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

The Respondent-employees (formerly in management cadres) resigned from M/s. Aplab Ltd. at various times, notably around 2015.

The employees filed applications for gratuity before the Controlling Authority in 2022, after a delay of approximately six to seven years.

The employer (Aplab Ltd.) contested the claims on grounds of limitation, asserting that the employees failed to submit Form “I” within 30 days of retirement as per the Rules.

The employer further argued that "Special Allowance" paid to management staff should be excluded from "wages" under Section 2(s) of the Payment of Gratuity Act, whereas employees claimed gratuity based on 26 days’ wages per year (instead of 15) based on an alleged company policy.

The Controlling Authority and Appellate Authority both partially allowed the claims, leading to cross-petitions by both employer and employees.

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 the employee has applied for it.

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 applied, which includes dearness allowance but excludes bonus, commission, HRA, and "any other allowance".

Section 7(3A) was applied regarding the mandatory liability of the employer to pay simple interest on delayed payments unless specific written permission for delay is obtained from the Controlling Authority.

The Court reasoned that the employer cannot plead limitation because it failed to fulfill its independent statutory duty under Section 7(2) to determine gratuity and send notice to the employee and Controlling Authority.

Regarding interest, the Court found that since the employer did not obtain written permission for delayed payment under the proviso to Section 7(3A), liability for interest was attracted, though interest should stop running on any "admitted amount" from the date it was deposited with the Authority.

On the substantive issue of "Special Allowance," the Court noted that the Appellate Authority failed to determine the true nature of the allowance—i.e., whether it was a disguised dearness allowance (included in wages) or an excluded "other allowance".

Furthermore, the claim for 26 days’ wages was based on photocopied documents whose authenticity and evidentiary value were never properly adjudicated by the lower authorities.

The Court held that the claims were not barred by limitation due to the employer's procedural defaults.

It directed the Appellate Authority to determine: (i) whether "Special Allowance" is, in substance, dearness allowance under Section 2(s); and (ii) whether the employees are entitled to 26 days' wages based on proved company policy.

Interest is payable on the enhanced portion from the date it was originally due, but not on already deposited amounts from their date of deposit.

The Court also ordered consideration of specific salary adjustments/undertakings for individual respondents (e.g., Mr. Gupte) if supported by records.