Mukti Lal Agarwala Vs. Trustees of The
Provident Fund of The Tin Plate Co. of India [1956] INSC 11 (14 February 1956)
AIYAR, N. CHANDRASEKHARA BOSE, VIVIAN IMAM,
SYED JAFFER
CITATION: 1956 AIR 336 1956 SCR 100
ACT:
Provincial Insolvency Act, 1920 (V of 1920),
s. 4-Insolvency of employees of a company-Having certain amounts standing to
their credit in the Provident Fund of the said companyWhether the said amounts
were the properties of the insolvents over which they had disposing power and
were thus available for distribution amongst the creditors-Provident
Fund-Rules-Construction-Word "Property" in the Insolvency Act-Meaning
of.
HEADNOTE:
The six employees in the Tin Plate Co. of
India Ltd. were adjudged insolvents. They were members in a Provident Fund of
the said company, having certain amounts standing to their credit in the Fund.
The appellants creditor of the said
employees-filed applications under s. 4 of the Insolvency Act against the
company and Trustees of the Fund for orders that amounts standing to the credit
of the insolvents in the Provident Fund account were their properties and had
vested in the court and were available for distribution amongst the creditors
and therefore should be brought into court.
The respondent pleaded in answer that the
amount standing to the credit of each insolvent in the Provident Fund
represented the contributions of the company and of the employees and that the
corpus was a trust fund in the hands of the trustees of the fund; so they were
not properties of the insolvents over which they had a disposing power and that
they were not debts due to the insolvents. It was said that according to the
rules governing the Provident Fund the monies become payable to the employee or
any other member of his family only on the happening of certain contingencies
such as retirement, discharge, dismissal or death and that till then no right
accrued to the insolvent. It was further urged that the trustees could not be
removed from the custody and control of the fund by the Official Receiver.
On a construction of the Rules of the
Provident Fund, the Insolvency Court held in favour of the creditor. On appeal,
the High Court held that under the rules of the Fund, the insolvents had no
present disposing power over the monies standing to their credit and that the
Fund had vested in the Trustee. On appeal to the Supreme Court:
Held that it is reasonably clear from these
rules that a subscriber has a present interest in the Fund though the moneys may
become payable to him, or his nominee or heirs only in the future. Even where
there is a declaration about the nominee who is to receive payment after the
subscriber's death, the fund would still be the property of the subscriber in
the hands of the nominee for the satisfaction of his debts, as there is no
present gift to take effect immediately.
It could not be maintained that the
subscribers had no right, title or interest in the fund or that such interest
as they may possess was dependent upon a possible contingency which may or may
not occur. The amount standing to the credit of a subscriber even if payable in
future would be a debt due by the company to him within the meaning of s. 60 of
the Code and hence liable to attachment and sale.
A person cannot enter into any arrangement or
agreement by which his own title will cease in the event of bankruptcy for it
would then be a fraud perpetrated on the Insolvency Law.
The liability of the estate to be attached by
creditors on a bankruptcy or judgment is an incident of the estate, and no
attempt to deprive it of that incident by direct prohibition would be valid.
Notwithstanding the rules of the Fund in the
present case, the subscribers have an interest in the moneys which can vest in
the Official Receiver on their adjudication.
The word "property" in the
Insolvency Act is used in the widest possible sense which includes even
property which may belong to or is vested in another but over which the
insolvent has a disposing power which he may exercise for his own benefit; and
this part of the definition has reference obviously to powers of appointment
and the power of a Hindu father who is the managing ember of a joint family.
The fact that on the date of the adjudication the insolvent could not transfer the
property does not militate against the view that he has a vested interest in
the same.
Banchharam Mojumdar v. Adyanath
Bhattacharjee, ([1909] I.L.R. 36 Cal. 936), Dugdale v. Dugdale ([1888] 38 Ch.
D. 176), Ex parte Dever. In re Suse and Sibeth ([1887] 18 Q.B.D. 660), Hudson
v. Gribble ([1903] 1 K.B. 517), D. Palaiya v.T. P. Sen and another (A.I.R. 1935
Pat. 211), Secretary, Burma Oil Subsidiary Provident Fund (India) Ltd. v.
Dadibhar Singh (A.I.R. 1941 Rang. 256), Gajraj Sheokarandas v. Sir Hukamchand Sarupchand
and another (A.I.R. 1939 Bom. 90).
Anandrao alias Adkoba s/o Risaram-ji v.
Vishwanath Watuji Kalar and others, (A.I.R. 1944 Nag. 144), Ismail Jokaria
& Co. v. Burmah Shell Provident Trust Ltd. (A.I.R. 1942 Sind 47), Bishwa
Nath Sao v. The Official Receiver ([1936] I.L.R. 16 Pat. 60), and Sat Narain v.
Behari Lal and Others ([1924] 52 I.A. 22), referred to.
CIVIL APPELLATE, JURISDICTION: Civil Appeals
Nos. 123 to 127 and 135 of 1953.
102 On appeal from the judgment and decree
dated the 12th May 1950 of the Patna High Court in Appeal from Original Orders
Nos. 266, 267, 268, 271, 274 and 280 of 1948 arising out of the Order dated the
26th June 1948 of the Court of the District Judge, Purulia in Insolvency Cases
Nos. 1/44, 13/46, 12/46, 10/46 and 44/41, respectively.
S. C. Isaacs (P. K. Chatterjee, with him) for
the appellant.
Bhabananda Mukherji, S. N. Mukherji and B. N.
Ghose, for the respondents.
1956. February 14. The Judgment of the Court
was delivered by CHANDRASEKHARA AIYAR J.-These appeals are by a creditor of six
employees in the Tin Plate Co. of India Ltd. who had been adjudged insolvents.
The employees are members in a Provident Fund of the Tin Plate Co. and there
were amounts standing to their credit in the said Fund.
The creditor, Mukti Lal Agarwala, filed
applications under section 4 of the Insolvency Act for orders that the amounts
standing to the credit of the insolvents in the Provident Fund account were
their properties and had vested in the court and were available for distribution
amongst the creditors. He sought a direction that the monies may be brought
into Court. The petitions were directed primarily against the Tin Plate Co.
Ltd. and the Trustees of the Provident Fund. They pleaded in answer that the
amount standing to the credit of each insolvent in the Provident Fund
represented the contributions of the Company and of the employees and that the
corpus was a trust fund in the hands of the trustees of the fund; so they were
not properties of the insolvents over which they had a disposing power and that
they were not debts due to the insolvents. It was said that according to the
rules governing the Provident Fund the monies become payable to the employee or
any other member of his family only on the happening of certain contingencies'
such as retirement, discharge, 103 dismissal or death and that till then no
right accrued to the insolvent. It was further urged that the trustees could
not be removed from the custody and control of the fund by the Official
Receiver.
The Insolvency Court, which was the court of
the District Judge at Purulia, heard the petitions and found on a construction
of the rules of the Provident Fund that the monies standing to the credit of A
& C accounts in the name of each insolvent was his property over which he
had a disposing power and hence they were available for distribution among the
creditors under the Insolvency Act.
The trustees of the Fund and the Tin Plate
Co. carried the matter on appeal to the High Court at Patna and the they were
successful. The learned Judges (V. Ramaswami and Sarjoo Prasad, JJ.) held that
under the rules governing the Fund the insolvents had no present disposing
power over the monies standing to their credit and that the Fund was really
vested in the trustees.
As the amount involved in the several
petitions taken together was over Rs. 20,000, the High Court granted leave to
the creditors to appeal to this court.
The main contentions urged by Mr. Isaacs on
behalf of the appellants were three in number:(a) The monies standing to the
credit of each insolvent in the Provident Fund are his property, though payable
at a future date and the question of present disposing power arises only for
bringing within the scope of the definition what may not otherwise be regarded
as "property".
(b) Though the Provident Fund rules speak of
a trust Fund and trustees, in reality, there was no transfer of ownership by
the employees in favour of the trustees and that there is no trust as such.
(c) In any event, even on the footing that a
trust was created over the Fund, the beneficial interest continues in the
employees and this interest would vest in the Official Receiver for the benefit
of the creditors in insolvency.
We have to examine the soundness of these
contentions.
104 The Provident Fund was started on the 1st
January, 1929.
The rules and regulations of this Fund are
found in the deed of trust dated the 15th July, 1930, marked as Exhibit 1.
These rules, as amended from time to time in
certain respects by supplementary deeds, are given in the appendix to this
judgment.
On the making of an order of adjudication,
the whole of the property of the insolvent shall vest in the court or in a
Receiver and shall become divisible among the creditors.
(Section 28 (2) of the Provincial Insolvency
Act). The property of the insolvent for the purposes of vesting shall not
include any property which is exempted by the Code of Civil Procedure, or by
any other enactment for the time being in force from liability to attachment
and sale in execution of a decree (section 28(5)). Section 2(d) of the Act
states:" 'Property' includes any property over which or the profits of
which any person has a disposing power which he may exercise for his own
benefit". A person has a disposing power over property which he may
exercise for his own benefit, such as a power of appointment conferred on him
under a will or a settlement, or the power of a Hindu father who is the manager
of a joint Hindu family to sell the shares of his sons in the family property
in discharge of their pious obligation to pay off his debts. In clause (b) of
sub-section (2) of section 38 of the English Bankruptcy Act, 1914, this power
is specified in these words:"The capacity to exercise and to take
proceedings for exercising all such powers in or over or in respect of property
as might have been exercised by the bankrupt for his own benefit at the
commencement of his bankruptcy or before his discharge, except the right of nomination
to a vacant ecclesiastical benefice;".
All that we have to find out is whether the
amounts standing to the credit of the several subscribers in the fund who have
been adjudged insolvents are divisible among their creditors. If so, they would
vest 105 in the court or the Official Receiver and would become available for
distribution. Whether they have any present interest in the monies is the
primary question that falls to be considered.
Section 60 of the Civil Procedure Code sets
out what property is liable to attachment and sale and what items are not. The
first part of section 60 runs in these terms:
"The following property is liable to
attachment and sale in execution of a decree namely, lands, houses, or other
buildings, goods, money, bank-notes, cheques, bills of exchange, hundis,
promissory notes, Government securities, bonds or other securities for money,
debts, shares in a corporation and, save as hereinafter mentioned, all other
saleable property, movable or immovable, belonging to the judgment debtor, or
over which, or the profits of which, he has a disposing power which he may
exercise for his own benefit, whether the same be held in the name of the
judgment-debtor or by another person in trust for him or on his behalf".
The exempted items do not apply. Clause (k)
deals with funds governed by the Provident Fund Act. Reference has, however,
been made to clause (m) which speaks of "an expectancy of succession by
survivorship or other merely contingent or possible right or interest".
Let us now advert to the relevant rules of
the Fund. The object of the Fund as set out in rule 2 is to accumulate for the
benefit of the Company's employees who have joined the Fund certain sums as a
future provision for them and for their families. Under rule 3, any employee,
who has completed one year's service with the Company, shall be eligible for
membership. Rule 4 provides for a declaration as regards the disposition of the
Fund in the event of death. This declaration can be cancelled and changed. Rule
5 provides that if the declaration becomes obsolete, the trustees could decide
who were to be recognized as the next of-kin and that payment by them to such
person will be an absolute discharge. Every member shall be allowed to
contribute any 11 106 sum not exceeding one-twelfth of his or her earnings and
such amounts would be credited in the name of each member in an account called
'A' Account (Rule 6). At the end of each year, an amount equal to the
contribution by the member shall be paid by the Company and credited to another
account to be opened in the name of the member and to be denominated his or her
'B' Account. An increased contribution by the Company in certain events at
particular specified rates is contemplated by rule 7(B). This further sum will go
into a 'C' account to be opened in the name -of each member. Rule 8 provides
that the moneys of the Fund shall be invested by the Trustees in accordance
with the provisions from time to time in force under the Indian Income-tax
(Provident Funds Relief) Act, 1929. Every year the A, B and C Accounts are to
be made up including the income from the investments according to certain
calculations.
Then come the important rules 10, 11, 12, 13,
15, 16, 17 & 18. Though the Fund is intended as a future provision for the
employees and their families, the membership is purely voluntary and arises on
an application to the Company, the trustees having nothing to do with the
admission. It is only the management of the Fund and the control of its funds
which vests in the trustees under rule 1. There is no transfer of the ownership
of the Fund. The contributions made by the members are not compulsory in their
nature. The monies of the Fund may, no doubt, be invested by the trustees, but
the subscriber does not divest himself or herself of control over the Fund in
certain respects. He or she can declare to whom the monies are to be paid in
the event of his or her death. This declaration can be changed at any time. If
the service terminates after fifteen years, the subscriber can get the full
amount in the A,B & C Accounts. If he or she retires with the Company's
consent before completion of fifteen years' service, he or she can get the
amounts standing in A & C Accounts together with a portion in B account.
Dismissal, or misconduct, or resignation without the 107 Company's consent
before completion of the 15 years would still entitle the subscriber to the
payment of the moneys in A & C Accounts. The provision in rule 16 that on
the death of any member, the amount will be paid to the next-of-kin, of course
proceeds on the same footing that the property belongs to the subscriber. ,
Whether the provisions that in the event of the declaration becoming obsolete,
or a member becoming insane or demented, the moneys can be paid at the absolute
discretion of the trustees to whomsoever they determine to be the next-of-kin,
or hold to be a proper and suitable person to receive payment, are valid is not
a question that arises in these appeals.
Retirement or death is not a mere possibility.
It is a contingency that is sure to happen, sooner or later.
Dismissal for misconduct or resignation
without consent before 15 years' service will secure earlier payment. (Rule
11).
It is reasonably clear from these rules that
a subscriber has a present interest in the Fund though the moneys may become
payable to him, or his nominee or heirs only in the future. Even where there is
a declaration about the nominee who is to receive payment after the
subscriber's death, the fund would still be the property of the subscriber in
the hands of the nominee for the satisfaction of his debts, as there is no
present gift to take effect immediately.
It is not easy to see how it could be
maintained that the subscribers have no right, title or interest in the fund, or
that such interest as they may possess is dependent upon a possible contingency
which may or may not occur. The amount standing to the credit of a subscriber
even if payable in future would be a debt due by the Company to him within the
meaning of section 60 of the Code and hence liable to attachment and sale. See
Banchharam Majumdar v. Adyanath Bhattacharjee (1).
Rule 17, which provides that on the
adjudication of the debtor as an insolvent the amounts standing to his credit
in the Fund shall be liable to be forfeited (1) [1909] I.L.R. 36 Cal 936.
108 to the Fund, was strongly relied upon by
the respondents.
But such a condition or agreement is invalid.
A man may give (in India only by will) property or its income to a donee with a
condition that the donee's interest will cease on bankruptcy and the property
will in that event go to another; if insolvency supervenes, the property will
not vest in the Official Receiver. If there is no gift over on the cesser of
the donee's interest, the property will revert to the donee and will vest in
the Official Receiver on the donee's insolvency. But a person cannot enter into
any arrangement or agreement by which his own title will cease in the event of
bankruptcy, for it would then be a fraud perpetrated on the Insolvency Law.
This principle has been enunciated in an early English case Wilson v.
Greenwood(1) in the following words and adopted in later cases too:
"The general distinction seems to be,
that the owner of property may, on alienation, qualify the interest of his
alienee, by a condition to take effect on bankruptcy; but cannot, by contract
or otherwise, qualify his own interest by a like condition, determining or
controlling it in the event of his own bankruptcy, to the disappointment or
delay of his creditors".
In Re Dugdale(2) we find the following
observations of Kay, J."The liability of the estate to be attached by
creditors on a bankruptcy or judgment is an incident of the estate, and no
attempt to deprive it of that incident by direct prohibition would be valid. If
a testator, after giving an estate in fee simple to A, were to declare that
such estate should not be subject to the bankruptcy laws, that would clearly be
inoperative. I apprehend that this is the test.
An incident of the estate given which cannot
be directly taken away or prevented by the donor cannot be taken away
indirectly by a condition which would cause the estate to revert to the donor,
or by a conditional limitation or executory devise which would (1) [1818] 86
E.R. 469, 476; 1 Swans. 471, 485.
(2) (1888) 38 Ch. 1). 176, 182.
109 cause it to shift to another
person".
The proposition is thus stated in Williams on
Bankruptcyt(1) at page 293: "But the owner of property cannot, by contract
or otherwise, qualify his own interest by a condition determining or
controlling it in the event of his own bankruptcy to the prejudice of his
creditors".
It appears to us to be unnecessary to refer
to all the decisions cited and relied upon in the course of the arguments on
either side. A few cases may, however, be dealt with. The English decisions
relied upon by the learned counsel for the appellant do not furnish much
guidance. Ex part Dever. In re Suse and Sibeth(2) was a case of what is
obviously a contingent interest dependent upon a mere possibility. The decision
in Hudson v. Gribble(3) dealt with a different question altogether.
Under a scheme framed by the Municipal
Corporation, persons in its service were to contribute to a Fund for the
encouragement of thrift among their officers and servants a certain percentage
of their salaries to be deducted from time to time from those salaries. Were
they exempt from payment of income-tax under the first rule of section 146 of
the Income-Tax Act, 1842, was answered in the negative. The point was whether
they were exempt because they were "sums payable or chargeable on the
salaries by virtue of any Act of Parliament where the same have been really and
bona fide paid and borne by the party to be charged". It is true that Lord
Justice Vaughan Williams says at page 525 that the sums contributed never
ceased to be the property of the persons from whose salaries or wages they were
deducted; and Lord Justice Stirling observes at page 528 "It is obvious
that, though the amounts so deducted are not immediately paid to the person
employed, they remain his property to a great extent". Both of them refer
to the fact that the subscribers were entitled to get back their contributions
upon retiring from the service. But they were dealing with particular words employed
in an Act of Parliament (1) 16th Eaition. (2) [1887] 18 Q.B.D. 660.
(3) [1903] 1.K.B. 517, 110 and the rules made
under a Corporation Act. General observations of the kind should not be
extracted from the context in which they were used and applied to other facts
and different language.
Coming to the Indian decisions, D. Palaiya v.
T. P. Sen and another(1) is a case where the rules of a provident fund created
by the Tata Steel Company were similar to the rules we have before us but the
forfeiture clause was construed as applying only to the portion of the amount
at the credit of members' account contributed by the -company and it was read
to mean that it was inapplicable to the subscribers' own contributions.
Secretary, Burma Oil Subsidiary Provident Fund (India) Ltd. v. Dadibhar
Singh(2) which held against the vesting proceeded upon the footing that there
was a trust created in favour of the trustees. Even if so, what was to happen
to the beneficial interest was not dealt with.
The relevant observations are:
"The forfeiture does not vest the money
in the trustees, the money having already vested in them. The money cannot be
attached as a 'debt' due to the judgment-debtor, because the word 'debt' as
used in S. 60 and in 0. 21, R. 46, Civil Procedure Code means an actually
existing debt that is a perfected and absolute debt, not merely a sum of money
which may or may not become payable at some future time or the payment of which
depends upon contingencies which may or may not happen".
The decision of Beaumont,, C. J. and
Rangnekar, J. in Gajraj Sheokarandas v. Sir Hukamchand Sarupchand and
another(1) does not apply because in that case there was a clause in the
articles providing that all moneys received by the East India Cotton
Association from its members would be under the absolute control of the
Association and could be used by it as if the moneys belonged to it absolutely.
Further the deposit was also subject to
certain liens.
Subject to the liability to forfeiture and to
the satisfaction of the liens, the deposit with interest was repayable to (1)
A.I.R. 1935 Pat. 211. (2) A.I.R. 1941 Rang. 256, 259.
(3) A.I.R. 1939 Bom.90.
111 the member on his ceasing from any cause
to be a member.
The facts were, therefore, very different.
Anandrao alias Adkoba s/o Risaramji v. Vishwanath Watuji Kalar and others(1) is
again a case where the money ceased to belong to the employee and the title was
in the trustees.
Referring to a Karachi case reported in
Ismail Jakaria & Co. v. Burmah-Shell Provident Trust Ltd.(2), Bose, J.
distinguished it on the ground that there the
money was not vested in the trustees but was only handed over to them for the
purposes of management, which was not the case before him.
The learned counsel for the respondents
strongly relied on Bishwa Nath Sao v. The Official Receiver(3) and argued that
there can be no property within the meaning of the Insolvency Act unless the
insolvent had a present absolute power of disposal over the same but the
decision which is that of a Full Bench and which interpreted the decision of
the Privy Council in Sat Narain v. Behari Lal(4) does not support any such
position all that was held was that on the insolvency of a father, his power to
sell the shares of his sons in the joint family property to discharge the pious
obligation vests in the Official Receiver, though the shares themselves do not
so vest.
Sufficient has been stated above to show that
notwithstanding the rules of the Fund in the present case, the subscribers have
an interest in the moneys which can vest in the Official Receiver on their
adjudication. Even if we regard the deed creating the fund as a trust deed,
notwithstanding that, no ownership has been transferred to the trustees and all
that they have got is the right of the management and control, the subscribers,
who joined the fund have undoubtedly got a beneficial interest which will vest
in the Official Receiver as property liable to attachment and sale under
section 60 which uses the language "whether the same be held in the name
of the judgment-debtor or by another person in interest for him or in his
behalf".
(1) A.I.R. 1944 Nag. 144.
(3) [1937] I.L.R. 16 Patna 60.
(2) A.I.R. 1942 Sind 47.
(4) [1924] L.R. 52 I.A. 22, 112 The learned
Judges of the High Court held that the 'property' mentioned in the Insolvency
Act must be such that the insolvent has an absolute and unconditional present
disposing power over the same. With great respect, this, however, does not seem
to be a correct interpretation. The word 'property' is used in the widest
possible sense which includes even property which may belong to or is vested in
another but over which the insolvent has a disposing power which he may
exercise for his own benefit; and as pointed out already, this part of the
definition has reference obviously to powers of appointment and the power of a
Hindu father who is the managing member of a joint family. The fact that on the
date of the adjudication the insolvent could not transfer the property does not
militate against the view that be has a vested interest in the same. Reference
was made to section 56(3) of the Provincial Insolvency Act which provides that
"Where the Court appoints a receiver, it may remove the person in whose
possession or custody any such property as aforesaid is from the possession or
custody thereof: Provided that nothing in this section shall be deemed to
authorise the court to remove from the possession or custody of property any
person whom the insolvent has not a present right so to remove".
This has no relevancy to the point at issue.
Whenever possession and custody could be taken by the Receiver, the person in
whose possession and custody the property is can be evicted. If possession or
custody could not be taken, still the right of the insolvent will vest in the
Official Receiver.
Mention has been made of three accounts in
the Fund called A, B and C; the first represents monies contributed by the
subscriber, the second consists of monies paid by the Company and the third
represents what may be roughly described as bonus which represents deferred
wages. The learned counsel for the appellant confined the relief he wanted to
the .amounts standing to the credit of each subscriber in his A and C Accounts
and conceded that the B Account monies would stand on a different footing. In
113 fact, even in the Insolvency Court the creditor concerned himself only with
the A & C Accounts.
Mr. Isaacs contended at first that he was
entitled to an order that the monies in the A & C Accounts should be
brought to the Insolvency Court but later he abandoned this contention. For the
respondents, it was urged that under section 10 of the Employees' Provident
Funds Act, 1952, which came into force after these proceedings were instituted,
there could be no attachment. This again is a question which is outside the
scope of the present proceedings. Once it is held that the right, title and
interest of the insolvents in the A & C Accounts with the Fund vest in the
Official Receiver, it is for him under the directions of the Insolvency Court
to take steps to realize the same, in whatever manner the law allows him to do.
The learned counsel for the respondents
handed to us a paper showing which of the respondents was still in service and
which have been discharged, their dates of appointments and of joining the
posts. Mohibulla, Anjab Alli and Hasimulla, respondents insolvents in Civil
Appeal No. 124, Civil Appeal No. 127 and Civil Appeal No. 126, have been shown
as discharged from service. A.M. Joseph, Rasid Alli alias Tasim Alli, and
Baldev Singh, respondents in Civil Appeals 135, 125 and 123, joined the Fund in
1933, 1932 and 1936 respectively and are still in service.
In the result, the appeals are partly allowed
and there will be a declaration that the right, title and interest of the above
mentioned insolvents in the moneys standing to their credit in A & C
Accounts respectively will vest in the Official Receiver. In other respects the
appeals will stand dismissed. The Tin Plate Co. which is the respondent No. 2,
will pay to the appellant his costs here and in the High Court. But the costs
in this Court will be limited only to one set.
APPENDIX.
This Indenture made the fifteenth day of
July, one thousand nine hundred and thirty BETWEEN THE 15 114 TINPLATE COMPANY
OF INDIA LIMITED a Joint Stock Company with Limited Liability duly incorporated
under the Indian Companies Act and having its Registered Office at No. 4,
Bankshall Street in the City of Calcutta (hereinafter called "the
Company" of the first part HARRY DOUGHLAS TOWNEND CHARLES ROLAND HATFIELD
AND JAMES PERCY AINSCOUGH all of No. 4, Bankshall Street aforesaid Merchants
(hereinafter called the "the Trustees" which expression shall mean
and include the said Harry Douglas Town end Charles Roland Hatfield and James
Percy Anscough or other the -"-Trustees of the fund herein mentioned for
the time being appointed as hereinafter mentioned) of the Second Part and the
PERSONS whose names appear in the Schedule hereto or who may by separate
writings agree to become parties hereto and bound hereby of the third part
WHEREAS the Company has decided to start as from the first day of January one
thousand nine hundred and twenty-nine a Provident Fund for the benefit of the
employees of the Company (hereinafter called "the said fund") and has
accepted contributions from the employees from the first January, one thousand
nine hundred and twenty-nine and for the management and regulations of such
fund has framed rules and 'regulations NOW THIS INDENTURE WITNESSETH and it is
hereby agreed between the parties hereto that the said Fund shall be governed
by the following rules and regulations:
Rules and Regulations
1. The Fund shall be called "THE
PROVIDENT FUND OF THE TIN PLATE COMPANY OF INDIA LIMITED". The management
of the Fund and the control of its funds shall be vested in the Trustees who
will undertake such management without remuneration.
2. The object of the Fund is to accumulate
for the benefit of the Company's Employees who have joined 115 the Fund certain
sums as a future provision for them and for their families.
3. All employees of the Company (excepting
only such covenanted employees on the higher grades of pay as may be excluded
by the Trustees at their discretion) upon completion of one year's services
with the Company shall be eligible for membership of the Fund. Applications to
join the Fund shall be in writing to the Company in a specified form and
written notification shall be given by the Company to applicants of their inclusion
as members.
4. Every application for membership shall be
accompanied by a declaration in a specified form signed by the applicant in the
presence of two witnesses who shall not be in any way related to the applicant.
Such declaration shall set forth the disposition in the event of his or her
death while a member of the Fund of the money which shall be standing to the
applicant's credit in the Fund. Should a member at any time desire to cancel
his or her form of declaration be or she may do so by submitting to the Company
a revised or substituted form in writing duly signed and witnessed in the same
manner as in the case of the original form which should specifically cancel and
annul all previous forms of declaration deposited by the member with the Fund.
5.In the event of the declaration as made
under rule 4 having become obsolete full discretion shall rest with the
Trustees as to the disposition of any sums standing to the credit of a member
on his or her decease and no person or persons shall be recognised as having
any claims thereto save and except such as shall be ascertained by the Trustees
or their delegate duly appointed to make enquiry in that behalf upon
satisfactory evidence adduced as to which the Trustees or their delegate
appointed to conduct the enquiry shall be sole judge to be the next-of-kin of
the deceased member and payment by the Trustees the moneys representing his or
her share in the fund 116 to the persons or person so ascertained shall operate
as an absolute discharge to the Trustees from all liability there for to all
persons whomsoever.
6. Each member shall be allowed to contribute
a definite proportion not exceeding one-twelfth of his or her earnings during
any one year which shall be deducted from his or her earnings in monthly or
weekly installments. Contributions as above shall be credited to an account to
be opened in the name of each member to be denominated his or her 'A' Account.
For the purpose of this fund, earnings shall
be deemed to mean solely the monthly or weekly sum paid to the Employee for
wages excluding from the purview of such term all accretions thereto and
perquisites in the way of acting allowance commissions bonus payments overtime
messing housing allowance lodging money travelling expenses and all such
similar payments.
7.(a) On or as at the thirty first December
in each year a sum equal to the amount contributed by each member to his or her
'A' account during that year shall be credited by the company to another
account to be opened in the name of each member and to be denominated his or
her 'B' Account.
The Company reserves to itself liberty to
make such further contributions as may be requisite for the purposes of Rule 14
below.
(b) If the net dividend paid by the Company
on its ordinary share capital in respect of any financial year shall be at a
rate of not less than seven and a half per cent on such ordinary share capital
a further sum calculated as hereinafter set out shall be paid by the Company.
Unless the Company shall decide that such further sum shall be paid into a
separate Fund or otherwise than into this Fund such further sum shall be paid
into this Fund to another account to be opened in the name of each person who
shall have been a member on the thirty-first day of December in the said
financial year and to be denominated his or her 'C' account.
The amount of such further sum 117 shall
depend upon the rate of such net dividend and shall be ascertained according to
the following scale: Rate of net dividend paid Amount of the further sum as
aforesaid. sum payable.
Not less than 7-1/2% and not One week's
wages.
exceeding 8-3/4% Exceeding 8-3/4 but not ex Two
week's wages.
exceeding 11-1/4% Exceeding 11-1/4 but not
Three week's wages.
exceeding 13 3/4% Exceeding 13 3/4% but not
Four week's wages.
exceeding 16-1/4% Exceeding 16-1/4% but not
Five week's wages.
exceeding 181% Exceeding 18-3/4% but not Six
week's wages.
exceeding 211% For each additional 2-1/2% An
additional week's wages.
For the purpose of this clause one week's
wages 'shall mean in the case of a worker in receipt of daily wages six times
his daily rate of pay at the thirty first day of December in such financial
year as aforesaid and in the case of a worker in receipt of monthly pay one
fifty-second part of twelve times his monthly rate of pay at the thirty-first
day of December in such financial year".
"Provided always that if at any time the
Company's Ordinary share capital shall be increased by capitalisation of any of
its undistributed profits (not including profits arising from a revaluation of
assets, from the sale of assets or from the sale of shares at a premium) or
reduced, then the rate of net dividend paid by the Company in respect of any
financial year after the coming into force of any such increase or reduction
shall for the purposes of this clause be deemed to be the rate of net dividend
actually so paid by the company altered in the ratio which the nominal value of
the Company's paid up capital at the end of such financial year (excluding
there from all 118 portions of such capital which represent capitalised profits
derived from revaluation of assets sale of assets or issue of shares at a
premium) shall bear to the value which it would have had if such increase or
increases or reduction or reductions of capital as shall come into effect after
the first day of January one thousand nine hundred and thirty eight had never
taken place".
"The payment into each member's 'C'
Account in accordance with the above provisions shall be made as soon as
conveniently may be after the holding of the annual Ordinary General Meeting of
the Company at which such net dividend as aforesaid is finally declared and
ascertained".
8. The moneys of the Fund shall be invested
by the Trustees in accordance with the provisions from time to time in force
under the Indian Income-tax (Provident Funds Relief) Act, 1929.
9. (1) (a) On or as soon as may be after the
thirty first day of December in each year the Trustees shall determine the
amount standing to the credit of each member in his'A', B and C accounts on
that date and for that purpose a general account shall be taken of the assets
of the fund and of the receipts payments dealings and transactions in
connection therewith during the calendar year terminating on such thirty first
day of December (hereinafter referred to as the period of account).
(b) Each such general account shall comprise
three revenue Accounts to be known as the 'A' Revenue Account, the 'B' Revenue
Account and the "C" Revenue Account respectively. The "A"
Revenue Account shall be credited with all income accrued or profits realised
during the period of account in respect of the investments representing moneys
lying to the credit of the "A" accounts and the appreciation (if any)
of such investments during the period of account. The "A" Revenue
Account shall be debited with all losses (if say) in respect of 119
depreciation of such investments and all sums paid during the period of account
in respect of interest on contributions to retiring members or the representatives
of deceased members as herein before provided. The 'B' Revenue Account shall be
credited with all forfeits and all income accrued or profit realised during the
period of account in respect of the investments representing moneys lying to
the credit of the 'B' Accounts and the appreciation (if any) of such
investments during the period of account. The 'B' Revenue account shall be
debited with all losses (if any) in respect of depreciation of such investments
and all expenses of the Fund. The "C" Revenue Account shall be
credited with all income accrued or profit realised during the period of
account in respect of the investments representing moneys lying to the credit
of the 'C' Accounts of the members, the appreciation (if any) of such
investments during the said period and all interest received by the Trustees
or., withdrawals made under Rule 18 hereof. The "C" Revenue Account
shall be debited with all losses (if any) in respect of depreciation of such
investment as last aforesaid.
(c) The balance of the "A",
"B" and "C' Revenue Accounts respectively shall be appropriated
to the "A", "B" and "C" accounts of the members
in each case in proportion to the amounts standing to the credit of their
respective "A", "B" and "C' accounts at the close of
the period of accounts provided always that for the purpose of such
appropriation the Trustees may if they think fit disregard any sum standing to
the credit of any member in his "A" "B" or the
"C" Revenue Account not exceeding on( rupee and may carry forward to
the next period of account any part of the balance of the "A" revenue
account, the "B" revenue account or the "C" Revenue account
which will not suffice to pay a complete one half percent on the total amount
standing to the "B" or "C" accounts as the case credit of
the "A", may be of all the members. Provided also that in
ascertaining the amount at credit of a member's "C' 120 account for the
purpose of calculating the proportions herein mentioned there shall be deducted
from such "C" Account only those sums withdrawn under the provisions
of Rule 18 hereof on which interest is not payable by him to the Fund.
(d)For the purpose of such Revenue Account
the Trustees shall value the investments and securities of the Fund, and if the
same shall in their opinion, which shall be final and conclusive, have
appreciated or depreciated since the date of purchase, or if a general account
shall have been taken subsequent to the date of purchase then since the date of
the last preceding general account the amount of such appreciation or
depreciation shall be credited or debited to such revenue account as though the
same were a realised profit or loss as the case may be.
(2)Notwithstanding the terms of Rule 9(1) the
Trustees shall have the right should they in their uncontrolled discretion deem
it necessary in the interests of the members as a whole to take out a general
account of the assets of the fund as at any date in any year other than or in
addition to the thirty first day of December and Members "A", "B"
and "C" accounts shall be adjusted accordingly.
(3)In the case of the taking of a general
account under rule 9(2) the words "the period of account" used
throughout these rules shall mean and refer to (where the context shall admit)
the period whereof such general account of the assets of the fund was taken
under rule 9(2).
10.On retirement of any member with the
consent of the General Manager of the Company before completion of more than
fifteen years service with the company he or she shall be paid the entirety of
the amount then standing to the credit of his or her "A" and
"C" account together with one fifteenth of the moneys standing to the
credit of his or her "B" account for such completed years service.
11. If any member before completion of
fifteen 121 years service with the company shall be dismissed for misconduct or
shall resign there from without the consent of the General Manager he or she
shall be paid only the amount then standing to his or her credit in
"A" account and 'C" Account.
12. The residue of any moneys standing to the
credit of a member's "B" account after payment of the moneys payable
to him or her there out under Rule 10 and the entirety thereof if he or she
shall be dismissed or resign in the circumstances as mentioned in rule 11 shall
be forfeited to the Fund and carried to the "B" Revenue Account to be
dealt with under Rule 9 (1)
13. Upon termination by any means of a
member's service if more than fifteen years thereof shall then have been
completed he or she shall be paid the entirety of the amount then standing to
the credit of his or her "B" and "C" account.
For the computation of length of service
under the foregoing rules continuous service only shall be reckoned as from the
date or last date on which the employee entered or re-entered service.
14. If in consequence of depreciation of
securities the amount as received by a member or his or her representatives in
respect of his or her "A" account under the last preceding rules
shall fall short of the total of the contributions as made thereto the company
may make an additional and contingent contribution to the fund to the amount of
the deficiency for payment thereof to the member.
15. If it shall be proved to the satisfaction
of any of the trustees that any member has become insane or otherwise
incapacitated from exercising proper control over his affairs they make payment
out of the moneys standing to his or her credit in the Fund and at such time or
times to such person or persons on his or her account as they may in their
absolute discretion think expedient. The above provisions for 16 122 payment
shall not apply to moneys forfeited under Rule 17 which shall be dealt with by
the Trustees at their absolute discretion there under.
16. On the death of any member while still in
the service of the Company the sum standing to his or her credit in
"A", "B" and 'C" accounts shall be paid to the person
or persons named in the declaration form signed under Rule 4 or failing such
declaration to the person or persons who shall be ascertained to be next-of-kin
under the provisions of Rule 5.
17. No member of the Fund shall have any
claim on the moneys standing to his or her credit therein otherwise than in
accordance with the provisions of these rules and no person or persons other
than a member save and except such as shall be nominated in the declaration
under the provisions of Rule 4 or shall be ascertained to be the member's
next-of-kin under Rule 5 shall have any claim thereto in any right whatsoever.
Any assignment by a member of the moneys which would otherwise be payable to
him or her under these rules whether absolute or by way of charge shall be
wholly void and in the event of any member executing any such assignment or
being adjudicated insolvent or if any order shall be served upon the Trustees
of the Company for payment of the moneys standing to his or her credit to any
person under any attachment or -other process of any Court the said moneys
shall at the time when they would have otherwise become payable to the member
but for such assignment insolvency or attachment be liable to be forfeited to
the FUND PROVIDED ALWAYS that the Trustees shall at their absolute discretion
and without any legal obligation so to do pay and apply the same for the
benefit of the member or his or her dependents and relatives.
18. Withdrawals by members of the money
standing to their credit with the Fund shall not be allowed by the Trustees
except that withdrawals from the amount standing to the credit of a member's
'C' 123 account may be allowed on the special grounds to -the extent and
subject to the conditions laid down by the Indian Income-Tax Act and the Rules
made thereunder in that behalf as in force from time to time.
19. There shall be not less than three
Trustees of the said Fund.
20. If and whenever any Trustees shall die
resign or become incapable of acting or shall permanently leave India one or
more persons in his place shall be appointed by the Company as such Trustees.
21. No copy shall be furnished to any member
of his or her account but member may have inspection thereof in the Books of
the Fund at all reasonable times.
22. These Rules may from time to time be
altered and amended and other Rules and Regulations may be added or substituted
for the management and working of the Fund in every case by the Company and the
Trustees and with out reference to the parties hereto of the third part,
provided always that should such addition or alteration curtail the rights or
increase the obligations of the members of the Fund any member shall be entitled
to withdraw from and at his or her own request in writing to the Fund, cease to
be a member of the Fund in which case he or she shall be paid the money
standing to his or her credit in the Fund (provided that the same shall not
have become forfeited under Rule 17) or such portion thereof as he or she would
have been entitled to if he or she had then retired from the service of the
Company with the consent of the General Manager of the Company.
Any such alteration or amendment shall, be
notified in writing to the parties responsible for according recognition to the
Fund under the provisions of the Indian Income-Tax (Provident Fund Relief) Act,
1929.
23. The Company may at any time in its
discretion dissolve or terminate the Fund and shall in such case carry out the
winding up of the Fund and the members of the Fund shall receive all the moneys
standing to their credit provided they shall not then have become forfeited
under Rule 17 'A', 'B' and C'.
24. Any payment made in accordance with the
Rules of the Fund to the member, his nominee or next of kin as ascertained or
to any person or persons other than the foregoing shall operate as a full and
efficient discharge of all liability of the Fund in respect thereof 25 These
Rules and Regulations shall come into force with effect from the 1st day of
January, 1929.
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