Provident fund, gratuity cannot be attached, rules court

An employee’s provident fund and gratuity cannot be attached under any decree in settlement of any debt or liability, the Gujarat High Court has held in an order made available Saturday.

The court also said that it cannot restrain the employee, after he receives the provident fund and gratuity amount, from utlising it the way he wants.

The court also ruled that neither the official assignee appointed under the Presidency Towns Insolvency Act, 1909, nor any receiver appointed under the Provincial Insolvency Act, 1920, shall be entitled to, or have any claim on, any such amount.

A single judge bench of Justice K.A. Puj gave this ruling while allowing a petition of Vithalbhai Barot and setting aside an order of a civil court of Mehsana.

According to the case details, the Dudhsagar Dairy Employees Credit and Supply Cooperative Society Limited filed a suit before the court for recovery of Rs.15.3 lakh against Barot.

This was decreed by the court in 1996. Against this order, Barot filed an appeal before the Gujarat State Cooperative Tribunal, which dismissed it.

Thereafter, the Dudhsagar Society filed a case before a civil court of Mehsana for execution of the decree. During the pendency of the case, it also petitioned the court for directions to the Mehsana District Milk Purchasers Cooperative Society Limited, that the amount which Barot has to receive for superannuation, gratuity, provident fund and leave encashment, may be directly paid to the Dudhsagar Society for settling its dues.

Barot objected to this on various grounds but the civil court in 2004 issued directions and Rs.3.66 lakh were deducted from Barot’s entitlement and credited to the account of the Dudhsadar Society.

This order was challenged in high court.

After hearing both sides, the high court in an order made available Saturday ruled: ‘If the amount of provident fund as well as gratuity payable to the petitioner (Barot) is credited to the account of the respondent (Dudhsagar Society) pursuant to the garnishee order passed by the learned Civil Judge, the same is immediately required to be returned to the employer of the petitioner as the said amount, under no circumstances, can be attached by the respondent.’

‘Once the amount is returned and it is thereafter paid by the employer to the petitioner, the same can be absolutely belonging to the petitioner and the court, at this stage, cannot pass any order restraining him from utilising the said amount,’ the court further noted.