TaxTMI 
TaxTMI 
1991 (2) TMI 414
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....Defendant No. 2 Shantaben and defendant No. 3 Champaben are the other two daughters of Kankuben. Plaintiffs Nos. 2 and 3 are the minor sons born out of wedlock of plaintiff No. 1 with deceased Bhanabhai. The deceased Bhanabhai was serving in Calico Mills at Ahmedabad. He has expired on 2.2.1974, The deceased had not executed any Will. The succession certificate Ex.25 is obtained by defendant No. 1 Lalitaben by filing Civil Miscellaneous Application No. 280 of 1974 before the City Civil Court, Ahmedabad. That application was filed for recovering following amounts: Amount of provident fund with the Calico Mills, Ahmedabad. ... Rs. 15,000/- Amount of gratuity with the Calico Mills, Ahmedabad. ... Rs. 8,000/- Amount of deposit with the Calico Mills Co-operative Credit society ... Rs. 1,750/- Amount of contribution ....
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....o 3 are entitled to have a share in the properties left by the deceased. As the learned Advocate for the appellant has not pressed the contention, it is not necessary for me to discuss the evidence for arriving at the aforesaid conclusion. 6. However, the learned Advocate Mr. Damani contended that as per the nomination form filled in by the deceased Bhanabhai, Shantaben, Lalitaben and Champaben are entitled to have the provident fund amount of the deceased. For this purpose he has relied upon Ex.84 which is a xerox copy of Form No. 8 filled in by deceased Bhanabhai wherein it is stated that the nomination made by him in the name of Kankuben (deceased wife) was cancelled and the amount standing to his credit in the employees' provident fund be received by the persons named therein in the event of his death before that amount has become payable. No dispute is raised with regard to the amount of gratuity or the deposit amount which was lying in the name of the deceased in the Calico Mills Credit Co-operative Society as there is no nomination for the said amount in her name. Therefore, for the said properties the plaintiffs are entitled to have their share as specified in the de....
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....and 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) Where the nomination is wholly or partly in favour of a minor, the member may, for the purposes of this Scheme, appoint a major person of his family as defined in Clause (g) of Paragraph 2, to be the guardian of the minor nominee in the event of ....
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....edit of the member shall vest in the nominee. 10. In my view, it would be difficult to accept the said contention. Firstly, it should be noted that Sub-section (2) nowhere provides that the Provident Fund amount shall vest absolutely in the nominee. Under Sub-section (2) limited protection is given against the debt or other liability incurred by the deceased or the nominee before the death of the member and against the decree or order of any Court, but it does not provide that the Law of Inheritance would not be applicable to the Provident Fund amount received by the nominee. 10-A. Secondly, the word "vest" is ambiguous and may have different shades depending on the context in which it is used. What meaning should be given to the word "vest" is considered by the Supreme Court in the case of F. & V. Merchants Union v. Improvement Trust, Delhi AIR 1957 SC 344. The Supreme Court has held that the term "vesting" has a variety of meanings which has to be gathered from the context in which it has been used. It may mean full ownership or only possession for a particular purpose of clothing the authority with power to deal with the property as the agent of another person or authority....
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....cates that the only object of incorporating Section 10 is to protect the provident fund amount against attachment. Sub-section(1) specifically provides that the member of the Provident Fund Scheme is not entitled to assign or charge the said amount. The purpose is to see that after the retirement he gets the said amount and that he does not waste the said amount by assigning or by taking loan on the basis of the said amount. It further affords protection against the attachment under any decree or order of any Court in respect of any debt or liability incurred by the member. The protection which is afforded is even given to the extent that the Official Assignee appointed under the Presidency Towns Insolvency Act or any receiver appointed under the Provincial Insolvency Act shall not be entitled to have any claim on the provident fund amount. Similar protection is given to a nominee under Sub-section (2) of the Act. Therefore, the sole purpose of Section 10 seems to afford protection to the member of the Provident Fund Scheme against creation of any debt by the member so that after retirement he gets something to survive or in case of his death his heirs get something to live on. The....
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....may be testamentary or according to Law of Inheritance applicable to the member. Reading Sub-section (2) of Section 10 it would be apparent that the legislature never intended to change the Law of Succession applicable to the member. The sole purpose of Sub-section (2) and of using the word "vest" seems to afford protection against the creation of debt so that the said amount may not be taken away by the creditor of the member of his nominee. Therefore the proper meaning which could be given to the word "vest' used in Sub-section (2) of Section 10 would be that the provident fund amount vests in the nominee so that he can receive the said amount from the concerned authority and give a valid discharge and that the said amount would not be liable to be attached for the debt incurred by the member or the nominee. The amount, however, can be claimed by the heirs of the member in accordance with the Law of Succession governing them. 12. While interpreting Section 39 of the Insurance Act, 1938 which provides for nomination of the person or persons to whom the money secured by the policy shall be paid in the event of his death the Supreme Court in Sarbati Devi v. Usha Devi AIR 1984....
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....uccession governing them. 13. In my view, the aforesaid reasoning of the Supreme Court by which Section 39 of the Insurance Act is interpreted would be wholly applicable for interpreting the provisions of Sub-section (2) of Section 10. 14. However, learned Advocate for the appellant has relied upon the decision in the case of Usha v. Smriti AIR 1988 Calcutta 115. In that case the Calcutta High Court held that the most striking difference about the status of the nominee under the Provident Fund Act and the Scheme and under the Insurance Act is that under Section 10(2) of the Provident Fund Act the amount standing to the credit of the member of the Fund at the time of his death shall vest in the nominee and, therefore, it 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. The relevant discussion is as under: "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 strikin....
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....ed because the proviso to the said clause specifically provides that the major sons and married daughters whose husbands are alive are not entitled to have any share in the provident fund amount where there is no subsisting nomination or the nomination relates only to a part of the amount standing to his credit in the Fund. For appreciating this contention, it would be necessary to reproduce Clause 70 of the Scheme which reads as under: "70. 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 the paragraph 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 me....