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

The Respondent-Employer (M/s. Aplab Ltd.) is a manufacturing company.

The Petitioners-Employees (including Gundu Daji Desai, a former Chief Regional Manager) resigned from service.

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

The employees filed applications before the Controlling Authority under the Payment of Gratuity Act, 1972, in 2022—approximately six to seven years after their resignations.

The Employer contended that the claims were barred by limitation as no Form “I” was submitted within 30 days of leaving service.

Furthermore, a dispute existed as to whether "Special Allowance" should be included in the definition of "wages" for calculating gratuity and whether interest was payable since the employer had deposited the admitted amount during the proceedings.

The Controlling Authority and Appellate Authority partially allowed the claims.

Both parties challenged these orders via multiple Writ Petitions.

1. Whether the employees' claims for gratuity were barred by limitation under Rule 7 and 10 of the Maharashtra Rules due to the delay in filing.

2. Whether the "Special Allowance" paid to management cadre employees constitutes "wages" or "dearness allowance" under Section 2(s) of the Payment of Gratuity Act, 1972.

3. Whether the employer is liable to pay interest under Section 7(3A) despite depositing the admitted amount during litigation.

4. Whether the employees are entitled to gratuity calculated at 26 days per year (based on company policy) instead of the statutory 15 days.

The court applied Section 7(2) of the Payment of Gratuity Act, which mandates that an employer must determine and notify the gratuity amount 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 issue the statutory notice under Section 7(2).

The definition of “wages” under Section 2(s) was central, which includes basic pay and dearness allowance but excludes various other allowances.

Additionally, Section 7(3A) was applied regarding the mandatory payment of simple interest for delayed gratuity unless the employer obtains written permission from the Controlling Authority for the delay.

The court reasoned 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.

Regarding interest, the court found that since the employer did not obtain written permission from the Controlling Authority for the delay (as required by the proviso to Section 7(3A)), it was liable for interest.

However, the court balanced this by holding that interest should not run on the "admitted amount" after the date it was deposited with the Authority.

On the substantive issue of "Special Allowance" and the claim for 26 days' wages, the court noted that the Appellate Authority failed to determine the true nature of the allowance—specifically whether it was "dearness allowance" in disguise—and failed to verify the authenticity of photocopied documents regarding company policy.

The court held that such factual determinations require an evaluation of original records and evidence, which cannot be conducted for the first time in writ jurisdiction.

The court held that: (i) the claims are not barred by limitation due to the employer's failure to comply with Section 7(2).

(ii) interest is payable on the unpaid portion but stops for the admitted portion upon its deposit.

(iii) the Appellate Authority must specifically determine if "Special Allowance" falls under Section 2(s) and if company policy warrants a 26-day calculation based on original deponents and records.

The parties were directed to appear before the Appellate Authority on March 23, 2026, for a decision within eight weeks.