Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

The Secretary Of State For India In Council v. Raj Kumar Mukherjee And Ors. Opposite Party.

Calcutta High Court
Jun 15, 1922
Important Paras
Please sign up to view Important Paras.
Smart Summary (Beta)

Structured Summary of the Opinion

Factual and Procedural Background

By an order dated 26 January 1922, Rule No. 515 of 1921 had been made absolute on the basis that sums standing to the credit of W.J. Godfrey in the State Railway Provident Institution were attachable by Raj Kumar Mukherjee in execution of a money decree obtained in the Sealdah Court of Small Causes. That earlier Rule had been unopposed (no appearance for Godfrey and the Administrator of the Fund was not represented because no notice had been given), and the Court reserved liberty to the latter to come in and move to have the order discharged.

Pursuant to that reservation, a new Rule was obtained on behalf of the Secretary of State for India (the present petitioner). At the hearing of the present Rule the learned Advocate-General represented the Secretary of State, and Mr. Mohendra Nath Roy (Vakil) appeared for the creditor. The central factual point is that the sum standing to Godfrey's credit consisted entirely of compulsory deposits made when he was employed by a State Railway and the question is whether those sums became attachable upon his retirement (or otherwise ceasing to be in service).

Legal Issues Presented

  1. Whether amounts standing to the credit of W.J. Godfrey in the State Railway Provident Institution, which were "compulsory deposits" when made during his service, became attachable on his retirement from railway service.
  2. Whether Rule 30 of the State Railway Provident Institution (providing that compulsory deposits and related sums are not attachable whether the depositor is in service, discharged, or deceased) is consistent with the Provident Funds Act, 1897 and other applicable law (including Section 4(1) of that Act and Civil Procedure Code section 60(1)(k)).

Arguments of the Parties

Secretary of State / Advocate-General (Applicant)

  • Relied on Rule 30 of the State Railway rules, which declares that "compulsory deposits ... whether in actual service, discharged, or deceased, can be attached" (the text actually states they "cannot be attached") — i.e., that compulsory deposits and the interest thereon are not attachable even after discharge or death.
  • Contended that the sums at Godfrey's credit were compulsory deposits within the meaning of the Provident Funds Act and thus exempt from attachment under Section 4(1) of the Act and under Civil Procedure Code section 60(1)(k).
  • Maintained that the statutory definition of "compulsory deposit" and the character of the deposits when made mean they retain that character and are not rendered attachable by subsequent events such as retirement.

Creditor (Mr. Mohendra Nath Roy)

  • Contended that Rule 30 was ultra vires of the Provident Funds Act and that the deposits were not "compulsory deposits" at the time of attempted attachment because, read with section 2(4) of the Act and Rule 22, they became repayable on the depositor leaving service.
  • Argued that when the money is payable on the employee leaving service it becomes payable on demand (or at the depositor's option), thereby falling outside the statutory definition of "compulsory deposit" and becoming liable to attachment.
  • Relied on observations in Miller v. B.B. & C.I. Railway (5 Bom. L.R. 454) to support the contention that retirement converts the deposits into repayable sums and hence attachable.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Veerchand v. B.B. & C.I. Railway, 29 B. 259 : 6 Bom. L.R. 921 Held that a deposit which, when made, was not repayable on demand (i.e., a "compulsory deposit") retains that character after the depositor's retirement or death; such deposits are not attachable. The Court followed and adopted the judgment of Sir Lawrence Jenkins, C.J., in this case as persuasive authority supporting the view that compulsory deposits retain their character and are not liable to attachment. Both judges in the present opinion indicated agreement with Jenkins C.J.'s statement.
Miller v. B.B. & C.I. Railway, 5 Bom. L.R. 454 Contains observations (by Russel, J.) suggesting that deposits may become repayable on events such as retirement and thus could fall outside the statutory definition of "compulsory deposit." The creditor relied on this authority, but the Court did not follow Miller; it noted that Miller was cited in Veerchand but was not followed there. The present Court preferred Veerchand's reasoning over Miller's observations.
Seth Manna Lal v. Gainsford, 35 C. 641 : 12 C.W.N. 633 Decided that a particular municipal fund was subject to the Provident Funds Act (primary question concerned applicability of the Act). The Court referred to this decision for the proposition that a fund may fall under the Provident Funds Act; it noted uncertainty in that decision about whether the particular subscriber was in service at the time of attempted attachment, so the case did not directly resolve the present point.
Hindley v. Joynarain Marwari, 54 Ind. Cas. 439 : 46 C. 962 : 24 C.W.N. 268 Held, in relation to an East Indian Railway Provident Fund, that whether the employee is in service or out of service, alive or dead, his share in the fund is unattachable in the hands of the institution. The Court regarded this decision as directly in point and supportive. It cited Rankin, J.'s statement that the employee's share is unattachable whether in service or not, and used it to reinforce the interpretation that the Act protects compulsory deposits irrespective of the depositor's subsequent status.

Court's Reasoning and Analysis

The Court proceeded by identifying and applying the relevant statutory provisions and institutional rules expressly referred to in the opinion:

  • The Court first observed that the General Provident Fund rules originally referred to were inapplicable; instead Rule 30 of the State Railway rules governs the State Railway Provident Institution. Rule 30 provides that compulsory deposits, bonuses and interest on compulsory deposits standing at the credit of a depositor, whether in service, discharged, or deceased, cannot be attached by a Court of law, while voluntary deposits are free to attachment.
  • The Civil Procedure Code, section 60(1)(k), was noted as exempting from attachment "all compulsory deposits and other sums of or derived from any fund to which the Provident Funds Act, 1897, for the time being applies in so far as they are declared by the said Act not to be liable to attachment." This frames the statutory protection for compulsory deposits and directs attention to the Provident Funds Act as the controlling instrument.
  • The crucial statutory provision is Section 4(1) of the Provident Funds Act (as amended), which states in plain terms that "compulsory deposits" in any Government or Railway Provident Fund shall not be liable to attachment under any decree or order of a court; neither an Official Assignee nor a Receiver is entitled to or has any claim on such compulsory deposits. The Court emphasized the plain and general wording: no compulsory deposits are attachable.
  • The pivotal interpretive question was the proper meaning of "compulsory deposit" (defined in section 2(4) of the Act as a subscription or deposit which is not repayable on demand or at the option of the subscriber, and including contributions credited and interest/increments accrued under the rules).
  • The creditor's argument was that Rule 22 (which allows withdrawal on leaving public service) and the statutory definition together mean that upon leaving service the deposit becomes repayable on demand and thus ceases to be a "compulsory deposit." The Court rejected this construction.
  • The majority reasoning (as articulated by the primary judge) treats "compulsory deposit" as characterizing the nature of the deposit at the time it is made and as retained while the deposit subsists in the fund. The Court explained that although a rule might make sums payable on certain events (e.g., retirement), that does not transform the historical character of deposits that were compulsory when made; accordingly, they remain compulsory deposits within the statutory meaning and are exempt from attachment under Section 4(1).
  • The Court also treated components added to the deposit (contributions credited by others, interest, increments) as falling within the statutory definition of "compulsory deposit," and accepted the view (following Sir Lawrence Jenkins in Veerchand) that the statutory definition was intended to cover such additions so that the fund would not be partly compulsory and partly not.
  • The Court reviewed relevant authorities. It found Veerchand v. B.B. & C.I. Railway to be closely on point and persuasive. It noted Miller v. B.B. & C.I. Railway had been relied upon by the creditor but observed that Miller was not followed in Veerchand and the present Court preferred the Veerchand reasoning. Hindley v. Joynarain Marwari was also treated as directly supportive of the protective construction.

Both judges agreed in the result and reasoning: Rule 30 is consistent with the Provident Funds Act insofar as it expresses the statutory result, and compulsory deposits remain exempt from attachment even after the depositor leaves service or dies.

Holding and Implications

Holding: The Court ordered that, in relation to the sums standing to the credit of W.J. Godfrey in the State Railway Provident Institution, these amounts remain not liable to attachment under the Provident Funds Act and the applicable State Railway rules. Concretely, the Court directed that the present Rule obtained on behalf of the Secretary of State be made absolute and that the earlier order dated 26 January 1922 in Civil Rule No. 515 of 1921 be discharged.

As to immediate consequences: if the amount standing to Godfrey's credit had been attached (or reattached) by the Sealdah Court of Small Causes, that attachment was to be withdrawn. Both judges concurred in this disposition.

Broader implication: The Court applied and adopted existing authorities (notably Veerchand) in concluding that compulsory deposits retain their character and exemption from attachment despite later events such as retirement or death. The opinion does not purport to lay down a novel statutory rule beyond this interpretation of the Provident Funds Act and State Railway Rule 30; its practical effect is to protect the particular fund-credit from attachment and to overturn the earlier order that had permitted attachment.


This summary is derived exclusively from the provided opinion text and does not add information beyond what the opinion contains.

Show all summary ...

1. By our order dated 26th January 1922, Rule No. 515 of 1921, was made absolute on the footing that the amounts standing to the credit of W.J. Godfrey in the State Railway Provident Institution was attachable at the instance of the then petitioner Raj Kumar Mukherjee, in execution of a decree for money which he had obtained against Godfrey in the Sealdah Court of Small Causes. Inasmuch, however, as the Rule was unopposed, there being no appearance for Godfrey and the Administrator of the Fund, to whom no notice of the Rule had been given, not being represented, liberty was expressly reserved to the letter to come in and move to have the order discharged. In pursuance of the liberty so reserved, the present Rule was obtained on behalf of the Secretary of State for India. At the hearing the learned Advocate-General appeared for the present petitioner, the Secretary of State, and the learned Vakil, Mr. Mohendra Nath Roy, for the creditor.

2. There is no dispute that the amount standing in the fund to Godfrey's credit was not attachable so long as he was employed as a servant of a State Railway. The question is whether the amount became attachable on his retirement from such service.

3. It now appears that the Rules regulating the General Provident Fund to which we were referred on the former occasion, do not apply t0 the State Railway Provident Institution, which is governed by the Rules contained in the State Railway Open line Code, Volume II, Appendix I. Rule 10 of the General Fund Rules is, therefore, out of the way. The corresponding Rule 30 of the relevant rules is otherwise framed and in the view we take gives rise to no difficulty. It is in these terms:

Neither compulsory deposits, nor bonuses, i.e., money added by Government to compulsory deposits, nor the interest thereon standing at the credit of a depositor, whether in actual service, discharged, or deceased, can be attached by a Court of law, but voluntary deposits and the interest thereon standing at the credit of, a depositor on any given date are free to attachment on that date.

4. It is conceded that the amount at Godfrey's credit consists entirely of deposits which, when they were made, were "compulsory deposits" within the meaning of this Rule and of the Provident Funds Act. There is no question of any voluntary deposits.

5. As to the word "discharged" it does not necessarily mean "dismissed." It is wide enough to include the case of a servant Who has been permitted to retire or take his discharge.

6. The question is whether Rule 30 is in accordance with the law on the subject.

7. The Civil Procedure Code, section 60(1)(k), exempts from liability to attachment

"all compulsory deposits and other sums in of derived from any fund to which the Provident Funds Act, 1897, for the time being applies in so far as they are declared by the said Act not to be liable to attachment"
.

8. That leaves the matter to be controlled by the Provident Funds Act and Rule 30 items merely to express the draftsman's view of the result of Sub-section (1) of the Section 4 of that Act (IX of 1897 as amended by Act IV of 1903). The question turns on that sub-section, the meaning of which, apart from any difficulty as to the term "compulsory deposits," is clear enough. "Compulsory deposits," it says, "in any Government or Railway Provident Fund shall not be liable to any attachment under any decree or order of a Court of Justice in respect of any debt or liability incurred by a subscriber to, or depositor in, any such fund, and neither the Official Assignee nor a Receiver appointed Under Chapter XX of the Code of Civil Procedure shall be entitled to, or have any claim on any such compulsory deposit." The words are quite plain and general. No "compulsory deposits" are attachable.,

9. But then it is argued that these deposits with which we are concerned, though they were compulsory deposits when they were made and so long as Godfrey continued in the Railway service, ceased to be compulsory deposits when he retired. The argument is based on the definition in section 2{4) of the Act and on Rule 22 of the Rules.

10. As defined In the Act "compulsory deposit" means "a subscription or deposit which is not re-payable on the demand, or at the option of the subscriber or depositor, and includes any contribution which may have been credited in respect of, and any interest or increment which may have accrued on, such subscription or deposit under the Rules of the Fund.

11. Rule 22, so far as it is material, is as follows:

Saving with the particular sanction of the Government of India, no compulsory deposit or bonus shall be withdrawn excepting

(i) on the decree of the depositor;

(ii) on his leaving the public service.

12. The contention is that if the Act and Rule 22 be read together, Godfrey's deposits became re payable oh his demand when he left the public service and thereupon were automatically removed from the category of compulsory deposits.

13. In my opinion that is a mistaken construction of the statutory definition. The definition speaks with reference to some fund in which the deposit is made, and, asit seems to me, it crystallizes the nature of the deposit at the time at which it is made. A compulsory deposit is a deposit which goes into the fund as a compulsory deposit and is at that date received end classified as such. It is conceivable that the Rules of a Fund might subject the general right of withdrawal conferred by such a rule as Rule 22 to restriction or condition so that the whole amount at a depositor's credit might, never become freely payable or re-payable on his demand. But quite apart from that, a depositor presumably continues to make compulsory deposits till he dies in service or retires, and I can see no ground for a different classification of such deposits, or a different description being applied to them after his death or retirement. IN other words, as long as the deposits subsists in the fund, so long, at any rate, both as matter of legal construction and in the common and ordinary way of speaking, they are properly and correctly described as compulsory deposits. If that be so, under Section 4 of the Act, they are not liable to attachment.

14. Though there is no decision binding on us, the question is not free from authority and the view I have expressed is supported by the judgment of Sir Lawrence Jenkins, C.J., in Veerchand v. B.B. & C.I. Railway 29 B. 259 : 6 Bom. L.R. 921, the facts of which are on all fours with the facts of the present case. The case of Miller v. B.B. & C.I. Railway 5 Bom. L.R. 454 at p. 458, on which reliance has been placed for the creditor, was there cited but was not followed. I am content to adopt the brief statement of the learned Chief Justice. The "deposit", he said "when it was made, was not re-payalble on demand, and, therefore, at that time was a 'compulsory deposit' and having once acquired that character with the attendant consequences, it continued (in my opinion) to retain it."

15. I have dealt with the case on the footing that no distinction exists between the deposits made by the depositor himself on the one hand and the contributions in. respect of those deposits and the interest. Or increment accrued on them on the other. I have assumed that there is a sense in which these secretions to the original deposits can be said to be "re-payable" or "not repayable" out he demand of the depositor. I do not forget, however, that Sir Lawrence Jenkins, C.J., found an argument on the frame of the statutory definition. If a word be interpreted as meaning one thing and including another and a different thing, the meaning of the word as, first defined would seem to be enlarged so as to include the second thing. It is as if the Legislature had said the word shall mean and include (1) the first thing and (2) the second thing. In the view suggested for the creditor, therefore, on the depositor's death or retirement, a distinction naphtha veto be drawn between the deposits made by the depositor himself, then re payable on his demand, and the additions to these deposits, to which the limitation of not being re-payable on his demand was never applicable or essential and which must, therefore, be understood as coming otherwise within the meaning of the term "compulsory deposit." The learned Chief Justice concluded: "I do, not suppose it was ever intended that the fund should as to part be, and as to part not be, a 'compulsory deposit.'"

16. As to the cases in this Court, in Seth Manna Lal v. Gainsford 35 C. 641 : 12 C.W.N. 633, the main question decided was that the fund there in question, which had been established by the Corporation of Calcutta, was subject to the Provident Funds Act. It is not clear whether the subscriber whose deposits it was sought to attach, was or was not at the time in the employ of the Corporation.

17. In Hindley v. Joynarain Marwari 54 Ind. Cas. 439 : 46 C. 962 : 24 C.W.N. 268, the Provident Fund was that of the East Indian Railway. The depositor had died and a decree for money had been obtained against his father as his legal representative. An attempt made in the course of executing the decree to attach the amount standing to the credit of the deceased in the fund, was frustrated by Rankin,. J. "Whether," said the learned Judge "the employee is in the service or out of the service, whether he be alive or dead, his share is unattachable in the hands of the institution." That decision is in point and the general observations which the learned judge makes on the nature of these funds may also be usefully referred to. For if there be any doubt as to the meaning of the Act it is permissible to have regard to the state of things to which the Act was intended to apply, the conditions in which it would operate, and the class of persons which it was intended to benefit.

18. In the result this Rule must, in my opinion, be made absolute. Our order dated 26th January 1922 in Civil Rule No. 515 of 1931 should be discharged, and if the amount standing to the credit of W.J. Godfrey in the Railway Provident Institution has been attached or reattached by the Sealdah Court of Small Causes, the attachment should be withdrawn.

Ghose, J.

19. I am of the same opinion. The Provident Funds Act seems to be an instance of fragmentary legislation, as it does not provide for all the circumstances under which the sums standing to the credit of depositors are payable and complications have arisen in the decision of the case on account of the rules framed from time to time for the administration of the fund and the resolution of the 29th of July 1919 to which our attention Was drawn. Rule 10, with reference to which we had decided the case at the previous hearing, has now been shown to have been excluded in its operation as regards subscribers to the State Railways Provident Fund. Rule 30, which is applicable to servants employed on State Railways has been relied on by the learned Advocate-General. Under this rule the money in deposit is not liable to attachment. It is contended on behalf of the creditor by Babu Mohendra Nath Roy that this rule is ultra vires of the Act. His main contention is that the money was not a compulsory deposit when it was sought to be attached and reference was made to rule 22 when provides, amongst other thing, that no compulsory deposit or bonus shall be withdrawn except on the depositor leaving the public service. It is urged that when the money is payable on the employee leaving the service, it is payable on his demand, and it, therefore, ceases to be a compulsory deposit within the definition in section 2(4) of the Act and is consequently liable to attachment. The observations of Russel, J., in Miller v. B.B. & C.I. Railway 5 Bom. L.R. 454 at p. 458, are relied on in suport this argument and it is contended that the case of Veerchand v. B.B. & C.I. Railway 29 B. 259 : 6 Bom. L.R. 921, which is a decision on the question in controversy was wrongly decided and ought not to be followed. It may be observed in passing that there was an appeal from the decision of Russel, J., but the Court of Appeal apparently retrained from expressing any opinion On this question See Veerchand v. B.B. & C.I. Railway 29 B. 259 : 6 Bom. L.R. 921.

20. It seem to me that the money in deposit is included within the definition of "compulsory deposit" in the Ac11. The deposit was not re-payable on the demand or option of the subscriber, but was payable only under certain circumstances. In my opinion it cannot be said that the deposit was payable on demand by reason of the fact that it became payable under the rules on one of the events happening afterwards, and that the character of the deposit that it was not repayable on demand remains Unaltered. Hence it is not excluded from the definition of compulsory deposit. The money, therefore, is not liable to attachment under the provisions of Section 4(1) of the Provident Funds Act. In this view I should follow the decision of Jenkins, C.J., in Vecrchand v. B.B. & C. I. Railway 29 B. 259 : 6 Bom. L.R. 921, and I need not refer further to the rubs or to the policy of the Act on which arguments were addressed to us.

21. I agree in the order proposed by my learned brother.