Union Of India v. Radha Kissen Agarwalla & Anr. Opposite Parties.

Banerjee, J.:— Civil Rules No. 2755 of 1957 arises out of an objection to attachment of a certain sum of money, said to form part of the Provident Fund money belonging to G.W Browne, Opposite Party No. 2.

2. It is admitted that Browne was a subscriber to the State Railway Provident Fund and elected to be governed by the Provident Fund Sterling Accounts Rules. Payment of his Provident Fund money, on his retirement, was required under the Rules to be made in Sterling. On August 26, 1947, the said G.W Browne wrote the following letter to the Financial Adviser and Chief Accounts Officer, East Indian Railway:—

“Dear Sir,

I request that my Provident Fund or/and Special Contribution/Gratuity moneys may be remitted to me by Bank Draft on District Bank to the following address—

Water St.

Liverpool,

I clearly understand that the remittance is made at my sole risk and that the East Indian Railway accepts no further responsibility for the money and I agree to the receipt granted by the Postal/Bank Authorities being treated as a valid discharge for the payment.

I hereby declare that I intend to reside after retirement in a country where Rupee is not legal tender.”

3. On July 27, 1955, the Deputy General Manager, Eastern Railway, (formerly East Indian Railway) wrote to the Chief Accounts Officer of the said Railway communicating the sanction of the General Manager (who was the competent authority in the matter) for payment of the Special Contribution to Provident Fund and the balance of the 10 p.c of the Provident Fund dues of the said G.W Browne in Sterling, in terms of Rule, 1410(1) of the Railway Establishment Code.

4. Thereafter, on February 22, 1956, the said G.W Browne again wrote a letter to the Chief Accounts Officer of the Eastern Railway in language similar to that used in the letter dated August 26, 1947, hereinbefore quoted, but this time advising to remit the money to:—

“The Westminister Bank.

66, Great Hampton Street,

Birmingham-18,

England.”

5. Two cheques, one for Rs. 14,428-8-9p. and another for Rs. 23,018-11-10p. were drawn by the Railway Administration in favour of the Reserve Bank of India and were sent to the Reserve Bank, with instruction to that Bank to convert the amounts, covered by the two cheques in Sterling and to transmit the money in Sterling to the Banker of the said G.W Browne in England.

6. The Opposite Party No. 1, Kashi Prosad Agarwalla had obtained a money decree against G.W Browne abovenamed. He put the decree to execution in Money Execution Case No. 52 of 1955 of the 3rd court of the Subordinate Judge at Alipore, caused the attachment of the two cheques, through Calcutta Small Causes Court, had them encashed and made the money brought to the executing court.

7. On being informed by the Reserve Bank of India of the situation, the present petitioner, Union of India, filed an objection to the attachment of money and claimed immunity from attachment, on the ground that the money covered by the two cheques was Provident Fund Money and therefore immune from attachment. Thereupon, the Opposite Party No. 1 did not further proceed with the execution case, with the result that the execution case was struck off on December 7, 1956.

8. On the very next day, the Opposite Party No. 1 started Money Execution Case No. 42 of 1956, out of which this Rule arises, and obtained an attachment of the money, which had been brought to the executing court in the previous execution case.

9. Thereupon, the petitioner, Union of India, filed another objection to the attachment on the ground that the money attached, being Provident Fund money, was immune from attachment under the law and that the attachment, in the manner done was illegal, alternatively without jurisdiction.

10. The executing court below overruled the objection with the following observation:—

“On a careful consideration of the matter I am inclined to say that the attachment issued by this court on 8-12-56 was perfectly in order. In my judgment the moneys attached by the court lost their character as Provident Fund moneys long before they were attached and hence they were not immune from attachment, as claimed by the objector * * *”

11. The propriety of the order is being disputed in this Rule at the instance of the Union of India.

12. Before we proceed to examine the contentions made on behalf of the petitioner, it is necessary for us to notice that the judgment-debtor opposite party, G.W Browne, did not put up any resistance to the attachment made. He did not appear in the court below, neither did he appear before us. Notice of the Rule appears to have been served on the judgment-debtor opposite party abovenamed, by registered post, and the acknowledgment of service by registered post was received back in this court on November 5, 1958. He did not, however, enter appearance in the Rule. The sole contest is by the Union of India.

13. Mr. Bhabesh Narayan Bose, learned Advocate for the petitioner, raised a two-fold contention for our consideration. He argued that the attached money was Provident Fund money and therefore, free from attachment in execution of the decree. The said money he contended, continued to be Provident Fund Money even after the same was deposited in the Reserve Bank of India and must be deemed to retain that character until a receipt for the money would be granted by Browne's Bankers in England. He contended in the next place that the executing court below had no territorial jurisdiction to attach the money.

14. Mr. Jitendra Kumar Sen Gupta, learned Advocate for the decree-holder Opposite Party No. 1, did not dispute that if the attached money retained its character as Provident Fund money even after the deposit thereof in the Reserve Bank of India, the decree-holder would not be entitled to attach the same. He, however, contended that the money had ceased to retain that character when the attachment was sought to be made and, in any event, the Union of India had no locus standi to object to the attachment.

15. We propose to deal with the last point raised by Mr. Sen Gupta first of all, because that point is in the nature of a preliminary objection and if that point succeeds, we need not go into the other points.

16. Mr. Bhabesh Narayan Bose, placed strong reliance on a decision reported in (1) 54 C.W.N 251 (Smt. Hira Devi v. Ram Grahit Singh). in which Sambhu Nath Banerjee, J. held that in suitable cases a receiver in execution may be appointed over Provident Fund money. While overruling, on merits, the objection of the Dominion of India which intervened to resist the appointment of a Receiver, his Lordship observed:—

“A point was taken on behalf of the decree-holder that as the judgment-debtor is not before the court the Dominion has no locus standi to make the application. I do not see much force in this contention. The Dominion, I think, can apply as in a pro interesse sua application. But having regard to the views I have taken on the merits of the case, I have not considered this preliminary objection and I do not express my final opinion on it.”

17. The observation made by Sambhu Nath Banerjee, J. is in the nature of obiter dictum and his Lordship did not decide the point although raised. We need notice here that the aforesaid judgment was set aside in appeal by Harries, C.J, and Sinha, J. and that judgment is reported in (2) 54 C.W.N 840. The appellate judgment again was upheld by the Supreme Court and that judgment is reported in (3) (1952) S.C.A 323 (Union of India v. Hira Devi). The Supreme Court, however, did not advert to question of locus standi of Union of India to intervene pro interesse suo. Since the point as to locus standi has again been raised, we propose to give our decision on the point.

18. The Latin expression ‘pro interesse suo’ means, in the English language, for his own interest; these words are used, especially of a party allowed to intervene for his own interest in a proceeding instituted between other parties.

19. In Chancery practice, it is competent to a party claiming the benefit of? decree, where the disobedient person either could not be arrested upon the process, or, having been arrested, remained in prison without paying obedience to the Court, to issue a writ of sequestration, directing the commissioners therein named to sequester the personal property of the defendant and the rents and profits of his real estates, and to keep him from the enjoyment of them, till he had cleared his contempt. Originally this process was merely used as a means of coercing the defendant by keeping him out of possession of his property; and the practice of applying the money received by sequestors in satisfaction of the sum decreed to be paid, is of comparatively recent origin. (See Daniel's Chancery Practice (eighth edition) Vol; I pp. 789–790). Where any person claimed to be entitled to an estate, or other property sequestered * * * or has title paramount to the sequestration, he should apply to the Court to direct an enquiry whether the applicant has any and what interest in the property sequestered. This enquiry is called an examination pro interesse suo; and order for such an examination may be obtained by a person interested [See Daniel's Chancery Practice (eighth edition) Vol. I p. sol.]

20. Sometimes, where the person claiming a legal right to property sequestered has made an application for an enquiry as to his interest, the court, finding his right to be clear and undisputed, may at once make an order in his favour, without an enquiry. The court may also order the possession of the property claimed to be delivered upto the claimant, upon his entering into good and sufficient security to restore it, in case the decision upon his claim should be against him. In such cases the court exercises a discretion, and where the case is considered to admit of no doubt, the court will determine it without further inquiry, in other cases the court will see what is necessary to be done, in order to try the question of right, and? will then put it in the way of trial. [See Daniel's Chancery Practice (eighth edition) Vol. I, p. 802.]

21. The nearest Indian equivalent of a pro interesse suo application is the procedure prescribed in rules 58 to 63 of Order XXI of the Code of Civil Procedure, dealing with investigation of claim and objections to attachment.

22. Under Order XXI, rule 58 of the Code:

“(1) Where any claim is preferred to, or any objection is made to the attachment of any property attached in execution of a decree on the ground that such property is not liable to such attachment the court shall proceed to investigate the claim or objection with the like power as regards the examination of the claimant or objector, and in all other respects, as if ho was a party to the suit.”

23. Order XXI, rule 59 makes provision for adducing of evidence by the claimant. Order XXI, rule 60 provides for the release of the property from attachment, on the court being satisfied about the claim and is set out below.

24. Whereupon the said investigation the court is satisfied that for the reason stated in the claim or objection such property was not, when attached, in the possession of the judgment-debtor or of some person in trust for him, or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the judgment-debtor at such time, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the court shall make an order releasing the property, wholly or to such extent as it thinks fit, from attachment.

25. Order XXI, rule 61 deals with the circumstances under which claim may be disallowed. Order XXI, rule 63 deals with the saving of suits to establish right to attached property.

26. Dealing with the limits of an enquiry under Order XXI, rules 59 to 61 of the Code of Civil Procedure, Lord Hobhouse observed in the case reported in (4) L.R 15 I.A 123 (Sardhari Lal v. Ambika Pershad).

“* * * * the Code does not prescribe the extent to which the investigation should go; and though in some cases it may be very proper that there should be as full an investigation as if a suit were instituted for the very purpose of trying the question, in other cases it may also be the most prudent and proper course to deliver an opinion on such facts as are before the Subordinate Judge at the time, leaving the aggrieved party to bring the suit which the law allows to him.”

27. And in the case reported in (5) I.L.R 51 Cal. 548 (Najimunessa v. Nacharaddin) it was observed:

“Now, rules 58 and 62 of Order XXI are directed to give a means by which execution proceedings may be made effective and not too closely entangled with disputes between third parties and the debtor. Provision is made for investigation of claims in a limited fashion. The scope of the enquiry being confined, the investigation will not always be at all elaborate and the Privy Council in the case already cited (15 I.A 123) have pointed out that sometimes that investigation may well be very slight indeed. Rules 60 and 61 provide then for a summary investigation into possession as distinct from a thorough trial of ultimate rights. It is impossible to separate altogether the question of possession and of title. Thus, if the judgment-debtor was in possession he may have been in possession as agent or trustee for another and this has to be enquired into. See the cases of Mohunt Bhagwan Ramanuj Das…Claimant, v. Khetter Moni Dassi…Decree-Holder; [(1887) 7 C.W.N 617]; Hamid Bokhut v. Buktear Chand [(1887) 14 Cal. 617]; Sheoraj Nandan Singh v. Gopal Surain Narain Singh [(1891) 18 Cal. 290]. To that extent, the title may be part of the enquiry in a claim case, but no ultimate questions of trust are intended to be thrashed out.

Again, one may take the simplest case. The judgment-debtor being truly and justly, in law and in fact, entitled in full right to a piece of land, a third person under a bona fide but unfounded claim of right may be in possession. In such a case, the person in possession is to have an order in his favour under rule 60 or rule 61. Having tested the matter by the limited test provided by these rules the execution court is required to make an order. What then is the order it is required to make? By rule 60, the court ‘shall make an order releasing the property wholly or to such an extent as it thinks fit, from attachment,’ Rule 61 is not quite so explicit by itself. The Court there is to make this order. ‘The Court shall disallow the claim.’ Reading that rule with rule 58, that means that the Court is to disallow or reject the claim preferred to or objection made to the attachment of the property attached on the ground that such property is not liable to such attachment. Now, that is the order which by rule 63 is made conclusive subject to a suit. The suit, if brought, is not limited by any special standard of evidence or of law. The claimant may if necessary, thrash out his title is the fullest and most ultimate sense. But if the title which he claims is not the ultimate full title to the property, then, of course, he must be content to assert whatever the title claimed may be. So, too, the decree-holder may make out his debtor's title exactly as if it were a suit for possession by the judgment-debtor (See 35 Bom. 79).”

28. That being the position in law, the Union of India would be entitled to object to the attachment only if it can bring its case within Order XXI, rule 58 of the Code and prove to the satisfaction of the court that the money was not in possession of the judgment-debtor but was part of a Provident Fund and as such immune from attachment, under section 3 of the Provident Funds Act, 1925 read with section 60(1)(k) of the Code of Civil Procedure.

29. Mr. Bhabesh Narayan Bose also relied on the proviso to Order XXI, rule 52 of the Code of Civil Procedure in support of his contention that the Union of Indian has locus standi to object to the attachment. Order XXI, rule 52 of the Code deals with attachment of property in the custody of a court or other public officer and the proviso is:

“* * * where such property is in the custody of a court, any question of title or priority arising between the decree-holder and any other person, not being the judgment-debtor, claiming to be interested in such property by virtue of any assignment, attachment or otherwise, shall be determined by such court.”

30. Even under Order XXI, rule 52 of the Code, the petitioner, Union of India, has to prove that it was interested in the money attached and has to show that the money being part of a Provident Fund, its duty was to see that it was not attached in contravention of the provisions of section 3 of the Provident Funds Act, 1925, read with section 60(1)(k) of the Code of Civil Procedure.

31. Therefore, the real question in this case is whether the attached money retained its character as compulsory deposit in a Provident Fund and was, as such, immune from attachment. If it did, then the Union of India had locus standi to object its unlawful attachment. If not, the petitioner, Union of India had no right to intervene and object to the attachment of the money.

32. There is no dispute, in the instant case, that the two sums of Rs. 14,428-8-9p. and Rs. 23,018-11-10p. formed part of the compulsory deposit of the subscriber G.W Browne abovenamed, in the Railway Provident Fund and the said two sums became repayable to him.

33. It is well settled that as soon as the compulsory deposit is paid out to the subscriber, the amount so paid out ceases to be a compulsory deposit in a Provident Fund. It is also well settled that payment of a debt may be made not only in cash but also in any other manner sanctioned or prescribed by the creditor (See section 50 of the Indian Contract Act).

34. We have already noticed that the opposite party No. 2, Browne, desired payment of his deposit in the Provident Fund, in Sterling and also desired that remittance be made to him by a Bank draft in a named Bank in England. It is not disputed that under the Foreign Exchange Regulations Act, 1947 the only legal method of remitting Provident Fund deposit, converted into Sterling, to the opposite party No. 2, in England was by the method adopted by the Railway Administration and hereinbefore stated.

35. The method adopted by the Railway Administration is also the prescribed method under Rule, 1413 of Provident Fund Sterling Accounts Rules (printed at page 145 of the State Railway Establishment Code, Vol. I) and we set out the material portion of the Rule hereinbelow:—

“1413(1) Where under these Rules any payment is to be made to the subscriber in sterling,

(a) the subscriber, prior to the date on which payment is to be made, shall send written instructions to the Accounts Officer intimating the place at which payment is to be made, such place being in a country where the rupee is not legal tender;

(b) the Accounts Officer, on receipt of the written instructions referred to in the preceding clause shall remit the amount through a bank for payment at the place at which payment is required.”

36. It was admitted before us that the bank referred to in the Rule quoted above must now be the Reserve Bank of India.

37. Now, illustration (d) to section 50 of the Indian Contract Act reads as follows:—

“A desires B, who owes him Rs. 100 to send him a note for Rs. 100/- by post. The debt is discharged as soon as B puts into the post a letter containing the note duly addressed to A.”

38. That illustration, read with section 50 of the Contract Act, justifies the conclusion that by sending the two cheques to the Reserve Bank of India, in performance of the manner of payment prescribed by the subscriber, G.W Browne abovenamed, the debt was discharged and the money must be deemed to have been paid out to the subscriber, G.W Browne.

39. Such a sum of money, namely, money deemed to have been paid out to the subscriber, looses all immunity from attachment.

40. If the cheque had been dishonoured or returned to the Provident Fund authorities, by the Bank, for some other reasons, different considerations might have arisen and the money after such dishonour or return, been deemed to form part of the Provident Fund deposit and not attachable as such. So also payment by mere book adjustment and removal of the sum from the Provident Fund Ledger account of the subscriber may not terminate the immunity of the deposit from attachment,. That is the view which was taken by Bachawat, J. in the unreported decision in (6) Civil Revision Cases No. 2879 and 2880 of 1954 (Divisional Accounts Officer v. Mukhila & Son). We are not however required to express out view on the legal position in any of the aforesaid circumstances. In the facts and circumstances of this case we are of the opinion, the sums attached had lost their immunity against attachment, for reasons already stated. That being so, we have also to hold that the Union of India, petitioner, has no locus standi to object to the attachment.

41. It remains for us to notice the remaining argument made by Mr. Bose, viz., that the executing Court lacked territorial jurisdiction to attach the money. This point, in the form in which it was argued before us, had not been taken in the court below and we are unwilling to allow the petitioner to argue the point for the first time in this Rule.

42. Then again the money attached was lying in the court of one of the Subordinate Judges at Alipore and we wonder how the point of lack of territorial jurisdiction at all arises. We, therefore, repel this argument advanced on behalf of the petitioner.

43. In the result this Rule is discharged with costs.

[Civil Rule, 2756 of 1957.]

44. It is conceded that this Rule must be discharged, if our judgment in the previous case is correct.

45. We, therefore, discharge this Rule also with costs.

Niyogi, J.:— I agree.

S.K.B