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  • EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT 1952
  • S. 23 of the Hindu Succession Act, 1956 (hereinafter referred to as the Succession Act)
  • SECTION 6 MARRIED WOMEN S PROPERTY ACT 1874
  • S. 14A(1) of the Delhi Rent Control Act, 1958
  • Provident Fund Act, the Central Government
  • provisions of the Provident Fund Act, 1925,
  • provisions of S. 39 of the Insurance Act
  • S. 10(2) of the Provident Fund Act, 1952
  • provisions of the Provident Fund Act
  • S. 3(2) of the Provident Fund Act, 1925
  • S. 5(1-B) of the Provident Fund Act
  • S. 10(2) of the Provident Fund Act
  • S. 23 of the Succession Act
  • S. 23 in the Succession Act
  • S. 39 of the Insurance Act
  • Provident Fund Act, 1925
  • (Amendment) Act, 1946
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
Judges
Acts
  • EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT 1952
  • S. 23 of the Hindu Succession Act, 1956 (hereinafter referred to as the Succession Act)
  • SECTION 6 MARRIED WOMEN S PROPERTY ACT 1874
  • S. 14A(1) of the Delhi Rent Control Act, 1958
  • Provident Fund Act, the Central Government
  • provisions of the Provident Fund Act, 1925,
  • provisions of S. 39 of the Insurance Act
  • S. 10(2) of the Provident Fund Act, 1952
  • provisions of the Provident Fund Act
  • S. 3(2) of the Provident Fund Act, 1925
  • S. 5(1-B) of the Provident Fund Act
  • S. 10(2) of the Provident Fund Act
  • S. 23 of the Succession Act
  • S. 23 in the Succession Act
  • S. 39 of the Insurance Act
  • Provident Fund Act, 1925
  • (Amendment) Act, 1946
Smart Summary

Factual and Procedural Background

Smt. Smriti Basu (nee Mazumdar), the sole issue of Samarendra Nath Mazumdar by his first wife, sued her stepmother, stepbrother and two stepsisters claiming partition of properties left by her father. The properties in dispute included a two-storeyed dwelling house, amounts payable under the deceased's life insurance policy, and sums standing to his credit in his provident fund account.

The defendants accepted that the plaintiff had a 1/5th share in the properties but contended (i) that Section 23 of the Hindu Succession Act, 1956 rendered the house impartible, and (ii) that the life insurance proceeds and provident fund sums belonged exclusively to the respective nominees (Smt. Usha Mazumdar and Sri Surojit Mazumdar). The trial Court rejected the defendants' contentions and decreed the suit in preliminary form. The defendants appealed against that decree.

Legal Issues Presented

  1. Whether Section 23 of the Hindu Succession Act, 1956 (restriction on female heir claiming partition of a dwelling-house "wholly occupied by members of his or her family") applies where the dwelling-house is partly tenanted — i.e., how the word "wholly" in S.23 should be interpreted.
  2. Whether a nominee under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (and the Scheme framed thereunder) acquires a beneficial interest in the provident fund amount standing to the credit of a deceased member (as opposed to merely a right to receive the amount), and consequently whether the plaintiff is entitled to share in the provident fund money received by the defendant-nominee.
  3. Relatedly, whether the principle established in Sarbati Devi v. Usha Devi (regarding nomination under Section 39 of the Insurance Act) applies to nominations under the Provident Fund Act and Scheme.

Arguments of the Parties

Defendants' (Appellants') Arguments — Mr. Pal

  • Conceded that the trial Court's finding regarding the plaintiff's entitlement to a share of the life insurance proceeds could not be challenged in view of the Supreme Court decision in Sarbati Devi v. Usha Devi (AIR 1984 SC 346).
  • Contended that Section 23 of the Succession Act applies even if a dwelling-house is partially tenanted. The word "wholly" should not be read in a literal vacuum but interpreted in light of the purpose of the Act to mean that so much of the dwelling-house as is wholly occupied by family members is protected; thus partition could be limited to portions not wholly occupied by family members. Relied on Vidyaben v. J.N. Bhatt (AIR 1974 Guj 23).
  • Argued that nomination under the Provident Fund Act (and its Scheme) confers on the nominee not only the right to receive the money but a beneficial interest in it. Relied on Keshablal v. Iva Rani Rudra (AIR 1947 Cal 176).

Plaintiff / Respondent's Arguments — Mr. Roy Chowdhury

  • Submitted that the word "wholly" in S.23 should be given its natural and plain meaning (entirely/fully), and where a dwelling-house is not fully occupied by family members the restriction in S.23 does not operate — thus the house in question is partible.
  • Contended that the principle in Sarbati Devi (that nomination under S.39 of the Insurance Act does not confer beneficial interest) should be applicable to nominations under the Provident Fund Act because the Provident Fund legislation is a beneficial statute whose benefits ought to be available to heirs. Relied upon Shaik Dawood v. Mahmooda Begum (AIR 1985 Andh Pra 321) in support of the view that Sarbati Devi applies to provident fund nominations.
  • Argued that the scheme-making power under the Provident Fund Act did not confer on the Scheme any power to bestow beneficial proprietary rights on nominees beyond a right to receive; accordingly, Chapter VIII of the Scheme should be read as conferring the right to receive only.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sarbati Devi v. Usha Devi, AIR 1984 SC 346 Held that a mere nomination under S.39 of the Insurance Act does not confer on the nominee any beneficial interest; nomination only authorises the insurer to pay and obtain valid discharge. The court accepted the effect of this Supreme Court decision: the trial Court's finding that the plaintiff had a claim proportionate to her share in the life insurance money could not be assailed. The decision was treated as authoritative on life insurance nominations.
Poppatlal Shah v. State of Madras, AIR 1953 SC 274 Rule of statutory construction: to ascertain legislative intent, all parts of a statute are read together; interpretation should consider purpose and context. Cited by Mr. Pal to urge purposive construction of "wholly". The court acknowledged the rule but applied the plain meaning to "wholly" and then considered purpose — arriving at the same conclusion that partial tenancy defeats the S.23 restriction.
Kanta Goel v. B.P. Pathak, AIR 1977 SC 1599 Illustrates purposive interpretation: statutes must be read in the spirit of their object; words must be guided by legislative purpose where appropriate. Referred to by Mr. Pal in support of a purposive reading of "wholly"; the court noted the precedent but nonetheless held that the plain meaning of "wholly" and the purpose of S.23 lead to finding that partial tenancy removes the restriction.
Vidyaben v. J.N. Bhatt, AIR 1974 Guj 23 Applied S.23 to permit partition of that portion of a dwelling-house which was let out, while denying partition of the portion occupied by family members. The court expressly declined to follow this decision, finding the reasoning unsound because it did not address that S.23's restrictive part operates only when the dwelling-house is wholly occupied by members of the family; the trial Court's finding of partibility was upheld instead.
Fauja Singh (Delhi HC), AIR 1978 Delhi 276 Delhi High Court view on interpretation of S.39 Insurance Act (later considered in Sarbati Devi). Mentioned in Sarbati Devi as a decision which the Supreme Court found unconvincing and overruled. The present court noted Sarbati Devi's overruling of such Delhi High Court decisions.
Mrs. Uma Sehgal (Delhi HC), AIR 1982 Delhi 36 Another Delhi High Court view on S.39 Insurance Act later considered in Sarbati Devi. Mentioned as a decision overruled by the Supreme Court in Sarbati Devi; the present court accepted Sarbati Devi's approach for insurance nominations.
Shaik Dawood v. Mahmooda Begum, AIR 1985 Andh Pra 321 Andhra Pradesh High Court held that Sarbati Devi's principle applies equally to nominations under the Provident Fund Act. The present court disagreed with Shaik Dawood on that point and explained, on analysis of the Provident Fund Act and Scheme, why Sarbati Devi's reasoning (insurance nominations) is not applicable to provident fund nominations.
Keshablal v. Iva Rani Rudra (Kesablal), AIR 1947 Cal 176 Division Bench held that a nominee (who was also a dependant) acquired vested rights in the provident fund sum under the Provident Fund rules; the sum vested in the dependant and was free from debts and liabilities. The court relied on this decision (and the similarity of statutory language) to support the conclusion that the provident fund amount vests in the nominee on the member's death and that such nominee acquires a beneficial interest. Applied to hold the provident fund money belonged to defendant No.4.

Court's Reasoning and Analysis

The court divided the analysis into two principal parts: (A) interpretation of Section 23 of the Hindu Succession Act in relation to a partly tenanted dwelling-house; and (B) whether nomination under the Provident Fund Act confers a proprietary interest in the provident fund sums.

A. Interpretation of S.23 (dwelling-house)

  • The court began with the statutory text of S.23 (quoted in the opinion) and noted that the plaintiff was a Class I heir and the property in question was admitted to be a dwelling-house.
  • It applied the basic rule of statutory construction: where words are plain and unambiguous, purposive aids are unnecessary. The natural and plain meaning of "wholly" is "entirely, completely, fully, totally".
  • On a literal reading, S.23's restriction on female heirs arises only where the dwelling-house is wholly occupied by members of the family. Thus, if any part of the house is not wholly occupied by family members (for example, is tenanted), the statutory requirement for the restriction is not met.
  • The court nonetheless considered purposive arguments (cited Poppatlal Shah and Kanta Goel) and concluded that even on a purposive reading the result is the same: S.23 aims to protect the family dwelling as an impartible asset where family possession is intact; parting with possession by letting a portion undermines that purpose and thus the restriction should not apply when the house is partly tenanted.
  • The court examined and rejected the Gujarat High Court decision in Vidyaben v. J.N. Bhatt because it failed to appreciate that S.23's restrictive operation is conditional on the dwelling being wholly occupied by family members. Consequently, the trial Court's finding that the suit house was partible (not wholly occupied) was upheld and the plaintiff's right to partition of her 1/5th share was sustained.

B. Nomination under Provident Fund Act — whether nominee acquires beneficial interest

  • First, the court accepted the established principle from Sarbati Devi that nomination under S.39 of the Insurance Act does not confer beneficial ownership on the nominee; the nomination only identifies who is authorised to receive payment and the insurer obtains discharge on paying that person.
  • Turning to the Provident Fund Act and the Scheme, the court examined the key provisions: S.10(1) & S.10(2) of the Provident Fund Act (protection against attachment and the specific vesting provision), para 61 (nomination provisions) and para 70 (accumulations of a deceased member — to whom payable) of the Scheme.
  • The court emphasised S.10(2) (quoted in the opinion): it provides that sums standing to the credit of a member at his death "shall... vest in the nominee" and "shall be free from any debt or other liability incurred by the deceased or the nominee before the death." The court read this as vesting proprietary interest in the nominee immediately on death.
  • Para 61 of the Scheme allows a member to "distribute" the amount among nominees at his discretion and describes the nominee's "interest" reverting to the member if the nominee predeceases the member. The court treated the words "distribute" and "interest" as indicative of an intention to transfer ownership (beneficial interest), not merely to designate a payee.
  • Para 70 prescribes payment to nominees if a valid nomination subsists, and otherwise to members of the family in "equal shares" with provisos excluding major sons and married daughters in presence of other family members. The court noted that these provisions allocate beneficial shares (equal shares and exclusions), which make sense only if the payment provisions effect a transfer of beneficial interest, not merely designation of payees.
  • The court rejected the Andhra Pradesh High Court view in Shaik Dawood (which applied Sarbati Devi to the Provident Fund context), explaining that headings cannot restrict a clear statutory language and that the express vesting language in S.10(2) and the Scheme's use of "distribute" and "interest" demonstrate a different legislative design from the Insurance Act.
  • The earlier Calcutta Division Bench decision in Keshablal v. Iva Rani Rudra (AIR 1947 Cal 176) under the Provident Fund Act, 1925 (with similar language) supported the conclusion that the provident fund amount vests in the dependant/nominee and confers an absolute title that is free from antecedent debts; the court found that principle applicable here.
  • Accordingly, the court concluded that the provident fund amount that stood to the credit of the deceased vested in defendant No.4 (the nominee) on the member's death and the plaintiff had no title to that sum.

Holding and Implications

Core Ruling: Appeal partly allowed.

The court modified the trial Court's decree to declare that the plaintiff is not entitled to any share in the amount which was standing to the credit of the deceased Samarendra Nath Mazumdar in his provident fund (that amount belonged exclusively to defendant No.4 as nominee). The remainder of the trial Court's decree (including the finding that the dwelling-house was partible and the plaintiff's entitlement to a 1/5th share and her share of the life insurance proceeds) was upheld.

Consequences for the parties: the plaintiff retains the right to partition of the dwelling-house and to her share in the insurance proceeds (consistent with Sarbati Devi), but loses any claim to the provident fund sums which vested in the nominee-defendant. The court directed no order as to costs.

The opinion does not purport to establish a broad new doctrinal precedent beyond applying and distinguishing existing authorities; it affirms the principle that (i) S.23's restriction applies only where a dwelling-house is wholly occupied by family members and (ii) nominations under the Provident Fund Act (and Scheme) operate differently from nominations under the Insurance Act because of express vesting language — resulting in a beneficial interest vesting in the nominee on the member's death.

Additional judicial note from the opinion: Justice Satya Brata Mitra concurred with the judgment ("I agree.").

    Smt. Usha Majumdar And Others v. Smt. Smriti Basu .

    Monoj Kumar Mukherjee, J.:— Smt. Smriti Basu (nee Mazumdar), who happens to be the only issue of one Samarendra Nath Mazumdar (since deceased) by his first wife, filed a suit, out of which the instant appeal arises, against her step mother, step brother and two step sisters claiming partition of the properties left behind by her father which include a two storied house and the moneys paid under his life insurance policy and from his provident fund account. In contesting the claim of the plaintiff the defendants did not dispute that she had 1/5th share in the properties left behind by her father but contended that in view of S. 23 of the Hindu Succession Act, 1956 (hereinafter referred to as the “Succession Act”) the house was impartible. It was further contended by them that the moneys payable and since paid under the life insurance policy and from the provident fund account of the deceased exclusively belonged to Smt. Usha Mazumdar (defendant 1), the second wife of the deceased, and Sri Surojit Mazumdar (defendant 4), the son of the deceased, as they were the respective nominees. The trial Court negatived all the contentions raised by the defendants and decreed the suit in a preliminary form. Hence this appeal at their instance.

    2. Mr. Pal, learned Advocate appearing on behalf of the defendants, fairly conceded that the finding of the Court below that the plaintiff had a claim, proportionate to her share, to the money received under the life insurance policy of her father could not be assailed in view of the Supreme Court judgment in the case of Sarbati Devi v. Usha Devi, reported in AIR 1984 SC 346. He however submitted that the other two findings of the trial Court, namely, that the house was partible and that the plaintiff-respondent was also entitled to receive her share in the provident fund money of the deceased were not legally sustainable.

    3. It is not in dispute that the house in question is exclusively used for residential purposes; and that its two rooms in the ground floor are in occupation of a tenant and the rest is in occupation of the defendants. In view of these facts the trial Court held that the restriction on the right of a married female to claim partition as engrafted in S. 23 of the Succession Act would not apply. Mr. Pal, however, submitted that the restriction imposed under S. 23 of the Succession Act would be applicable even if a dwelling house was partially tenanted. According to Mr. Pal the word “wholly” appearing in S. 23 should not be given its plain and literal meaning but should be interpreted in a manner consistent with the purpose and object of the Act itself. When so interpreted it would mean so much of the dwelling house as was “wholly” occupied by the members of the family and consequently the plaintiff herein could legitimately claim partition only of that portion of the dwelling house which was in occupation of the tenant, argued Mr. Pal. In this connection he referred to a judgment of the Gujarat High Court in the case of Vidyaben v. J.N Bhatt reported in AIR 1974 Guj 23. In combating the above contention of Mr. Pal Mr. Roy Chowdhury, learned Advocate appearing for the respondent, submitted that the word “wholly” appearing in S. 23 should be given its natural meaning more particularly when the section was a clog on the right of an individual to succeed to an estate and that when such a meaning was given there was no escape from the conclusion that the suit house was partible as it was not fully occupied by the members of the deceased's family.

    4. To appreciate the respective contentions of the parties it will be profitable at this stage to extract S. 23 of the Succession Act, sofar as it is relevant for our present purposes:

    “Where a Hindu intestate has left surviving him or her both male and female heirs specified in Class I of the Schedule and his or her property includes a dwelling-house wholly occupied by members of his or her family, then, notwithstanding anything contained in this Act, the right of any such female heir to claim partition of the dwelling-house shall not arise until the male heirs choose to divide their respective shares therein;…………”

    Undoubtedly the plaintiff-respondent is one of the heirs specified in Class I of the Schedule under the Act and, as has already been noticed, the house in question is admittedly a dwelling house.

    5. It is a well-settled principle of law that there is no need to call into aid any of the rules of construction when meaning of the words in a statute is plain and unambiguous, but where the meaning is not explicit the word must be construed keeping in view the context and setting in which it is used and the purpose the relevant legislation seeks to achieve. The natural and plain meaning of the word “wholly” is entirely, completely, fully, totally and in every respect. On a plain meaning of the word “wholly” therefore there is no escape from the conclusion that to put a fetter to the right of a female heir to claim partition under S. 23 of the Succession Act, the dwelling house must be entirely, completely, totally and fully occupied by the members of the family.

    6. To bring home his contention that plain meaning should not be always given to words used in a statute and rationale behind its enactment should be considered, Mr. Pal first drew our attention to the decision of the Supreme Court in the case of Poppatlal Shah v. State of Madras reported in AIR 1953 SC 274 wherein it was observed that it was a settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute were to be taken together and each word, phrase or sentence was to be considered in the light of the general purpose and object of the Act itself. While on this point Mr. Pal drew our attention to another decision of the Supreme Court in the case of Kanta Goel v. B.P Pathak, reported in AIR 1977 SC 1599 wherein, while interpreting S. 14A(1) of the Delhi Rent Control Act, 1958 the Supreme Court observed as under:

    “The legislative project and purpose turn not on niceties of little verbalism but on the actualities of rugged realism, and so, the construction of S. 14A(1) must be illumined by the goal, though guided by the word. We have, therefore, no hesitation in holding that S. 14A(1) is available as a ground, if the premises are owned by him as inherited from his propositus in whose name the property stood. ‘In his name’ and ‘let out by him’, read in the spirit of the provision and without violence to the words of the section, clearly convey the idea that the premises must be owned by him directly and the lease must be under him directly which is the case where he, as heir, steps into his father's shoes who owned the building in his own name and let it out himself.”

    7. Even if we proceed to consider the meaning of the word “wholly” in the light of the purpose and object for which S. 23 has been engrafted in the Statute we reach the same conclusion. The object behind incorporating S. 23 in the Succession Act is not far to seek. In enacting the section the Parliament must have thought that the dwelling house of a Hindu joint family should be regarded as an impartible asset as ordained by the ancient Hindu doctrines and precepts and as such should be allowed to be preserved by the family until the male heirs opted for dividing the same and to that extent the legislature intended to recognise and preserve the old tradition and sentiment of creation and protection of Hindu joint families. If a female member was given a share and was allowed to have such a house partitioned it was very likely that she would dispose of her share to some outsider and thereby would be a party to disintegration and fragmentation of the family dwelling house which the legislature did not want. At the same time the legislature must have thought that if the male members themselves decided to divide their respective shares in the dwelling house then, and in that case, the female members should be entitled to claim partition because such disintegration and fragmentation were being brought about by the male members themselves. The principle will be equally applicable if the house is partly tenanted. By tenanting a portion of the house the members of the family part with the possession of the house to certain extent and thereby the whole purpose of keeping the dwelling house as the exclusive domain of the male heirs is similarly lost. In any view of the matter therefore the restriction on the right of female heirs to claim partition in respect of the entire d welling house of her predecessor-in-interest will not operate when it is partly occupied by the members of the family.

    8. Undoubtedly, the decision in the case of Vidyaben (AIR 1974 Guj 23) (supra) supports the contention of Mr. Pal. In that case the first floor of the suit property, which was a dwelling house, was occupied by the members of the family while the ground floor was let out to tenants. On those facts and relying upon S. 23 of the Succession Act, the learned single Judge passed a decree for partition as prayed for by a female heir in respect of the ground floor but did not pass a decree in respect of the portion occupied by the male members of the family as they did not ask for any partition. Drawing inspiration from the above judgment, Mr. Pal argued that the word “wholly” meant so much of the portion of the dwelling house which was wholly occupied by the members of the family. We regret our inability to concur with the above judgment and for that matter with the submission of Mr. Pal having regard to the fact that the learned Judge did not consider that the restriction to the right of female heir to ask for partition of the family dwelling house operates (i) if the dwelling house is wholly occupied by the members of the family of male or female intestate, and (ii) till the male heirs choose to divide their shares in it. The word “then” appearing in S. 23 makes it ineluctably clear that the restrictive part of the section comes into operation only if the first requirement is fulfilled, namely, the dwelling house is wholly occupied by the members of the family. For the foregoing discussions the findings of the learned trial Court that the house in question is partible and the plaintiff is entitled to a partition in respect of her 1/5th share therein must be upheld.

    9. That brings us to the question whether the plaintiff is also entitled to equable distribution of the money which was standing to the credit of her father in his account under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (“Provident Fund Act” for short) and since received by the defendant-appellant No. 4 as nominee in respect thereof. Mr. Pal submitted that the principle laid down by the Supreme Court in the case of Sarbati Devi (AIR 1984 SC 346) (supra), that a mere nomination made under S. 39 of the Insurance Act did not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured, was not applicable to nominations made under the Provident Fund Act as would be evidently clear from the various provisions of the Act and the Scheme framed thereunder; and according to Mr. Pal, the nominee under the latter becomes entitled to the money also. He relied upon a Division Bench judgment of this Court in the case of Keshablal v. Iva Rani Rudra, reported in AIR 1947 Cal 176 in support of this contention. Mr. Roy Chowdhury on the other hand submitted that the principle laid down in the case of Sarbati Devi (supra) was equally applicable to the nomination made under the Provident Fund Act, particularly because it was a beneficial piece of legislation and the benefits accruing therefrom should be made available to all the heirs of the deceased. In support of his contention Mr. Roy Chowdhury relied upon a decision of the Andhra Pradesh High Court in the case of Shaik Dawood v. Mahmooda Begum, reported in AIR 1985 Andh Pra 321.

    10. To consider and appreciate the rival contentions of the parties in their proper perspective it will be necessary to read the provisions of S. 39 of the Insurance Act juxtaposing the relevant provisions of the Provident Fund Act and the scheme framed thereunder. S. 39 of the Insurance Act reads as under:

    “39. Nomination by policy-holder—

    (1) The holder of a policy of life insurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of his death:

    Provided that where any nominee is a minor, it shall be lawful for the policy-holder, to appoint in the prescribed manner any person to receive the money secured by the policy in the event of his death during the minority of the nominee.

    (2) Any such nomination in order to be effectual shall unless it is incorporated in the text of the policy itself, be made by an endorsement on the policy communicated to the insurer and registered by him in the records relating to the policy and any such nomination may at any time before the policy matures for payment be canceled or changed by an endorsement, or a further endorsement or a will, as the case may be, but unless notice in writing of any such cancellation or change has been delivered to the insurer, the insurer shall not be liable for any payment under the policy made bona fide by him to a nominee mentioned in the text of the policy or registered in records of the insurer.

    (3) The insurer shall furnish to the policy-holder a written acknowledgement of having registered a nomination or a cancellation or change thereof, and may charge a fee not exceeding one rupee for registering such cancellation or change.

    (4) A transfer or assignment of a policy made in accordance with S. 38 shall automatically cancel a nomination:

    Provided that the assignment of a policy to the insurer who bears the risk on the policy at the time of assignment, in consideration of a loan granted by that insurer on the security of the policy within its surrender value, or its reassignment on repayment of the loan shall not cancel a nomination, but shall affect the rights of the nominee only to the extent of the insurer's interest in the policy.

    (5) Where the policy matures for payment during the lifetime of the person whose life is insured or where the nominee or, if there are more nominees than one, all the nominees die before the policy matures for payment, the amount secured by the policy shall be payable to the policy-holder or his heirs or legal representatives or the holder of a succession certificate, as the case may be.

    (6) Where the nominee or if there are more nominees than one, a nominee or nominees survive the person whose life is insured, the amount secured by the policy shall be payable to such survivor or survivors.

    (7) The provisions of this section shall not apply to any policy of life insurance to which S. 6 of the Married Women's Property Act, 1874 applies or has at any time applied:

    Provided that where a nomination made whether before or after the commencement of the Insurance (Amendment) Act, 1946 in favour of the wife of the person who has insured his life or of his wife and children or any of them is expressed, whether or not on the face of the policy, as being made under this section the said S. 6 shall be deemed not to apply or not to have applied to the policy.”

    In the case of Sarbati Devi (AIR 1984 SC 346) (supra) the Supreme Court considered the above clauses in details to decide the only question which was raised therein, namely, whether a nominee under the above section got an absolute right to the amount due under a life insurance policy on the death of the assured. On such consideration and looking into decisions of different High Courts on the point the Supreme Court observed that the language of S. 39 of the Insurance Act was not capable of altering the course of succession and ultimately decided the question with these words:

    “……The reasons given by the Delhi High Court are unconvincing. We, therefore hold that the judgments of the Delhi High Court in Fauja Singh's case AIR 1978 Delhi 276 and in Mrs. Uma Sehgal's case AIR 1982 Delhi 36 do not lay down the law correctly. They are, therefore, overruled. We approve the views expressed by the other High Courts on the meaning of S. 39 of the Act and hold that a mere nomination made under S. 39 of the Act does not have the effect of conferring on the nominee any beneficial interest in the amount payable under the life insurance policy on the death of the assured. The nomination only indicates the hand which is authorised to receive the amount, on the payment of which the insurer gets a valid discharge of its liability under the policy. The amount, however, can be claimed by the heirs of the assured in accordance with the law of succession governing them.”

    As regards the relevant provisions of the Provident Fund Act and the Scheme made thereunder, our attention was first drawn to S. 10 of the Act, which relates to protection against attachment. Sub-sec. (1) thereof provides, inter alia, that the amount standing to the credit of any member in the 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; and sub-sec. (2) reads as under:

    “(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 nominee and shall be free from any debt or other liability incurred by the deceased or the nominee before the death of the member or of the exempted employee.”

    Chapter VIII of the ‘Employees’ Provident Fund Scheme, 1952 (‘Scheme’ for short), framed under the Provident Fund Act, relates to nominations, payments and withdrawal from the fund; and para 61 thereof, which speaks about nomination, reads inter alia, as under:

    “61. Nomination— (1)Each member shall make in his declaration in Form 2, a nomination conferring the right to receive the amount 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 member may in his nomination distribute the amount that may stand to his credit in the Fund amongst his nominees at his own discretion.

    (3) If a member has a family at the time of making a nomination, the nomination shall be in favour of one or more persons belonging to his family. Any nomination made by such member in favour of a person not belonging to his family shall be invalid.

    (4) If at the time of making a nomination the member has no family, the nomination may be in favour of any person or persons but if the member subsequently acquires a family, such nomination shall forthwith be deemed to be invalid and the member shall make a fresh nomination in favour of one or more persons belonging to his family.

    (4-A)……………………..

    (5) A nomination made under sub-para (1) may at any time be modified by a member after giving a written notice of his intention of doing so in Form 8 annexed hereto. If the nominee predeceases the member, the interest of the nominee shall revert to the member who may make afresh nomination in respect of such interest.

    (6)…………………….”

    11. The other para of the said chapter which has a bearing on the question involved herein is para 70, which is extracted below:

    “70. Accumulations of a deceased member— To whom payable. — On the death of a member before the amount standing to his credit has become payable or where the amount has become payable before payment has been made—

    (i) if a nomination made by the member in accordance with para 61 subsists, the amount standing to his credit in the Fund or that part thereof to which the nomination relates, shall become payable to his nominee or nominees in accordance with such nomination; or

    (ii) 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 become payable to the members of his family in equal shares:

    Provided that no share shall be payable to—

    (a) sons who have attained majority;

    (b) sons of a deceased son who have attained majority;

    (c) married daughters whose husbands are alive;

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

    if there is any member of the family other than those specified in cls. (a), (b), (c) and (d):

    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 member and had not attained the age of majority at the time of the member's death.

    (iii) in any case, to which the provisions of cls. (i) and (ii) do not apply the whole amount shall be payable to the person legally entitled to it.”

    12. Relying upon the provisions of the Provident Fund Act and the Scheme quoted and discussed hereinbefore Mr. Pal submitted that there could not any manner of doubt that the rights of a nominee under the Provident Fund Act differed substantially from those of a nominee under the Insurance Act. According to Mr. Pal, whereas under the Insurance Act the nominee only had a right to receive the money but no right to the money qua nominee, the nominee under the Provident Fund Act had not only the right to receive the money but also a right to the money. Mr. Roy Chowdhury on the other hand submitted that the word “vest” appearing in S. 10(2) of the Provident Fund Act was advisedly used only to protect the provident fund money from debts and other liabilities incurred by the nominee and not for giving him any right in respect of the money. Mr. Roy Chowdhury also drew our attention to S. 5(1-B) of the Provident Fund Act and submitted that thereunder the Central Government was empowered to frame scheme to provide for all or any of the matters specified in Sch. II of the Act and entry 10 of the said schedule which was relevant for the present purposes related to “the nomination of a person to receive the amount standing to the credit of a member after his death and the cancellation or variation of such nomination.”; and consequently, Mr. Roy Chowdhury argued, that Chapter VIII of the Scheme could not and did not bestow any right upon the nominee except the right to receive the amount standing to the credit of the deceased member.

    13. Having given our anxious consideration to the various provisions of the Provident Fund Act and the Scheme we are of the opinion that the status of a nominee under the Provident Fund Act is completely-different from his counterpart under the Insurance Act. The most and striking difference about the status of the nominee under the two Acts is clearly discernible from S. 10(2) of the Provident Fund Act quoted earlier which expressly provides that the amount standing to the credit of a member of the Fund at the time of his death shall vest in the nominee and it shall be free from any debt or liability incurred by the deceased or the nominee before the death of the member. From S. 10(2) it is abundantly clear that immediately upon the death of the member the provident fund money becomes part of the asset of the nominee whereas under the Insurance Act after the death of the assured the money continues to be his asset; and the money which was standing to the credit of the member becomes free even from the debt or liability incurred by the nominee before the Heath of the member. Only because the money vested in and thereby became the property of the nominee after the death of the member such a provision was required to be incorporated as, otherwise, being estate of the nominee, it was liable to be attached for debts or liabilities incurred by him prior to the death of the member. That the nominee under the Provident Fund Act, unlike the nominee under the Insurance Act, gets a right to the money also has been made clear by the provisions of paras 61 and 70 of the Scheme quoted earlier.

    14. It is of course true that para 70 is prefixed with the heading “Accumulation of a deceased member to whom payable;” (emphasis supplied) and relying upon the same the Andhra Pradesh High Court held, in the case of Shaik Dawood (AIR 1985 Andh Pra 321) (supra), that the principle laid down by the Supreme Court in the case of Sarbati Devi (AIR 1984 SC 346) (supra) would be equally applicable under the Provident fund Act but we regret our inability to agree with the views so expressed for reasons to follows. Headings or titles prefixed to a section cannot restrict the meaning of the section itself if its language is clear and as our discussion will presently show, the language of para 70 is manifest. But before however we proceed to analyse para 70 let us examine para 61 of the Scheme. Under this para if a member, who had no family of his own, makes an outsider his nominee, such nomination will automatically fail if he subsequently acquires a family and he will have to make a fresh nomination in favour of one or more persons belonging to his family. It will be pertinent to point out that under S. 39 of the Insurance Act there is no such mandate; and under S. 38 thereof a life insurance policy can even be assigned or transferred. Para 61(2) envisages that a member may in his nomination distribute (emphasis supplied) the amount that may stand to his credit in the funds amongst his nominees in his own discretion and sub-para (5) thereof says that if one of the nominees predeceases the member the interest (emphasis supplied) of that nominee shall revert to the member who may make a fresh nomination in respect of such interest. The word “distribute” means divide, apportion, allot, dispense and therefore when the member has been empowered “to distribute the amount amongst his nominees at his discretion” it certainly means that thereby he would be giving the amount to them. A concept of distribution as envisaged in para 61(2) of the Scheme cannot by any stretch of imagination mean that the member was distributing the right to receive the money amongst his nominees. That by such distribution the nominee acquires ownership to the money has again been made explicitly clear by the word “interest” appearing in sub-para (5). The word “interest” obviously means the right to the money that accrued in favour of the nominee consequent upon its distribution by the member. It is of course true that the member may modify his nomination even during his lifetime and thereby extinguish a nominee's interest but then ultimately the nominee, whoever he may be, acquires an interest in the money.

    15. Coming now to para 70 of the Scheme, we get that sub-para (ii) thereof expressly says that the money shall become payable to the members of the family, in cases provided therein, in “equal shares” and proviso thereto expressly lays down that no share shall be payable to the sons of the deceased member who have attained majority or daughters who have their husbands living. The major sons and married daughters whose husbands are alive have been expressly excluded from receiving any share obviously because they are expected to be capable of maintaining themselves. If really para 70 only referred to right of the nominees mentioned therein to receive the money, and not to have any beneficial interest in the money, there was no necessity of expressly providing therein that it should not be paid to the persons who are capable of maintaining themselves nor it would have provided that the money would be payable in equal shares. In other words, if really the para intended to mean that the nominees were to receive the money only and not to have any beneficial interest therein the minors would not have been preferred to collect the same instead of majors who would be in a better position to receive the money and to pay the same to the beneficiaries. On the contrary, para 70 has taken care of the minor heirs of the deceased member by providing that the money should be paid to and received by them so that being unable to maintain themselves, they can gainfully utilise the money. Lastly para 70(iii) provides that in case the provisions of the paragraph are not applicable the entire amount shall be paid to persons legally entitled (emphasis supplied) to it. Entitlement to a property obviously means a right to the property and consequently the fact that the money would be payable to such person means that he will be entitled to appropriate the money. For the foregoing discussions we therefore find no hesitation in concluding that the nominee under the Provident Fund Act, unlike the nominee under the Insurance Act, has not only the right to receive the money but also a beneficial interest therein.

    16. The contention of Mr. Roy Chowdhury that under item 10 of Sch. II of the Provident Fund Act, the Central Government could not make any provision for bestowal of any right to the money under the Scheme cannot be entertained having regard to the fact that the said item speaks of nomination of a person to receive the amount; and the word “receive” does not militate against the concept of acceptance of money as owner in respect thereof.

    17. The case of Kesablal (AIR 1947 Cal 176) (supra) relied upon by Mr. Pal was sought to be distinguished by Mr. Roy Chowdhury on the ground that it related to a different Act and it had no manner of application to the facts of the instant case. Undoubtedly that case related to the provisions of the Provident Fund Act, 1925, but then, since the provisions thereof are similar to the provisions of the Act with which we are now concerned, the principle enunciated therein is equally applicable here. The main question that fell for consideration in that case was whether by virtue of nomination made by her husband in her favour, Iva Rani (the respondent therein) became absolutely entitled to the amount standing to his credit in the provident fund after his death. Under the rules framed under the Provident Fund Act, 1925 payment was to be made to the members of the subscriber's family, whether they had been nominated or not, in preference to the claims of nominees who were not members of the family. It was obligatory, under those rules, on the part of the subscriber, who had a family of his own, to nominate one or more members of his family and on his death, if he had left a family behind, even if there was a nomination, in favour of a person who was not a member of the family, his provident fund money must nevertheless be paid to the members of his family. As has already been noticed the Provident Fund Act and the Scheme with which we are concerned also lay down the same principles with the only distinction that if the nominee acquired a family the nomination in favour of an outsider would automatically lapse. Relying upon the above Rules and the language of S. 3(2) of the Provident Fund Act, 1925 which read—

    “3(2) Any 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 dependant of the subscriber or depositor, or to such person as may be authorized by law to receive payment on his behalf, shall, subject to any deduction authorized by this 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 dependent before the death of the subscriber or depositor.”

    the Division Bench held that the provident, fund money vested in Iva Rani because, besides being the person authorised to receive the money under the rules was also a dependant of the subscriber. The Bench then took up for consideration the question whether such vesting in the dependant conferred on her an absolute title in respect of the money which so vested. The Court answered the question in the affirmative on the ground that the sum so “vested” in the dependant was free from any debt or other liability incurred by the deceased or incurred by the dependant before the death of the subscriber or depositor. It may be recalled that S. 10(2) of the Provident Fund Act, 1952 also runs in the same line. On the conclusions as above, it must therefore be held that the amount which stood to the credit of the deceased Samarendra Nath Mazumdar in his provident fund and was received by the defendant No. 4 as his nominee, exclusively belonged to the latter and the plaintiff-respondent has no title to the same.

    18. In the result the appeal succeeds in part. The decree of the trial Court is modified with his declaration that the plaintiff-respondent is not entitled to any share in the amount which was standing to the credit of the deceased Samarendra Nath Mazumdar in his provident fund. The rest of the decree as passed by the trial Court will stand. There will be however no order as to costs.

    Satya Brata Mitra, J.:— 19. I agree.

    Appeal partly allowed.

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    Smt. Usha Majumdar And Others v. Smt. Smriti Basu .
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