GPF Nomination and Family Rights

Source: Supreme Court

Why in News? 

The bench of Justices Sanjay Karol and Nongmeikapam Kotiswar Singh in the case of Smt. Bolla Malathi v. B. Suguna and Ors. (2025) once an employee gets married, the nomination made in favour of a parent would cease to exist, and the General Provident Fund amount will be equally distributed between the deceased employee's wife and parents under Rule 33 of the GPF (Central Service) Rules, 1960.

What was the Background of Smt. Bolla Malathi v. B. Suguna and Ors. (2025) Case? 

• The case involved a Defence Accounts Department employee who nominated his mother (Respondent No.1) in 2000 for GPF, Central Government Employees Group Insurance Scheme (CGEGIS), and Death cum Retirement Gratuity (DCRG). 
• The deceased, Bolla Mohan, joined the Defence Accounts Department, Government of India on February 29, 2000. 
• Upon joining service, he nominated his mother (respondent) as the recipient of his General Provident Fund, Central Government Employees Group Insurance Scheme, and Death cum Retirement Gratuity. 
• The nomination form specified that the nomination would become ineffective or invalid upon the subscriber acquiring a family. 
• On June 20, 2003, the deceased married the appellant. 
• After marrying the appellant in 2003, he updated nominations only for CGEGIS and DCRG in favor of his wife, but not for GPF. 
• The deceased died in service on July 4, 2021. 
• Following his death in 2021, the wife received all other service benefits totaling Rs. 60 lakhs including leave encashment, CGEIS, DCRG, and medical reimbursement, but was denied GPF, as authorities relied on the old nomination favoring the mother. 
• When the appellant applied for the GPF amount on September 9, 2021, the Defence Accounts Department refused release citing the mother's nomination on record. 
• The Central Administrative Tribunal Mumbai held that the GPF nomination automatically became invalid upon the deceased employee's marriage and directed equal distribution of the fund between the wife and the mother. 
• The Bombay High Court reversed the CAT order, holding that the nomination continued unless the employee formally cancelled it, which prompted the appellant-wife to move to the Supreme Court.

What were the Court's Observations? 

• The Supreme Court noted that the nomination form clearly stated it would become invalid upon the subscriber acquiring a family through marriage or otherwise, making it invalid by its own terms in 2003. 
• The bench stated that "the nomination in favour of the respondent no.1 (deceased's mother) would become invalid upon him (deceased employee) acquiring a family (marriage or otherwise)." 
• The Court reiterated the settled legal position that a nomination does not confer a superior claim over the General Provident Fund, holding that respondent no.1 (the deceased's mother) could not claim priority over the appellant (the deceased's wife). 
• The Court emphasized that upon the deceased acquiring a family, the earlier nomination in favor of his mother stood terminated, triggering Rule 33 of the GPF (Central Service) Rules, 1960, which mandates equal distribution of the GPF among eligible family members. 
• The Court emphasized that Rule 33 of the GPF (Central Service) Rules mandates that when no valid nomination subsists, the amount becomes payable to all family members in equal shares. 
• The Court cited the established legal principle that nomination merely indicates the hand authorized to receive the amount and does not confer beneficial interest, as held in Sarbati Devi v. Usha Devi (1984) and Shakti Yezdani v. Jayanand Jayant Salgaonkar (2024). 
• The Court clarified that respondent authorities are not obligated to ask subscribers to alter nominations and it remains the subscriber's duty to make such changes. 
• Accordingly, the bench held that "the GPF of the deceased shall be distributed between the appellant and respondent no.1." 
• The Supreme Court set aside the High Court judgment and upheld the CAT order directing equal distribution of the GPF amount between the appellant wife and the mother, guaranteeing equal rights to the wife and parents in the GPF amount upon marriage of the employee. 

What is the General Provident Fund? 

About: 

• The General Provident Fund is a retirement benefit scheme for government employees in India governed by the GPF (Central Service) Rules, 1960. 
• Government employees contribute a portion of their salary to the GPF during their service, which accumulates with interest over time. 
• Upon retirement, resignation, or death, the accumulated amount along with interest becomes payable to the subscriber or their legal representatives. 

Nomination Under GPF Rules: 

• Rule 5 of the GPF (Central Service) Rules allows subscribers to nominate one or more persons to receive the GPF amount in case of their death. 
• A subscriber can specify conditions under which the nomination becomes invalid, such as upon acquiring a family through marriage. 
• Rule 5(5)(b) provides that nomination shall become invalid upon occurrence of a contingency specified by the subscriber. 
• Rule 5(6) requires the subscriber to send written notice canceling the nomination and submit a fresh nomination when any event makes the previous nomination invalid. 

Distribution on Death of Subscriber: 

• Rule 33 of the GPF (Central Service) Rules governs the procedure upon death of a subscriber. 
• When a valid nomination in favor of family members subsists, the GPF amount becomes payable to the nominee in the specified proportion. 
• If no nomination in favor of family members subsists, the entire amount becomes payable to all family members in equal shares, notwithstanding any nomination in favor of non-family members.