General Provident Fund | Succession Certificate Not Necessary For Nominee To Collect PF Amount Above ₹5,000 : Supreme Court

The Supreme Court recently held that even where the General Provident Fund balance exceeds ₹5,000, a valid nominee is entitled to receive the amount without being required to first produce a succession certificate, probate, or letters of administration, and that insisting on such documents would render the concept of nomination otiose.

“Consequently, this Court is of the view that in cases of a valid nomination, the amount in the provident fund account of the deceased depositor or subscriber is required to be released to the nominee”, the Court stated.

A bench of Justice Manoj Misra and Justice Manmohan dismissed a plea filed by the Union of India against a Calcutta High Court judgment which had upheld the release of General Provident Fund amounts to a nominee without insisting on a succession certificate, even where the amount exceeded the threshold of ₹5,000 provided in the Provident Fund Act, 1925.

“While the basis of classification, namely, the amount of Rs. 5,000/- may have been substantial and reasonable in the year 1925, i.e., when the Act was passed, however, the same has ceased to be of any relevance a century later due to inflationary market forces. Recognising this ground level reality, the government itself in the Rules framed thirty-five (35) years later stipulated that in cases of nomination, irrespective of the amount of money lying in the account, the same shall be released to the nominee”, the Court observed, relying on Rule 33(ii) of the General Provident Fund (Central Services) Rules, 1960.

The Court clarified that while the amount is to be released to the nominee, the nominee is only a trustee to collect the funds and not the beneficial owner. It noted that release of the amount to the nominee would not bar any objector or any holder of probate, letters of administration or a succession certificate from claiming their share before a competent court.

The Central Administrative Tribunal, Kolkata had directed the authorities to release the amounts lying in the General Provident Fund account of a deceased government employee to his brother, Paresh Chandra Mondal, who was the nominee.

The Tribunal had held that Rule 33(ii) of the General Provident Fund Rules entitled him, as the sole valid nominee, to receive the GPF amount of his deceased brother. The Calcutta High Court dismissed the writ petition filed by the Union of India against the order, agreeing with the Tribunal's interpretation. Thus, the present special leave petition was filed by the Union of India.

Additional Solicitor General Kanakamedala Ravindra Kumar submitted that objections had been raised by some nephews of the deceased against the respondent's claim. It was argued that even in the presence of a valid nomination under the 1960 Rules, the amount could not be released without a succession certificate in view of Section 4(1)(c)(i) of the Provident Funds Act, 1925, since the amount exceeded ₹5,000.

The ASG contended that the High Court and the Tribunal had wrongly given primacy to Rule 33(ii) over the statutory provisions of Sections 4(1)(b) and 4(1)(c)(i) of the 1925 Act, which had overriding effect where the balance exceeded ₹5,000. It was also argued that although the respondent had produced a succession certificate under the Indian Succession Act, 1925, the GPF amount was not mentioned in its schedule and had therefore been rightly not accepted by the authorities.

The Court declined to entertain the petition, noting that Rule 33(ii) of the 1960 Rules had been framed by the Central Government itself.

Sections 4(1)(c)(i) and 4(1)(c)(ii) of the Provident Funds Act, 1925 apply in situations where the provident fund amount exceeds ₹5,000.

Section 4(1)(c)(i) covers cases where there is a nominee. In such cases, the amount shall be paid to the nominee on production of a probate, letters of administration, or a succession certificate.

Section 4(1)(c)(ii) covers cases where there is no nominee. In such cases, the amount is payable to a person who produces a probate, letters of administration, or a succession certificate entitling that person to receive the amount.

The Court observed that if a succession certificate were to be insisted upon in all cases under Sections 4(1)(c)(i) and 4(1)(c)(ii), it would render nominations under the Act and the Rules meaningless. The Court said that accepting the Government's submission would defeat the purpose of having a nomination, which carried its own sanctity.

The Court further noted that the ₹5,000 threshold under Section 4 of the 1925 Act might have been reasonable when the legislation was enacted, but had lost relevance due to inflation over a century.

The Court said that Sections 4 and 5 of the Act and Rule 33(ii) of the 1960 Rules must be construed harmoniously, particularly since a literal reading of Section 4 would lead to inconsistent results.

“Consequently, keeping in view Rule 33 (ii) of the Rule 1960 and the fact that Section 5(1) of the Act begins with a non-obstante clause by virtue of which, any valid nominee in accordance with the rules of the Fund would be entitled to receive the sums in the provident fund account, means that the nominee has primacy to receive the amounts standing in the name of a depositor upon his death”, the Court observed.

The Court also observed that the Government should not involve itself in protracted litigation concerning the estate of a deceased employee, as insisting on probate or succession certificates even in cases of valid nomination would unnecessarily make the Government a party to private disputes.

“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 dispositor 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”, the Court observed.

In light of these reasons, the special leave petition was dismissed. The Court, however, clarified that if any competing interest were to challenge the High Court's order, the matter could be considered on merits.

Case no. – Petition for Special Leave to Appeal (C) Diary No. 71438 /2025

Case Title – Union of India & Anr. v. Paresh Chandra Mondal

Citation : 2026 LiveLaw (SC) 42

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