Sista Venkatachalam vs Bhamidipalli Saramma

Rajagopalan, J.—The plaintiff-respondent in, second appeal is the mother of the late Venkatanarayana who died without issue on 21-11-

1937. Subhadramma was the widow of Venkatanarayana. On his death, she succeeded to his separate properties which consisted of (1) the

amount payable under an insurance policy which Venkatanarayana had taken out and (2) the amount lying to the credit of Venkatanarayana in his

provident fund account. Subhadramma acquired two items of Immovable properties. The finding of the lower appellate Court was that item 1 of

the two items shown in the schedule to the plaint was acquired by Subhadramma with the money she got from the insurance company and that item

2 was purchased with the monies drawn from the provident fund. Before Subhadramma died she executed the Will under which the defendants-

appellants in the second appeal claimed the properties. On the death of Subhadramma Venkatanarayana''s mother as the reversioner to the estate

of Venkatanarayana sued the defendants for recovery of possession of these properties. Both the Courts held that the will was a genuine

document. But the learned District Munsif dismissed the plaintiff''s claim holding that the two items of properties should be treated as the absolute

properties of Subhadramma. On appeal, the learned Subordinate Judge held that while the amount in the provident fund of the late

Venkatanarayana had become the absolute property of Subhadramma when it came to her, she had only a widow''s estate in the amount paid

under the policy of insurance. Since it was with that amount that item 1 had been purchased, the learned Subordinate Judge held that the plaintiff

was entitled to recover possession of item 1 as reversioner to the estate of the late Venkatanarayana after the death of Subhadramrna. The

defendants preferred the second appeal.

The only question for determination in this second appeal is whether the learned Subordinate Judge was right in holding that the amount paid

under the insurance policy had not become the absolute property of Subhadramma which she could dispose of by her will.

Venkatanarayana was in the service of the District Board as a school teacher. He contributed to the provident fund. He took out a policy No.

24706 in the Lakshmi Insurance Co. It was common ground that contributions to this policy were made out of the amounts lying to the credit of

Venkatanarayana in his provident fund. Venkatanarayana assigned this policy to the President, District Board, East Godavari ""as security for

payment of all sums which under the Local Boards Provident Fund Rules I may hereafter become liable to pay to that fund"", Ex. B. (l)(a). On the

death of Venkatanarayana, the President of the District Board assigned the policy to Venkatanarayana''s heir and widow Subhadramma under Ex.

B. 1(b) which ran,

I, President, District Board, Rajahmundry, the assignee of the within policy, hereby assign all the benefits of the within policy to Bhammidipalli

Subhadrammagaru......

Rule 10(1) of the Provident Fund Rules framed by the Government u/s 71(g) and Section 199(2)(a) of the Madras Local Boards Act, 1920 ran:

At the request in writing of any subscriber, and with the consent of the District Board, any portion or whole of his subscriptions with interest

thereon may be invested by the District Board in a policy of life assurance in such office and for such amount and on such terms as may be mutually

agreed upon in writing between such subscriber and the District Board.

It was under this rule that the premia for the policy taken out by Venkatanarayana were paid out of the amounts to his credit in his provident fund.

Clause 2 of Rule 10 ran :

Such policy so arranged shall be effected in the name of the subscriber who shall assign the same in favour of the President, District Board, it shall

be held and unless reassigned over as provided for in Clause (c) or Clause (d) of the proviso, shall be realised by the District Board and the net

proceeds on realisation shall be credited to the account of each subscriber.

Clause (c) of the proviso did not apply; it provided for the contingency of retirement of the subscriber from service; Venkatanarayana died while

still in service. Clause (d) of the Proviso to Rule 10 ran :

On the death of a subscriber while in service, the policy effected on his life shall be reassigned to the, nominee appointed by him under Rule 5 or

to all the nominees appointed by him under that rule jointly specifying the shares to which each of the nominees is entitled.

it was common ground that Subhadramma was the nominee. It was under Clause (d) of the proviso to Rule 10 that the President, District Board,

executed Ex. B. l(b) assigning the policy and the benefits accruing thereunder to Subhadramma.

The real question is, did the money payable under the policy become part of the provident fund of Venkatanarayana? If that question is to be

answered in the affirmative Subhadramma as the nominee would be absolutely entitled to all the amounts that had been credited to the provident

fund of Venbatanarayana. If, however, the question is answered in the negative, the amount collected under the policy of insurance will have to be

treated as an item of the estate of the late Venkatanarayana distinct from the amount which lay to his credit in his provident fund, and the

nomination under the rules of the provident fund would not govern a devolution of interest in this part of the estate of Venkatanarayana, that is the

amount paid under the policy of insurance.

Sub-clause (2) of Rule 10 provides for the realisation of the amount payable under the policy of insurance by the assignee, that is, by the

President, District Board and for that amount being credited to the Provident Fund of the subscriber, that is Venkatanarayana. The amount payable

under the insurance policy was not collected'' in fact by the President of the District Board, nor was it credited to the provident fund account of

Venkatanarayana. It should be remembered that Sub-clause (2) of Rule 10 is also subject to the proviso. Clause 1(d) of the proviso specifically

provided for the contingency of the subscriber dying in service. In that contingency which happened when Venkatanarayana died, all that the

President of the District Board could have done was to reassign the policy to the nominee of Venkatanarayana who would be entitled to get all the

amounts that stood to the credit of Venkatanarayana in his provident fund account. I am unable to accept the contention, that the effect of the

reassignment under Clause (d) of the proviso to Rule 10 was to make the amount realised under the insurance policy by the assignee

Subhadramma part of the provident fund amount of Venkatanarayana. As I have already pointed out, in fact, at no time was the amount realised

under the insurance policy credited to the provident fund account of Venkatanarayana. The mere fact that Subhadramma was the nominee entitled

to the whole of the amount that stood to the credit of Venkatanarayana in his provident fund account, is not enough to cover the money realised by

Subhadramma on a reassignment of the policy under the provisions of Clause (d) of the proviso to Rule 10 as part of the provident fund amount. It

was certainly money that belonged to the estate of Venkatanarayana which Subhadramma was entitled to inherit but she succeeded only to a

widow''s estate therein and no more. The definition of ""provident fund"" in the Provident Funds Act, 1925 (Clause 2(c) ) cannot help the

defendants. The amount paid under the insurance policy cannot be viewed as ""increment accruing on such subscriptions"" within the meaning of

Clause 2(e) despite the fact that the premia towards that policy were paid out of the provident fund of Venkatanarayana.

The view taken by the lower appellate Court that the plaintiff was entitled to succeed to item 1 after the death of Subhadramma is correct.

The second appeal fails and is dismissed with costs.