Distribution of GPF : Nomination does not grant absolute title to the nominee - Law of succession governs GPF

Supreme Court Clarifies Distribution of GPF Upon Subscriber's Death Nominee's Role Limited to Receiving Funds; Succession Laws Govern Distribution

In a significant ruling, the Supreme Court of India has clarified the principles governing the distribution of the General Provident Fund (GPF) upon the death of a subscriber, highlighting that nomination under the General Provident Fund (Central Service) Rules, 1960 does not confer absolute ownership to the nominee. The judgment was delivered by a bench comprising Justices Sanjay Karol and Nongmeikapam Kotiswar Singh in the case of Smt. Bolla Malathi v. B. Suguna.

The case revolved around the GPF entitlement following the death of Bolla Mohan, an employee of the Defence Accounts Department, Government of India. The deceased had initially nominated his mother as the recipient of GPF benefits. However, after marrying Smt. Bolla Malathi in 2003, he updated the nomination for other benefits such as the Central Government Employees Group Insurance Scheme (CGEGIS) and Death-cum-Retirement Gratuity (DCRG) in favor of his wife, but did not alter the GPF nomination.

Following Mohan's death in 2021, a dispute arose between the mother and the wife over the entitlement to the GPF amount. The Central Administrative Tribunal (CAT) had initially ruled that the GPF amount should be divided equally between the mother and the wife, as the nomination became invalid upon the subscriber acquiring a family, in accordance with Rule 33 of the GPF(CS) Rules.

The High Court of Judicature at Bombay, however, set aside the CAT's order, favoring the mother as the sole nominee. This decision was based on the interpretation that the lack of a formal cancellation or alteration by the deceased meant the original nomination stood.

In its judgment, the Supreme Court overruled the High Court's decision, reinstating the CAT's order. The Court emphasized that the mere act of nomination does not grant the nominee absolute rights over the fund. Instead, the nominee merely acts as a recipient, while the actual distribution must follow the law of succession.

The Court referenced key precedents, including Sarbati Devi v. Usha Devi and Shakti Yezdani v. Jayanand Jayant Salgaonkar, which underscore that nominations do not override succession laws. Justice Sanjay Karol, delivering the judgment, stated that the nomination in favor of the mother became invalid upon the deceased acquiring a family, thus necessitating distribution among eligible family members.

The Supreme Court's ruling reaffirms the principle that nominations under such statutes merely indicate the hand authorized to receive funds, not to confer ownership, which is determined by succession laws.

Bottom Line:

Nomination under General Provident Fund (Central Service) Rules, 1960 does not confer an absolute title to the nominee; distribution of GPF amount must follow the rules and the principles of succession.

Statutory provisions: General Provident Fund (Central Service) Rules, 1960, Rule 33, and related provisions on nomination and succession.

Smt. Bolla Malathi v. B. Suguna, (SC) : Law Finder Doc Id # 2818291