### Employer’s failure to give statutory notice under Section 7(2) negates limitation for filing gratuity applications.

The Respondent-employees, formerly working in various capacities (including management cadre) at M/s. Aplab Ltd., resigned from their services.

Upon resignation, disputes arose regarding the non-payment of gratuity.

The employees approached the Controlling Authority in 2022—approximately six to seven years after their resignations—claiming gratuity calculated on 'basic pay' plus 'special allowance' at a rate of 26 days per year for those with over 15 years of service.

The employer contended the claims were barred by limitation, as no Form “I” was submitted within 30 days.

The employer further argued that "special allowance" is excluded from "wages" under Section 2(s) of the Payment of Gratuity Act and that gratuity should be capped at 15 days per year.

The Controlling Authority and Appellate Authority both partially allowed the employees' claims but restricted the rate to 15 days.

Both parties filed Writ Petitions challenging these orders.

Whether the employees’ applications were barred by limitation under Rule 10 of the Maharashtra Rules due to the delay in filing.

Whether the employer is liable to pay interest under Section 7(3A) despite the employees' delay in approaching the Authority.

Whether "special allowance" constitutes "dearness allowance" or "wages" under Section 2(s) of the Act for the purpose of gratuity calculation.

Whether the employees are entitled to gratuity at the rate of 26 days per year based on company policy.

The Court applied Section 7 of the Payment of Gratuity Act, 1972, which mandates that an employer must determine and provide notice of gratuity "as soon as it becomes payable," regardless of whether an application is made.

It relied on the second proviso to Rule 10 of the Payment of Gratuity (Maharashtra) Rules, 1972, which stipulates that no limitation applies if the employer fails to issue the statutory notice under Section 7(2).

Regarding "wages," the Court applied Section 2(s), which includes dearness allowance but excludes other specific allowances.

Section 7(3A) was applied regarding the mandatory payment of interest on delayed gratuity unless specific written permission is obtained from the Controlling Authority.

The Court reasoned that the employer cannot invoke limitation because it failed its primary statutory duty under Section 7(2) to determine and notify the gratuity amount upon the employees' resignation.

Regarding interest, the Court held that since the employer did not obtain written permission for the delay as required by the proviso to Section 7(3A), liability for interest is mandatory; however, interest stops accruing on the "admitted amount" once it is deposited with the Authority.

On the substantive issue of "wages" and the "26-day rule," the Court found the lower authorities failed to conduct a factual inquiry into whether the "special allowance" was actually "dearness allowance" in disguise or if the company policy for 26 days was proved by valid evidence, noting that only photocopies were produced.

It held that the claims were not barred by limitation.

The Court ordered the Appellate Authority to determine, within eight weeks: (i) if "special allowance" is substantively "dearness allowance" under Section 2(s), and (ii) if the 26-day calculation rate is supported by authentic evidence.

The Court clarified that interest is payable on any enhanced/unpaid amount from the date it became due, but not on amounts already deposited from the date of deposit.

Finally, the Authority was directed to consider specific salary adjustments/undertakings (e.g., in Mr. Gupte’s case).