# UNION OF INDIA v. RADHA KISSEN AGARWALLA & ANR

- **Citation:** [1969] 3 S.C.R. 28
- **Court:** Supreme Court of India
- **Decided:** 1968-12-06
- **Case number:** Civil Revision No. 2755 of 1957
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-radha-kissen-agarwalla-anr-4869
- **Pages:** 5

## Headnote

B
Provide/It Funds Ac;/, 1925, s. 3(1)-Foreign Railway employee eleczinR to have his provident fund In sterling-·lnstructing 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.
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 udministration 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 Xingdom.
'rhe respondent had o,btain~d a 1noney decree against B and upon.
applying for execution of that decree obtained an order for attachment
or tbt: cheques
lying with the Reserve
Bank. The cheques we.re 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 th~ cou.rt loiit their character
as provident fund monies Jong before they were attached and were not
therefore- immune from attachment.
The High Court in revision
confirmed the order of the executing court.
On apP.al to this Court,
HELD : Allowin~ tlie appeal
The order of attachment passed by the. executing court was contrary
to s. 3 of the Provident Funds Act, 1925.
The Raihvay 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 Jong as
the money remained under the control of the Railway administration as
provident fund moriey, it was exempt from attachment under s. 60(1) (k)
CPC read with s. 3 of the Provident, Funds Ac!, 1925. [31 B-F]
c
D
E
F
G
H
I
UNION v. RADHA K!SSEN (Shah, J.)
29
A
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 Jiahflity of the Railway Administration. [32 A-Bl

## Text

28
UNION OF INDIA
v.
RADHA KISSEN AGARWALLA & ANR.
December 6, 1968
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.]
B
Provide/It Funds Ac;/, 1925, s. 3(1)-Foreign Railway employee eleczinR to have his provident fund In sterling-·lnstructing 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.
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 udministration 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 Xingdom.
'rhe respondent had o,btain~d a 1noney decree against B and upon.
applying for execution of that decree obtained an order for attachment
or tbt: cheques
lying with the Reserve
Bank. The cheques we.re 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 th~ cou.rt loiit their character
as provident fund monies Jong before they were attached and were not
therefore- immune from attachment.
The High Court in revision
confirmed the order of the executing court.
On apP.al to this Court,
HELD : Allowin~ tlie appeal
The order of attachment passed by the. executing court was contrary
to s. 3 of the Provident Funds Act, 1925.
The Raihvay 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 Jong as
the money remained under the control of the Railway administration as
provident fund moriey, it was exempt from attachment under s. 60(1) (k)
CPC read with s. 3 of the Provident, Funds Ac!, 1925. [31 B-F]
c
D
E
F
G
H
I
UNION v. RADHA K!SSEN (Shah, J.)
29
A
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 Jiahflity of the Railway Administration. [32 A-Bl
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 105 of
B
1966.
c
D
E
F
G
H
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.
Tl:!_e 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 eleeted 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
wa~
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 dn
England.
The respondent Radha Kissen Agarwalla had
obtained
a
money decree against Browne and he applied to the 3rd Court
of the Su.bordinate 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 orders
of the executing court the cheques were encashed and the amount
realized was deposited in the executing court.
30
SUPREME COURT REPORTS
[ l 969] 3 S.C.R.
The Union of India claimed immunity from ·attachment oi
the cheques on the ground that they represented provident fund
money which by s. 3 of the Provident. Funds ~ct., 1925, was
immune from attachment.
The execuuon application filed by
Radha Kissen Agarwalla was struck off on December 7, 1956.
On the next day Radha Kis.<en 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."
This rule clearly enables the subscriber to give instructions to the
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 i~
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 s11ch convmion in view of the
A
I
B
c
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D
E
F
G
H
A
B
UNION V. RADHA KISSEN (Shah, J.)
31
~urrency restrictions imposed by the Government of India.
For
J>Urpose of conve!""ion and transmission of the amo~~mt to Bro-_v~e,
the Reserve Bank .! India was the agent of the Railway Adnumstration.
Until tt.e money was converted into sterling and .was
transmitted by the Reserve Bank to Browne, the money remamed
at the disposal of the Railway Administration.
The Railway Administration was in respect of the p~vident
fund money in the position of a trustee for Browne and tt 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 :wi!h s. 3
c of the Provident Funds Act, 1925, the compulsory depostt tn any
reco.gnised 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 :
D
E
"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 ~ubscriber 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
F
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
G
H
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 nerforrnance of the
manner of nayrnent prescribed by Browne. the debt was
discharged a~d the money must .be deemed to have been paid out to
the Aubscnber Browne.
Sect10n 50 of the Contract Act provide<i :
''The performance of any promise may be made in
any manner, ~r at any time which the promise pres-
~'lies or sanctions
32
SUPREME COURT REPORTS
[ 1969] 3 S.C.R.
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, desires 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, Birm~ngb:am. 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.
·
lt was somewhat faintly suggested that the Union of India
had no interest in maintaining an application for
removal
of
attachment.
But the Union of India was a trustee for the subscriber of the money.
When the amount lying with the Resel'Ve
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.
A
B
c
D
E
F
The appeal is therefore allowed and the order passed by the
G
High Court is set aside. There will be no order as to costs.
R.K.P.S.
Appeal allowed.