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

The Petitioner-employees resigned from the Respondent-company (M/s. Aplab Ltd.) after various years of service.

Gundu Daji Desai resigned in 2015 while serving as Chief Regional Manager.

The company failed to pay gratuity immediately, citing financial difficulties and the employees' failure to submit Form “I”.

The employees approached the Controlling Authority in 2022—approximately seven years after resignation.

The Controlling Authority and Appellate Authority partially allowed the claims, directing the employer to pay gratuity along with 10% interest.

Both the employer (challenging the inclusion of "special allowance" and interest) and the employees (seeking calculation based on 26 days instead of 15 days per year) filed Writ Petitions before the Bombay High Court.

Whether the employees' claims were barred by limitation under Rule 10 of the Payment of Gratuity (Maharashtra) Rules, 1972, due to the delay in filing Form “I”.

Whether the "Special Allowance" paid to the employees falls within the definition of "wages" under Section 2(s) of the Payment of Gratuity Act, 1972.

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

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

The court applied Section 2(s) of the Payment of Gratuity Act, 1972, which defines "wages" to include dearness allowance but exclude other allowances like bonus or HRA.

It relied on Section 7(2), which mandates the employer to determine gratuity and give notice regardless of whether an application is filed.

The court further applied 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 provide the statutory notice under Section 7(2).

Interest liability was governed by Section 7(3A), which mandates interest for delayed payments unless the employer obtains written permission from the Controlling Authority.

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

Regarding interest, the Court found the employer liable under Section 7(3A) because it had not obtained the required written permission for the delay, though it clarified that interest should not run on amounts already deposited with the Authority from the date of such deposit.

On the substantive issue of "Special Allowance" and the "26-day calculation rule," the Court found that the lower authorities failed to determine the true nature of the allowance (i.e., whether it was dearness allowance in disguise) and failed to verify the authenticity of photocopied documents regarding company policy.

The Court noted that nomenclature is not matches; the functional nature of the payment must be examined.

The Court held that (i) the claims were not barred by limitation;

(ii) interest is payable on the unpaid/delayed balance but stops on the deposited amount from the date of deposit;

and (iii) the Appellate Authority must specifically adjudicate, within eight weeks, whether the "Special Allowance" constitutes "wages" under Section 2(s) and whether the 26-day calculation rule applies based on original records.

The Court also directed the Authority to consider a specific claim for adjustment of dues against respondent Mr. Gupte.