Q:My husband died while he was in service. He didn?t make any will. My children and I are his legal heirs. We have submitted an application to his employer claiming the gratuity amount payable to him. However, the employer has informed us that my husband had made a nomination in favour of my mother-in-law and only she is entitled to receive the gratuity. It is necessary to mention that we always lived separately from my mother-in-law and now she is insisting that she is entitled to the entire amount. Can we claim the right to receive the gratuity?

Name withheld

A:Under Section 6 of the Payment of Gratuity Act 1972, if an employee has a family at the time of making his nomination, he is bound to make his nomination in favour of one or more of his family members. For the purpose of the said Act, the ?family? of a male employee shall be deemed to consist of, inter alia, himself, his wife, his children, his dependent parents, the dependent parents of his wife and the widow and children of his predeceased son. Thus if your mother-in-law can establish that she was a ?dependent parent? of your deceased husband, the nomination in her favour would be a valid nomination. If such nomination is valid, then the employer is bound to hand over the gratuity amount to her as the nominee.

Although the nominee is entitled to receive the amount from the employer, it is pertinent to point out that this does not mean that the nominee has any exclusive right over the amount. There is a subtle, but significant, difference between the rights of a nominee and that of an heir. Mere nomination does not have the effect of conferring on the nominee any beneficial interest to the amount that is otherwise payable to the legal heirs of the deceased. The courts have held that a nominee only holds the money as a ?trustee? on behalf of the heirs of the deceased. After all, the intention was to nominate a person to collect the dues on behalf of the employee and not to make a grant to that person.

Nomination does not defeat the rights of the other heirs of the employee under the applicable provisions of ordinary succession law. A nomination made in favour of another does not create a title nor confer any permanent right over others in the property of the deceased. It is meant to provide for an interregnum between the death and the full administration of the estate. Thus your mother-in-law (who incidentally is also an heir of the deceased) would be obliged to share the said gratuity amounts with the other heirs of the deceased in accordance with the laws of succession applicable to your late husband.