I was told, once, that this was the handle (locking) to a Kitbag typically used during WW I and II (and others I am sure). Most of these did not have an integral locking mechanism but rather a hole for a padlock. I have also received email with a similar explenation from one of the readers of these pages:
I got a hold of an old book that describes your "kit bag lock" as a Navigation case lock with a hand drawing. It goes on to say that the maps and charts were kept with him most of the time and the lock also functioned as a handle on the box. Unfortunately, there is no drawing of it being used as such, just the lock itself.