Death Gratuity Of Deceased Employee Can Be Attached In Execution Proceedings Against Legal Heirs As It Forms Part Of Estate: Delhi HC

Delhi High Court: A single judge bench of Justice Ravinder Dudeja held that the gratuity that remains unreleased at the time of an employee's death, becomes part of his estate. The court confirmed that this can also be attached against decrees passed against their legal heirs. The court clarified that Section 60(g) of the Civil Procedure Code, 1908, only protects gratuity if it is received during the employee's lifetime, and not when it passes on as inheritance. Background Canara Bank filed a suit for recovery of a loan that was taken by a late Pranab Kumar against four defendants. The petitioner in this case (Bureau of Outreach and Communications) was Pranab Kumar's employer, who was holding on to his death gratuity. In 2007, the trial court passed an ex-parte decree for Rs 89,689 with interest and Canara Bank then filed an execution petition to recover the amount. During these proceedings, the bank sought to attach the terminal benefits of late Pranab Kumar including his death gratuity of Rs. 2.3 Lakhs, which was with his employer. In 2013, the executing court ruled that terminal benefits cannot be attached in execution of civil decrees. Relying on Section 60(g) of the CPC, and Radhey Shyam Gupta vs Punjab National Bank (Civil Appeal Nos 6440-41 of 2008), the court explained that stipend, gratuity and provident fund deposits cannot be attached. However, in another order passed in 2015, the same executing court reversed its earlier position. Relying on the Delhi High Court judgement in Ramwati vs Krishan Gopal, 2025 DHC 4048, the court held that the decree holder bank was entitled to the attachment of even terminal benefits of the deceased. Thus, the court then passed the final order in 2019, directing the release of all gratuity to Canara Bank. Aggrieved, the Bureau (Pranab Kumar's employer) filed an appeal against this order. Arguments The Bureau argued that the 2015 order violated the principles of res judicata. He argued that the same executing court had earlier decided in 2013 that gratuity and terminal benefits cannot be released to decree holders. He argued that the death gratuity of Pranab Kumar was immune from attachment as per Section 60(g), CPC. As there was no claimant to this gratuity, the bureau argued that it should be forfeited to the government as per Rule 52 of Central Civil Services (Pension) Rules. On the other hand, Canara bank argued that as per Section 60(g), CPC, gratuity is protected from attachment only when it is received by the employee. In this case, however, no gratuity was received by Pranab Kumar during his lifetime. Thus, they argued that it is not protected from attachment in this case. Relying on Ramwati vs Krishan Gopal, 2025 DHC 4048, the bank argued that his legal heirs would be entitled to receive gratuity only as a part of his estate. Court's Reasoning Firstly, the court discussed the scope of protection under Section 60(g), CPC. The court noted that while gratuity is generally protected against attachment, this applies only if the gratuity was received by the concerned employee. However, in this case, the court noted that the employee had not received the gratuity himself. Thus, the court held, that the present matter was distinguishable from Radhey Shyam Gupta, where the employee had actually received the gratuity himself. Secondly, the court noted that when an employee dies before receiving any gratuity, it becomes payable to family members or nominees of the deceased. Further, relying on Ramwati vs Krishan Gopal, the court explained that when an employee dies, the gratuity changes its character and becomes a debt payable to the legal heirs. Since Section 60(g) only refers to gratuity “allowed to pensioners”, the court held that it only protects the gratuity payable to the employee. Thus, the court ruled, that once an employee dies, the gratuity is not payable to the employee anymore, but becomes payable to their legal heirs. The court ruled that this makes the gratuity attachable. Thirdly, the court relied on Murugaiah Velar vs Velammal (C.R.P.(NPD) (MD) No.470 of 2006). In this case, the Madras High Court had held that legal representatives claiming gratuity can only inherit it as a part of the estate of the deceased. Thus, the court held, that the exemption under Section 60(g) only applies only to the deceased employee and cannot be claimed by his legal representatives. Fourthly, the court discussed the argument on Rule 52 of CCS Pension Rules. The court explained that as per the rule, death gratuity lapses to the government if the deceased employee leaves no family and makes no nomination. However, the court noted that the daughter of the deceased employee is alive in this case. Thus, the court held that the gratuity was payable to her and Rule 52 would not apply. Consequently, the court dismissed the petition. The court explained that if the gratuity were...

Death Gratuity Of Deceased Employee Can Be Attached In Execution Proceedings Against Legal Heirs As It Forms Part Of Estate: Delhi HC

Pranav Kumar

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