Smt. Bolla Malathi vs B. Suguna & Ors.
Background
A Defence Accounts Department employee, when he joined service in 2000, nominated his mother (B. Suguna) to receive his General Provident Fund (GPF). He married the appellant (Bolla Malathi) in 2003 and later nominated her for two other benefit schemes, but never updated the GPF nomination. He died in service in 2021. The wife, who had already received about Rs. 60 lakh in other benefits, sought release of the GPF but was refused because the mother remained the nominee on record. The Central Administrative Tribunal (CAT) split the GPF equally between wife and mother, but the Bombay High Court overturned this and awarded the entire GPF to the mother as the still-valid nominee.
Decision Breakdown
The Supreme Court held that under the applicable GPF Rules and the employee's own nomination form, a nomination automatically becomes invalid once the subscriber "acquires a family" (i.e., marries), even though the Rules don't prescribe a formal cancellation procedure, the condition in the nomination form itself renders it void on that contingency. Since the employee married in 2003 and never re-nominated for GPF, the mother's nomination stood invalidated at the time of his death, so Rule 33(i)(b) required the GPF to be distributed equally among all eligible family members rather than paid solely to the named nominee. The Court also reaffirmed settled law (citing Sarbati Devi and Shakti Yezdani) that a nomination only identifies who is authorised to receive the money, not who owns it: actual entitlement follows the law of succession. The High Court's ruling was set aside and the CAT's order restoring an equal 50-50 split between the wife and mother was upheld.
Lesson Learnt
A nomination for provident fund/insurance benefits is not the same as ownership. It merely identifies who can collect the money, and where scheme rules say a nomination lapses on a change in family status (like marriage), failing to formally update it does not defeat that automatic invalidation; the money must still go according to the rules of succession/eligible family members.