Sri P.S Narayana, J.:— This Court ordered notice before admission returnable in six weeks on 28 April, 2006 and the learned counsel for petitioners was permitted to take out personal notice to the first respondent and to file proof of service and interim stay was granted for a period of eight weeks.
2. Sri S. Chalapathi Rao, the learned counsel entered appearance.
3. Sri P. Hari Prasad, the learned counsel representing Sri Pamulaparthi Sadasiva Rao, the learned counsel representing the petitioners would maintain that the learned II Additional Senior Civil Judge, Warangal had erred in ordering attachment before judgment under Order XXXVIII Rule 5 of the Code of Civil Procedure (hereinafter in short referred to as Code) relating to the provident fund and L.I.C policy amounts. The learned counsel also had drawn the attention of this Court to S. 60 of the Code and S. 10 of the Employees' Provident Fund (Miscellaneous Provisions) Act, 1952, (hereinafter in short referred to as Act) and would maintain that in the light of the specific bar imposed basing on public policy, the learned Judge erred in ordering attachment before judgment and directing the withholding of the amounts in stead of dismissing the application. The counsel also placed reliance on certain decisions.
4. Per contra, Sri Chalapathi Rao, the learned counsel representing the first respondent/plaintiff in the suit would maintain that the provisions of S. 60 of the Code are not applicable. The learned counsel also would submit that when once the service benefits or retrial benefits of the deceased pass on into the hands of the legal heirs or legal representatives they partake the estate of the deceased only and would be of different character and hence the attachment before judgment of the amounts ordered by the learned Judge cannot be found fault. At any rate, the learned counsel would submit that the contention that the L.I.C policy amounts also cannot be attached before judgment definitely cannot be sustained since neither S. 60 of the Code nor S. 10 of the Act can be made applicable to such a case.
5. Heard the counsel.
6. The first respondent herein as plaintiff in O.S No. 105 of 2004 on the file of II Additional Senior Civil Judge, Warangal filed an application I.A No. 244 of 2005 under Order XXXVIII, Rule 5 of the Code praying for attachment before judgment of the provident fund and the L.I.C policy amounts of the deceased Linga Reddy. The revision petitioners are defendants 1 and 2 in the said suit and respondents Nos. 1 and 2 in the said application, being the son and the wife of the said deceased Linga Reddy, respectively. Respondents Nos. 3, 4 and 5 in the said application, the Assistant Commissioner, Provident Fund, Warangal, Branch Manager, L.I.C of India, Husnabad, Divisional Manager, L.I.C of India, Karimnagar, are shown as respondents Nos. 2, 3 and 4 in the present civil revision petition and it had been further specified that they are not necessary parties to the present civil revision petition.
7. The parties hereinafter would be referred to as “plaintiff” and “defendants 1 and 2” as arrayed in O.S No. 105 of 2004, specified supra.
8. The father of first defendant and husband of the second defendant one Linga Reddy, it is stated, borrowed a sum of Rs. 2,60,000 from the plaintiff and executed a promissory note in favour of the plaintiff during his lifetime and the said Linga Reddy died on 6 February, 2004. It is also the stand taken by the plaintiff that in spite of repeated demands made relating to the recovery of the amount specified supra, the defendants 1 and 2, the legal representatives of the said Linga Reddy had been avoiding payment though they have been receiving the death benefits/service benefits of the said Linga Reddy and also the Life Insurance Policy amounts relating to the said Linga Reddy. It is also stated that if the defendants 1 and 2 are successful in taking away these amounts, the plaintiff may not realise any amount even in the event of a decree being passed ultimately as against the said parties.
9. The defendants 1 and 2 had taken a stand that the alleged promissory note is a forged and a fabricated one and the amounts in question are not liable for attachment in view of S. 60 of the Code. The third respondent, the Assistant Commissioner, Provident Fund, Warangal, in the said application shown as second respondent in the, civil revision petition, had taken a specific stand that as per S. 10 of the Act, the Provident Fund amount of a member is immune from attachment and hence the same cannot be attached. Respondents Nos. 4 and 5 in the said application shown as respondents Nos. 3 and 4 in the present revision, had taken a stand that out of the two policies sought to be attached, policy No. 682067600 does not belong to the deceased Linga Reddy, i.e, the life assured, and they did not receive any claim from defendants 1 and 2 claiming under policy bearing No. 680868957 and they have also not received the information regarding the death of the life insured, i.e, Linga Reddy and thus the amount under the policy payable on death of the assured cannot be attached. The learned Judge recorded certain reasons and placed reliance on the decision of this Court in Medavati Rama Krishna Reddy v. Peddada Sitalatha, [1997 (1) A.L.D 90], and ultimately held that the plaintiff is entitled for attachment of the said benefits as a security to the decree that may be passed in his favour and as the L.I.C officials, respondents Nos. 4 and 5, contended that the policy bearing No. 682067600 does not belong to Linga Reddy, that the operation of that order would not be there and if any policy is existing in the name of the said person, i.e, Linga Reddy, those amounts shall be withheld or attached and accordingly allowed the application.
10. The attachment before judgment prayed in the application is in relation to the provident fund and the L.I.C policy amounts. In the light of the stand taken in the counter before the learned Judge, there appears to be some doubt relating to the L.I.C policy amounts. The defendants 1 and 2 no doubt had taken the specific stand relating to the exemption available under S. 60 of the Code. However, the Assistant Commissioner, Provident Fund, Warangal had taken a specific stand of the bar imposed on attachment of the provident fund amount by virtue of S. 10 of the Act. Section 60 of the Code deals with Property liable to attachment and sale in execution of the decree. Sub-section (1) specifies:
“The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, shares in a Corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by any another person in trust for him or on his behalf.”
Further the provision specifies:
“Provided that the following particulars shall not be liable to such attachment or sale, namely:
(g) stipends and gratuities allowed to pensioners of the Government or of a local authority or of any other employer, or payable out of any service family pension fund notified in the Official Gazette, by the Central Government or the State Government in this behalf, and political pension;
(k) all compulsory deposits and other sums in or derived from any fund to which the Provident Funds Act, 1925 (19 of 1925), for the time being applies in so far as they are declared by the said Act not to be liable to attachment;
(ka) all deposits and other sums in or derived from any fund to which the Public Fund Act, 1968 (23 of 1968), for the time being applies, in so far as they are declared by the said Act as not to be liable to attachment;”
In Union of India v. Jyothi Chit Fund and Finance, [1976 (2) L.L.N 1], it was held that the provisions of the Provident Funds Act, 1925, being in the larger interest of the public they cannot be waived. In Lukas v. Harris, [1887 (18) Q.B.D 127], where a receiver was appointed to collect the pensions of two officers of Her Majesty, keeping in view the object underlying the provisions of the Army Act, it was observed:
“It is beyond dispute that the object of the Legislature was to secure for officers who had served their country, a provision which would keep them from want and would enable them to retain a respectable social position. I do not see how this object could be effected unless those pensions were made absolutely inalienable, preventing not only the person himself assigning his interest in the pension, but also preventing the pension being seized or attached under a garnishee order, or by an execution or other process of law. Unless protection is given to this extent the object which the Legislature had in view is frustrated, and a strange anomaly would exist. A person with a pension would not be able to utilize his pension to pay a debt beforehand but immediately his creditor had obtained judgment might be deprived of his pension by attachment, equitable execution, or some other legal process. It is impossible to suppose that the Legislature could have intended such anomaly.”
In Muktilal v. Trustees of Provident Fund, [A.I.R 1956 S.C 336], the Apex Court observed that the subscriber to provident fund has a present interest in the fund even though the moneys might become payable to him or his nominee, or his heirs only in future. In Union of India v. Heera Devi, [A.I.R 1952 S.C 227], it was held that the expression “compulsory deposit” is defined as being “a subscription to, or deposit in a provident fund” and such deposit is not liable to attachment and the Provident Fund amount was exempted from attachment and is inalienable and normally no execution can lie as against such a sum. In the decision referred in Medavati Rama Krishna Reddy v. Peddada Sitalatha case (vide supra), a learned Judge of this Court while dealing with Ss. 60(1)(c), 60(1)(g) and 60(1) (kkk) of the Code, as introduced by the amendment in the State of Andhra Pradesh in 1979, held that in a suit for recovery on the basis of a promissory note where the borrower who had executed the pronote died before discharge of liability and the suit was filed against wife and son of the borrower and application for attachment of amounts due by way of gratuity, family benefit fund and group insurance of the deceased was filed it was held that all these amounts were not liable for attachment in case the attachment was sought during the lifetime, but by virtue of Cl. (kkk) in S. 60(1) of the Code, introduced by the State amendment, the amount due towards family benefit fund and group insurance amounts due to the legal representatives of the deceased Government servant were exempt from attachment and however there is no exemption to amounts due towards gratuity and the amount towards gratuity is liable to be attached and the order of the lower Court was set aside to that extent.
11. The Act, Act 19 of 1952, is an Act to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for the employees in factories and other establishments. Section 10 of the Act dealing with protection against attachment reads:
(1) The amount standing to the credit of any member in the fund or of any exempted employee in a provident fund shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by the member or the exempted employee, and neither the official assignee appointed under the Presidency Towns Insolvency Act, 1909 (3 of 1909) nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920) shall be entitled to, or have any claim on, any such amount.
(2) Any amount standing to the credit of a member in the fund or of an exempted employee in a provident fund at the time of his death and payable to his nominee under the scheme or the rules of the provident fund shall, subject to any deduction authorised by the said scheme or rules vest in the nominees shall be free from any debt or other liability incurred by the deceased or the nominee before the death of the member of the exempted employee and shall also not be liable to attachment under any decree or order of any Court.
(3) The provisions of Sub-sec. (1) and Sub-sec. (2) shall, so far as may be, apply in relation to the pension or any other amount payable under the pension scheme and also in relation to any amount payable under the insurance scheme as they apply in relation to any amount payable out of the fund.
The use of the word “vest” in S. 10(2) of the Act and the meaning thereof had been dealt with in N.G Commissariat v. Central Bank of India, [(1993) 2 LLJ 98]. The language of Sub-sec. (2) of S. 10 of the Act is clear and categorical. Section 2 of the Act deals with Definitions. Section 2 (g) of the Act defines “factory” as:
“…. unless the context otherwise requires, “factory” means any premises, including the precincts thereof, in any part of which a manufacturing process is being carried on or is ordinarily so carried on, whether with the aid of power or without the aid of power.”
The Act is applicable to the employees in factories and also other establishments. Reliance was placed on Yogesh Sharma v. Devi Dayal, [A.I.R 1977 Del. 270], in relation to the exemption claimed for attachment of the amounts. Reliance also was placed on Sher Bahadur v. Pasupathy, [A.I.R 1973 Ker. 175], Kousalya Devi v. Praveen Bankers, [A.I.R 1980 Ker. 148], Tata Iron and Steel Company v. Bir Singh, [1983 (2) L.L.N 479]. A similar question had fallen for consideration before this Court in V. Ratnakumari v. K. Subbarayamma, [1993 (2) A.P.L.J 154], wherein the learned Judge held that under S. 10(1) of the Act, the amount standing to the credit of any member in the provident fund is not liable to be attached and the nominees or where there are no nominees, the legal representatives, are entitled to receive the amount “free from any debt or other liability incurred by the deceased.”
12. On a careful analysis of the provisions of the Act, by virtue of the clear statutory bar imposed as against the attachment of the provident fund benefits, the first limb of the order of the learned Judge cannot be sustained and accordingly the same is liable to be set aside.
13. Coming to the second limb of the impugned order, strong reliance was placed on Sub-sec. (3) of S. 10 of the Act which specifies that the provisions of Sub-sec. (1) and Sub-sec. (2) shall, so far as may be, apply in relation to the pension or any other amount payable under the pension scheme and also in relation to any amount payable under the insurance scheme as they apply in relation to any amount payable out of the fund. The words “… payable under the insurance scheme…” occurring in the said Sub-sec. (3) of S. 10 of the Act would assume some importance in the context of the facts of the present case. “Insurance scheme” is defined under S. 2 (ib) of the Act as “… unless the context otherwise requires, insurance scheme” means the employees' deposit-linked insurance scheme framed under Sub-sec. (1) of S. 6-C. Section 6-C of the Act deals with Employees' Deposit-linked Insurance Scheme and Sub-sec. (1) specifies:
“The Central Government may, by notification in the Official Gazette, frame a scheme to be called the Employees' Deposit-linked Insurance Scheme for the purpose of providing life insurance benefits to the employees of any establishment or class of establishments in which this Act applies.”
In the light of the provisions referred to supra, the present Life Insurance Policies too, if any, may not fall under Sub-sec. (3) of S. 10 of the Act and S. 10(3) of the Act as such is not attracted. Further, S. 60(1)(kb) of the Code exempts “all monies payable under a policy of insurance, on the life of the judgment-debtor.” In the State amendment of Andhra Pradesh of Section 60 of the Code, under exemption clause, after Cl. (k), Cl. (kk) had been introduced which specifies:
“amounts payable under policies issued in pursuance of the Rules for the Andhra Pradesh Government Life Insurance Department.”
In Federal Bank, Ltd. v. Smt. Indiradevi Kunjamma, [A.I.R 1986 Bom. 101], relying upon Smt. Sarbati Devi v. Smt. Usha Devi, [(1984) 1 SCC 424 : A.I.R 1984 S.C 346], it was held that the monies payable under insurance policy on the life of a judgment-debtor are entirely exempted from attachment and sale, irrespective of the circumstances as to whether the insurance policy matures during the lifetime of the assured or the monies become payable after his death. The Cl. (kb) aforesaid of S. 60 of the Code was introduced in the year 1976. While considering whether such amount to be exempted from attachment, the Law Commission of India in its 54th report observed:
“In order to encourage thrift, the habit of life insurance should be encouraged, and that consideration, in its turn justifies a more liberal approach as regards exemption of policies of life insurance from attachment. No doubt, considerations justifying an exemption have to be balanced against the legitimate claims of a creditor who has taken all the trouble of obtaining a decree, and who is engaged in the still more troublesome venture of executing it. The less obstacles are placed in his way, the better. Nevertheless, on the same principle on which monies in certain provident funds are exempted from attachment there is a case for the exemption of monies due on a policy of life insurance. Further, we do not think that there should be any limit as to the maximum that is to be exempted out of the amount due on the policy.”
14. While construing and appreciating the exemptions, the policy underlying the incorporation of such exemptions under S. 60 of the Code and S. 10 of the Act also may have to be kept in mind. In view of the applicability of the bar imposed by S. 60(1)(kb) of the Code, this Court is of the considered opinion that the order impugned in relation to the life insurance policies also cannot be sustained and hence the revision petitioners are bound to succeed even in relation to the second limb.
15. In the result, the civil revision petition is allowed setting aside the impugned order of attachment before judgment under Order XXXVIII, Rule 5 of the Code. No order as to costs.