Employer's failure to issue statutory notice under Section 7(2) negates limitation for filing gratuity applications.

The Respondent-Company (M/s. Aplab Ltd.) is a manufacturer of UPS systems.

Various employees (the Petitioners/Respondents in connected matters) resigned or retired from service.

Gundu Daji Desai resigned in 2015 as Chief Regional Manager with a last drawn basic salary of Rs. 36,500.

The employees approached the Controlling Authority under the Payment of Gratuity Act, 1972 ("the Act") in 2022—approximately six to seven years after leaving service—claiming gratuity calculated on both basic pay and "special allowance," and at the rate of 26 days per year per company policy for long-term service.

The employer contested the claims on grounds of limitation (delay), the exclusion of "special allowance" from the definition of "wages," and the rate of calculation.

The Controlling Authority and Appellate Authority partly allowed the claims, directing payment based on 15 days' wages but including the special allowance and interest.

Both the employer and employees filed cross-writ petitions.

Whether the claims for gratuity were barred by limitation under Rule 10 of the Maharashtra Rules due to the delay in filing Form "I".

Whether "special allowance" falls within the definition of "wages" under Section 2(s) of the Act.

Whether the employees are entitled to interest under Section 7(3A) despite the delay in approaching the Authority and the employer’s deposit of the admitted amount.

Whether the gratuity should be calculated on the basis of 15 days or 26 days per year of service as per alleged company policy.

The court applied Section 2(s) of the Payment of Gratuity Act, 1972, which defines "wages" to include all emoluments and dearness allowance but excludes bonus, commission, HRA, and "any other allowance".

It relied on Section 7(2), which mandates the employer to determine and notify gratuity "as soon as it becomes payable" regardless of an application by the employee.

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

Under Section 7(3A), simple interest is mandatory for delayed payment unless the employer obtains written permission from the Controlling Authority for the delay.

The Court held that the employer cannot raise the plea of limitation because it failed its own statutory duty under Section 7(2) to determine and notify the gratuity amount upon the employees' resignation; thus, the second proviso to Rule 10 protected the employees' claims.

On the issue of interest, the Court reasoned that while interest is a statutory right for delayed payment, the employer is not liable for interest on the "admitted amount" from the date it was deposited with the Authority.

Regarding the "special allowance" and the "26-day rule," the Court found that the lower authorities failed to properly analyze whether the allowance was "dearness allowance" in disguise or an excluded allowance under Section 2(s).

Furthermore, the employees relied on photocopied "restructuring documents" to claim the 26-day calculation rate, the authenticity and evidentiary value of which were never verified by the lower courts.

The claims are not barred by limitation.

The employer is liable for interest on the unpaid/disputed portion but not on the deposited admitted amount from the date of deposit.

The Appellate Authority must determine, based on original records, whether the "special allowance" constitutes "wages" and whether company policy entitles officers to 26 days of gratuity.

The Authority was directed to decide the remanded points within eight weeks.