Gratuity recovery prevails over sick company stay provisions because retirement benefits are protected social security rights.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar recovery proceedings for gratuity under the Payment of Gratuity Act, 1972. Gratuity was treated as a statutory retirement benefit and deferred wage protected by the overriding effect of section 14 of the Gratuity Act. The analysis emphasises that gratuity forms part of social security and post-retirement sustenance, and cannot be subordinated to the rehabilitation process of a sick industrial company. The non obstante stay under section 22 was therefore considered inapplicable to defeat enforcement of gratuity, leaving the award recoverable through the certificate or recovery process with interest.

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Issues: Whether section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 bars recovery proceedings for gratuity payable under the Payment of Gratuity Act, 1972.

Analysis: Gratuity was treated as a statutory retirement benefit and a deferred payment earned during service, protected by the overriding effect of section 14 of the Payment of Gratuity Act, 1972. The Court held that gratuity is part of the social security framework flowing from the constitutional protection of life, dignity, and post-retirement sustenance, and that such a right cannot be subordinated to the rehabilitation process of a sick industrial company. Although section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 contains a non obstante clause and stays certain recovery actions, its application to gratuity recovery was found to be disproportionate to the object of rehabilitation and inconsistent with the mandatory character of gratuity payments.

Conclusion: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar recovery proceedings for gratuity, and the petitioner was entitled to enforcement of the gratuity award with interest through the certificate or recovery process.

Ratio Decidendi: A statutory stay on recovery in insolvency or sickness-rehabilitation legislation cannot be applied to defeat the enforcement of gratuity, which is a protected retirement benefit and part of the employee's constitutionally safeguarded social security rights.

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