1. The question of importance with reference to the proviso (kb) under subsection (1) of Section 60 of the Code of Civil Procedure 1908 (CPC) falls for consideration in this civil revision petition filed by the Judgment Debtors (J.Drs) whose application for exempting the LIC claim amount of their predecessor was rejected by the Court of I Additional Junior Civil Judge, Tanuku. For the sake of convenience, respondent is referred to as Decree Holder (D.Hr) and petitioners are referred to as J.Drs.
2. Bomminayana Lakshmunaidu had borrowed certain amount from the D.Hr. He had taken Policy No. 690589976 of Life Insurance Corporation of India (LIC), Rajam Branch, Vizianagaram District. Be that as it is, D.Hr filed OS No. 95 of 2004 for recovery of a sum of Rs. 81,000/- against wife and minor children of Lakshmunaidu, who died before filing the suit. During the pendency of the suit, D.Hr attached LIC policy of Lakshmunaidu. The suit was decreed on 22.6.2007 for Rs. 81,229/- with interest. D.Hr then filed EP No. 397 of 2007 for recovery of LIC amount attached earlier. J.Drs filed counter opposing the execution by attachment of insurance amount. The Court below rejected the objections, allowed E.P. and directed to send for the amount from the garnishee. Aggrieved by the said order dated 17.12.2005, J.Drs filed present civil revision petition.
3. After receiving notice, D.Hr appeared through the Counsel. The Counsel for both the parties made respective submissions. They also relied on precedents, to which reference is made hereafter.
4. On a plain reading of Clause (kb) of Section 60(1) of CPC, the money payable under a policy of insurance of life of J.Drs shall not be liable for attachment or sale in execution of a decree. In this case, LIC policy is of Lakshmunaidu, predecessor of J.Drs, who himself not a defendant in the money suit. Hence the question is when a suit for recovery of money due from policy holder is filed against the legal representatives of such policy holder, can they seek exemption from attachment and sale. The answer must be in the negative. Had the policy holder been alive, certainly the money payable on such policy is unattachable. Even if a suit is filed for recovery of the amount due from the policy holder after his death, the effect of the Proviso is not taken away. This view is supported by the decisions of High Courts of Bombay, Madras and this Court.
5. In Federal Bank Ltd v. Smt. Indiradevi Kunjamma, AIR 1986 Bom 101 (Panaji Bench, Goa), it was held as follows:
The reason behind this submission is that, according to the learned Counsel, once the assured died, the monies payable under the policy come to his estate, and therefore his heirs and legal representatives are appropriating the said monies and as such, the said monies are entirely outside the scope of the aforesaid Clause (kb). I am afraid that this reasoning of the learned Counsel cannot be accepted. I say so, because, first of all one has to bear in mind the policy of the Legislature that caused the exemption to be laid down. I am of the opinion and I believe that the Legislature had exempted from attachment the monies payable under a policy of insurance on the life of the judgment-debtor in order to give some security to the heirs and legal representatives of the deceased. This being the position, even though the said monies are becoming a part and parcel of the estate of the deceased, nevertheless the exemption laid down in Clause (kb) C.P.C. follows the same monies. I am fortified in this view by the observations of the Supreme Court in Sarbati Devi's case to the effect that the exemption was specifically laid down because the amounts payable under an Insurance Policy on the life of a person were otherwise attachable. In other words, the Supreme Court pointed out that had it not been for the specific provision of Clause (kb) of Section 60(1) C.P.C, the monies payable under an Insurance Policy on the life of a person would have been liable to attachment and sale for the satisfaction of a decree. I am thus of the firm view that monies payable under an Insurance Policy on the life of a judgment-debtor are entirely exempted from attachment and sale by virtue of the aforesaid Clause (kb) of Section 60(1) C.P.C, irrespective of the circumstance as to whether the Insurance Policy matures during the lifetime of the assured or the monies become payable after his death.
6. In Vallabhaneni Ratnakumari & Anr.… v. Katta Subbaravamma…., 1993 (3) ALT 464, this Court interpreting Section 10(1) and (2) of Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Section 60(kb) and Order XXXVIII Rule 5 of CPC, held as under:
Under sub-section (2) of Section 10 of the Act, the amount standing to the credit of a member in the Fund at the time of his death and payable to his nominee shall, subject to any deduction authorised by the 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……” A combined reading of sub-sections (1) and (2) thereof makes it abundantly clear that the amount in question is not liable to be attached, and the nominees or, where there are no nominees, the legal representatives, are entitled to receive the amount “free from any debt or other liability incurred by the deceased”. The said amount of Rs. 50,000/- standing to the credit of the deceased Satyanarayana must, therefore, be paid to the nominees or, if there are no nominees, his legal representatives, and no part of that amount is liable to be attached whatever be the extent of the debt or liability incurred by the deceased Satyanarayana. The impugned order of the learned III Additional District Munsif, Machilipatnam, made in IA No. 1560 of 1991 in SC No. 94 of 1991 is, therefore, set aside and the civil revision petition is accordingly allowed. No costs.
7. In Regional Manager, LIC of India v. John Bosco, AIR 2002 Mad. 348, Madras High Court held as under:
Proviso (kb) to Section 60(1) C.P.C, no doubt, exempts all money payable under the policy of insurance under the life of the judgment debtor, but the policy amount under life insurance scheme only confers a right not on the policy holder but as legal representatives. Therefore, moneys payable under the insurance policy of a judgment debtor are entirely exempted from the attachment and sale, irrespective of the circumstances as to whether the insurance policy matures during the life time of the assured or the moneys become payable after the death of the judgment debtor, as held by the Apex Court in Smt. Sarbiti Devi v. Smt. Usha Devi, (1984) 1 SCC 424 : AIR 1984 SC 346.
The legislative object behind the above exemption protected under proviso (kb) to Section 60(1) CPC is that the money payable under the policy of insurance of life of a policy holder is intended to give some security to his heirs and legal representatives. Such legislative object, in my consideration, cannot, in any way be diluted, merely because the policy amount sought to be attached is that of the judgment debtor or otherwise; as otherwise, the intention of the Legislature to provide security to the legal representatives of the policy holder would be defeated.
8. In Pulugu Karnakar Reddy v. Shreya Financiers and Hire Purchase, 2007 (2) ALD 254 : 2007 (2) ALT 212, this Court reviewed the case law and held that amounts payable under insurance policy on the life of the deceased are exempt from attachment for any amounts due by insured under Section 60(1)(kb) of CPC. Therefore, if the suit was filed against petitioners as successors of policy holder, the policy amount is exempted. The fact that attachment before judgment became final, does not change the situation nor the order of the Court attaching LIC amount operates as res judicata.
9. The civil revision petition, for the above reasons, is accordingly allowed.
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