Yes. For compassionate appointment a undertaking/affidavit is given by such employee during applying and before joining too. Not only that, in this case, her mother in law can complaint to the department and the DM as well if she is acting smart.
Usually, the compassionate appointment is done that way. Chances are that the department wasn't made aware by the 'Bahu' about her dependent 'Saas'. 'Bahu' may face problem, if complaint is raised by her dependent 'Saas'.