as may be authorised by law to receive payment on his behalf, shall, subject to any

deductions authorised by the 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. So it is only the

sum standing to the credit of the subscriber in the fund at the time of his decease that is not liable to be attached or proceeded against for the debts

of the deceased subscriber. Can it be said that this amount deposited by the insurance company payable under the life insurance policy is an

amouat standing to the credit of the deceased subscriber in the fund at the time of his decease? Provident Fund is defined as being a fund in which

subscriptions or deposits of any class or classes of employees are received and held on their individual accounts, and includes any contributions

and any interest or increment accruing on such subscriptions, deposits or contributions under the rules of the fund. This money is certainly not in the

individual account in the fund. Nor is it any interest or increment accruing on such subscriptions. So under the terms of the Provident Funds Act,

this amount is not an amount which is''exempt from being proceeded against in respect of the debts of the deceased.

What is urged, however, is that since the policy of the Act was tosee that all the mbneys subscribed should go to the dependant for whose

benefit the provident fund was subscribed and as the Government by reason of the assignment of the policy held it as security for the amounts

drawn from the fund, it must be considered to be part of the fund. Both the Courts are right in not accepting this. The Provident Fund Rules clearly

indicate that in respect of the money due under the policy the assignment confers only a limited interest. When a subscriber to the fund draws the

amount for the purpose of paying premium be has to assign the policy over to the Accounts Officer within three months or such further period the

Accounts Officer may fix and if hefails to do it, the only right which the Government has is to recover the amount so advanced from the provident

fund from theemolumentsof the subscriber by instalments or in such way as the Government may direct. Under Rule 21 the subscriber shall not,

during the currency of the policy, draw any bonus, the drawing of which during such currency is optional under the terms of the policy, and if he

has no option to refrain from drawing the quits the service or retires, the polifcy could be re-assigned by the Accounts Officer to him or if he pays

all amounts withdrawn by him and the interest thereof the policy should be re-assigned to the subscriber. But if he died before quitting service, the

policy is then gssigned over to the beneficiary if there is one or to such person as may be legally entitled to receive the money. Under Rule 23 if the

policy matures before the subscriber quits the service or by the death of the subscriber''s wife or husband if their lives happen to be insured under

the policy and the amount falls due for payment by reason of the death, if the amount due under the policy and bonuses are greater than the amount

withheld or withdrawn from the provident fund, the policy shall be re-assigned to the subscriber or to the subscriber and to the joint assured as the

case may be and the subscriber shall immediately on recent of the policy moneys from the insurance company pay or repay to the fund the whole

amount withheld or withdrawn, and on his failure to do so it can be recovered from the emoluments. If the amount payable by the company is less,

the Accounts Officer shall himself realise the amount assured together with any such bonus and shall place the amount so realised to the credit of

the subscriber. This is the only instance in which the amount is refunded to the fund from out of the amount, and if the policy lapses or is assigned

otherwise than to the Secretary of State in Council under Rule 20, or is charged or encumbered, it is only then that the amount Should be

recovered from the emoluments of the officer as per Sub-rule (4) of Rule 20.It is thus clear that it is only in one case the Accounts Officer to whom

it was assigned can himself draw the money and credit to the provident fund and this Snot such a case. In the other cases it is the subscriber who

draws the amount from the company who will have to deposit the amount into the provident fund; and if he does not do so, Government can

withhold his emoluments and pay the fund. Thus it is clear that till the money is repaid by the subscriber or drawn by the Accounts Officer himself if

under the rules he is himself empowered to draw the policy amount under the assignment, the money does not become part of jthe provident fund

In this case, under the rules, the Accounts Officer has no right to draw the amount himself from the company. He has to assign the amount to the

person entitled as the asset of the deceased. Consequently, it cannot partake of the character of the provident fund The Subordinate Judge was

therefore perfectly justified in holding that it cannot be said to partake of the character of the provident fund so as to attract the provisions of the

Act. The learned Judge was right in holding that the amount can be proceeded against by the creditors as it is an asset of the deceased judgment-

debtor. In Walchand Molaji v. Charles A. Williams I.L.R.(1935)Bom. 517 the question that arose for consideration was whether the Sum of

money to his credit in the provident fund on his retirement, could be said to be free from attachment and free from the liabilities of his creditors by

reason of the fact that the amount was prohibited from being attached under the provisions of the Provident Fund Act. It was pointed out at page

520 :

It is not disputed before us--and I think it cannot be disputed having regard to the current of decisions, some of which I shall refer to presently,--

that, as long as a compulsory deposit is in the hands of the Government or the institution which keeps and manages the fund, it is exempt from

attachment under any decree, and neither does it vest in the Official Assignee nor in a receiver, appointed under Chapter XX of the Civil

Procedure Code.

Thiagarajan by mother and next friend Ananthalakshmi Ammal, alias Seethalakshmi Ammal and Another Vs. K. Venkatarama Ayyar, has no

application to the facts of this case. So also Ashby v. Costin (1888) 21 Q.B.D. 401. In both the money attached was the fund payable by a

Benefit Society to the nominees and heirs of the deceased and was not an asset of the deceased. Here the life insurance amount was an asset of

the deceased.

The appeal and the petitions accordingly fail and are dismissed with costs.

Leave refused.