Section 5 of The Provident Funds Act, 1925
Rights of nominees.
1[(1) Notwithstanding anything contained in any law for the time being in force or in any disposition, whether testamentary or otherwise, by a subscriber to, or depositor in, a Government or Railway Provident Fund of the sum standing to his credit in the Fund, or of any part thereof, where any nomination, duly made in accordance with the rules of the Fund, purports to confer upon any person the right to receive the whole or any part of such sum on the death of the subscriber or depositor occurring before the sum has become payable or before the sum, having become payable, has been paid, the said person shall, on the death as aforesaid of the subscriber or depositor, become entitled, to the exclusion of all other persons, to receive such sum or part thereof, as the case may be, unless--
- (a)such nomination is at any time varied by another nomination made in like manner or expressly cancelled by notice given in the manner and to the authority prescribed by those rules, or
- (b)such nomination at any time becomes invalid by reason of the happening of some contingency specified therein,-- and if the said person predeceases the subscriber or depositor, the nomination shall, so far as it relates to the right conferred upon the said person, become void and of no effect: Provided that where provision has been duly made in the nomination in accordance with the rules of the Fund, conferring upon some other person such right in the stead of the person deceased, such right shall, upon the decease as aforesaid of the said pers on, pass to such other person.]
- (2)Notwithstanding anything contained in 2[the Indian Succession Act, 1925 (39 of 1925)] or the Bombay Regulation VIII of 1827, any 3[person, who becomes entitled as aforesaid, may be granted] a certificate-under that Act, or that Regulation, as the case may be, entitling him to receive payment of such sum or part, and such certificate shall not be deemed to be invalidated or superseded by any grant to any other person of probate or letters of administration to the estate of the deceased. 4[(3) The provisions of this section as amended by sub-section (1) of section 2 of the Provident Funds (Amendment) Act, 1946 (11 of 1946), shall apply also to all such nominations made before the date of the commencement of that Act: Provided that the provisions of this section as so amended shall not operate to affect any case, in which before the said date any sum has been paid, or has under the rules of the Fu nd become payable in pursuance of any nomination duly made in accordance with those rules.]
Summary
- A nomination made under the fund rules gives the nominee the right to receive the fund upon the subscriber's death, overriding any other law or disposition, whether testamentary or otherwise (transfer of property through a will or other means).
- This right belongs to the nominee to the exclusion of all other persons.
- A nomination is valid unless it is varied by a new nomination, cancelled by notice, or becomes invalid due to a specified event.
- If the nominee predeceases (dies before) the subscriber, the nomination becomes void, unless the rules provide for a backup nominee to take their place.
- A nominee can obtain a certificate under the Indian Succession Act, 1925, or Bombay Regulation VIII of 1827, which is not invalidated by any probate granted to others.
- These rules apply to all nominations made before the 1946 Amendment Act, unless the money was already paid or became payable before that date.
Practical examples
FAQ
1. How can a nomination be changed or cancelled?
A nomination can be varied by another nomination made in the same manner, or cancelled by giving notice as prescribed by the fund rules.
2. What happens if the nominee dies before the subscriber?
If the nominee dies first, the nomination becomes void and has no effect, unless a backup nominee is specified in accordance with the rules.
3. Can another person's probate of the deceased's estate invalidate the nominee's certificate?
No, a certificate granted to the nominee is not invalidated or superseded by any probate or letters of administration granted to any other person.
Test yourself
1.Which amendment Act is mentioned in Section 5(3) as updating the nomination rules?
2.If a nominee dies before the subscriber, what happens to the nomination?
3.Which 1925 Act is mentioned in Section 5(2) regarding the granting of certificates?
4.Under what condition can a nomination become invalid under Section 5(1)(b)?
5.Does a nominee's right to receive the fund exclude other persons?
6.Which older regulation from the year 1827 is mentioned in Section 5(2)?