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

The Petitioner company (employer) challenged orders passed by the Controlling Authority (Nov 9, 2023) and the Appellate Authority (Oct 19, 2024) under the Payment of Gratuity Act, 1972

The employee (Respondent) resigned as Chief Regional Manager in 2015 but filed for gratuity only in 2022

The employer contended the claim was barred by limitation as the employee failed to submit Form “I” within 30 days of resignation

a dispute arose regarding the calculation of "wages": the employer argued gratuity should be based only on basic pay and dearness allowance (DA)

the employee claimed "Special Allowance" should be included as a disguised form of DA and that gratuity should be calculated at 26 days per year per company policy instead of the statutory 15 days

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

It relied on Section 7(2), which mandates employers to determine and notify gratuity amounts regardless of whether an application is filed

It further applied Rule 10 of the Payment of Gratuity (Maharashtra) Rules, 1972, specifically the second proviso, which stipulates that no limitation applies if the employer fails to provide the statutory notice under Section 7(2)

Regarding interest, Section 7(3A) and its proviso were applied, establishing that interest is mandatory unless the employer obtains written permission from the Controlling Authority for delayed payment due to the employee's fault

The Court reasoned that the employer cannot plead limitation because it failed its own statutory duty under Section 7(2) to determine and notify the gratuity amount upon the employee's resignation; thus, Rule 10's exception to limitation applies

Regarding the "Special Allowance," the Court found that the Appellate Authority failed to conduct a factual inquiry into whether this component was actually DA in disguise or a distinct excluded allowance

The Court noted that the "26-day calculation" claim was based on photocopied restructuring documents whose authenticity and evidentiary value were never formally verified by the lower authorities

On the issue of interest, the Court held that while interest is statutory under Section 7(3A), the employer is not liable for interest on the "admitted amount" from the date it was deposited with the Authority, as the employee was no longer deprived of those funds

the claim is not barred by limitation due to the employer's procedural default

interest is payable on the unpaid balance but ceases on the admitted portion from the date of deposit

the Appellate Authority must specifically determine, based on original records, whether the "Special Allowance" constitutes "wages" and whether company policy entitles the employees to a 26-day calculation rate

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