M V KRISHNAMOORTHY Vs. ANANDALAKSHMI

JUDGEMENT

(1.) DEFENDANTS Nos. 1 and 2 are the appellants. The first respondent herein filed the suit claiming that she was entitled to the provident fund amount of Rs. 9, 151 due from the respondents Nos. 2 and 3 herein, who were defendants Nos. 3 and 4 in the trial court, on the ground that she was the heir and dependent of deceased K. Subramanian, who was working as an assistant in the Life Insurance Corporation at Coimbatore. Subramanian died on 28th January, 1970, leaving behind his wife, the plaintiff, without any children. DEFENDANTS Nos. 1 and 2 are his father and mother. Plaintiff claimed that though 3rd defendant admitted her claim in some letters and agreed to pay the provident fund amount to her, later on refused to pay stating that the first-defendant had been nominated by her late husband. In the alternative, she claimed that she will be entitled to share the amount along with the second-defendant. Hence the present suit. The first-defendant, father of late Subramanian claimed that he had been nominated even as early as 10th March, 1958, to receive the provident fund amount and hence he is wholly entitled to it. Second-defendant mother claimed that she was also an heir to her son and that she was entitled to a share in the property. The 3rd defendant claimed that under r. 22 of Provident Fund No. 1 Rules (hereinafter will be referred to as "the Rules"), the first-defendant alone had been nominated to receive the amount and, therefore, the suit claim has to fall.

(2.) THE trial court dismissed the suit holding that Ex. B-1, the nomination, made by late Subramanian on March 10, 1958, in favour of his father, entitles him to get the entire amount to the exclusion of others and there being no other nomination made by him subsequently, plaintiff has no legal right to file the suit.THE lower appellate court, on a consideration of the correspondence exchanged between the parties to the proceedings and of the initial stand taken by the LIC, held that Ex. B-1 cannot be acted upon and the intention of late Subramanian was to benefit only the plaintiff and hence decreed her claim. THE lower appellate court also held that defendants Nos. 3 and 4 have withheld certain material documents, which, if produced, would have necessarily established that Ex. B-1 had been subsequently varied after late Subramanian married the plaintiff in 1965.

(3.) RULE 22 before the 1972 amendment, provided that all nominations must be in writing and must be registered with the trustees. RULE 23 deals with payment to nominee and is to the effect that on the death of a member, the full amount shall be paid to the nominee, and such payment shall be a good discharge to the trustees and to the Corporation ...... against all claims whatsoever in respect of the Fund by whomsoever claiming through the said member. These two rules go to show that the main purpose of taking nomination is for the trustees of the fund to relieve themselves of their obligation in paying the provident fund amount, irrespective of the persons who may be entitled to the fund. Whenever the provident fund amount is disbursed, the custodian of the fund is anxious to have a good discharge against all claims from whomsoever claiming through the member. The rules nowhere provide that the nomination is to be construed as a "will" by the member. If a nomination is to be taken as a final disposition made by the member as to how it should be taken by his heirs on his death, it would lead to anomalies because till the member dies, the nominee acquires no right to claim the amount. The legal right of a member to decide from time to time as to how his assets should be taken consequent on his death, cannot be frozen by a nomination given, as part of his service conditions. His legal rights about disposition of his assets cannot be circumscribed by such a nomination. If he is to execute a "will" later on, contrary to the nomination that has been made earlier, the terms and conditions of the "will" alone can prevail, and so far as the trustees of the fund are concerned, their obligation will be fully discharged by paying it to the nominee, who will, in turn, be liable to hand over the funds to the persons entitled to as per the "will". In case of intestate succession, the nominee is bound to hand over the amounts to the heirs of the deceased. The main purpose of a nomination is intended to benefit the custodians/trustees of the fund to know as to how or to whom they should hand over the amounts and need not make themselves answerable to multiplicity of claims from different persons claiming to succeed to the interests of the deceased member. If there is no nomination, the custodian of the fund cannot decide as to who are the lawful heirs to succeed and they will have to wait for a court order to be produced, and unless finality is reached therein, the disbursement of the fund will be delayed. Funds, like the provident fund, in the case of State or other public institutions, may be sufficiently safeguarded even if there is to be a delay in disbursement. But in cases of other institutions, if the amounts are not immediately disbursed on the basis of nomination, and before proceedings in court are over, if for any reason, the companies or institutions are liquidated, the contributions made by a member of such bodies, will not enure to the benefit of the legal heirs till finality is reached in court proceedings unless the amount is deposited in court at the earliest stage. The concept of nomination has been thought of to achieve the disbursement of the amounts, at the earliest point of time, to the nominee, who will be answerable to claims made by those who are entitled to the amount lawfully. Nomination means "to mention by name" " to appoint "" to propose formally ".As far as the rules governing the present matter are concerned, r. 23 itself brings about the purpose for taking a nomination, and it being for giving a good discharge to the trustees, it cannot be held that Ex. B-1 nomination results in the father alone acquiring absolute rights in the amounts to the exclusion of the legal heirs of late Subramanian, who died intestate. Hence, assuming that the rules as they stood on the date of death of Subramanian, are alone applicable, Ex. B-1 nomination has resulted in the first defendant being entitled to draw the amount from the 4th defendant, and, in turn, he is bound to hand over the amounts to the lawful heirs in equal shares, they being the plaintiff and the second defendant in this case. So far as the 4th defendant is concerned, they are not answerable to any claims made by any of the heirs of late Subramanian and on payment of the entire amount to the first defendant, they are fully discharged of their obligations under the RULEs. Looked at from the other point of view, the resultant position is, the plaintiff will be entitled to one-half of the amounts, as above held. On the aspect of nominations, I have already considered the limited purpose for which they are taken by custodians of funds and as to why nominations cannot be construed as equivalent to "will". A few decisions dealing with this aspect and most of them arising under the Provident Funds Act, 1925, have been placed before me. It must be remembered that on an interpretation and construction of the section of the Act, the scope of a nomination made under the Act had been duly construed by different High Courts. At the outset, I will refer to two Division Bench decisions of this court, they being : Korlam Sitaramaswamy v. Korlam Venkatarama Rao [1944] 1944 AIR(Mad) 370, wherein relying upon the earlier decision of this court in Lakshmamma v. Subramanyan [1939] 1939 AIR(Mad) 489, it was held that since rule 5 provided that the nominee is conferred with absolute rights, it is only the nominee and his heirs who can take the amount to the exclusion of others, and Nishtala Subramanya Somayajulu v. Kannepalli Lakshmi Somi Devi [1950] 1950 AIR(Mad) 210, wherein also it was held that even if the nominee (wife) pre-deceased, her husband (who made the nomination) the persons entitled to the fund are his wife's heirs. Here again emphasis was laid on the word "absolutely" found in s. 5 of the Act and also on note II to r. 17 of the RULEs. Subsequently s. 5(1) of the Act has been amended by deleting the word "absolutely", which has been taken note of by the High Court of Punjab and Haryana reported as Smt. Hardev Kaur v. Chowdhry Jodh Singh [1969] AIR 1969 P & H 44. Hence, the two Division Bench decisions which are referred to above and cited by the learned counsel for the appellants cannot be of any assistance to him for construing rr. 22 and 23 of the RULEs applicable to employees of the Life Insurance Corporation of India.As I have stated earlier, most of the decisions which are relied upon, are based on the Provident Funds Act, and the decisions of the other High Courts subsequent to the amendment of s. 5 of the Act have taken the position that the nomination cannot be read as making the nominee an owner of the funds, and that he functions as a trustee creating a right in him to receive the money from the government or the holder of the provident fund, and there is nothing in the section which makes the money to belong to him absolutely.