RAJADURAI, et al. Appellant, and FONSEKA, Respondent

068-NLR-NLR-V-44-RAJADURAI-et-al.-Appellant-and-FONSEKA-Respondent.pdf


282'
Rajadurai and Fonseka.
1943Present: Moseley A.C.J. and Jayatileke J.
RAJADURAI, et al. Appellant, and FONSEKA, Respondent.
145—D. C. Jaffna 15,889.
Railway Benefit Association—Money payable on death or retirement of member—Death of member—Money paid to next of kin—Not available to creditor—Ceylon Railway Benefit Association Ordinance (Cap. 208), Rule 9 (I).
Money' which is payable on death during his employment in the PublicService or on his retirement of a member of the Railway Benefit Associa-tion arid which according to the- Rules has to be paid to the member,his nominee or next of kin cannot be followed by his creditors in thehands of the next of1 kin to whom it has been paid on the death of amember.
Letchchimipillai v. Sivakoluntu (25 N. L. R. 225) followed.
I
' N this action the plaintiff sued the defendants the widow and minorchildren of S. T. Rajadurai, deceased, for the recovery of Rs. 350
balance due on a promissory note made by the deceased. The defendantsadmitted the debt and the only question, was whether a certain fund inpossession of the defendants was available for execution. It was thearhount payable to the deceased on his, retirement or death by the CeylonRailway Benefit Association of which , the ‘deceased was a member.The learned District Judge answered the question in the affirmative.
N.. Nadarajah, K.C. (with him H. W. Thafnbiah), for the defendants,■ appellants.—The only question at issue is whether the defendants can besaid to have adiated as their inheritance the sum payable to them underrule 9 (1) read with section 3 of the Railway Benefit Association Ordinance(Cap. 208). It is submitted' that the money in question did not belong
116 A7. L. R. 438.
283
MOSELEY A.C.J.—Rajadurai and Fonseka.
to the deceased and does not form a part of his estate. Letchchimipillai v,Sivakoluntu1 is directly in point. The District Judge was wrong in holding,that the deceased had a disposing power over the fund when in realityhe had only a nominating power. The fund cannot be considered aspart of the estate of the deceased. See, Urquhdrt v. Butterfield3 andAttorney-General v. Roiosell’.
E. B. Wickremanayake (with him H. Wanigatunge), fop the plaintiff,respondent.—Letchchimipillai v. Sivakoluntu (supra) has no applicationto the facts of this case. No nominee had been appointed in that" casewho predeceased the subscriber. The case of Ceylon Mutual ProvidentAssociation v. Mendis et al.‘ is more in point. The decision in Letchchimi-pillai v. Sivakoluntu can be explained on the basis of a novation andcontractual rights; it was, therefore, held that the nominee had not onlya legal right but also a beneficial interest.
The primary object of the Association in the present case is to benefitthe member who subscribed. The member can obtain relief from theAssociation in times of distress and sickness. He can, further, draw themoney for himself on his retirement. The money is the property of themember and, under rule 9 (1), where it is not paid to the member or hisnominee, it becomes part of his estate and goes to his heirs. In the Eng-lish cases cited on behalf of the appellants the funds had clearly beencreated not for the benefit of the subscribers but for the benefit of theirwidows and children. In re Griffin5 is an example of an English casewhere the money was recognized as that of the subscriber.
N. Nadarajah, K.C., in reply.—Rule 9 (1) constitutes a contract betweenthe member and the Association as to the payment of the money. Theterms of the contract cannot be varied in any manner Other than thatprescribed by the rules—Ashby v. Costin'*. Bennett v. Slater et al'.
Cur. adv, vult.
March 5, 1943. Moseley A.C.J.—
The respondents sued the appellants, who are respectively the widowand two minor children of one S. T. Rajadurai, deceased, for recoveryof Rs.- 350 being the balance due on a promissory note made by the'; deceased in favour of the respondent. The appellants admitted the debtand the only question for decision was whether a certain fund in possessionor at the disposal of the appellants was available for execution. Thisfund amounted to Rs. 3,257.62 and is the amount payable on the retire-tment or death of the deceased by the Ceylon Railway Benefit Associationof which the deceased was a member. The one issue framed'was asfollows:—•
“ Did defendants (1st to 3rd) adiate as their inheritance the sum ofRs. 3,257.62 mentioned in the evidence of the witness Ramachandran(Secretary and Treasurer of the Association).”, ’
The learned District Judge answered the question, in the affirmativeiThe money forming the above-mentioned fund became available to theappellants, in pursuance of rule 9 '(1) of the Rules of . the Association, made
1 (1923) 25 N. L. R. 225.J (1922) 24 A% L. R.- 205:
* L. R. (1887) 36 Oh. D. 55.5 L. R. (1902) I Ch. 135 ..
a L. R. (1887) 36 Ch. D. at 67.• L. R. 21 Q. B. D. 401
’ L. R. (1899) 1 Q: B. 45;
284 •
MOSELEY A.C.J.—Rajadumi and Fonseka.
under the provisions of Ceylon Railway Benefit Association Ordinance{Cap. 208 of the Legislative Enactments).
The rule is as follows :—
“ 9 (1) : On the retirement from the public service, or on the deathduring his employment in the public service of any member of thecorporation who has contributed regularly in accordance with theserules to the funds of the corporation, and has also been a member of thecorporation for a period of not less than one year, a donation inaddition to the payment referred to in rule 8, shall be paid to suchmember or to his nominee or next of kin or heirs at law, as the case maybe.”
The provision made by the rule for payment is strictly in accordancewith the terms of section 3 of the Ordinance. It should be stated thatthe deceased had made a nomination in accordance with the provisionsof the Ordinance and that the nominee had predeceased him. The moneywas therefore payable to the next of kin i.e. the appellants.
Counsel for the appellants relied upon the case of Letchchimipillai v.Sivakoluntu1 where the question for decision was in regard to therights of a nominee of a member of a mutual provident association.The member died intestate and the heirs asserted that the sum payableby the association to the nominee formed part of the estate ofthe deceased. It was held that the nominee was the owner of themoney and that the heirs of the deceased could claim no interest in it.That is to say, the money formed no part of the estate of the deceasedand could not be followed by his creditors.
Counsel for the respondent sought to distinguish that case, and nodoubt in some respects it may be distinguished, from the case before usnow. The association in the case cited was a provident associationwhich afforded no benefit to the member during his lifetime, while in thepresent case it was open to the member, if he so elected, to draw suchmoney as might then be due to him on his retirement. I am unable tosee that this distinction materially affects the case. The statutoryprovisions of rules in respect of each of the associations concerned providefor the naming of a nominee, and Mr. W ickrem an ay ake conceded, asindeed I think he must, that had the nominee survived the member histitle to the money would have been unassailable. He argued, however,that the primary object of the Railway Benefit Association is to giverelief to its members in times of distress and sickness, and that the benefitof the dependents of a deceased member was of only secondary importance.He cited in support of his view the preamble and section 3 of Cap. 208,,but an examination of the Ordinance indicates that the only mannerin which a member may seek relief prior to his retirement is by borrowingfrom the association, and section 3 makes no distinction between themember and his family when it comes to the ultimate disposal of thefund, unless one can be drawn from the mere fact that the member ismentioned before his nominee or his widow and children.
In regard to the position enjoyed by a nominee it is, I think, clear that.it is the same whether it be a provident or benefit association. Counselfor the respondent described the standing of the nominee as the result
I (1923) 25 N. L. R. 225.
Thuraisamy and Thailpayar.
285
•of a contract between the member and himself. It is moreover the result' of a contract between the member and the association, that is to say,his fellow-members. Can it not be said that section 3 of the Ordinanceand the Rules which provide for the devolution of the fund on the deathof the member, and in the absence of a nominee, on the widow andchildren, express a contract between the member and the association?It seems to me that it must be so. Mr. Wickremanayake, if I rightlyunderstood his argument, interpreted the provisions to which I havereferred as merely reproducing the law of succession and that the inten-tion of the legislature was to provide that, failing the member or hisnominee, the money was to go to the member’s estate. I can see noreason for supposing that the legislature would employ such unnecessaryphraseology when its intention, if that it were, could have been moreconveniently expressed.
The decision in the English cases which were brought to our noticewere carefully considered in Letchchimipillai v. Sivakoluntu (supra) and Ido not think it is necessary to refer to them beyond quoting an observa-tion of Cave J. in Ashby v. Costin (supra) which is as follows : —
“ The money …. was to be paid according to the bargain made by
the deceased with the other members. ”
The bargain in the present case seems to me to be (using the words ofJayewardene A.J. in Letchchimipillai v. Sivakoluntu) that the moneystanding in the deceased’s name should, in the absence of a nominee,devolve in a particular order of succession.
For these reasons I do not think the money paid or payable from thisfund to the widow and children is available to the respondent.
The appeal is allowed with costs. The judgment of the District Courtis set aside and judgment will be entered for the defendants with costs.
Jayetilrke J.—I agree.
Appeal allowed.