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Smt. Sarju Bai Vs. Smt. Gango Bai and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAllahabad High Court
Decided On
Judge
Reported in(1972)IILLJ540All
AppellantSmt. Sarju Bai
RespondentSmt. Gango Bai and ors.
Excerpt:
- - a division bench recommended that the case should more properly engage the attention of a full bench. 2 and he alone was entitled to get and appropriate the provident fund as well as the special contribution. he was a dependant as defined by the act as well as the rules. the plaintiff's claim to this amount was clearly misconceived. in view of the divided success, the parties shall bear their own costs throughout......singh having made a nomination in favour of defendant no. 2 in accordance with the provident fund rules, he alone was the owner entitled to receive the amount mentioned in the nomination, to the exclusion of all other persons. there is no dispute that the provident funds act, 1926, applies to this case. for the appellants reliance was placed upon section 5(1) of the act. learned counsel for the respondents urged that section 5(1) only entitles the nominee to receive the amount. it does not make him the owner of the money. section 3(2) of the act vested the amount in the dependants. it was submitted that section 3(2) would govern the present case.8. the material provision in section 3(2) of the act is that where any sum is, under the rules of the fund, payable to any dependant, it.....
Judgment:

Satish Chandra, J.

1. A learned single Judge felt there was a conflict of decisions on the construction and inter-action of Sections 3(2) and 5(1) of the Provident Funds Act, 1952, and referred the appeal to a larger Bench. A Division Bench recommended that the case should more properly engage the attention of a Full Bench. That is how the appeal has been laid before this Bench.

2. Having heard learned Counsel we feel that in view of the facts of the case, the controversy regarding the construction of Section 5(1) does not really arise. But since the appeal itself has been referred to us for decision, we proceed to do so.

3. One Ganesh Singh was employed in the Central Railway as a fitter. He was posted at Jhansi. He was a contributor to the provident fund. He retired on 9th February, 1957, but before the provident fund could be repaid to him he died on 9th March, 1957. At his death a sum of Rs. 5,129,25 stood to his credit as the provident fund while a sum of Rs. 1,770 was payable as special contribution. The plaintiffs-respondents filed a suit No. 82 of 1958 for a declaration. They alleged that plaintiff No. 1 Smt. Gango Bai was the legally wedded wife of Ganesh Singh. The other plaintiffs were her sons and daughters by Ganesh Singh. Smt. Sarju Bai, defendant No. 1, had been employed as a maid servant by Ganesh Singh. Defendant No. 2, Bhagwan Singh, was born as a result of Ganesh Singh's illicit relationship with Smt. Sarju Bai. She was not his legally married wife nor was defendant No. 2 his son. The defendants were not entitled to any part of the provident fund. During his lifetime Ganesh Singh appears to have made a nomination in favour of Bhagwan Singh, defendant No. 2, in respect of his provident fund. On its strength the defendants were claiming that they were entitled to the entire sum standing to the credit of Ganesh Singh in his provident fund account including the special contribution. The plaintiffs claimed a declaration that the plaintiffs alone were entitled to it.

4. In defence it was pleaded that Sarju Bai was the legally wedded wife of Ganesh Singh and defendant No. 2 was his lawful son. The nomination created a beneficial interest in favour of defendant No. 2 and he alone was entitled to get and appropriate the provident fund as well as the special contribution.

5. The trial Court upheld the plaint case, and repelling the defence, decreed the suit. On appeal, however, it was found that Sarju Bai was the legally married wife of Ganesh Singh and Bhagwan Singh was his legitimate son. The nomination in favour of defendant No. 2 was held invalid. Both the widows and their children were held entitled to 1/9th share each in the provident fund and the special contribution.

6. Aggrieved, the defendants have come to This Court in second appeal.

7. The appellants' case is that Ganesh Singh having made a nomination in favour of defendant No. 2 in accordance with the Provident Fund Rules, he alone was the owner entitled to receive the amount mentioned in the nomination, to the exclusion of all other persons. There is no dispute that the Provident Funds Act, 1926, applies to this case. For the appellants reliance was placed upon Section 5(1) of the Act. Learned Counsel for the respondents urged that Section 5(1) only entitles the nominee to receive the amount. It does not make him the owner of the money. Section 3(2) of the Act vested the amount in the dependants. It was submitted that Section 3(2) would govern the present case.

8. The material provision in Section 3(2) of the Act is that where any sum is, under the rules of the Fund, payable to any dependant, it shall vest in the dependant. The relevant part of Section 5(1) provides that where any nomination duly read in accordance with the Rules of the Fund purports to confer upon any person the right to receive the whole or any part of the Fund, such person shall become entitled to the exclusion of all persons to receive such sum.

9. Section 3(2) vests in the dependant the sum payable to him under the Rules. Section 5(1) per se confers exclusive entitlement to receive the nominated sum. There is a conflict of opinion whether this entitlement carries or implies a beneficial interest in the nominated sum. No case, however, says that Section 5(1) overrides or modifies Section 3(2). This Court in Administrator General v. Manager, E.I. Railway A.I.R. 1961 All. 815, has observed that a nomination made against the provisions of Section 3(2) would be invalid.

10. The operative efficacy of both those provisions depends on the Rules of the Fund ; for Section 3(2), the Rules must make the sum payable to any dependant. Section 5(1) requires a nomination duly made in accordance with the Rules.

11. In order to apply them, the rules will have to be scrutinised.

12. The deceased Ganesh Singh was governed by the State Railway Provident Fund Rules given in Chapter XIII of the Indian Railway Establishment Code, Vol. I. Rule 1302 gives the definitions. Sub-clause (2) defines 'children' to mean legitimate children and step-children. It shall also include adopted children. Clause (4) defines 'dependant' to mean any of the following relatives of a deceased subscriber, namely, a wife, husband, parent, child, minor brother, unmarried sister and deceased son's widow and child, and where no parent of the subscriber is alive, a paternal grandparent. Sub-clause (6) defines 'family' to mean, in the case of a sole subscriber, a wife or wives and children of the subscriber, and the widow or widows and children of a deceased son of the subscriber. Rules 1338 and 1340 are relevant and material. They are as follows i

1338, Nominations. (1) The Accounts Officer shall, as soon as the account is opened, invite every subscriber to make a nomination conferring the right to receive the whole or part of the amount, excluding the amount of special contribution admissible under Rule 1314 that may stand to his credit in the fund in the event of his death before the amount standing to his credit has become payable, or where the amount has become payable, before payment has been made.

(2) A subscriber making a nomination shall send it, if a gazetted railway servant to the Accounts Officer, otherwise, to his immediate superior.

(3) A subscriber may in his nomination distribute the amount that may stand to his credit in the fund amongst his nominees at his own discretion.

(4) A nomination made under Sub-rule (2) or a declaration made before these rules came into force, may be cancelled by a subscriber by sending a notice in writing, if a gazetted railway servant to the Accounts Officer, otherwise, to his immediate superior.

(5) On the marriage or re-marriage of a subscriber who is not a Hindu, Muslim, Buddhist or any other person, exempted from the operation of the Indian Succession Act, 1925 (XXXIX of 1925), any nomination already made by him shall forthwith become null and void.

(6) A subscriber may provide in a nomination:

(a) in respect of any specified nominee, that in the event of his pre-deceasing the subscriber the right conferred upon the nominee shall pass to such other persons as may be specified in the nomination;

(b) that the nomination shall become invalid in the event of happening of a contingency specified therein.

(7) Immediately on the death of a nominee in respect of whom no special provision has been made in the nomination under Clause (a) of Sub-rule (6) the nomination being thereon rendered partially or wholly null and void or on the occurrence of any event by reason of which the nomination becomes invalid in pursuance of Sub-rule (5) or of Clause (b) of Sub-rule (6) the subscriber may send to the Accounts Officer an intimation of this occurrence and may also send a fresh nomination made in accordance with the provisions of this rule.

(8) A nomination or its cancellation shall take effect to the extent that it is valid, on the date on which it is received by the Accounts Officer or in the case of a non-gazetted railway servant on the date on which it is received by his immediate superior.

(9) Nothing in these rules shall be deemed to invalidate a nomination duly made before these rules came into force but their validity will be subject to the provisions of Sub-section (1) of Section 5 of the Provident Funds Act, 1925.

134. Persons to whom accumulations are payable:

(1) Subject to the provisions of Rule 1341 on the death of a subscriber before the amount standing to his credit has become payable or where the amount has become payable, before payment has been made;

(i) the amount of the special contribution credited to the subscriber's account under Rule 1314 shall become payable to the widow or widows or and dependant children of the deceased subscriber in such shares as the controlling officer may determine ;

(ii) If a nomination made by the subscriber in accordance with Rule 1338 subsists, the amount which becomes payable under Clause (i) or that part thereof to which the nomination relates, shall become payable to his nominee or nominees in accordance with such nomination ; provided that if the amount exceeds rupees five thousand and the nominee is not a dependant, it shall be payable only on production by the nominee of probate or letters of administration evidencing the grant to him of administration to the estate of the deceased or a succession certificate entitling him to receive payment of the amount; and

(iii) If no nomination subsists, or if the nomination relates only to a part of the amount standing to his credit in the fund, the whole amount or the part thereof to which the nomination does not relate, as the case may be, shall, subject to the provisions of Clause (i), become payable to the members of his family in equal shares, and if there are no such members shall become payable-

(a) if the amount does not exceed rupees five thousand to any person appearing to the Accounts Officer to be entitled to receive it;

(b) If the amount exceeds rupees five thousand, to any person who produces probate or letters of administration evidencing the grant to him of administration to the estate of the deceased or a succession certificate entitling him to the payment of the amount;

Provided that no share shall be payable to

(1) sons who have attained legal majority ;

(2) sons of deceased son who have attained legal majority ;

(3) married daughters whose husbands are alive;

(4) married daughters of a deceased son whose husbands are alive ;

if there is any member of the family other than those specified in Clauses (1), (2), (3) and (4):

Provided further that the widow or widows and the child or children of a deceased son shall receive between them in equal parts only the share which that son would have received if he had survived the subscriber and had not attained the age of legal majority at the time of the subscriber's death.(3) The General Manager may delegate powers under Sub-rule (1)(i) of this rule to a head of a department or a Divisional Superintendent, as the case may be, or in respect of non-gazetted subscribers, to a District Officer.

13. Rule 1338(1) provides for nomination in respect of the Fund, excluding the amount of special contribution. Under Rule 1340(1)(ii) the amount to which the nomination relates, excluding the amount of special contribution (which becomes payable under Rule 1340(1)(i) becomes payable to the nominee. These two rules exclude the special contribution from the subscriber's right of nomination. The subscriber is not competent to make any nomination for it.

14. Under Rule 1340(1)(i) the amount of special contribution becomes payable to the widow or widows or/and dependent children of the deceased subscriber in such shares as the controlling officer may determine. In view of Section 3(2) of the Act, the determined shares of the special contribution shall vest in the mentioned dependants, namely, the widows or dependent children.

15. Since no nomination can be legally made, no occasion will arise to invoke Section 5(1) in regard to special contribution. We need not hence consider the academic question whether the right to receive under Section 5(1) imports ownership, as far as the special contribution is concerned.

16. The plaintiff's claim for this amount was premature, because there is no evidence that any share has as yet been determined by the Controlling Officer. The defendants' claim to this amount, based as it is on the alleged nomination, is illegal, because no nomination could, under the rules of the Fund, be made for it. In relation to this amount the proper relief will be to declare that both sets of parties will be entitled to such shares in the special contribution as the controlling officer may determine.

17. We now come to the balance of the provident fund.

18. In view of Rule 1323(3) there can be more than one nominee amongst whom the subscriber can distribute his fund. Rule 1340(1)(ii) comtemplates that anominee may be a person who is not a dependant. Under it, if the amount exceeds Rs. 5,000 and the nominee is not a dependant, the amount shall be payable only on production by the nominee of a probate or letters of administration. Obviously if the amount is in excess of Rs. 5,000 (as it is in the present case the amount being Rs. 5,129.25) it is payable to the nominee, if he is a dependant without probate or the letters.

19. When under the rules of the Fund, an amount becomes payable to any dependant, Section 3(2) is attracted and the amount vests in that dependant. Section 3(2) does not specify how the amount should become payable to a dependant. The only condition is that it should become payable under the rules of the Fund. If under the rules an amount becomes payable to a particular dependant by reason of nomination, Section 3(2) will equally apply, and the sum to which the nomination relates will vest is the nominee dependant,

20. In such a case, the nominee dependant will become the owner under Section 2(2). He need not take recourse to Section 5(1) to establish his beneficial interest in such sum.

21. Here the finding of the fact is that Bhagwan Singh, the nominee, was the legitimate son of Ganesh Singh. He was a dependant as defined by the Act as well as the rules. The nominated sum vested in him alone under Section 3(2). Under Section 5(1) he undeniably acquired an exclusive right to receive the amount. The plaintiff's claim to this amount was clearly misconceived.

22. In this view, the question if the right to receive under Section 5(1) carries or confers a beneficial interest does not really arise. Even if it is held that it does not make the nominee the owner, the plaintiffs cannot succeed. We hence do not deem it worth while to enter into that controversy.

23. In the result, the appeal succeeds and is allowed in part. The suit is decreed for a declaration that the parties to the suit shall be entitled to thesocial contribution in such shares as the controlling officer may determine. On our findings, the plaintiff's suit for declaration in respect of the rest of the amount of provident fund is dismissed. In view of the divided success, the parties shall bear their own costs throughout.


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