### Employer’s Failure to Notify Gratuity Amount Prevents Limitation Bar and Sustains Statutory Interest Liability

The respondent-employees (various managers and staff) resigned from M/s. Aplab Ltd. between 2015 and 2016.

One primary respondent, a Chief Regional Manager, resigned in 2015 without the full notice period.

The employees did not file "Form I" for gratuity immediately, nor did the employer determine the gratuity or issue notice under Section 7(2) of the Act.

In 2022, the employees filed applications before the Controlling Authority.

The employer contested the claims on grounds of limitation, the exclusion of "special allowance" from "wages," and disputed the calculation rate.

The Controlling Authority partially allowed the claims, directing payment with 10% interest.

Both parties appealed, and the Appellate Authority dismissed both appeals, leading to these cross-writ petitions.

1. Whether the applications for gratuity were barred by limitation under Rule 10 of the Maharashtra Rules due to the delay in filing.

2. Whether the employer is liable to pay interest under Section 7(3A) despite the employees' delay in approaching the authority.

3. Whether "special allowance" falls within the definition of "wages" under Section 2(s) of the Payment of Gratuity Act, 1972.

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

The court applied Section 2(s) of the Payment of Gratuity Act, 1972, which defines "wages" as all emoluments earned on duty/leave paid in cash, including dearness allowance but excluding bonus, HRA, and other allowances.

It applied Section 7(2), which mandates the employer to determine gratuity suo motu regardless of an employee application.

It further relied on Rule 10 of the Payment of Gratuity (Maharashtra) Rules, 1972, specifically the second proviso, which waives limitation if the employer fails to give statutory notice.

The court also applied Section 7(3A) regarding mandatory interest for delayed payments unless specific written permission is obtained from the Controlling Authority.

The court reasoned that the employer cannot raise a plea of limitation because it failed its mandatory duty under Section 7(2) to determine and notify the gratuity amount; thus, Rule 10’s second proviso specifically prevents the claim from being time-barred.

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

However, interest is not payable on the "admitted amount" from the date it was actually deposited with the Authority.

On the substantive issue of "wages," the court found that the Appellate Authority failed to conduct a factual inquiry into whether the "special allowance" was a disguised dearness allowance or an excluded allowance.

It also noted that the employees' claim for a 26-day calculation based on company policy was supported only by photocopied documents whose authenticity and evidentiary value were not properly adjudicated.

It held that: (i) the claims are not barred by limitation.

(ii) the employer is liable for interest on the unpaid/disputed balance, but not on the deposited admitted amount from the date of deposit.

(iii) the Appellate Authority must specifically determine if "special allowance" constitutes "wages" under Section 2(s) and if the 26-day calculation policy applies based on original records.

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