Central
Section 3 of The Provident Funds Act, 1925
Protection of compulsory deposits.
- (1)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 subscriber or depositor, and neither the Official Assignee nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920), shall be entitled to, or have any claim on, any such compulsory deposit.
- (2)Any sum standing to the credit of any subscriber to, or depositor in, any such Fund at the time of his decease and payable under the rules of the Fund to any dependant of the subscriber or depositor, or to such person as may be authorised by law to receive payment o n his behalf, shall, subject to any deduction authorised by this Act and, save where the dependant is the widow or child of the subscriber or depositor, subject also to the rights of an assignee under an assignment made before the commencement of this Act, vest in the dependant, and shall, subject as aforesaid, be free from any debt or other liability incurred by the deceased or incurred by the dependant before the death of the subscriber or depositor .
Summary
- A compulsory deposit (money saved in a fund that cannot be withdrawn on demand until a specific event happens) in a Government or Railway Provident Fund cannot be assigned (transferred to another person) or charged (used as security for a loan) in any way.
- These deposits cannot be attached (seized by court order) under any decree or order of any Civil, Revenue, or Criminal Court for any debt or liability of the subscriber.
- Neither the Official Assignee (a court official who manages the assets of a bankrupt person) nor any receiver appointed under the Provincial Insolvency Act, 1920, has any claim or right to these deposits if the subscriber is insolvent (bankrupt).
- When a subscriber dies, the fund balance vests in (becomes the property of) their dependant, subject to authorized deductions.
- This vested money is completely free from any debt or liability incurred by the deceased subscriber, or any debt incurred by the dependant before the subscriber's death.
Practical examples
1Vikram has 80,000 rupees in his Government Provident Fund and owes 40,000 rupees to a private creditor. The creditor gets a civil court order to seize Vikram's savings, but under Section 3, the court cannot touch Vikram's provident fund.
2Sunita, a railway clerk, dies with 150,000 rupees in her fund. Her husband is her dependant and receives the money. A debt collector tries to seize this money to pay off credit card debts that Sunita had incurred before her death. Under Section 3, the money is fully protected and cannot be taken.
FAQ
1. Is the money safe from the dependant's own debts?
Yes, it is free from any liability or debt incurred by the dependant before the death of the subscriber.
Test yourself
1.Which of the following can legally attach a compulsory deposit in a Government Provident Fund?
2.What cannot be done to a compulsory deposit under Section 3(1)?
3.Which specific insolvency law is mentioned in Section 3 as having no claim on compulsory deposits?
4.When a subscriber dies, the money in the fund vests in which of the following?
5.For whose debts is the vested sum in the dependant free from liability?
6.Whose assignment rights are preserved under Section 3(2), except when the dependant is a widow or child?