IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CMPMO No. 133 of 2010 Date of decision: 13.09.2010 Pawna Thakur & another …Petitioners. Versus Chinti & others …Respondents. Coram The Hon’ble Mr.Justice Deepak Gupta, J. Whether approved for reporting?1 Yes. For the petitioners: Mr. C.N. Singh, Advocate. For respondent No. 2 : Mr. Navlesh Verma, Advocate. For respondent No. 3, 5 to 7: Mr. Vivek Thakur, Additional Advocate General, with Mr. Rajesh Mandhotra, Deputy Advocate General. For respondent No. 4: Mr. Anup Rattan, Central Government Counsel. Deepak Gupta, J. (Oral) 1. The question which has been raised in this petition is whether a nominee entitled to receive the amount in terms of Section 5 of the Provident Funds Act is entitled to receive this amount as sole heir of the deceased or receives this amount only as a nominee on behalf of the legal heirs and is, therefore, duty bound to pay this amount to the legal heirs. 2. A dispute is pending between the parents of late Shri Sita Ram Thakur on one side and his widow and daughter on the 1 Whether the reporters of local papers may be allowed to see the Judgment? Yes. 2 other side. The admitted facts of the case are that late Shri Sita Ram Thakur was employed in the HPPWD and in respect of his Provident Fund had made a nomination in favour of his wife. The parents of Sita Ram Thakur filed a suit that Smt. Pawna Thakur- defendant is not the legally wedded wife of deceased Sita Ram and they were his sole legal heirs. It was also prayed that the respondents be restrained from giving any amount to Pawna Thakur and Nitu and her nomination be declared null and void. Written statement was filed on behalf of the defendants and it was re-asserted that Pawna Thakur was the widow of Sita Ram Thakur and Nitu was his daughter. 3. It appears that vide order dated 15th September, 2006, the stay application filed by the parents was rejected and it was found that the applicants had failed to prove a prima facie case in their favour. The learned trial Court was of the view that Pawna Thakur and Nitu were the widow and daughter of the deceased Sita Ram Thakur. It also appears that thereafter 2/3rd of the amount was released in favour of Pawna Thakur and Nitu. Thereafter, another application was filed by the plaintiffs in which it was prayed that 1/3rd amount may be ordered to be released in favour of the mother, being the Class-I heir. This application was allowed by the learned trial Court and 1/3rd of the GPF amount was ordered to be released in favour of the mother, Smt. Chinti. This order is under challenge in this petition filed by the widow and daughter of Sita Ram Thakur. 3 4. Mr. C.N. Singh, Advocate, places reliance on Rule 5 of the Central Provident Fund (Central Services) Rules, 1960 and submits that in view of the language of Rule 5, the nominee is not only entitled to collect the amount, but virtually becomes the legatee of the person making nomination. He has also placed reliance on the judgment of the Orissa High Court in M. Malati & others versus Dharma Rao & another, AIR 1968 ORISSA 8. A number of other authorities have been cited, but it is not necessary to cite all these in view of the law laid down by the Apex Court. 5. In Vishin N. Khanchandani & another versus Vidya Lachmandas Khanchandani & another, (2000) 6 SCC 724, the Apex Court in respect of nominations made in respect of National Savings Certificates held as follows: “12. The submission made on behalf of the appellants has no substance in view of sub-section (2) of Section 8 and the Statement of Objects and Reasons necessitating the passing of the Act. Sub- section (1) of Section 8 provides that if any payment is made in accordance with the provisions of the Act to a nominee, the same shall be a full discharge from all further liabilities in respect of the sum so paid. Section 7 of the Act provides that after the death of the holder of the savings certificates, payments of the sum shall be made to the nominee, if any, and sub-section (1) of Section 8 declares that such payment shall be a full discharge from all further liabilities in respect of the sum so paid. However, sub-section (2) of Section 8 specifies that the payment made to the nominee under sub-section (1) shall not preclude any 4 executor or administrator or the legal representative of the deceased holder of a savings certificate from recovering from the person receiving the same under Section 7; the amount remaining in the nominee’s hand after deducting the amount of all debts or other demands lawfully paid or discharged by him in the due course of administration. In other words though the nominee of the National Savings Certificates has a right to be paid the sum due on such savings certificates after the death of the holder, yet he retains the said amount for the benefit of the persons who are entitled to it under the law of succession applicable in the case, however, subject to the exception of deduction mentioned in the sub-section. In the Statement of Objects and Reasons of the Act it is stated: “The Post Officer National Savings Certificates Ordinance, 1944 (42 of 1944), issued under Section 72 of the Ninth Schedule to the Government of India Act, 1935, as originally enacted and continued in force by virtue of the provisions of the India and Burma (Emergency Provisions) Act, 1940 (3 and 4 Geo. 6, Ch. 33) regulates the sale and discharge of National Savings from time to time that as the production of legal proof of succession involves considerable delay and expense, the holders of savings certificates may be allowed the right to nominate one or more persons to receive the amounts due in respect of such certificates in the event of their death without the production of succession certificate or other proof of title. In seeking time to amend that Ordinance for the above purpose, opportunity is taken to replace it by an Act of Parliament.” (emphasis supplied) 13. In the light of what has been noticed hereinabove, it is apparent that though the language and phraseology of Section 6 of the Act is different from the one used in Section 39 of the Insurance Act, yet, the effect of both the provisions is same. The Act only makes the provisions regarding avoiding delay and expense in making 5 the payment of the amount of the National Savings Certificates, to the nominee of the holder, which has been considered to be beneficial both for the holder as also for the post office. Any amount paid to the nominee after valid deductions becomes the estate of the deceased. Such an estate devolves upon all persons who are entitled to succession under law, custom or testament of the deceased holder. In other words, the law laid down by this Court in Sarbati Devi case holds the field and is equally applicable to the nominee becoming entitled to the payment of the amount on account of National Savings Certificates received by him under Section 6 read with Section 7 of the Act who in turn is liable to return the amount to those in whose favour the law creates a beneficial interest, subject to the provisions of sub-section (2) of Section 8 of the Act.” 6. Mr. C.N. Singh submits that this judgment of the Apex Court is not applicable to the present case, since the Apex Court has delivered this judgment specifically in view of the provisions of Section 8 (2) of the Act, which gave a right to the legal heirs to claim the amount from the nominee. However, the matter does not end there. The Apex Court in Shipra Sengupta versus Mridul Sengupta & others, (2009) 10 SCC 680 was specifically dealing with a matter in which one of the claims related to the amount paid to the nominee under the Provident Funds Act, 1925. Section 5 of the Act is virtually identical to Rule 5. After taking into consideration the entire law on the point, the Apex Court held as follows: 6 “17. The controversy involved in the instant case is no longer res integra. The nominee is entitled to receive the same, but the amount so received is to be distributed according to the law of succession. In terms of the factual foundation laid in the present case, the deceased died on 8.11.1990 leaving behind his mother and widow as his only heirs and legal representatives entitled to succeed. Therefore, on the day when the right of succession opened, the appellant, his widow became entitled to one-half of the amount of the general provident fund, the other half going to the mother and on her death, the other surviving son getting the same. 18. In view of the clear legal position, it is made abundantly clear that the amount under any head can be received by the nominee, but the amount can be claimed by the heirs of the deceased in accordance with the law of succession governing them. In other words, nomination does not confer any beneficial interest on the nominee. In the instant case the amounts so received are to be distributed according to the Hindu Succession Act, 1956.” 7. In view of the clear cut exposition of law by the Apex Court even in respect to the claim made under the Provident Fund Act, it is apparent that the nominee only receives the amount on behalf of the legal heirs and no right is created in the nominee to appropriate the amount to his / her own account. It is true that in the latter case, there is no reference to a provision, such as Section 8 (2), which was referred to in Vishin N. Khanchandani & another 7 versus Vidya Lachmandas Khanchandani & another, (2000) 6 SCC 724, but since the Apex Court has decided the matter in respect of the Provident Fund Act, this Court cannot go beyond the judgment of the Apex Court. 8. In view of the above discussion, the petition is dismissed, being without any merit. No costs. (Deepak Gupta) Judge September 13, 2010 (rajni)