1992 (12) TMI 228 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the "nominee" has absolute title to the Provident Fund Amount by virtue of nomination under the Employees' Provident Funds Scheme, 1952.
2. Whether the Provident Fund Amount forms part of the estate of the deceased and is available for distribution among heirs notwithstanding the nomination.

Detailed Analysis:

Issue 1: Absolute Title of Nominee
The court addressed whether the nominee under the Employees' Provident Funds Scheme, 1952, has absolute title to the Provident Fund Amount. The respondent contended that the nomination confers absolute entitlement, thereby excluding the amount from the deceased's estate. However, the court found that the nomination does not confer absolute or beneficial title. The nominee is merely authorized to receive the amount for the benefit of the deceased's heirs. This interpretation aligns with the legislative history and the Supreme Court's interpretation of the term "vest" in similar contexts, notably in the case of The Fruit and Vegetable Merchants' Union v. The Delhi Improvement Trust. The court concluded that the nominee's right is limited to the collection and distribution of the amount to the rightful heirs.

Issue 2: Inclusion in the Estate
The court examined whether the Provident Fund Amount forms part of the deceased's estate. The petitioner argued that the nomination of the deceased's brother was invalid as it did not comply with the scheme's requirement that nominations be made in favor of family members, defined as including the wife, children, and dependent parents. The court agreed, referencing para 61(3) of the Employees' Provident Funds Scheme, 1952, which invalidates nominations made in favor of non-family members. Consequently, the Provident Fund Amount is part of the deceased's estate and should be distributed among the heirs.

Legislative and Judicial Precedents
The court reviewed several precedents and legislative amendments to support its findings. The amendment of Section 5 of the Provident Funds Act, 1925, which removed the term "absolutely," was significant in establishing that nominees do not acquire absolute title. The court also referenced the Supreme Court's decision in Smt. Sarbati Devi v. Smt. Usha Devi, which held that a nomination under the Insurance Act does not confer beneficial interest, drawing an analogy to the Provident Funds Act.

Conflicting Judgments
The court acknowledged conflicting judgments from various High Courts. The Andhra Pradesh High Court in Shalikh Dawood v. Mahmooda Begum held that the nominee has no title to the Provident Fund Amount, while the Calcutta High Court in Smt. Usha Mujumdar v. Smt. Smriti Basu opined that the nominee has absolute title. The court preferred the Andhra Pradesh view, emphasizing equity, justice, and legislative intent.

Conclusion and Orders
The court concluded that the nominee has no title to the Provident Fund Amount, which forms part of the deceased's estate. The petitioner, being the minor son and sole heir, is entitled to the amount. The court directed the Prothonotary and Senior Master to expedite the issuance of the Succession Certificate and ensure the minor's interests are safeguarded. The court also instructed inquiries into other amounts due to the deceased from the Central Bank of India.

No Order as to Costs
Given the complexity of the legal points involved, the court made no order as to costs.

Expedited Actions
The Prothonotary and Senior Master were directed to act on an ordinary copy of the order and issue the Succession Certificate by January 31, 1993, if possible, and to expedite the issuance of a certified copy of the order.

This comprehensive analysis preserves the legal terminology and significant phrases from the original text, ensuring a thorough understanding of the judgment.