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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: RADHA KISSEN AGARWALLA & ANR.

DATE OF JUDGMENT: 06/12/1968

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. GROVER, A.N.

CITATION:  1969 AIR  762            1969 SCR  (3)  28  1969 SCC  (1) 225  CITATOR INFO :  F          1976 SC1163  (11)

ACT: Provident  Funds Act,1925, s. 3(1)-Foreign Railway  employee electing to have his provident fund in sterling--instructing Railway  administration to remit money to his bank in  U.K.- Railway forwarding amount to Reserve Bank for conversion and remittance-Whether  amount  exempt  from  attachment  before remittance and while with the Reserve Bank.

HEADNOTE: B was an employee of the East India Railway and a subscriber to  the  State  Railway Provident Fund.  He  elected  to  be governed  by  the  Provident Fund  Sterling  Account  Rules, according  to  which  payment  of  his  provident  fund   on retirement was to be made in sterling.  B ’addressed letters to  the  Railway Accounts Officer in August 1947  and  again after  his retirement in February 1956 requesting  that  the amounts standing to his credit in the provident fund account be remitted to his bank in the United Kingdom.  The  Railway administration drew cheques in respect of B’s provident fund in  favour of the Reserve Bank of India and instructed  that bank to convert the amount into sterling and to transmit  it to B’s Bank in the United Kingdom. The  respondent  had obtained a money decree against  B  and upon applying for execution of that decree obtained an order for  attachment of the cheques lying with the Reserve  Bank. The  cheques  were  encashed and  the  amount  realised  was deposited  in  the executing court.  The  appellant  claimed immunity  from attachment of the cheques under s. 3  of  the Provident  Funds  Act, 1925 and the  respondent’s  execution application  was thereupon struck off.  On filing  a  second execution application, the respondent obtained an order  for attachment  of  the money lying in the executing  court.   A further application by the applicant claiming immunity  from attachment was rejected by the executing court on the ground that  the monies attached by the court lost their  character as Provident fund monies long before they were attached  and were  not therefore immune from attachment.  The High  Court in revision confirmed the order of the executing court.

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On appeal to this Court, HELD : Allowing the appeal The  order of attachment passed by the executing  court  was contrary to s. 3 of the Provident Funds Act, 1925. The  Railway administration was in respect of the  provident fund  money  in the position of a trustee for B and  it  had undertaken to discharge its obligation by arranging to  have the amount converted into sterling and to remit it to B. The Reserve Bank was the agent of the Railway administration for converting  and remitting the amount on its  behalf.   Until the money was converted and transmitted by the Reserve  Bank to   B,  it  remained  at  the  disposal  of   the   Railway administration.   So  long as the money remained  under  the control  of  the Railway administration  as  provident  fund money,  it was exempt from attachment under s. 60(1)(k)  (PC read with s. 3 of the Provident Funds Act, 1925.[131 B--F] 29 The  High Court was in error in relying on illustration  (d) of  s.  50 of the Contract Act.  B had  not  authorised  the Reserve Bank to receive payment of the money on his  behalf, nor  had  he  sanctioned  payment to  the  Reserve  Bank  in discharge  of the liability of the  Railway  Administration. [32 A-B]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 105 of 1966. Appeal from the judgment and order dated February 3, 1961 of the Calcutta High Court in Civil Revision No. 2755 of 1957. D.  Narsaraju,  R.  M.  Mehta  and  S.  P.  Nayar,  for  the appellant. Ganpat Rai, for respondent No. 1. The Judgment of the Court was delivered by SHAH,  J.  G. W. Browne was an employee of  the  East  India Railway and was a subscriber to the State Railway  Provident Fund.   He  elected  to be governed by  the  Provident  Fund Sterling Accounts Rules, whereunder payment of the provident fund credited in his account in rupees was on retirement  to be made in sterling.  On August 26, 1947, Browne addressed a letter to the Financial Adviser and Chief Accounts  Officer, East  India  Railway,  requesting that  the  provident  fund payable to him on retirement may be remitted to him by  Bank Draft on the District Bank, Water Street, Liverpool.   After Browne  retired  from service, the Deputy  General  Manager, Eastern  Railway,  wrote a letter on July 27, 1955,  to  the Chief  Accounts Officer, communicating the sanction  of  the General  Manager for payment of the special contribution  to provident fund to Browne in sterling in terms of r.  1410(1) of  the Railway Establishment Code.   Another  communication was  received  from  Browne  (who  had  apparently  by  then migrated  to  the United Kingdom) on February 22,  1956,  by which  he requested that the amount standing to  his  credit in-the Provident Fund Account be remitted to the Westminster Bank, Birmingham.  The Railway Administration then drew  two cheques-one  for Rs. 14,428-8-9 and another for Rs.  23,018- 11-10   in  favour  of  the  Reserve  Bank  of  India   with instructions to the Reserve Bank to convert amounts  covered by  the  cheques into sterling and to transmit the  fund  in sterling to the bankers of Browne in England. The  respondent Radha Kissen Agarwalla had obtained a  money decree against Browne and he applied to the 3rd Court of the Subordinate  Judge at Alipore for execution of that  decree, and  obtained an order for attachment of the  cheques  lying with the Reserve Bank.  The cheques were attached and  under

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orders of the executing court the cheques were encashed  and the amount realized was deposited in the executing court. 30 The  Union of India claimed immunity from attachment of  the cheques  on the ground that they represented provident  fund money  which by s. 3 of the Provident Funds Act,  1925,  was immune from attachment.  The execution application filed  by Radha  Kissen Agarwalla was struck off on December 7,  1956. On  the  next  day Radha Kissen  Agarwalla  started  another execution application and applied for and obtained an  order for attachment of the money lying in the executing court  in the execution case which had been struck off.  The Union  of India again applied for removal of attachment on the  ground that  the  money represented provident fund  money  and  was immune from attachment under the law and that the attachment was "illegal and without jurisdiction".  The executing court overruled  the  objection  observing  "that  the  attachment issued  by the Court on December 8, 1956, was  perfectly  in order. . . . .. 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".  The Union of India then  applied to  the High Court of Calcutta in revision.  The High  Court confirmed. the order passed by the executing court. Rule  1413  of the Provident Fund Sterling  Accounts  Rules, insofar as it is relevant, provides :               "(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." Accounts  Officer for payment of the amount standing to  his credit  in  a  Provident Fund Account  in  sterling  if  the country  in which it is to be paid, the rupee is  not  legal tender.   Browne had given intimation before he  retired  of his  intention to receive the provident fund amount  due  to him at the foot of the Provident Fund Account in sterling in the United Kingdom.  After retirement of Browne, in order to carry  out  that  obligation, the Accounts  Officer  of  the Railway made out two cheques in the name of Browne and  sent them  to  the Reserve Bank for conversion of the  amount  in sterling.   The  Reserve Bank was the only  authority  which could permit such conversion in view of the 31 currency  restrictions imposed by the Government  of  India. For purpose of conversion and transmission of the amount  to Browne,  the  Reserve  Bank of India was the  agent  of  the Railway Administration.  Until the money was converted  into sterling and was transmitted by the Reserve Bank to  Browne, the   money  remained  at  the  disposal  of   the   Railway Administration. The  Railway Administration was in respect of the  provident fund  money in the position of a trustee for Browne  and  it had  undertaken to discharge its obligation by arranging  to have  the amount converted into sterling and to remit it  to Browne.  Under s. 60 (1) (k) of the Code of Civil Procedure, 1908,  read with s. 3 of the Provident Funds Act, 1925,  the

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compulsory deposit in any recognised Provident Fund  Account is  exempt  from attachment in execution of a  decree  of  a civil  court.  Section 3 ( 1 ) of the Provident  Funds  Act, 1925, provides :               "A  compulsory  deposit in any  Government  or               Railway Provident Fund shall not in any way be               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 the Official Assignee nor any receiver               appointed under the Provincial insolvency Act,               1920, shall be entitled to, or have any  claim               on, any such compulsory deposit." The  Reserve Bank was, as already stated, the agent  of  the Railway  Administration  for conversion of the  amount  into sterling  and  was not the agent of Browne  to  receive  the amount  on his behalf.  So long as the money remained  under the control of the Railway Administration as provident  fund money, it was exempt from attachment.  Clause (b) of r. 1413 (1), which we have already noted, imposed upon the  Accounts Officer an obligation to send the amount through a bank  for payment at the place at which Payment was required, and  the payment  was required either under the first  intimation  at Liverpool  by  bank draft or under the later  intimation  by payment to the bankers of ’Browne at Birmingham. The High Court relied upon illustration (d) to s. 50 of  the Indian-Contract  Act in support of the view that by  sending the two cheques to the Reserve Bank of India in  performance of the manner of Payment prescribed by Browne, the debt  was discharged,  and the money must be deemed to have been  paid out  to the subscriber Browne.  Section 50 of  the  Contract Act provides               "The performance of any promise may be made in               any  manner, or at any time which the  promise               prescribes or sanction 32 It enacts the elementary rule relating to the performance of a  promise under a contract : performance has to be  in  the manner  and  at the time which the  promisee  prescribes  or sanctions.   Browne had not authorised the Reserve  Bank  to receive  payment  of  the money on his behalf,  nor  had  he sanctioned  payment to the Reserve-Bank in discharge of  the liability of the ’Railway Administration.  Illustration  (d) to S. 50 of the Contract Act on which reliance was placed by the High Court reads :               A, desire 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." The  illustration only covers cases in which a creditor  has directed  the  debtor to send him the amount  owed  by  the, debtor  in  a  certain manner.   Browne  asked  the  Railway Administration by the first intimation to send the amount by bank  draft and later to the Westminster  Bank,  Birmingham. Only after the direction of Browne regarding transmission of the  fund was complied with, the obligation of  the  Railway Administration  could be discharged and not till  then.   In our  view, the High Court was in error in holding  that  the money  in the hands of the Reserve Bank of India had  ceased to be provident fund money and was liable to be attached. It  was somewhat faintly suggested that the Union  of  India had no interest in maintaining an application for removal of

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attachment.   But the Union of India was a trustee  for  the subscriber  of  the money.  When the amount lying  with  the Reserve Bank as the agent of the Railway Administration  was attached  the Union had clearly an interest to maintain  the application for removal of attachment. The  order  of attachment of the amount into which  the  two cheques  drawn by the Railway Administration were  converted on  encashment  was  contrary to the terms of S.  3  of  the Provident Funds Act, 1925. The appeal is therefore allowed and the order passed by  the High  Court  is  set aside.  There will be no  order  as  to costs. R.K.P.S. Appeal allowed. 33