Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Mad) 11563

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Maria Clete, J
Anand Institute of Higher Technology – Appellant
Versus
M.Somasekar – Respondent
W.P.No. 4121, 4123 and 4126 of 2021

Advocates:
For the Appellants/Petitioners: P.Nehru, G.K.Kalidasan, B.Mohanakrishnan
For the Respondents: A.Thirumaran, R.Kumaravel

The Payment of Gratuity Act does not prescribe a limitation period for approaching the Controlling Authority. Delegated rules attempting to impose such a limitation are ultra vires. Furthermore, the employer has a statutory mandate to pay gratuity upon cessation of employment regardless of the filing date.

Headnote:(A) Payment of Gratuity Act, 1972 - Section 7 - Tamil Nadu Payment of Gratuity Rules, 1973 - Rule 10 - Limitation period for filing application before Controlling Authority - Statute does not prescribe any specific period of limitation for approaching Controlling Authority under Section 7(4)(b) - Delegation of rule-making power to state government does not authorize prescribing a limitation period as it is a matter of substantive legislative power - Any rule prescribing such limitation is ultra vires the Act. (Paras 9, 11)

(B) Payment of Gratuity Act, 1972 - Section 7(2) - Obligation of employer to pay gratuity - Statutory compulsion - Employer’s duty to determine and pay gratuity arises upon cessation of employment regardless of whether an application is filed by the employee - Payment of gratuity is a beneficial social welfare legislation and cannot be denied due to technical grounds. (Paras 4, 11, 14)

(C) Limitation - Sufficient cause - Condonation of delay - Expression 'sufficient cause' must be interpreted liberally to advance substantial justice - No rigid or straitjacket formula for condonation exists, and it depends on facts of each case, provided there is no gross negligence or lack of bona fides. (Paras 13, 16)

Facts of the case:
Employees filed applications for gratuity several years after leaving service. The employer failed to respond to the initial notices. When employees moved the statutory authority for gratuity, they sought condonation of delay. The authority, noting the breach of statutory duty by the employer to initiate payment upon cessation of employment, condoned the delay. The employer challenged these orders before the High Court, contending the applications were time-barred.

Findings of Court:
The Court held that the employer has a primary statutory obligation to pay gratuity upon separation, and failure to do so constitutes a continuous breach. The rules prescribing a 90-day limit for approaching the Controlling Authority are ultra vires the parent Act.

Issues: Whether the Controlling Authority was justified in condoning the delay in filing gratuity applications and whether the prescribed limitation period in the Rules is legally sustainable.

Ratio Decidendi: As the Payment of Gratuity Act is a social welfare legislation that imposes an absolute obligation on the employer to pay gratuity, and since the parent Act specifies no limitation period for approaching the Controlling Authority, delegated rules cannot impose a bar on the claimant's right.

Result: Writ petitions dismissed with costs.

Table of Content
1. gratuity is a statutory right; employer's duty to pay regardless of formal applications. (Para 2 , 3 , 4 , 5 , 6)
2. absence of specific statutory limitation for claims before the controlling authority. (Para 7 , 8 , 9 , 10 , 11 , 12)
3. beneficial legislation requires liberal interpretation of 'sufficient cause' for delay. (Para 13 , 14 , 15 , 16)
4. dismissal of unmeritorious petitions and imposition of costs for delaying statutory claims. (Para 17 , 18)

C O M M O N J U D G M E N T

1.Heard.

2.The petitioner is an engineering college, and the contesting 1^st respondents were employed as Assistant Professors in the said institution. According to the petitioner college, all three individuals left the college on 30.11.2016. Nearly three years later, on 09.09.2019, they submitted Form-I under the Payment of Gratuity Act, 1972, seeking payment of gratuity. It is admitted that the petitioner did not issue any response to the said Form -I notice. Consequently, all three individuals submitted Form-N to the 2^nd respondent, initiating a formal claim for gratuity against the petitioner.

3.As there was a delay in submitting the Form-N applications, the contesting respondents filed Interim Applications Nos. 204/2019, 163/2019, and 104/2019 before the 2^nd respondent, seeking condonation of delay. In the affidavits filed in support of these applications, each of them stated that, ever since their relief from service, they had been making oral representations to the college for payment of gratuity. However, as there was no response, they were compelled to issue notices in Form-I, which also went unanswered. The 2^nd respondent thereafter issued notices in respect of both the Form-N claims and the applications for condonation of delay.

4.The petitioner filed a counter statement contending that the reasons offered for condonation of delay were unsatisfactory and false. However, they reserved their right to file detailed counter statements in the main proceedings at a later stage. Notably, the petitioner made no mention of having responded to the Form-I notice issued by the respondents. After hearing both sides, the authority observed that gratuity is not a gratuitous benefit but a statutory entitlement that recognises an employee’s service. Referring to Section 7(3) of the Payment of Gratuity Act, the authority held that the obligation to pay gratuity arises within 30 days from the date of cessation of employment, irrespective of whether an application is made by the employee. It is the employer’s duty to ensure timely payment. The petitioner’s failure to respond even after receipt of Form-I notice amounted to a clear disregard of the statutory mandate. Consequently, the authority rejected the petitioner’s objections and condoned the delay.

5.The main gratuity applications in P.G. Case Nos. 102/2020, 103/2020, and 105/2020 remain pending without adjudication, as the petitioners have approached this Court by filing the present writ petitions. These writ petitions were admitted on 19.02.2021, and an interim stay of further proceedings was granted on the same day. The contesting respondents have entered appearance and filed three applications seeking vacation of the interim stay, supported by a counter affidavit. In the said counter, they contended that the Payment of Gratuity Act does not prescribe a specific statutory limitation period for claiming gratuity and that the employer’s obligation to pay gratuity is not discharged merely because the employee did not make a formal demand.

6.However, the interim applications seeking vacation of the stay were not taken up for hearing. When the matter was listed on 05.11.2024, this Court directed that all three writ petitions be referred to the Lok Adalat scheduled for 14.12.2024. As no settlement could be arrived at, the matters were returned to this Court for hearing on merits.

7.The sole issue for consideration is whether the petitioners’ challenge to the 2^nd respondent’s order condoning the del

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2025 Supreme(Online)(Mad) 11563

IN THE HIGH COURT OF JUDICATURE AT MADRASMaria Clete, JAnand Institute of Higher Technology – AppellantVersusM.Somasekar – RespondentW.P.No. 4121, 4123 and 4126 of 2021

Cases Referred (1)

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Maria Clete, J
Anand Institute of Higher Technology – Appellant
Versus
M.Somasekar – Respondent
W.P.No. 4121, 4123 and 4126 of 2021