IMPORTANT POINT
General Provident Fund – Nomination – When nomination becomes invalid, amount is to be distributed/divided amongst all eligible members.

JUDGMENT :

SANJAY KAROL J.

Leave Granted.

2. The family members i.e. wife and mother of the deceased, one Bolla Mohan are at odds in this appeal arising out of a judgment and order dated 11th February 2025 passed by the High Court of Judicature at Bombay in Writ Petition No. 5756 of 2024, regarding the release of General Provident Fund¹[Hereinafter referred to as ‘GPF’] amount accrued in the course of employment of the deceased in the Defence Accounts Department, Government of India

3. When the deceased joined service on 29th February 2000, as per the applicable rules, he nominated the respondent no.1 herein (mother) as recipient of GPF, Central Government Employees Group Insurance Scheme²[Hereinafter referred to as ‘CGEGIS’] and the Death cum Retirement Gratuity³[Hereinafter referred to as ‘DCRG’]. On 20th June 2003, the deceased married the appellant herein and subsequently nominated her as recipient for CGEIS and DCRG only. The deceased died in service on 4th July 2021. It is an admitted position that the appellant herein has received all benefits arising from the employment of the deceased totaling to Rs.60 lakhs. On 9th September 2021, when she applied for the funds accumulated in the GPF to be released, respondent Nos. 2 to 4 refused the same, on account of respondent no.1 being the nominee on record.

4. The matter was pleaded before the Central Administrative Tribunal⁴[Hereinafter referred to as ‘CAT’], Mumbai Bench, Mumbai by the Appellant. Considering the applicable Rules, the General Provident Fund (Central Service) Rules, 1960⁵[Hereinafter referred to as ‘GPF(CS) Rules’] and observing that Rule 33 thereof provides for the manner in which the funds in GPF are to be distributed upon the death of subscriber in cases where the nomination persists and, where it does not. The CAT noted that although initially, the nomination of Respondent No.1 was valid, it subsequently became invalid but was not changed accordingly by the deceased and thus has to be declared invalid by a competent authority. Since no nomination persisted at the time of death, it was held that the amount had to be released in equal shares to all members of the family. As such it was directed that the appellant and respondent no.1 both would receive half of the total amount.

5. On appeal, the High Court set aside findings of the CAT in the following terms:

“11. In the present case, ‘a subscriber’ is the Deceased and ‘specified nominee’ is the Petitioner (mother). From the above facts, it is clear that this is not a case of a specified nominee predeceasing the subscriber. The Petitioner (mother) is still alive. Therefore situation contemplated in Rule 5(5)(a) has not arisen and it will not apply. Rule 5(5)(b) provides that the nomination shall become invalid in the event of the happening of a contingency which is specified by the subscriber. In the present case, such a contingency is provided by the Deceased as “on acquiring family”. Rule 5(6) provides that on the occurrence of any event by reason of which nomination becomes invalid in pursuance of clause 5(5) (b) or proviso thereto, the subscriber shall send to the Accounts Officer a notice in writing canceling the nomination, together with a fresh nomination made in accordance with the provisions of this rule. Therefore in our considered opinion, combined reading of Rules 5(5) and 5(6) does not contemplate or provide for auto- cancellation of the nomination in the event of contingency provided. In the present case admittedly, the Deceased has neither sent a notice in writing canceling the Petitioner’s nomination nor fresh nomination is made in favour of Respondent No.1 in accordance with Rule 5 for GPF amount. Therefore it will not r