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

The Respondent-employer (M/s. Aplab Ltd.) challenged orders passed by the Controlling Authority (9.11.2023) and the Appellate Authority (19.10.2024) under the Payment of Gratuity Act, 1972, which directed payment of gratuity and interest to several retired employees.

The employees, who were in management cadres, resigned between 2015 and 2016 but filed applications for gratuity only in 2022.

The employer contended the claims were barred by limitation and that "special allowance" should be excluded from "wages" for calculation.

Conversely, the employees filed cross-petitions seeking gratuity based on 26 days per year (as per alleged company policy) instead of the statutory 15 days.

Whether the employees' applications were barred by limitation under Rule 10 of the Maharashtra Rules due to the delay in filing Form “I”.

Whether "special allowance" constitutes "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 a dispute and subsequent deposit of the admitted amount.

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

The court applied Section 7(2) of the Payment of Gratuity Act, which mandates the employer to determine and provide notice of gratuity regardless of whether an application is filed.

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 provide the statutory notice under Section 7(2).

Regarding "wages," the court interpreted Section 2(s), which includes dearness allowance but excludes other specific allowances, necessitating a "nature of payment" test over mere nomenclature.

Section 7(3A) was applied to enforce interest on delayed payments unless written permission for delay is obtained from the Authority.

The Court observed that since the employer failed to issue the mandatory notice under Section 7(2), it could not invoke limitation to defeat the employees' claims.

Regarding interest, the Court held that while the employer is liable for interest under Section 7(3A) for the period of delay, such liability ceases for the "admitted amount" once it is deposited with the Controlling Authority.

On the substantive calculation of gratuity, the Court found that the Appellate Authority failed to determine the true nature of the "special allowance"—specifically whether it was a disguised dearness allowance—and failed to verify the authenticity of photocopied documents suggesting a 26-day calculation policy.

The Court emphasized that nomenclature in salary slips is not conclusive; a factual inquiry into the purpose and uniformity of the allowance is required.

The Court upheld the finding that the claims were not barred by limitation but set aside the findings on the quantum of gratuity.

The Appellate Authority was directed to determine: (i) if the "special allowance" is dearness allowance under Section 2(s), and (ii) if company policy entitles management staff to 26 days’ wages per year.

The Court ordered that interest shall not be payable on deposited amounts from the date of deposit, and any adjustment for employee dues (e.g., Mr. Gupte’s undertaking) must be considered.

The remanded issues must be decided within eight weeks.