Employers cannot bypass the statutory gratuity appeal by invoking writ jurisdiction after limitation expires.

The Respondent was employed by the Petitioner-Trust, which manages the Breach Candy Club, from 1 November 2000 until his termination on 2 July 2023, completing approximately 23 years of service.

The Trust alleged that, during digitisation of membership records, the Respondent had shredded original records and caused substantial financial loss. He was suspended and subsequently terminated after disciplinary allegations were raised.

The Respondent’s civil suit challenging his suspension and termination was partly decreed, with the City Civil Court holding the termination illegal and awarding him Rs.15,38,874 towards salary arrears; the parties’ appeals were pending.

Following the Respondent’s unsuccessful efforts to obtain gratuity from the Trust, he filed Application (PGA) No. 127 of 2025 before the Controlling Authority under the Payment of Gratuity Act, 1972.

The Controlling Authority proceeded ex parte and, by order dated 19 November 2025, directed the Petitioners to pay Rs.11,67,785 as gratuity with simple interest at 10% per annum from 2 July 2023.

The Petitioners contended that they had not been duly served and that the Respondent’s gratuity had been forfeited or could be adjusted against alleged losses under Section 4(6) of the Act. They did not pursue the statutory appeal under Section 7(7) and instead filed the present petition under Articles 226 and 227 of the Constitution.

Whether the writ petition was maintainable when the Petitioners had not availed the statutory appellate remedy under Section 7(7) of the Payment of Gratuity Act, 1972?

Whether the Petitioners were duly served with the gratuity proceedings through the Trust’s Administrative Manager, and were therefore justified in seeking interference on the ground that the order was passed ex parte?

Whether the Respondent’s gratuity could be forfeited or withheld under Section 4(6) of the Payment of Gratuity Act on the basis of alleged misconduct and loss caused to the Trust?

Whether the interest awarded by the Controlling Authority required modification, and what consequential relief should be granted?

Section 7(7) of the Payment of Gratuity Act provides a statutory appeal against an order of the Controlling Authority within 60 days, with condonation permissible only for a further period of 60 days; an employer’s appeal cannot be entertained unless the awarded gratuity is deposited.

The Court relied on Nanded Zilla Dekhrekh Sahakari Sanstha Maryadit v. Narhar Pralhadrao Kulkarni, holding that an appeal cannot be entertained beyond the maximum 120-day period, and on Assistant Commissioner (CT), LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Ltd., regarding the consequences of an exhausted statutory remedy.

Rule 15 of the Payment of Gratuity Rules, 1972 permits service of notices personally, by registered post or in the manner prescribed by the CPC, and service on an authorised person may constitute valid service.

Rule 11(5) permits recall of an ex parte order where sufficient cause is shown within 30 days.

Under Section 4(6), gratuity may be forfeited only to the extent of direct damage or loss caused by the employee’s wilful omission or negligence, or in the specified cases of violence, disorderly conduct or an offence involving moral turpitude.

Rule 8 requires the employer to issue Form-M where the gratuity claim is not admissible; the Court, relying on Chairman and Managing Director, Bank of Maharashtra v. Kishore, held that forfeiture must be preceded by a fair notice specifying the basis and extent of the alleged loss.

Section 8 and the Central Government notification prescribe recovery with compound interest at 15% on unpaid gratuity.

The Court held that the Petitioners could not bypass Section 7(7) merely because the limitation period for filing an appeal had expired. The Trust had received the Controlling Authority’s order through the Respondent’s advocate on 29 November 2025 and had sufficient opportunity either to appeal or seek recall of the ex parte order under Rule 11(5), but deliberately took no action.

The plea of non-service was rejected because the bailiff had served all eight notices on Mr. Krishnanath Satardekar, the Trust’s Administrative Manager, who was authorised to receive communications on behalf of the Trust and its trustees. The Court distinguished the earlier correspondence relied upon by the Petitioners, noting that it concerned authority to sanction leave and not authority to accept service.

On merits, the Court found that no valid forfeiture had been effected. The Petitioners had not issued Form-M or otherwise communicated a decision forfeiting gratuity.

The termination letter referred to an alleged loss of Rs.5 crores and adjustment against salary, but did not state that gratuity was forfeited.

Further, the alleged shredding of membership records did not establish the direct loss contemplated by Section 4(6)(a), and the Trust’s counterclaim for Rs.5 crores had been rejected by the Civil Court.

Accordingly, the Respondent remained entitled to statutory gratuity. In view of the pending recovery proceedings and the Petitioners’ continued failure to pay, the Court directed payment with the statutory 15% compound interest rather than the 10% simple interest awarded by the Controlling Authority.

It further held that the Respondent’s gratuity had not been validly forfeited under Section 4(6), as no Form-M notice or legally sufficient basis for forfeiture had been established.

The Petitioners were directed to pay Rs.11,67,785 towards gratuity with statutory compound interest at 15%, together with costs of Rs.1,00,000, within six weeks.