Summary of this article
SC says marriage cancels old General Provident Fund nomination.
Wife and mother must share GPF equally.
Nominee cannot override legal family rights.
The Supreme Court has held that a General Provident Fund (GPF) nomination made by an employee in favour of a parent becomes invalid the moment the employee gets married. After marriage, the fund should be divided among the legal family members, comprising a spouse and parents.
A bench of Justices Sanjay Karol and N Kotiswar Singh, while setting aside the Bombay High Court's previous decision, restored the order of the Central Administrative Tribunal. The Tribunal had directed that in case of a deceased Defence Accounts Department employee, the GPF amount should be divided equally between his wife and mother.
Nomination Ends After Marriage
An employee had nominated his mother for the GPF in 2000. He married in 2003 and subsequently changed his nominations for other benefits, such as the Central Government Employees Group Insurance Scheme and gratuity in favour of his wife, but did not do so regarding GPF. When he died in 2021, his wife got all other service benefits, except that the department refused to release the GPF amount to her on the grounds that the old nomination in favour of the mother was still valid.
The Tribunal thus held that the GPF nomination became invalid immediately upon the employee's marriage. The Supreme Court upheld the judgment and held that the creation of a family instantaneously alters the legal character of the nomination. It said that the nomination was not an assurance of absolute ownership over the fund and did not take away or diminish the rights of legal heirs.
Rule 33 Requires Equal Distribution
The court referred to Rule 33 of the General Provident Fund (Central Service) Rules, 1960. The rule stipulates that in the event of the death of an employee with a family, the GPF amount will have to be apportioned among the eligible family members, even if the nomination is old and in favour of somebody else. The bench stated that the earlier nomination in favour of the mother automatically got revoked as soon as the employee married. Nomination, the court further added, did not confer any superior right, and therefore, the mother cannot claim any superiority over the wife.
The court also referred to an earlier judgment in Sarbati Devi vs. Usha Devi from 1984. In that case, the court held that a nominee is only a custodian of the money and not the exclusive owner. Applying the same principle, the bench said the nomination alone cannot give the mother a better claim than the wife.
Understanding The General Provident Fund
General Provident Fund is a long-term savings scheme for government employees. A fixed portion of salary is deducted every month and deposited in the employee's GPF account. The amount earns interest and can be withdrawn only under certain rules.
But employees are required to nominate a person to receive the fund in case of death. The rules also say, however, that the nomination should conform to the employee’s family situation. If the employee gets married later, for instance, the earlier nomination may be cancelled by law, even if the employee does not update it.
By this judgment, the Supreme Court reinstated the order of the Tribunal and directed that the amount of GPF was to be shared equally between the wife-respondent and the mother-appellant of the deceased employee.
