Report No. 137

2.5.7. Withholding disbursement by unwarranted insistence on succession certificate.-

Para 72(1) of the Scheme of 1952 provides that when the amount standing to the credit of a member, or the balance thereof after deduction under para 69, becomes payable, it shall be the duty of the Commissioner to make prompt payment as provided in this Scheme. In case there is no nominee in accordance with this Scheme or there is no person entitled to receive such amount under para 70, the Commissioner may, if the amount to the credit of the Fund does not exceed Rs. 10,000 and if satisfied after inquiry about the title of the claimant, pay such amount to the claimant. A plain reading of the provisions of para 72(1) shows that the Commissioner is duty bound to-

(i) pay the amount to the nominee, if a valid nomination subsists; or

(ii) to pay the amount to the members of the family in accordance with clause (ii) of para 70, if there is no valid nomination or if the nomination relates only to a part of the amount.

The Commissioner cannot ask either the nominee or the members of the family, enumerated in clause (ii) of para 70, to produce Succession Certificate. A Succession Certificate may be called for only when there is no nominee and no person entitled to receive the amount under clause (ii) of para 70. In other words the Commissioner may call for Succession Certificate only in cases falling under clause (iii) of Para 70 and that too when there is a doubt about the title of the claimant or where rival claimants come forward. Paras 115, 116 and 117 or Chapter III of Manual of Accounting Procedure (Volume 1) (Part II), Employees Provident Fund Organisation, read as under:-

"115. If there is no nominee in accordance with the Employees' Provident Funds Scheme, 1952, or there is no person entitled to receive such amount under sub-para (ii) of para 70 of the Scheme, the claim is required to be settled under para 70(iii) of the Scheme. In such cases the Regional Commissioner, if the amount to the credit of the Fund does not exceed Rs. 10,000 and if he is satisfied after enquiry about the title of the claimant, may pay such amount to the claimant under para 70(iii) of the Scheme. For this purpose the Regional Commissioner may make reference to the appropriate state (normally revenue) authorities.

116. Where even after reference to the civil authorities as indicated in the above paras, there is a doubt about the title of the claimant or where rival claimants come forward, it would be necessary to call for a Succession Certificate.

117. Again, in cases where there is no nominee or there is no person entitled to receive the Employees' Provident Fund dues under sub-para (ii) of para 70 of the Scheme and the amount of the claim exceeds Rs. 10,000, proof of heirship has to be called for. The claimant in such cases may be advised to produce a Succession Certificate from an appropriate Court of Law. Payment in accordance with para 70(iii) of the Scheme, to the persons in whose favour Succession Certificate has been granted would be valid discharge.

In cases where the claimants find it difficult to produce Succession Certificate and where the Regional Commissioner is satisfied that the difficulty is genuine, he may refer the matter with complete details to the Central office. In deserving cases of genuine distress, the Central office, in consultation with the Central Government, where necessary, may authorise the Regional Commissioner to make payments to the claimants on execution of an indemnity bond with adequate number of solvent sureties."

Notwithstanding the aforesaid clear provisions on the subject, it has been observed that the authorities call for Succession Certificate on the slightest pretext even when the case falls under clause (i) or clause (ii) of para 70 of the Scheme. The case of Shri K. Gandhi of National Project Construction Corporation may be mentioned by way of illustration. Shri Gandhi who dies on October 17, 1986, had made the nomination in favour of his two sisters and one brother. The two sisters were to get, in equal shares, 50 per cent. of the amount, while the remaining 50 per cent was to go to his brother.

One of the nominees, the brother, had predeceased the employee. On the claim papers having been submitted by the two sisters, the authorities in July 1988 decided to call upon the claimants to produce the Succession Certificate in respect of the whole of the amount. In this case 50 per cent of the amount could have been paid to the two sisters under clause (i) of para 70. The remaining 50 per cent. was to be disbursed in accordance with clause (ii) of para 70. However, instead of taking such a course, the authorities called upon the claimants to produce Succession Certificate in respect of whole of the amount. The case is still pending.

At the cost of repetition, it may be stated that the Office of the Regional Provident Fund Commissioner is insisting on the production of Succession Certificate on the slightest pretext even in cases falling under clauses (i) and (ii) of para 70 of the Scheme. To reinforce the point, it is apposite to advert to Imambhai v. Regional Provident Fund Commissioner, 1982 (1) GLR 581, wherein the claim of the nominee was repelled by a one word order "rejected" even though no succession certificate could have been insisted upon. Says the High Court:-

"4. An examination of the record also reveals that the applicant as required to obtain a succession certificate in support of his claim though ultimately his claim was rejected. The document placed on record goes to show that the applicant had to incur an expenditure of more than a thousand rupees. Court fee stamp of Rs. 900 had to be procured for obtaining the succession certificate. Some amount must have been expended in payment of legal fees for obtaining the succession certificate.

Not less than a thousand rupees must have been spent in this connection. It was not realized that having regard to the fact that the deceased workman had made a nomination under Paragraph 23(1) of the Employees Deposit-Linked Insurance Scheme, 1976 (quoted hereinbelow) which categorically provides certificate for payment of the amount due to the nominee, succession certificate was not necessary. Paragraph 23(1) reads as under:

"The nominations made by an employee under the Employees Provident Funds Scheme, 1952 shall be treated as nominations under this Scheme and the assurance amount shall become payable to such nominee or nominees."

It is hoped that the office of the Regional Provident Fund Commissioner will guide the applicants in such matters so that they are saved from incurring unnecessary expenditure. It is also hoped that the Regional Provident Fund Commissioner will make an appropriate inquiry, obtain legal opinion, if necessary, and pass an appropriate order so that a rightful claimant is not driven to a Court of law in order to obtain his dues under the relevant provision of the benevolent Act and the Scheme which have been specially designed with an eye on amelioration of the workers."

It should therefore be provided in the Scheme itself that succession certificate should not be insisted upon in cases covered by paras 70(i) and 70(ii). Only in cases covered by para 70(iii) and that too only provided there is a bona fide doubt about the title of the claimant or there is a rival claimant it may be demanded.