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Matildas Bishop Vs. Suzan Anthony Millard - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberO.C.J. Appeal No. 9 of 1945 and Suit No. 1347 of 1944
Judge
Reported inAIR1946Bom138; (1945)47BOMLR906
AppellantMatildas Bishop
RespondentSuzan Anthony Millard
DispositionAppeal dismissed
Excerpt:
provident funds act (xix of 1925), sections 4 and 5 - g.i.p. railway provident fund rules, rule 25-nomination by a subscriber-nomination ceases to exist on marriage of subscriber-whether rule 25 is ultra vires.;rule 25 of the g.i.p. railway provident fund rules is not ultra vires the provident funds act, 1925.;a nomination made by a subscriber (who is not a hindu, mahomedan, buddhist, etc.) to the g.i.p. railway provident fund ceases to subsist under rule 25, on the subscriber subsequently contracting a marriage, and on his death, the provident fund becomes payable not to the nominee but to his widow. - - if the word 'subsists,'which is used in the rules, was retained with proper alterations in the issue, it might have been better. the parties, however, have clearly understood the rival..........and no authority is needed to support it. it was next contended that rule 25 of the provident fund rules, which was in force in august, 1985, if read as making a nomination revocable on the marriage of the subscriber, was ultra vires. it was argued that the notes printed at the foot of the prescribed form of nomination cannot be considered as forming part of the rules. they were mere notes for the guidance of the department. it was next contended that whatever general notes for the guidance of the department may exist, in fact the deceased made the nomination without any reservation and on a form which did not contain any such notes. therefore, in any event, the nomination made by the deceased was not controlled by any such condition and effect should be given to the nomination,.....
Judgment:

Kania, J.

1. This is an appeal from the judgment of Mr. Justice Bhagwati, Eustace Edwin Millard, an employee of the G. I. P. Railway, was a subscriber to the provident fund of the railway company. On July 23, 1936, he made a nomination under the rules of the fund in the prescribed form, which is headed 'The Form of declaration', in favour of his mother, He married the respondent on July 18, 1941, and died on October 1, 1943. He left him surviving his widow the respondent, and two sisters who are the appellants. His mother died on September 23, 1943, i.e. before his own death. After his death the appellants obtained letters of administration to the estate of their mother and claimed to receive payment of the provident fund due to the deceased from the railway company. The respondent claimed the same fund on the ground that on her marriage the nomination ceased to subsist under the rules. The G. I. P. Railway being owned at all material times by Government, the Governor General in Council filed an interpleader suit as the plaintiff. He was discharged from the suit on payment of his costs, after he desposited the amount in Court. The only issue which was ordered to be tried first was as follows:

Whether the marriage of defendant No. 1 (respondent) to the deceased subsequent to the nomination by the deceased in favour of his mother revokes the nomination?

I must say that the word 'revokes' is not happily chosen. If the word 'subsists,' which is used in the rules, was retained with proper alterations in the issue, it might have been better. The parties, however, have clearly understood the rival contentions arising on the construction of the rules and the Provident Funds Act, 1925.

2. On behalf of the appellants it is contended that the Provident Funds Act should be first looked at and Section 5 of the Act determines the rights of the nominee. The relevant portion of that section is as follows:

Subject to the provisions of this Act, but otherwise notwithstanding anything contained in any law for the time being in force, or any disposition, whether testamentary or otherwise by a subscriber to...the Railway Provident Fund of the sum standing to his credit in the Fund...any nomination duly made in accordance with the rules of the fund, which purports to confer upon any person the right to receive the whole or any part of such sum on the death of such subscriber...shall be deemed to confer such right absolutely until such nomination is varied by another nomination made in like manner or is expressly cancelled by the subscriber...by notice given in such manner and to such authority as is prescribed by those rules.

It was pointed out that although under the Act there was no provision for making rules by Government or the railway administration, the existence of the rules is assumed. It was argued that while rules might be framed for the internal management of the fund, no rule can be framed so as to override Section 5 and prescribe a method by which a nomination duly made under the rules can be varied or cancelled, otherwise than as prescribed by the section. In this connection it was pointed out that in England under the Friendly Societies Act, 1875, there was no provision for revocation of the nomination on the marriage of the subscriber. The provision of revocation on the happening of that event was made by express legislation under the Friendly Societies Act, 1896. It was therefore contended that the same result cannot be achieved by making a rule to that effect.

3. The appellants relied on Secy, of State v. Nagendra Mohan (1938) 42 C.W.N. 1143 to support the contention that a will cannot revoke a nomination. No authority is required for that proposition, because Section 5 itself provides that a will by itself shall not be considered a sufficient revocation of the nomination. Bennett v. Slater [1899] 1 Q.B. 45 was relied upon to support the contention that a nomination made under the Friendly Societies Act, 1875, was not revocable in any manner other than that prescribed by the corresponding subsection and was not revocable by a subsequent will of the nominator. In that judgment the Court emphasised that a nomination cannot be revoked otherwise than in the manner prescribed by the section. I think the clear words used in Section 5 of the Provident Funds Act are equally emphatic on the point and no authority is needed to support it. It was next contended that Rule 25 of the Provident Fund Rules, which was in force in August, 1985, if read as making a nomination revocable on the marriage of the subscriber, was ultra vires. It was argued that the notes printed at the foot of the prescribed form of nomination cannot be considered as forming part of the rules. They were mere notes for the guidance of the department. It was next contended that whatever general notes for the guidance of the department may exist, in fact the deceased made the nomination without any reservation and on a form which did not contain any such notes. Therefore, in any event, the nomination made by the deceased was not controlled by any such condition and effect should be given to the nomination, irrespective of the note printed at the foot of the prescribed form. It was lastly contended that this note is an attempt to prescribe a condition subsequent to revoke the nomination; and is made with a view to make the rule a will of the subscriber who was not a Hindu, Mahomedan, Buddhist or a person exempt from the operation of the Indian Succession Act and was thus in conflict with the express words of Section 5 of the Provident Funds Act.

4. The material part of Rule 25 is in these terms:

25. (a) Subject to the provisions of Clause (6) below, the disposal of the balance at credit of deceased members shall be regulated by Section 4(1) of the Provident Funds Act, 1925, reprinted as annexture AAA.

(b)(i) If a declaration made by a member in accordance with the provisions of rules subsists vide notes to annexture A, the amount standing to his credit in the fund, or the part thereof to which the declaration relates shall, subject to the other provisions of these rules, be payable in accordance with such declaration.

The whole of the Provident Funds Act is reprinted as annextunes AAA. Annexture A is the form of declaration. The material part is as follows:

I hereby declare that in the event of my death the under-mentioned person or persons shall be entitled to receive payment of my provident fund holding including additional benefits, if any, in the proportion mentioned against their names....

Then follow certain columns, with headings, in which the name of the nominee, his relationship to the member, the proportion of the holdings etc. have to be filled in. Paras. 1 and 2 of the notes are in these terms:

When a deposit account is first opened the member concerned shall be required to give a declaration particularising the person or persons by whom he is desirous that the whole or any portion of his deposit shall be received in the event of his death, and the deposit shall subject to the other provisions of these rules, be payable in accordance with such declaration. Such declaration should, whenever possible, be in the handwriting of the member and must be signed by him. The declaration which should be attested by two witnesses in the presence! of the declarant and of each other will remain in force until it is revised or cancelled by means of a notice in writing given to the Chief Accounts Officer in the prescribed form. Such notice or revised. declaration shall also be similarly attested by two witnesses. On the marriage or remarriage of a member who is not a Hindu, Mahomedan, Buddhist, or other person exempted from the operation of the Indian Succession Act, any declaration already submitted by him shall forthwith become null and void and a fresh declaration shall be required.

2. This declaration is made under Provident Fund Rules 24(a) and 25.

The declaration made by the deceased and filed with the railway company is substantially in the same form, except that at the foot no notes are printed. The definition of 'dependent' as found in the Provident Funds Act Section 2(c) is printed. The Provident Fund Rules and Regulations (a copy of which is put in as exhibit) is headed 'Revised Rules and Regulations for the maintenance and management of the Fund'.

5. On behalf of the respondent it is contended on the other hand that the rules of the provident fund govern the rights of the parties. The Act is applicable, but unless any rule is in conflict with the express statute, the rights of the contracting parties, i.e. Government on the one hand and the employees on the other, must be according to the rules. It was argued that the whole argument of the appellants was based on a misreading of Section 5, It was not disputed that a nomination cannot be varied or cancelled except as provided in Section 5. The section however recognises the nomination made in accordance with the rules of the fund. The Act did not prohibit the making of rules in respect of nominations, so as to make them conditional or subsisting on certain contingencies only. It was pointed out that Sections 3, 4 and 5 contained the scheme of the Act. While Section 5 defined the rights of the nominee, Section 4 was the material section as it contained provisions relating to repayment of the fund. Section 4(1)(c)(i) was relevant to be considered in this connection. In that clause the sum or the balance of the provident fund which was not payable under Clause (a) or {b) to the dependent or when it was less than Rs. 5,000, was to be paid to 'any person nominated to receive it under the rules of the fund.' Relying on the general words used in that clause it was argued that the nomination made under the rules controlled the right to receive payment. If the nomination itself was not bad according to the rules, it was wrong to contend that because the nomination was conditional, viz. subsisting on the non-occurrence of a certain event, it should be considered as varied or cancelled otherwise than in the manner prescribed in Section 5.

6. In my opinion the contention of the respondent on the construction of the section and rules is correct. The proper approach to the question is to consider the scheme of the Act first. While Section 5 of the Act, as shown by the marginal note, prescribes rights of the nominees, the important section to be considered is Section 4. The claim to receive the money must therefore be under that section, and that section alone. It cannot rest on Section 5. Under Section 4(1)(c)(i) a person who is properly nominated according to the rules is entitled to receive the money. The question therefore is in whose favour there subsists a nomination on the date the claim to receive the money is made. To answer that question one must turn to the nomination paper. I find nothing in Section 5 to prevent a nomination being considered subsisting under certain conditions only. The words of Section 5 do not prohibit the making of such nomination. The Act only provides for a nomination made according to the rules. There is nothing in the rules to prevent such a nomination being made. Section 5 prevents the variation or cancellation of a nomination, which is filed with the company, otherwise than as prescribed by that section. The question in the present case is not of a variation or cancellation of the nomination so made, but the effect of the nomination itself. That question is not dealt with by Section 5 at all. According to Section 5 a nomination duly made in accordance with the rules of the fund becomes effective and would confer a right to receive the balance of the fund on the death of the subscriber, but such right must be found in the nomination made according to the rules of the fund. I do not think that the section prevents the making of a rule, which would make a nomination subsisting on certain contingencies only. Rule 25(a) prescribes that, subject to the provisions of Clause (b), the disposal of the balance shall be regulated by Section 4(1) of the Act. Therefore before approching Section 4(1) the railway authority has to ascertain whether the case is covered by Rule 25(6). That clause of the rule (which I have quoted above) in terms provides 'if the declaration made by the member subsists'. There is an express reference after those words to the note annexed as A. Therefore, the question whether the declaration subsists or not has to be determined on a reference to the notes found in annexture 9 to the rules. The notes thus form an integral part of the sub-clause. The last part of the first paragraph of the notes prevents the subsistence of such nomination on the marriage or remarriage of a member who was not a Hindu, Mahomedan, Buddhist, or a person exempted from the operation of the Indian Succession Act. It declares that in case of such a member the declaration already submitted by him, on marriage or remarriage, shall forthwith become null and void. Giving proper effect to the words used in the notes it is therefore clear that on the marriage or remarriage of such a member, according to Rule 25(b)(1), the-declaration does not subsist. If the declaration does not subsist one must turn to Rule 25(a) to ascertain the party to whom the fund is payable. It is there prescribed that the fund shall be payable according to the rules found in Section 4(1). It is not disputed in the present proceedings that if the declaration does not subsist the respondent is entitled to the fund. The only issue on which the Court's opinion is sought is whether on the true construction of the Act and the rules the declaration subsisted after the marriage of the respondent with the deceased.

7. The fact that in this individual case these notes do not appear at the foot of the nomination paper does not in any way help the appellants because by reference to the notes in Rule 25(b) the notes become a part of the rule, and the nomination, even without containing the notes, is still a nomination under the rules and the effect thereof is controlled by the notes printed at the foot of the prescribed form.

8. The argument that the rule is ultra vires the Government is unsound because there is no limitation to the rule-making power of Government under the Act. The rule, as construed above, does not come in conflict with any express provision or condition found in Section 5. The argument that the attempt is to create another condition subsequent is also unsound because what is intended to be attained by the notes is not to prescribe a condition subsequent and cancel it, but to prescribe the occurrence of an event which limits the existence of the nomination itself. By the nomination, made with this condition, there is no variation or cancellation of the nomination, but the operation of the nomination itself is limited to the period prescribed by the notes. I do not think by the notes an attempt is made to make a will, in the 'case of an exempted person. I do not find anything in the Act to prevent the contracting parties from agreeing to a rule which will operate only in respect of a certain class of subscribers, as distinguished from certain other class of subscribers. The law of contract does not prevent the making of such contracts. If a member does not like the rules he has always the option not to be a subscriber. If under the terms of his service he has to be a subscriber, there is no obligation on him to take up such service, unless he is willing to accept the conditions offered to him. One of the conditions may be that he has to subscribe to a fund according to the rules framed by the Government.

9. In England the change was made by legislation. I am however unable to find anything in the Provident Funds Act to prevent the same result being achieved by rules here. A change by legislation may have been desirable but may not have-been done in view of the fact that there would be discrimination on this point between persons to whom the Indian Succession Act applied and persons to whom it did not apply. We are not concerned with the reasons why the Legislature omitted to include such a provision in the Provident Funds Act in respect of a limited class of members. What we are concerned with is to ascertain whether the framing of the rules is against the Act and I am unable to find any law which prevents the framing of that rule.

10. The learned Judge in the trial Court has approached the matter correctly. The appeal fails and is dismissed with costs. Two counsel certified.

Chagla, J.

11. I agree with the judgment just delivered by my brother Kania and have very little to add. In my opinion the vital and operative section of the Provident Funds Act is Section 4. It is that section which regulates the obligation cast upon the officers of the fund to make payment to persons mentioned in that section. It is also that section which lays down the rights of the persons who have to receive from the fund. It is only under that section that a person becomes entitled to be paid out of the fund of which he is a subscriber. All that Section 5 does is, as its marginal note indicates, to declare the rights of the nominees and it provides that the right of the nominee is absolute and is not qualified or controlled in any manner. But the right of the nominee which is declared by that section is the right of a nominee under a valid and subsisting nomination, and in order to find out what a valid and subsisting nomination is one has to turn not to Section 5 but to Section 4, because Section 4 in terms provides that when a payment has to be made under a nomination it is to a person nominated to receive the fund under the rules of the fund. The right of the nominee to receive as a nominee must be a right given to him under the rules of the fund and not under any provisions of the statute. To my mind what is decisive of this appeal is the answer to the question, 'Who is the person in this case who is entitled to receive as a nominee under the rules of the railway provident fund?' It cannot be disputed that, as the rules of the railway provident fund stand, the appellants are not entitled to receive the fund, as the nomination of the deceased's mother came to an end on the marriage of the deceased with the respondent, and the appellant's mother ceased to be the person nominated to receive the amount under the rules of the fund. Once that question is answered under Section 4, it is futile in my opinion to proceed further to examine Section 5, because Section 5 only deals with and can only deal with nominations which are valid and subsisting nominations under Section 4. As I have pointed out it is only with regard to the nominees under valid and subsisting nominations that Section 5 declares the rights, and that section further provides that so long as a valid and subsisting nomination is not varied or cancelled in accordance with the rules of the fund, those rights would continue. In this case no question of variation or cancellation arises.

12. I therefore agree with my learned brother that the appeal should be dismissed with costs.


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