TATA IRON STEEL CO LTD Vs. SULTAN KHAN KABULI

JUDGEMENT

(1.) THESE two appeals arise out of an objection filed in two insolvency cases. The objectors are the appellants in both the appeals. After the adjudication of the applicants in the insolvency cases as insolvent, orders of interim attachment were passed in both these cases on the 5th of September 1959 and 15th July, 1958 respectively. Objection was raised against this attachment in respect of the retiring gratuity available to the insolvent. The court below has held that they were attachable and against that these two miscellaneous appeals have been directed.

(2.) THE point involved is whether the retiring gratuity for which provision has been made in the employer company's Retiring Gratuity Rules 1937 would vest in the insolvency court after the workman has been adjudged as insolvent. Strictly speaking there is no question of attachment. Under Section 28 of the Provincial Insolvency Act 1920 it has been provided in Clause (2) " on the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a receiver as hereinafter provided, and shall become divisible among the creditors, and thereafter, except as provided by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable under this Act shall during the pendency of the insolvency proceedings have any remedy against the property of the insolvent in respect of the debt, or commence any suit or other legal proceeding, except with the leave of the Court and on such terms as the Court may impose".

(3.) ON the basis of this rule it is contended on behalf of the appellant company that over the gratuity, until it is actually granted by the company and paid to the employee, the employer company reserves to itself absolute discretion and that the employee cannot have, as a matter of right, a claim to it. It is, however, conceded that once the gratuity is sanctioned and is paid out to an employee it becomes his property and that would vest within the meaning of Section 28(2) of the Provincial Insolvency Act. Before it is actually delivered, it remains in the hands of the employer to be given as bounty or gift. A gift becomes complete either by actual delivery to the donee or by its expression in a registered instrument. In the instant two cases, out of which these two appeals arise, admittedly the company had not paid the gratuities to the two insolvents, although the amounts had been determined and sanctioned for payment. The contention of learned counsel is that as long as actual payment is not made, that is to say, as long as the delivery of the amount to the employee is not made, it does not become the property of the employee and he does not exercise any power of disposal over such amount in spite of its determination or sanction for payment by the company. In support of this contention reliance is placed on the case Secretary of State v. Jamuria Das, ILR 11 Pat 584 corresponding to There, the Railway Company had asked one of the employees as to in which Bank his gratuity could be deposited to his credit. At that stage one of his creditors wanted to attach the gratuity in an insolvency proceeding. It was held that that gratuity had not become a recoverable debt or a completed gift and as such could not be the subject matter of attachment.