Employer's failure to issue statutory notice under Section 7(2) of the Gratuity Act negates limitation bars.

The Respondent employees (primarily management cadre) resigned from M/s. Aplab Ltd. at various times, with some instances dating back to 2015.

The employees moved the Controlling Authority under the Payment of Gratuity Act, 1972, in 2022—after a gap of approximately six years—claiming gratuity.

The employer contended that the claims were barred by limitation as no Form “I” was submitted within thirty days.

A dispute arose regarding whether "Special Allowance" should be included in "wages" for calculation and whether gratuity should be paid at 15 days or 26 days per year based on company policy.

The Controlling Authority and Appellate Authority largely ruled in favor of the employees, leading to cross-writ petitions by both the employer and employees.

The court applied Section 7(2) of the Payment of Gratuity Act, which mandates that an employer must determine and provide notice of gratuity as soon as it becomes payable, regardless of whether an application is made.

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).

Regarding wage calculation, the court applied Section 2(s), which includes dearness allowance in "wages" but excludes other specific allowances.

The court applied Section 7(3A) regarding the mandatory payment of interest on delayed gratuity unless specific written permission is obtained from the Controlling Authority.

The High Court observed that while employees delayed their claims, the employer failed its independent statutory obligation under Section 7(2) to determine gratuity and notify the authority; thus, the employer could not invoke limitation.

On the issue of interest, the Court held that since the employer did not obtain written permission for delayed payment under the proviso to Section 7(3A), liability for interest was attracted, but only until the date the employer actually deposited the admitted amount with the Authority.

Regarding the "Special Allowance" and the 26-day calculation claim, the Court found the lower authorities failed to determine the true nature of the allowance (i.e., whether it was disguised dearness allowance) or verify the authenticity of photocopied policy documents.

The Court noted that nomenclature in salary slips is not decisive; the purpose and calculation method of the allowance must be factually examined.

It held that the claims were not barred by limitation due to the employer’s default.

It ordered that interest is not payable on the admitted amounts from the date of their deposit, but remains payable on any unpaid balance.

The Court remanded the matter to the Appellate Authority to determine two specific factual points: (i) whether the "Special Allowance" is substantively "dearness allowance" under Section 2(s), and (ii) whether the company policy justifies a 26-day calculation.

The Authority was directed to decide these points within eight weeks.