Employer's failure to issue statutory notice under Section 7(2) precludes limitation plea against gratuity claims.

The Petitioner-employees, including Gundu Daji Desai (Chief Regional Manager), resigned from the Respondent-company (M/s. Aplab Ltd.) in 2015.

The company failed to pay gratuity immediately, citing financial difficulties and the employees' failure to submit "Form I".

In 2022, approximately six years later, the employees filed applications before the Controlling Authority under the Payment of Gratuity Act, 1972.

The Controlling Authority (Labour Court, Thane) directed payment of gratuity including "Special Allowance" in the calculation and awarded 10% interest.

Both parties appealed; the Appellate Authority (Industrial Court, Mumbai) dismissed both appeals in October 2024.

The Company challenged the inclusion of allowances and the interest, while the Employees challenged the calculation rate (seeking 26 days instead of 15 days per year).

Whether the claims for gratuity were barred by limitation due to the delay in filing Form I and approaching the Authority.

Whether "Special Allowance" falls within the definition of "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 the employees' delay and the employer's partial deposit of the admitted amount.

Whether the employees are entitled to gratuity calculated at 26 days per year instead of 15 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 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.

The definition of "wages" under Section 2(s) was applied, which includes basic pay and dearness allowance (DA) but excludes other allowances.

Section 7(3A) regarding the mandatory payment of simple interest on delayed gratuity, unless written permission for delay is obtained from the Authority, was central to the interest determination.

The Court reasoned that the burden of initiating the gratuity process lies primarily on the employer under Section 7(2); since M/s. Aplab Ltd. failed to issue the mandatory notice, they could not invoke limitation to bar the employees' claims.

Regarding interest, the Court found that interest is compensatory; while the employer is liable for interest on delayed payments, such liability ceases for the "admitted amount" from the date it is deposited with the Authority.

On the definition of "wages," the Court noted that the nomenclature "Special Allowance" is not leaf-binding; the Authority must investigate if it is dearness allowance in disguise.

The Court found the existing record insufficient to determine if the "Special Allowance" was DA or if a company policy existed for a 26-day calculation, noting the Appellate Authority failed to verify the authenticity of photocopied restructuring documents.

The claims are not barred by limitation due to the employer's procedural default.

Interest is not payable on the deposited admitted amount from the date of deposit, but remains payable on any unpaid balance.

The Appellate Authority must conduct a fresh factual inquiry into whether the "Special Allowance" constitutes "wages" under Section 2(s) and whether the 26-day calculation rate applies based on company policy.

Parties were directed to appear before the Appellate Authority on March 23, 2026.