NISAR AHMAD Versus ROZI KHAN
The respondent, Rozi Khan, in this case applied for execution of the decree for Rs. 3,406.50 passed in his favour and against the appellant. He submitted that only Rs. 200.00 out of the decretal amount had been paid to him and the remaining amount of Rs. 3,206.50 was due to him from the judgment- debtor. He had prayed in the execution application that the salary of the appellant due to him every month from his employer Messrs Volkart (Pakistan) Ltd., may be attached till the payment of the decretal amount.
2. However, the decree‑holder filed another application thereafter with the prayer that since the appellant's services were being terminated by his employer, therefore, a direction be issued to the Messrs Volkart (Pakistan)
Ltd., to withhold the payment of amount of Rs. 3,206.50 out of the amount payable to the judgment‑debtor. This direction was accordingly issued by the learned District Judge by his order dated 3‑3‑1971. It is significant to notice, as admitted in the impugned order, that the services of the judgment debtor, the appellant, wire to terminate with effect from 31‑3‑1973 and at the time when the attachment order was passed on 3‑3‑1971 he was still in service.
3. The judgment‑debtor thereafter applied for the vacation of the attachment order, as referred to above. The said application was rejected by the learned District Judge on 2‑4‑1.971 mainly on the ground that since his services had been terminated on 31‑3‑1971, therefore, after his retirement he was not entitled to toe protection as given by the relevant provision of the Provident Funds Act, 1925 as well as section 60(l)(k), C. P. C. providing that all compulsory deposits and other sums in or derived from any fund to which the Provident Funds Act, 1925 for the time being applies in so far as they are declared by the said Act not to be liable to attachment. In this view of the matter the )earned District Judge attached the Provident Fund of the judgment‑debtor\ lying with Messrs Volkart (Pakistan) Ltd., as according to him it had become his property by that time. The appellant has now come up High Court in execution first appeal and has challenged the validity of the impugned order.
4. The Provident Funds Rules of Messrs Volkart (Pakistan) Ltd., if any, have not beer brought on record by any of the parties. It is, however, not denied that the Provident Funds Act, 1925 and the rules framed there under are applicable to its employees. Section 3(1) of the said Act provides that a compulsory deposit in any Government or Railway Provident Fund shall not in any way 17e capable of being assigned or charged and shall not be liable to attachment under any decree or order of any civil, revenue or criminal Court in respect of any debt or liability incurred by the subscriber, or depositor, and neither that Official Assignee nor any receiver appointed under the Provincial Insolvency, Act, 1920, shall be entitled to, or have any claim oar, any such compulsory deposit. "Compulsory deposit" has been defined in section 2 of the Act as a subscription to, or deposit in, a Provident Fund, which, under the rules of the Fund, is not, until the happening of some specified contingency, repayable on demand . . . . . The compulsory deposit,. according to the said definition, also includes any contribution and any interest or increment which has accrued under the rules of the Fund on any such subscription deposit or contribution. Rule 13.28 of the Punjab General ` Provident Fund Rules, as contained in Part II, Chapter XIII of the Civil Services Rules (Punjab), `volume 11 (Second Edition, 1,953) provides that when a subscriber quits the service, the amount standing to his credit in the Fund shall become payable to him. Rule 13.29 further provides that the amount standing to his Credit in the Fund shall, upon application made by him in that behalf to the Accounts Officer, become payable to the subscriber.
5. It has been argued that after the retirement of an employee, the provident fund standing in his name becomes his property and is liable to be attached. According to the learned counsel appearing on behalf of the respondent, the protection as granted in relation to the Provident Fund under section 3(1) of the Provident Funds Act as well as section 60 (1)(k), C. P. C. ceases to exist after the retirement of an employee.
In the first Instance it is significant to notice that the order attaching the Provident Fund of the appellant to the extent of the amount due from him to the respondent was made on 3‑3‑1971, when the appellant was still in service.
There is no doubt that he was to be relieved from his service with effect from 31‑3‑1971, but the fact remains that the appellant still being in service on 3‑3‑1971 he had not retired as yet and the Provident Fund was still lying .with his employer and had not become his property after having been paid to him. The question to be examined in this case is; as to whether the .amount lying in the Provident Fund of the appellant, when he had not yet retired could be attached. According to law the provision as contained in section 3 (1) of the Provident Funds Act intends to protect compulsory deposits only so long as they remain deposited in the Fund and the ,protection as afforded by the said provision will not continue .after the money in such compulsory deposits has been paid to the ‑subscriber or depositor on the happening of any contingency which entitles .him to draw the same. Reference in this respect can be made to Mai Dhan Sita Ram v. Imperial Bank of India 165 1 C 767, Official Assignee, Madras v. Ram janayaki Ammal A I R 1928 Mad. 784 ; Ranganayaki Ammal v. Official Assignee, Madras A I R 1931 Mad. 797 ; Central Bank of India Ltd. v. M. V. V. Rao A I R 1949 Cal. 144 ; Rukmini Kumar v. Assam Bangal Loan Co. Ltd. 40 C W N 1406 and Baramdeo Pandey v. Fay Smith 44 C W N 637. This view also gains strength from a Full Bench judgment as reported in Joseph :Benjamin Bonjour v. Official Assignee of Madras A I R 1956 Mad. 283, wherein it has been held that the immunity under section 3(1) of the Provident Funds Act does not extend to the money paid over to a subscriber or depositor from his Provident Fund, as the said money can no longer be described as compulsory deposit.
6. In the present case, it has not been denied that when the order of attachment was passed on 3‑3‑1971, the appellant was still in service and the amount lying in his Provident Fund had not been paid over to him. It means that the amount in question had not passed over to him when the same was attached. The Punjab General Provident Fund Rules, as referred to above, clearly provide that the amount in the Fund will be payable to the employee when he quits the service and will be paid to him on the application made by him in that behalf. Section 2 of the Provident Funds Act, which defines the `compulsory deposits' and which gives the protection, as discussed above, lays down that the compulsory deposits in a Provident Fund are repayable on demand on the happening of some specified contin gencies, meaning thereby that so long as the said amount is not paid over to the .subscriber it shall vest in the employer and will not become the property of the depositor and the protection as provided by section 3(1) of the Provident Funds Act as well as section 60(l)(k), C. P. C. will be applicable to such amount.
7. In 165 I C 767 referred to above, the Provident Fund of an employee of the Imperial Bank of India had been attached while he was still in service. It was held that the said amount, under the law, was exempt from attachment. The facts of the case as reported in A I R 1928 Mad. 784, decided by a Single Bench of the Madras High Court, affirmed by a Division Bench. of the same Court, judgment reported in A I R 1931 Mad. 797. are that an employee of a railway company was adjudged an insolvent and a receiver was appointed. Subsequently he resigned his appointment and drew his Provident Fund from the railway company. A large portion of the amount so drawn was paid by him to his wife. He was convicted by the District Judge under section 43(2) of the Provincial Insolvency Act of 1907 of the offence of making a fraudulent transfer and sentenced to three months' imprisonment. On appeal to the High Court his conviction was set aside. It was held that neither the receiver nor the creditors had any claim to the money from the Provident Fund drawn by the insolvent. It was observed in A I R 1928 Mad. 784 that section 3(1) of the Provident Funds Act provided protection to the compulsory deposits so long as they remained deposited in the Provi dent Fund and as soon as the said amount was paid over to the depositor the same could not be described as compulsory.
In the present case it has nowhere been shown that at the time when the attachment order was passed by the learned District Judge the amount of Provident Fund had been withdrawn by the appellant or paid to him by his employer. As mentioned above, the employee was even in service at the time when the impugned order was passed. In this view of the matter it cannot be said that the protection as contained in the relevant provisions as referred to above does not apply to the amount lying in his Provident Fund. It may be mentioned here that the operation of the impugned order was suspended by and on 14‑4‑1971 subject to the condition that the appellant would furnish reasonable security equivalent to the amount in question to the satisfaction of the Executing Court within a fortnight. The said security was furnished and thereafter the amount due to the appellant from his employer, including his Provident Fund, was paid to him. As such, the amount in question having been paid to the appellant has become his own property and the protection given by the relevant law does not extend to the same.
8, It was held in Walchand Molaji Marwari v. Charles A. Williams and others A I R 1935 Bom. 396 that as long as a compulsory deposit was in the hands of the Government or the institution which kept and managed the fund, it was exempt from attachment under any decree and neither did it vest in the Official Assignee nor in a receiver appointed by the Court. However, it was contended in that case that the amount of Provident Fund, which was paid to its subscriber, was not his property and still continued to retain its character of a compulsory deposit for all times. This contention was repelled by the learned Judges observing that under the Act the said amount was liable to be paid on the happening of a contingency provided for in the Act and the Rules and, as such, the amount was payable to the subscriber even during his lifetime. It was observed that being so it was difficult to see on what principle it could be said that the sum which was paid to the subscriber was not his property and still continued to retain its character of a compulsory deposit for all times.
The discussion as made in the judgment as referred to above shows that so long as the amount remains in the hands of the employer it retains its character as compulsory deposit and after it is paid to the subscriber o ` depositor it loses its said character and becomes private property of the employer.
9. In Secretary of State v. Har Charan Das and another A I R 1929 All. 417, amount of compulsory deposit, Rs. 450, was attached in execution of the decree against one Gulzari Lal. It appears from the judgment that at the time when the amount was attached he was in service, but at the time when the judgment was pronounced he had retired. The judgment does not show that the amount in question had been paid to Gulzari Lal after his retirement. It was held that the amount could not be attached even after his retirement until it was paid over to him. The same point was involved in the Secretary of State for India‑in‑Council v. Raj Kumar Mukherjee and others A I R 1923 Cal. 585. It was held in that case that the fact that the deposits become repayable to the employee when he leaves service does not remove them from the category of compulsory deposits. As long as the deposits subsist in the fund, they are properly and correctly described as compulsory deposits.
10. The above discussion would show that so long as the amount remains in the compulsory deposit and is not paid over to the subscriber or the depositor it retains its character as compulsory deposit and is not liable to be attached. It ceases to be a compulsory deposit the moment it is paid over to the depositor and the protection as given by the relevant provisions of law, as referred to above, ceases to exist in relation to that amount. Since in the present case the appellant was still in service and had not retired when the attachment order was passed on 3‑3‑1971, the same cannot be maintained under the law. Even on 2‑4‑1971, when the application of the appellant for the vacation of the attachment order was rejected, the amount lying in his Provident Fund had not been paid to him, as such, according to law its character as compulsory deposit had not been changed. It is established on record that the amount of the fund was paid to the appellant after the present appeal was admitted for hearing.
11. In the circumstances both the impugned orders, dated 3‑3‑1971 and 2‑4‑1971, cannot be maintained and the same are hereby set aside.
The appeal is accepted with costs throughout.
K. B. A. Appeal accepted.