Supreme Court Affirms Primacy of GPF Nomination, Bars Insistence on Succession Certificate

In a clear reaffirmation of long-settled principles governing provident fund disbursements, the Supreme Court of India, in Union of India v. Paresh Chandra Mondal 2026 (SC) 42, by judgment dated 7 January 2026, has held that where a valid nomination exists under the General Provident Fund (Central Services) Rules, 1960, the GPF amount of a deceased employee must be released directly to the nominee, without insisting on a succession certificate, probate or letters of administration.

The dispute arose after the Union of India challenged concurrent orders of the Central Administrative Tribunal, Kolkata, and the Calcutta High Court, which had directed the authorities to release the GPF amount of a deceased Central Government employee to his brother, who was the sole and validly recorded nominee. The Government resisted payment on the ground that, under Section 4(1)(c)(i) of the Provident Funds Act, 1925, provident fund amounts exceeding ₹5,000 could be paid only upon production of a succession certificate.

Rejecting this argument, the Supreme Court held that the Government’s position overlooked the clear statutory and rule-based scheme governing GPF. The Court noted that Rule 33(ii) of the GPF (Central Services) Rules, 1960, framed by the Central Government itself, accords unambiguous primacy to a valid nomination, irrespective of the amount lying in the fund. Once a nomination is in force, the authorities are bound to release the amount to the nominee.

The Court further placed reliance on Section 5 of the Provident Funds Act, 1925, which contains a non-obstante clause overriding other laws and vests exclusive authority in the nominee to receive the provident fund dues. Read together, the Act and the GPF Rules leave no scope for insisting on a succession certificate where a valid nomination exists. The Court emphasised that statutory provisions must be read harmoniously, and not in a manner that defeats the very purpose of providing a nomination mechanism.

Importantly, the Bench observed that insisting on succession certificates despite a valid nomination would render the nomination framework otiose and burdensome, particularly when viewed against contemporary realities. The Court noted that the ₹5,000 monetary threshold prescribed under the 1925 Act has become entirely anachronistic, having lost relevance due to inflation and the vastly increased scale of provident fund accumulations.

At the same time, the Court reiterated a crucial doctrinal distinction: a nominee is not the absolute owner of the amount, but merely a trustee authorised to receive it. Payment to the nominee does not extinguish or prejudice the rights of the legal heirs, who remain free to pursue their substantive claims in appropriate civil proceedings in accordance with succession law.

Dismissing the Government’s challenge, the Supreme Court also expressed disapproval of unnecessary litigation over provident fund dues of deceased employees, advising the authorities to adopt a humane and legally consistent approach in such matters. The ruling provides much-needed clarity and relief to nominees and reinforces that administrative authorities cannot impose procedural hurdles where the law itself mandates direct payment.