GPF Withdrawal: Succession Certificate Not Required For Nominee To Claim The Fund

The Supreme Court of India, in a recent order, held that a nominee need not provide a succession certificate to claim the group provident fund (GPF) after the employee is deceased. The bench comprising Justice Manoj Misra and Justice Manmohan rejected the plea filed by the Union of India, which asserted that a nominee is not eligible to receive GPF above Rs 5,000. The court noted that the threshold of Rs 5,000 established in 1925 is not relevant now, considering the inflationary conditions.  

It then held that the government should not be a party to the protracted litigation pertaining to a deceased employee’s estate when a valid nomination exists. The judgment reaffirms the sanctity of nomination and that it is a crucial tool for immediate financial relief, which cannot simply be denied the benefits.

Case Brief

The nominee, Paresh Chandra Mondal (respondent in this case), sought the release of the GPF amount belonging to his deceased brother, a government employee. The respondent is the only nominee per the records. When the government denied the claim, Mondal approached the court.

In response, the Central Administrative Tribunal (CAT), Kolkata, and subsequently the Calcutta High Court, passed an order in Mondal’s favour, as per Rule 33(ii) of the GPF (Central Service) Rules, 1960. According to the rule, the nominee is entitled to receive the fund balance.

However, the Union of India approached the Supreme Court and filed a Special Leave Petition to challenge the order.

Arguments

The additional solicitor general (ASG) representing the Union of India (petitioner in this case) argued by referring to Section 4(1)(c)(i) of the Provident Fund Act, 1925, which must take precedence over the GPF (Central Service) Rules, 1960. The counsel argued that, as per the law, if the GPS exceeds Rs 5,000, one needs to provide a succession certificate, probate, or a letter of administration, and the fund can be released only then. The ASG also contended that the GPF amount was not listed specifically in the succession certificate provided by Mondal, and thus, the authorities can withhold payments.

Court Observation

The Supreme Court critiqued the government’s stance. It said, “If a succession certificate is required in both eventualities, i.e. cases covered under (i) and (ii) of Section 4(1)(c), then it would render otiose all nominations made under the Act, 1925, read with the Rules, 1960.”

The court highlighted that while the Rs 5,000 limit might have been reasonable in 1925, it is irrelevant now, after 100 years.

The bench also referred to Section 5(1) of the Provident Fund Act, which contains a non-obstante clause, giving a valid nominee “primacy to receive the amounts standing in the name of a depositor upon his death”.

The court emphasised that nominees are “mere trustees” to collect the funds, and they are not necessarily the ultimate beneficiaries. So, other legal heirs remain free to claim their share from the nominee in a competent court.

Court Judgment

The court ruled that Sections 4 and 5 of the Provident Fund Act must be read harmoniously with Rule 33(ii) to ensure a nominee receives the funds promptly.

It held, “This Court is of the view that the Government of India should not get involved in protracted litigation with respect to the estate of a deceased employee or depositor under the Act, 1925. The requirement to have a probate or letters of administration or succession certificate, even in cases of valid nomination, will invariably make the Government a party to litigation, which should ideally only be between private parties.”

It dismissed the Special Leave Petition and upheld the High Court’s order to release the GPF amount to Paresh Chandra Mondal.