Canara Bank Vs N. Palani and another

S.S. Subramani J.

1. This revision is by the decree-holder in O. S. No. 267 of 1982 on the file of the District Munsif, Gudalur.

2. In the execution of the decree, the decree-holder wanted to attach a fixed deposit receipt to the extent of Rs. 6,066.15. By the impugned order, the executing court held that the amount is not liable to be attached and, consequently, the execution petition was dismissed. The main reason for dismissing the petition was, that the amount which represents the fixed deposit was the life insurance policy amount payable to the deceased judgment-debtor and the same is exempted from attachment u/s 60(1)(kb) of the Code of Civil Procedure. According to the executing court, even if the amount has changed hands and is now in fixed deposit, the character of the amount is the same and hence it is exempted from attachment. The correctness of the said order is challenged in this revision.

3. To appreciate the contention of the legal heirs of the judgment-debtor, we have to find what is the exemption that is provided u/s 60(1) (kb) of the Code of Civil Procedure.

4. Section 60(1)(kb) of the CPC reads thus :

"all money payable under a policy of insurance on the life of the judgment-debtor;"

5. The words that are used are, "payable under a policy of insurance."

6. The word "payable" is not defined in the Code. In Ramanatha Iyer''s Law Lexicon, Reprinted Edition 1987, the word "payable" is defined. It says :

"The word ''payable'' is a descriptive word meaning capable of being paid; suitable to be paid; admitting or demanding payment; justly due; legally enforceable."

7. From the above definition, it is clear that for the amount that has been paid, the exemption can have no application. Only so long as it remains the amount under the policy of insurance and retains the character, the exemption applies. Once it goes out of the hands of the insurance company, it ceases to retain the character "payable" under the policy of insurance.

8. I am supported to take the above view, in view of the decision in Union of India (UOI) Vs. Radha Kissen Agarwalla and Another, . It was a case under the Provident Funds Act. In that case, an employee of the East India Railway sought to attach the Railway Provident Fund of a sub-scriber. He elected to be governed under the Provident Fund Sterling Accounts Rules. On retirement, and while it was in the hands of the Railways, he requested that the amount may be credited to his account at Westminster Bank, Birmingham. The railway administration then drew two cheques covering the amount and addressed a letter to the Reserve Bank of India, with instructions to convert the amount into sterling and to transmit the fund in sterling to the bankers of the employee in England. In the meanwhile one of the creditors of the employee sought attachment of the amount while it was in the hands of the Reserve Bank. The attachment was ordered. The Union of India took the matter before the Supreme Court on the ground that so long as it retains the employee, it retains the character of provident fund and hence exempted from attachment. Since the instructions of the employee had not been complied with, the character of the amount even though in the hands of the Reserve Bank has not changed. While considering the contention, their Lordships held (page 764) :

"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 ceased to be provident fund money and was liable to be attached."

9. From the said decision, it is clear that once the direction of the debtor has been complied with and goes out of the hands and reaches the agent of the debtor, it can be attached. The said decision was followed in the decision reported in Union of India (UOI) Vs. Jyoti Chit Fund and Finance and Others, . That was also a case under the Provident Funds Act. Before the Government servant received the amount, there was attachment. Later, the executing court raised the attachment on the ground that the amount continues to have the character of compulsory deposit. The same was challenged by the Union of India. While considering that, their Lordships of the Supreme Court held (page 1166) thus :

"We may state without fear of contradiction that provident fund amounts, pensions and other compulsory deposits covered by the provisions we have referred to, retain their character until they reach the hands of the employee. The reality of the protection is reduced to illusory formality if we accept the interpretation sought. We take a contrary view which means that attachment is possible and lawful only after such amounts are received by the employee. If doubts may possibly be entertained or this question, the decision in Union of India (UOI) Vs. Radha Kissen Agarwalla and Another, erases them. Indeed, our case is a fortiori one, on the facts. A bare reading of Radha Kissen, makes the proposition fool-proof that so long as the amounts are provident fund dues then, till they are actually paid to the Government servant who is entitled to it on retirement or otherwise, the nature of the dues is not altered. What is more, that case is also authority for the benignant view that the Government is a trustee for those sums and has an interest in maintaining the objections in court to attachment. We follow that ruling and overrule the contention."

10.Similar is the case in so far as the present petition is concerned. Once the amount has gone out of the hands of the insurance company, which they were holding as trustees, it cannot be said that the money already received by the legal heirs of the deceased judgment-debtor retains the character of policy under insurance.

11. Learned counsel for the respondents relied on a decision of the Bombay High Court in Federal Bank Ltd. Vs. Indiradevi Kunjamma and Others, . In that case, the creditor sought an attachment of the amount payable under the life insurance policy. While seeking an injunction, injunction was sought against the life insurance company while it was holding the amount belonging to the judgment-debtor. In that connection, the learned judge of the Bombay High Court held that u/s 60(1)(kb) of the Code of Civil Procedure, it retains the character of life insurance amount and that the amount is not payable under the policy of insurance.

12. Hence, the said decision will not have any application to the facts of this case. So long as the insurance policy has matured either on the death or during the lifetime of the judgment-detor and it is received by the judgment-debtor or his legal heirs, it becomes part of the estate of the deceased. In taking the view, I am supported by the decision in Smt. Sarbati Devi and Another Vs. Smt. Usha Devi, . In that case, the question that came up for consideration was regarding the interpretation of section 39 of the Insurance Act, i.e., regarding the effect of the nomination under the policy. It was held that the nomination will not take away the right of the legal heirs to claim the amount and on the death of the insured, the amount covered by the policy forms part of the estate and the ordinary law of succession will prevail. In view of these decisions, it has to be held that the fixed deposit receipt cannot have any exemption u/s 60(1)(kb) of the Code of Civil Procedure. It is not money payable under the policy of insurance on the death of the judgment-debtor. The order of the court below set aside, and the revision is allowed. The executing court is directed to take up the execution petition to its file and pass appropriate orders on the execution petition, for realisation of the amount.