Bombay High Court
BREACH CANDY SWIMMING BARTH TRUST AND ORSversusRAJESH SOMNATH NERKAR
- Decided
- Disposal
- Disposed Off
Holding
The Court held that the Trust was properly served, had no valid forfeiture notice, failed to avail the statutory appeal within the prescribed period, and therefore the Controlling Authority’s order directing payment of gratuity stands.
Summary
The Breach Candy Club Trust terminated its former manager, Rajesh Somnath Nerkar, after alleging he shredded original membership records, leading to a claim for gratuity under the Payment of Gratuity Act, 1972. The Controlling Authority allowed Nerkar’s application and ordered the Trust to pay Rs 11,67,785 with 10% simple interest, but the Trust challenged the order via a writ petition, arguing improper service of notice, lack of opportunity to defend, and that gratuity should be forfeited under Section 4(6) due to alleged loss of Rs 5 crore. The Court examined whether the Trust and its trustees were properly served, whether the statutory appeal under Section 7(7) was available, and whether the forfeiture provisions applied without a Form‑M notice. It held that the Trust and trustees are not separate juristic entities, that service of notice on the Administrative Manager was valid, that the Trust failed to file the statutory appeal within the prescribed period, and that no valid forfeiture notice was issued, so gratuity could not be denied. Consequently, the Court dismissed the writ petition, affirmed the Controlling Authority’s order, and directed payment of gratuity with 15% compound interest and costs.
Issues considered
- Whether the Trust and its trustees were properly served with notice of the gratuity application under the Payment of Gratuity Rules.
- Whether the Trust was entitled to forfeit the gratuity under Section 4(6) of the Payment of Gratuity Act without issuing a Form‑M notice.
- Whether the Trust could bypass the statutory appeal provision of Section 7(7) by filing a writ petition after the appeal period had expired.
- Whether the Controlling Authority’s ex‑parte order can be set aside on the ground of procedural irregularities.
Legislation cited
- Code of Civil Procedure, 1908
- Payment of Gratuity Act, 1972 — s. 4(6), 7(7)
- Payment of Gratuity (Central) Rules, 1972 — s. 11, 15, 8
Subjects
- gratuity
- Payment of Gratuity Act
- service termination
- forfeiture of gratuity
- notice of service
- statutory appeal
- trust liability
- writ petition
- interest on gratuity
- procedural default
Judgment
Neeta Sawant WP-9972 OF 2026
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 9972 OF 2026
Breach Candy Swimming Bath Trust and Ors. …..Petitioners
: Versus :
Rajesh Somnath Nerkar …. Respondent
Mr. Archit Jayakar with Ms. Pooja Yadav & Mr. Kshitij Abbhi, for
Petitioners.
Ms. Tanaya Patankar with Mr. Nikhil Patil i/b Mr. Rahul Shirgavkar, for
the Respondent.
CORAM : SANDEEP V. MARNE, J.
Reserved On : 18 August 2026.
Pronounced On: 01 September 2026.
Judgment:
1) Breach Candy Club is an elite social club in Mumbai run by a
Trust. Founded in 1878 and nestled in a premium location in South
Mumbai, the entry to the Club is not easy 1. For over a decade now,
disputes are going on over governance and managing the affairs of the
Trust and about retaining control over the management. The Club’s ex-
Manager is caught up in the crossfire over management disputes, and the
new managing committee held him responsible for shredding the original
1
Article in NDTV Lifestyle ‘Mumbai's Breach Candy Club, Where Just Money Can't Buy Access For Indians’
published on 29 May 2026
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Neeta Sawant WP-9972 OF 2026
membership records while carrying out the digitization process at the
instance of the erstwhile managing committee. The Club terminated his
services and has denied him gratuity. The Controlling Authority under the
Payment of Gratuity Act, 1972 has ordered the Club to pay gratuity to the
ex-Manager. The Club is opposed to payment of gratuity to its ex-
Manager, who worked with it for 23 years and believes that he is
responsible for causing financial losses to the Club to the tune of Rs. 5
crores and has accordingly filed the present Petition challenging the order
of the Controlling Authority.
2) The Petition is filed by the Petitioner-Trust and its trustees
challenging the judgment and order dated 19 November 2025 passed by
the Controlling Authority under the Payment of Gratuity Act, 1972 (P.G.
Act) by which Application (PGA) No. 127 of 2025 filed by the Respondent
has been allowed and the Petitioners are directed to pay an amount of
Rs.11,67,785/- to the Respondent towards gratuity alongwith simple
interest @ 10% p.a. from 2 July 2023 onwards.
3) Petitioner No.1 is a registered Trust, and it manages and
administers the Breach Candy Club in Mumbai. Petitioners No. 2 to 7 are
the present trustees constituting the managing committee of the Trust.
Respondent was employed by the Trust on 1 November 2000 as Office
Clerk. On 14 September 2001, his designation was changed from Office
Clerk to Computer Clerk. From 20 January 2006 onwards, Respondent was
given the position of Assistant Manager by the Trust. On 9 July 2008,
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Respondent was made Manager of the Trust by the earlier Managing
Committee.
4) It is the case of the Petitioners that the erstwhile managing
committee of the Trust decided to digitize the membership records of the
Trust in the year 2012. It is alleged that Respondent shredded the original
membership records of the Trust after the digitization during 2012 and
2013. In October 2013, a No-Confidence Resolution was adopted against
the then Managing Committee of the Trust in the Extraordinary General
Meeting and some of the Petitioners along with other personnel were
appointed as the Managing Committee of the Trust. It appears that there
were disputes between the members about governance and managing the
affairs of the Trust, details of which are not relevant for deciding the issue
at hand. By letter dated 25 November 2022, the Respondent was called
upon to provide documents of digitization of the Trust membership
records. By letter dated 9 December 2022, Respondent allegedly admitted
having shredded the original application forms. Respondent was
suspended from service on 16 January 2023.
5) Respondent filed S.C. Suit No. 1013 of 2023 in the City Civil
Court at Bombay seeking directions, inter-alia to resume duties as
Manager. The Trust issued show cause notice dated 24 May 2023 to the
Respondent calling upon him to provide explanation in relation to various
violations alleged in the notices/complaints received. Respondent
responded to the show cause notice on 16 June 2023. On 23 June 2023,
Respondent’s application for temporary injunction was dismissed by the
City Civil Court. On 2 July 2023, Petitioner-Trust terminated his services.
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Respondent filed Appeal from Order No. 553 of 2023 in this Court
challenging the order of rejection of temporary injunction. The Appeal
from Order was withdrawn with liberty to make application for gratuity.
Respondent accordingly approached the Petitioner-Trust with request for
payment of gratuity.
6) On 21 February 2025 Respondent filed Application (PGA) No.
127 of 2025 before the Controlling Authority under the P.G. Act. The
notices issued in the Application were served upon the Administrative
Manager of the Trust and it is claimed that neither the Trust nor the
Trustees had knowledge of filing of gratuity proceedings. Petitioners
accordingly failed to appear before the Controlling Authority. On 27 June
2025, Respondents applied for ex-parte proceeding of the Application. On
8 August 2025, the request was allowed and the Application was directed
to proceed ex-parte. By judgment and order dated 19 November 2025, the
Controlling Authority allowed Application (PGA) No. 127 of 2025 and
directed Petitioners to pay to the Respondent gratuity of Rs.11,67,785/-
alongwith simple interest @ 10% p.a. from 2 July 2023.
7) In the meantime, the Suit filed by the Respondent was
apparently decreed on 26 September 2025 directing the Defendants
therein to pay to the Respondent an amount of Rs.15,38,874/- against
arrears of salary from 25 November 2022 onwards by holding that
termination and suspension of the Respondent was illegal.
8) After the Application was allowed by order dated 19
November 2025, Respondent’s advocate served copy thereof on the
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Respondent-Trust by letter dated 29 November 2025. However,
Petitioners failed to implement the order of the Controlling Authority.
Therefore, Respondent filed Recovery Application (PGA) No. 26 of 2026
before the Controlling Authority on 2 April 2026. The Trust was served
with the Recovery Application. It is claimed that only after the service of
the Recovery Application, the Petitioners learnt about filing of gratuity
application by the Respondent. Accordingly, Petitioners have filed the
present petition challenging the judgment and order dated 19 November
2025 passed by the Controlling Authority.
9) Mr. Jayakar, the learned counsel appearing for the
Petitioners submits that the impugned judgment and order of the
Controlling Authority deserve to be set aside on account of failure to
grant opportunity of defending the Application to the Petitioners. That
the notices in the gratuity application have not been served on the
Petitioners. That the bailiff handed over the notices in respect of the
Petitioners to the Clerk working in the Trust. That the Clerk is not an
authorized person, who could have been served with the notices in the
Application. He relies on Rules 11 and 15 of the Payment of Gratuity
(Central) Rules, 1972 (P.G. Rules) in support of his contention that the
notice needs to be served only on the authorized person. That
Respondent was well aware of the position that Mr. Krishnanath
Satardekar, Clerk was not authorized to accept service of any documents
on behalf of the Trust or the Trustees. He relies on email correspondence
of November 2022 in which Respondent has clearly acknowledged
knowledge on his part that Mr. Krishnanath Satardekar was not
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authorized to accept any service on behalf of the Trust or the Trustees.
He submits that the Petitioners have thus been denied opportunity of
defending the Application and that the same is erroneously decided ex-
parte.
10) Mr. Jayakar further submits that the Trust is not a juristic
entity. That the Trust comprises and is represented by the trustees.
Knowing this position well, the Respondent had impleaded all the
Trustees of the Trust to his gratuity application. That therefore the
Trustees were required to be served independently with the notice in the
application. That the bailiff’s report does not make out any efforts made
by him to serve the Trustees of the Trust. Mr. Jayakar therefore submits
that the proceedings conducted by the Controlling Authority suffered
from the vice of impropriety, where Petitioners are denied due
opportunity of defending the Application. That Petitioners have valid
defences to oppose the Application. That therefore the proceedings
deserve to be remanded. He submits that Petitioners are willing to deposit
the amount of gratuity with the Controlling Authority as a precondition
for remand of the proceedings. In support of his contention that the trust
is not a juristic entity, Mr. Jayakar has relied on judgment of the Kerala
High Court in K.R. Rajan Versus. Cherian K. Cherian & Anr.2 and of
Delhi High Court in Duli Chand Versus. M/s. Mahabir Pershad Trilok
Chand Charitable Trust3 of this Court in Municipal Corporation of
Greater Mumbai, Office of the Education Department Versus. Mrs.
Vrunda Vijaykumar Kulkarni,4
2
2019 SCC Online Ker 4699
3
1948 (6) DRJ 153
4
WP-306 of 2018 decided on 2 & 6 August 2018
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11) Mr. Jayakar further submits that under Rule 11(5) of the P.G.
Rules, the maximum permissible time for seeking recall of the order has
also elapsed. That Petitioner No.1 cannot file an appeal under Section
7(7) of the P.G. Act on account of statutory bar on condonation of delay
beyond the period of 60 days. He submits that the Petitioner-Trust is thus
rendered remediless on account of erroneous orders passed by the
Controlling Authority.
12) Without prejudice to the ground of non-service of notice, Mr.
Jayakar submits that the Petitioners have validly forfeited the gratuity of
Respondent under the provisions of Section 4(6) of the P.G. Act. That
Respondent has committed grave misconduct resulting in heavy losses to
the Petitioners. That termination letter clearly quantified the losses at
Rs.5 crores. That Petitioners are entitled to adjust the amount of losses
suffered by them against the gratuity payable to the Respondent under
the provisions of Section 4(6)(a) of the P.G. Act. He submits that there is a
clear admission by the Respondent of having committed the misconduct
of shredding original records of members. That therefore since
misconduct is established by admission on the part of the Respondent,
Respondent is not entitled to gratuity. He submits that under the
appointment letter, Respondent was entrusted with the responsibility of
safe upkeep of the records. That he has violated the terms of his
employment and has been rightly terminated. He submits that though the
Suit of the Respondent has been partly decreed, the Appeal preferred by
the Petitioners is pending before this Court. That the Respondent has also
filed a cross-appeal, being dissatisfied with the decree of the Trial Court.
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He therefore submits that the impugned order of the Controlling
Authority be set aside and the Application be remanded for fresh
decision.
13) Lastly, Mr. Jayakar submits that in the event this Court
arrives at the conclusion that Petitioner No.1-Trust was duly served with
the notice of the gratuity application, at least opportunity be granted to
Petitioner Nos.2 to 7 to file their independent appeal against the
impugned order of the Controlling Authority as there is still time left for
filing the appeal, if the period is computed from the date of receipt of
order by them.
14) Ms. Patankar, the learned counsel appearing for the
Respondent opposes the Petition. She raises preliminary objection and
submits that the petition is not maintainable in view of failure to avail
alternate remedy of filing appeal under Section 7(7) of the P.G. Act. She
relies on judgment of this Court in Nanded Zilla Dekhrekh Sahakari
Sanstha Maryadit Versus. Narhar Pralhadrao Kulkarni 5. She submits
that the statutory remedy of filing appeal is foreclosed due to expiry of
period of limitation and relies on judgment of the Apex Court in
Assistant Commissioner (CT), LTU, Kakinada and Ors. Versus. Glaxo
Smith Kline Consumer Health Care Limited 6. Alternatively, she submits
that all the Petitioners are duly served with the notice of the gratuity
application. She submits that for the purpose of service of notice of P.G.
Application, the Trust and the Trustees are the same. That the employer
5
2017 (5) Mh.L.J. 286
6
(2020) 19 SCC 681
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is ultimately the Trust and the Trustees do not have individual liability to
pay gratuity to the Respondent. That Trustees were impleaded only for
representing the Trust. She invites attention of this Court to the Bailiff’s
Report in support of her contention that all the 8 notices are accepted by
Mr. Krishnanath Satardekar who was working as Administrative Manager
of the Trust and not a Clerk. That Petitioners are erroneously branding
Mr. Krishnanath Satardekar as a Clerk whose designation is correctly
pleaded in the petition as Administrative Manager. She relies on letters
dated 29 June 2023 and 30 June 2023 in support of her contention that
notices acknowledged by Mr. Krishnanath Satardekar have been
responded by the Trust thereby indicating authority in Mr. Krishnanath
Satardekar to receive letters, communications, notices etc. on behalf of
the Trust. That therefore Mr. Krishnanath Satardekar is the authorized
person within the meaning of P.G. Rules. She submits that pleadings in
para 4.46 to 4.47 of the petition indicate that the reason for failure to
appear before the Controlling Authority is admitted as ‘inadvertently
remained to be informed to the trust/persons in charge of the legal matters’.
Thus, the real case in the plaint is inadvertence in placing the notices
before the trustees/persons in charge and not non-receipt of the notices
as such.
15) Ms. Patankar submits that the Petitioners are habitual in not
taking cognizance of services of notices on them. She invites the
attention of this Court to the notice dated 29 November 2025, whereby a
copy of the order passed by the Controlling Authority was served. She
submits that the said copy was acknowledged by another person, Mr.
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Andre, and that the order was still not acted upon by the Petitioners. That
notices in the Recovery Application are also served in similar manner and
if Petitioners can act upon notices received in the Recovery Application,
there is no reason why they should not have acted upon the notice issued
in the main application.
16) Ms. Patankar would accuse the Petitioners of suppression of
material facts. She submits that Petitioner suppressed letters dated 16
December 2024 and 25 January 2025 and Form-I submitted on 19
February 2025. The Petitioners clandestinely and without notice to the
Respondent, withdrew the gratuity amount payable to the Respondent
from the LIC on 17 February 2025, even before the notice in Form-I was
served upon them on 19 February 2025. That these facts are suppressed in
the petition by the Petitioners.
17) Ms. Patankar further submits that reliance by the
Respondents on the provisions of Section 4(6) of the P.G. Act is
inapposite. She submits that Petitioners have never communicated
decision to forfeit the gratuity by service of notice under Form-M. In
support of her contention that Form-M is mandatory she relies on
judgment of this Court in Chairman and Managing Director, Bank of
Maharashtra & Ors. Versus. Kishore & Ors 7 Ms. Patankar relies on
decree passed by the Civil Court in support of her contention that
termination has been held to be illegal. That the City Civil Court has
recorded an express finding that shredding of records was as per the
directions issued by the erstwhile Managing Committee. That therefore
7
2022 SCC Online Bom 11759
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admission given by the Respondent needs to be read in that context. That
the Respondent is also discharged from criminal prosecution. On above
broad submissions, Ms. Patankar prays for dismissal of the petition.
18) Rival contentions urged on behalf of the parties now fall for
my consideration.
19) The case involves failure on the part of Petitioner No.1-Trust
to pay gratuity to the Respondent, who was admittedly its employee
during the period from 1 November 2000 till his termination on 2 July
2023. Respondent served for 23 long years with the Petitioner-Trust. His
services were terminated vide letter dated 2 July 2023. Termination was
subject matter of S.C. Suit No. 1013 of 2023 before the City Civil Court, in
which the Respondent has partly succeeded, and his termination is held
to be illegal, and a partial money decree is passed in his favour. During
pendency of the Suit, Respondent filed Application (PGA) No. 127 of 2025
before the Controlling Authority. Petitioners did not appear before the
Controlling Authority and the proceedings are decided ex parte. The
Application is allowed and the Petitioners are directed to pay an amount
of Rs.11,67,785/- to the Respondent towards gratuity alongwith simple
interest @ 10% p.a. from 2 July 2023 onwards.
20) Considering the limited scope of enquiry, it is not necessary
to delve deeper into the reasons why Respondent’s services are
terminated. The same was subject matter of issue in S.C. Suit No. 1013 of
2023. Suffice it to observe that the City Civil Court has answered the issue
about legality in suspension and termination in favour of the Respondent
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and against the Petitioners. By decree dated 26 September 2025, the
Respondent is awarded monetary claim in the sum of Rs.15,38,874/- along
with interest @ 6% p.a. possibly towards arrears of pay from 25 November
2022 till the date of filing of the suit. His prayer for damages of
Rs.80,00,000/- has been rejected. Similarly, counter-claim filed by the
Petitioners seeking damages of Rs.5 crores against the Respondent has
also been rejected. Both the parties have filed First Appeals before this
Court, which are pending.
21) The limited scope of enquiry in the present petition is
whether the impugned order passed by the Controlling Authority
directing payment of gratuity to the Respondent warrants interference.
22) It must be observed at the very outset that Petitioners have
not availed the statutory remedy of filing Appeal under Section 7(7) of the
P.G. Act. against the order passed by the Controlling Authority. Sub-
section (7) of Section 7 provides for statutory remedy of filing Appeal
before the Appellate Authority. However, the requirement is that the
Appeal must be filed within a period of 60 days from the date of receipt of
the order. The Appellate Authority has discretion of condoning the delay
of only upto the maximum period of 60 days under the first proviso to
sub-section (7) of Section 7. Under the second proviso, it is mandatory
that the employer must deposit the amount of awarded gratuity as a
precondition for entertainment of the Appeal. Sub-section (7) of Section 7
of the P.G. Act provides thus:
(7) Any person aggrieved by an order under sub-section (4), may, within
sixty days from the date of the receipt of the order, prefer an appeal to
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the appropriate Government or such other authority as may be specified
by the appropriate Government in this behalf:
Provided that the appropriate Government or the appellate authority, as
the case may be, may, if it is satisfied that the appellant was prevented
by sufficient cause from preferring the appeal within the said period of
sixty days, extend the said period by a further period of sixty days.
Provided further that no appeal by an employer shall be admitted unless
at the time of preferring the appeal, the appellant either produces a
certificate of the controlling authority to the effect that the appellant
has deposited with him an amount equal to the amount of gratuity
required to be deposited under sub- section (4), or deposits with the
appellate authority such amount.
23) Petitioners have however not availed the remedy of filing
Appeal under Section 7 and have straightaway proceeded to file the
present petition under Article 227 of the Constitution of India
challenging the order of the Controlling Authority dated 19 November
2025. There are multiple reasons assigned by the Petitioners for their
failure to file an appeal against the impugned order. The first reason is
that the maximum period condonable under proviso to Section 7(7) has
expired qua Petitioner No.1-Trust. Though Petitioner No.1-Trust
complains of improper service of notice in gratuity application, there is
no denial to the fact that it received the order by advocate’s notice dated
29 November 2025. Therefore, at the very least, Petitioner No. 1–Trust
could have preferred an appeal under Section 7(7) of the P.G. Act after 29
November 2025. Since the maximum period permissible for filing of an
Appeal has expired even from 29 November 2025, Petitioner-Trust is now
precluded from filing the appeal.
24) In respect of Petitioner Nos.2 to 7, it is sought to be
contended that they never received either the notice in the main gratuity
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application or notice dated 29 November 2025. It is claimed that they
acquired knowledge about passing of the impugned order only on 24 April
2026 when notices in Recovery Applications were served on them.
However, they have also chosen to file the present petition by joining
hands with the Petitioner-Trust.
25) In my view, for the purpose of discharging the statutory
liability to pay gratuity to the employee, Petitioner No.1 cannot be
regarded as distinct and separate than Petitioner Nos. 2 to 7. In law, the
Trust is not a juristic entity and is required to be sued through the
trustees. In that regard, reliance by Mr. Jayakar on judgments of the Delhi
High Court in Duli Chand (supra) and of Kerala High Court in K.R. Rajan
(supra) is apposite. However, for the purposes of the present proceedings,
Petitioner Nos.2 to 7 cannot take a stand different than the one taken by
Petitioner No.1. The ultimate liability to pay the gratuity to the
Respondent rests on the employer which is Petitioner No.1-Trust. Thus,
impleadment of Petitioner Nos.2 to 7 to the P.G. Application was only for
the purpose of representing the Trust. In that sense, Petitioner Nos.2 to 7
cannot segregate themselves from Petitioner No.1 by seeking to adopt a
different stand. This discussion is necessitated on account of complaint
raised by the Petitioners that Petitioner Nos.2 to 7 were not individually
served with the notices in P.G. Application. The aspect of service of
notices is being dealt with separately in the latter part of the judgment.
This Court however does not appreciate the plea raised on behalf of
Petitioner Nos.2 to 7, who have joined in a common petition filed by
Petitioner No.1, that they have a separate or independent right to defend
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the P.G. Application or to challenge the order passed by the Controlling
Authority. Infact, Mr. Jayakar has urged before the Court that liberty be
granted to Petitioner Nos.2 to 7 to file Appeal against the order passed by
the Controlling Authority. Such plea sought to be raised on behalf of
Petitioner Nos.2 to 7 is totally baseless. Once liability qua Petitioner No.1
to pay gratuity gets crystalized, the Trustees cannot separate themselves
and seek to challenge the Trust’s liability in their individual capacity as
trustees. This is a reason why I have held that for the purpose of payment
of gratuity, the Trust and the Trustees are the same.
26) Coming back to the issue of failure on the part of the
Petitioners to file appeal against the order of the Controlling Authority,
there is a purpose and object behind not permitting the employer to
challenge the order of the Controlling Authority beyond the stipulated
time. P.G. Act is a special statute governing liability of employer and right
of employee in respect of the service gratuity. The legislative intent is not
to permit the errant employer to keep the employee under long litigation
and therefore bars the remedy of appeal upon expiry of the 60+60=120
days. It is impermissible to file the appeal once period of 120 days expire.
27) In Nanded Zilla Dekhrekh Sahakari Sanstha Maryadit
(supra), this Court has held that it is impermissible to entertain the
appeal once the maximum period prescribed in Section 7(7) of the P.G.
Act is over. This Court held thus:
22. The intent of the legislature in not permitting the filing of an appeal
under section 7(7) beyond 120 days is apparent and is more conspicuous
when certain provisions for condonation of delay are provided in other
Labour Laws. The Labour Courts (Practice and Procedure) Rules, 1975
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framed under the MRTU and PULP, 1971 prescribe limitation under Rule 61
which is 90 days. Said Rule 61 reads as under:—
“61. If a complaint under section 28 covers any unfair labour practice
which occurred more than 90 days before the date the complaint was
filed, the complainant shall file along with the complaint a separate
application, for condonation of delay. That application shall disclose
separately and specifically each unfair labour practice which
occurred more than 90 days after the complaint was filed and in
respect of which condonation of delay is sought, the date of the
occurrence thereof and the reasons for condonation of delay in
respect thereof Such an application shall be supported by an
affidavit.”
23. It is, therefore, clear that the legislature intended entertaining a
complaint beyond 90 days subject to condoning the delay for reasons which
may be acceptable.
28. Though the proviso below section 7(7) does not use the said words “but
not thereafter”, it permits extending of the period of limitation by a further
period of 60 days. In my view, if the legislature did not intend to permit
filing of an appeal under section 7(7) beyond 60 days after the limitation
period of 60 days is over, it cannot be interpreted to conclude that the
proviso setting forth the limitation of 60 days would have no sanctity. Had
the legislature intended to permit a litigating party to file an application
beyond the said 60 days, in all beyond 120 days and if the said delay was to
be condoned by enlarging the limitation period, the legislature would not
have prescribed 60 days by the proviso to section 7(7).
29. In the matter of Western Coalfields v. Presiding Officer, Central
Government, 2000 (III) CLR 399, it was concluded that when the law does
not provide for enlargement of the limitation period beyond what has been
prescribed, the Court would not have the jurisdiction to condone the said
delay. I am, therefore, of the view that the decision of the Gujarat High
Court in the GSRTC case (supra) and Backbone Projects case (supra) would
not be of assistance to the petitioner.
30. In the light of the above, I do not find that the Appellate
Authority/Industrial Court has committed any error in concluding that the
appeals filed by the petitioner beyond 120 days under section 7(7) cannot be
entertained.
28) In Mahanagar Media Network Pvt Ltd. vs. Stanny Pariera8,
this Court has discussed the legislative object behind imposing strict
8
Writ Petition No. 4574 of 2025decided on 10 August 2026
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period of limitation for challenging the order of the Controlling Authority
under the P.G. Act. This Court has held that it is not permissible to
directly file Petition in this Court merely because the period of limitation
for filing of appeal under Section 7(7) of the P.G. Act has expired. This
Court has held thus:
9) ….. There is legislative objective behind prescribing a limit on
condonation of delay considering the position that the PG Act is a social
welfare legislation. Gratuity is payable only upon cessation of
employment and is to be paid at the time of their retirement. Legislative
objective is that employees cannot be made to wait endlessly for receipt
of gratuity. The gratuity is to be paid with a view to provide financial
assistance to the employee whose monthly salary stops after cessation of
service/retirement. Therefore, the Legislature has put an embargo on
condonation of delay in filing appeal under first proviso to sub-section 7
of Section 7 of the PG Act. An additional condition is imposed in the
second Proviso for employers, who cannot embroil the employee in
endless litigation by simply lodging an appeal before the Appellate
Authority. The employer must deposit awarded amount of gratuity so
that baseless appeals are not filed with the objective of delaying
payment of gratuity and the employee does not have to run behind the
employer for recovery of gratuity, in the event of dismissal of the appeal
10) In Chief Executive Officer, Zilla Parishad, Beed (supra), order passed
by the Controlling Authority was directly sought to be challenged before
the High Court under Articles 226 and 227 of the Constitution of India.
Discouraging such tendency and keeping in mind the legislative scheme
of the PG Act, this Court held in paragraphs 10 to 13 of the judgment as
under:-
10. The question therefore is when a specific act has been put in
place to deal with all connected and incidental issues to payment
of gratuity, whether it would it be appropriate for any party, in
order to avoid the precondition of deposit of entire amount while
filing appeal, to by pass the said provision and invoke the writ
jurisdiction of this Court.
11. The payment of gratuity and its provisions is a part of social
security legislation which not only has to be dealt with on a
broader spectrum, but with a high degree of sensitivity.
12. I have therefore no hesitation in concluding that this writ
petition, filed with an intent and object of avoiding deposit of the
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Neeta Sawant WP-9972 OF 2026
determined amount while preferring an appeal, is not
maintainable before this Court, by bypassing the Appeal
provision u/s. 7(7).
13. In the light of the above, the petition stands dismissed for
being untenable. Nevertheless, this would not come in the way of
the petitioner taking recourse to section 7 (7) of the Gratuity Act
for preferring an appeal against the impugned order dated
23/08/2011 passed by the Controlling Authority.
11) Similarly, in Management of Sri Sowdeswari Industries, Coimbatore
(supra) the Madras High Court deprecated the shortcut method of
challenging order of Controlling Authority by filing Writ Petition in the
High Court and has held in paragraphs 5 to 8 as under:-
5. The contention of the third respondent-workman is that the
statutory appeal provided under Section 7(7) of the Payment of
Gratuity Act, has not been exhausted by the writ petitioner-
management and it is a precondition that in the event of
preferring an appeal under Section 7(7) of the Act, the amount of
gratuity to be deposited and the said appeal must be filed within
a period of 60 days
from the date of the original order. The writ petitioner had not
done anything in this regard and therefore, the writ petition
deserves to be rejected.
6. The learned counsel appearing on behalf of the writ petitioner
states that the management during the relevant point of time
was closed down and was not running the business. Therefore, it
will be difficult for the management to settle the entire dues to
the employees. This Court is not inclined to accept such
contentions in view of the fact that the writ petitioner-
management received the
notice from the first respondent-competent authority and failed
to participate in the adjudication in an effective manner.
7. This apart, the final order had been passed by the first
respondent on 2.7.2012 and thereafter, the recovery certificate
was also issued on 3.4.2014. The writ petition was filed on
22.4.2014, challenging the original order passed by the first
respondent without exhausting the remedy of appeal provided
under Section 7(7) of the Gratuity Act.
8. Thus, the writ petitioner has not exhausted the statutory
remedy provided under the Act, not deposited the gratuity
amount for the purpose of preferring an appeal and no such
appeal was filed within a period of 60 days as contemplated
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under the said Act. This being the factum of the case, this Court
is of the opinion that the writ petitioner has not established any
ground for the purpose of considering the claim made in the writ
petition. Accordingly, the writ petition stands dismissed and the
order passed by the first respondent in G.A.No.6 of 2012 dated
2.7.2012 stands confirmed. However, there shall be no order as to
costs. Consequently, connected miscellaneous petitions are also
dismissed.
12) In my view, in the present case as well, the Petitioner cannot be
permitted to bypass the statutory remedy under the PG Act by filing Writ
Petition directly in this Court merely because the maximum period of
condonable delay has expired.
29) Thus, the right to file appeal by the Petitioners stands
foreclosed upon expiry of period specified in Section 7(7) of the P.G. Act.
Reliance by Ms. Patankar on judgment of the Apex Court in Assistant
Commissioner (CT), LTU, Kakinada Vs. Glaxo Smith Kline Consumer
Health Care Ltd. in this regard is apposite. In that view of the matter,
Petitioners cannot be permitted to maintain the present Petitioner by
taking disadvantage of their own mistake of not filing the Appeal and
sleeping over the order of the Controlling Authority despite having full
knowledge of the proceedings and the Order.
30) Non-filing of the Appeal is sought to be justified by the
Petitioners claiming that they were not properly served with notices in
the P.G. Application. The plea sought to be raised appears to be
completely baseless. It is first necessary to examine the events that
occurred before filing of the Application for gratuity by the Respondent
before the Controlling Authority. Respondent had filed Appeal from Order
No. 553 of 2023 in this Court challenging the order rejecting temporary
injunction by the City Civil Court in S.C. Suit No.1013 of 2023 after he was
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terminated from service. By order dated 6 December 2023, this Court
permitted the Respondent to withdraw the Appeal from Order noting the
contention that he was not paid gratuity and granted liberty to him to file
an application before the Controlling Authority for payment of gratuity.
Petitioners were represented before this Court through an advocate and
noticed the factum of Respondent’s grievance about non-payment of
gratuity and the liberty granted to file application before the Controlling
Authority. After passing of order dated 6 December 2023, the Respondent
first approached the Petitioners seeking gratuity vide letter dated 16
December 2024 which was acknowledged by Petitioner No.1-Trust. No
action was taken on letter dated 16 December 2024, which necessitated
filing of one more representation dated 25 January 2025, demanding
gratuity and receipt of this letter was also acknowledged by Petitioner
No.1-Trust. Petitioner No.1 responded to the reminder dated 25 January
2025 given by the Respondent through email dated 27 January 2025
stating that ‘the Managing Committee is reviewing this and would revert
shortly’. There are no averments relating to this email by the Petitioners
in the petition. Since the gratuity was not paid, Respondent submitted
Form-I (application for gratuity by an employee) claiming gratuity of
Rs.11,67,785/- on 19 February 2025, receipt of which was also
acknowledged by the Petitioner No.1-Trust. It is only after Petitioner
No.1-Trust failed to act on letters dated 16 December 2024, 25 January
2025 and 19 February 2025 that the Respondent approached the
Controlling Authority by filing Application (PGA) No. 127 of 2025 on 21
February 2025.
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31) According to Ms. Patankar, one more important
development occurred after receipt of the first two letters dated 16
December 2024 and 25 January 2025 and after the response of Petitioner
No. 1-Trust dated 27 January 2025. She has placed on record a copy of the
statement of LIC dated 17 February 2025, indicating that an amount of
Respondent’s gratuity of Rs. 11,67,785/- was withdrawn by the Trust and
the same was transferred and credited to the account of Petitioner No. 1-
Trust. Thus, while informing the Respondent that the Managing
Committee was reviewing the request of the Respondent for release of
gratuity, the Trust appears to have withdrawn the gratuity of the
Respondent from LIC on 17 February 2025. Here it must be added that
there is no reference to the document dated 17 February 2025, in any of
the pleadings. However, the document placed on record by Ms. Patankar
clearly indicates appropriation of Respondent’s gratuity by the
Petitioner-Trust from LIC gratuity fund.
32) The above events would clearly indicate that the Petitioners
were fully aware of the efforts made by the Respondent for securing the
amount of his gratuity. They knew that Respondent was going to file and
Application for gratuity before the Controlling Authority. Before filing
such application also, Respondent had thrice written to the Petitioners
for payment of gratuity. Petitioners had promised to look in the matter.
They apparently did not want to pay gratuity to the Respondent and
therefore withdrew the gratuity amount from LIC while falsely informing
the Respondent that the managing committee was reviewing the matter.
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33) Having considered the conduct of Petitioners before filing of
P.G. Application, now their conduct post filing of the Application also
needs to be appreciated.
34) The bailiff report indicates that he visited the premises of the
Trust on 25 March 2025 and handed over to Mr. Krishnanath Satardekar 8
notices bearing no. 778 to 785 in respect of 8 Respondents in the
Application. Mr. Krishnanath Satardekar accepted the notices on behalf of
all the Petitioners. Since the Trustees were not impleaded in independent
capacity, their addresses were indicated as office of the Trust. Mr.
Krishnanath Satardekar accepted the notices on behalf of the Petitioner-
No. 1 Trust, as well as on behalf of the other trustees. Petitioners however
did not act after being served with the notices in the Application. The
conduct of the Petitioners in not responding to the notice served by the
bailiff was consistent with their past conduct in not reacting on the three
applications submitted by the Respondent. Consistent with their past
conduct, Petitioners decided not to respond to the notices received from
the Controlling Authority on 25 March 2025.
35) Considering the above factual situation, I am not inclined to
accept the contention sought to be raised on behalf of the Petitioners that
notices of the Application were not duly served on them. The contention
that Mr. Krishnanath Satardekar was not the authorized person to accept
the notice on behalf of the Petitioner-Trust is raised out of desperation
and is clearly baseless. He was not a Clerk as sought to be orally suggested
during the course of arguments. He was the Administrative Manager as
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Neeta Sawant WP-9972 OF 2026
described in the Petition. He had full authority to receive notices on
behalf of the Trust and the trustees.
36) Reliance by Mr. Jayakar on Rule 15 of the P.G. Rules is clearly
misplaced. Rule 15 provides thus:
15. Service of summons or notice:-
(1) Subject to the provisions of sub-rule (2) any notice, summons,
process or order issued by the controlling authority may be served either
personally or by registered post acknowledgement due or in any other
manner as prescribed under the Code of Civil Procedure, 1908 (At 5 of
1908).
(2) Where there are numerous persons as parties to any proceeding
before the controlling authority and such persons are members of any
trade union or association or are represented by an authorised person,
the service of notice on the Secretary, or where there is no Secretary, on
the principal officer of the trade union or association, or on the
authorised person shall be deemed to be service on such persons.
37) Under Rule 15(2), when there are numerous persons as
parties to the proceedings before the Controlling Authority who are
members of an association, service thereof on authorized person is
deemed to be service on such persons. In the facts and circumstances of
the present case, it is clearly established that Mr. Krishnanath Satardekar
is an authorized person to receive notices on behalf of the Petitioners.
Though Mr. Jayakar has sought to reply upon email correspondence of 24
November 2022 and 26 November 2022 to paint a picture as if Mr.
Krishnanath Satardekar did not have any authority to accept service, Ms.
Patankar has placed on record letter dated 29 June 2023 accepted by Mr.
Satardekar on which Petitioner No.1-Trust has given response on 30 June
2023. Also, the earlier correspondence of November 2022 is in respect of
the grant of medical leave, and all that is communicated by Mr. Andre by
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Neeta Sawant WP-9972 OF 2026
email dated 24 November 2022 is that he and Mr. Krishnanath Satardekar
did not have the authority to sanction leave. Authority to sanction leave
is an altogether different concept from the authority to accept service. It
is thus clearly established that Mr. Krishnannath Satardekar had full
authority to accept service of notice on behalf of the Petitioners. The
notices of the P.G. Application were duly served on the Petitioners.
38) The conduct of the Petitioners after passing of order dated 19
November 2025 by the Controlling Authority is also telling. Petitioners,
who consciously did not bother to appear before the Controlling
Authority, continued with their attitude and did not take any action
despite receipt of copy of the order served on the Managing Committee of
the Trust vide letter dated 29 November 2025. Despite receiving the letter
from an Advocate stating that the Controlling Authority had directed
payment of gratuity along with interest, Petitioners continued with their
non-cooperative attitude and failed to obey the order or to challenge the
same. They drew Respondent to another round of litigation, where he was
required to file Application for issuance of Recovery Certificate. It is only
after receipt of notices in the Recovery Application on 24 April 2026 that
the Petitioners finally realized that some action needs to be taken and
this is how the petition is filed on/or before 16 July 2026.
39) Considering the above position, I am not inclined to accept
the contention sought to be raised on behalf of the Petitioners that they
did not have notice of the P.G. Application filed by the Respondents.
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Therefore, the pretext set up for non-availability of alternate remedy of
filing Appeal under Section 7(7) of the P.G. Act cannot be accepted.
40) After receipt of copy of the Order of the Controlling
Authority, Petitioners could have also availed the remedy of applying for
setting aside the ex-parte order under Rule 11(5) of the P.G. Rules which
provides thus :
(5) If the employer concerned fails to appear on the specified date of
hearing after due service of notice without sufficient cause, the
controlling authority may proceed to hear and determine the application
ex parte. If the applicant fails to appear on the specified date of hearing
without sufficient cause, the controlling authority may dismiss the
application:
Provided that an order under this sub-rule may, on good cause being
shown within thirty days of the said order, be reviewed and the
application re-heard after giving not less than fourteen days’ notice to
the opposite party of the date fixed for re-hearing of the application.
41) Petitioners were served copy of the order by letter dated 29
November 2025 and had sufficient opportunity of filing an application
under Section 11(5) for recall of the order dated 19 November 2025. The
Petitioners have thus consciously not availed multiple opportunities
made available to them and cannot now be permitted to maintain a direct
Petition before this Court, on the pretext that the remedy of filing appeal
is no longer available due to passage of time.
42) In my view the Petition deserves to be dismissed as I am not
inclined to entertain the same.
43) However, if the aspect of entertainability of the Petition is to
be momentarily ignored, I find no valid defense on the part of the
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PAGE NO. 25 of 34
1 September 2026
Neeta Sawant WP-9972 OF 2026
Petitioners for denial of gratuity to the Respondent. As observed above,
Respondent has admittedly served the Petitioners for 23 long years. He
has been terminated and his termination has been held to be illegal by the
City Civil Court. Since the employment was governed by contract of
service and since Petitioner No.1 is not an instrumentality of State,
reinstatement could not be granted. Therefore, the City Civil Court has
passed only a money decree in favour of the Respondent. Respondent’s
claim for damages is pending before the Appellate Court. However, the
least that needs to be paid to him is the gratuity statutorily payable under
the provisions of the P.G. Act.
44) Mr. Jayakar has relied upon the provisions of Section 4(6) of
the P.G. Act to contend that the Petitioners are justified in withholding
the gratuity for recovery of losses caused to the Petitioner-Trust on
account of the acts of the Respondent. Section 4(6) of the P.G. Act
provides thus:
(6) Notwithstanding anything contained in sub-section (i),-
(a) the gratuity of an employee, whose services have been terminated for
any act, wilful omission or negligence causing any damage or loss to, or
destruction of, property belonging to the employer, shall be forfeited to
the extent of the damage or loss so caused.
(b) the gratuity payable to an employee [may be wholly or partially
forfeited].
(i) if the services of such employee have been terminated for his
riotous or disorderly conduct or any other act of violence on his
part; or
(ii) if the services of such employee have been terminated for any
act which constitutes an offence involving moral turpitude,
provided that such offence is committed by him in the course of
his employment.
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1 September 2026
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45) However, if gratuity is to be withheld, a notice in Form-M
under Rule 8 of the P.G. Rules is required to be given. The Respondent
had served notice in Form-I on the employer under Rule 7. If the
employer was of the opinion that the gratuity was forfeited, a notice
rejecting the claim for payment of gratuity under Form-M was required to
be issued under Rule 8(1)(ii) of the P.G. Rules. Rule-8 of the P.G. Rules
provides thus :
8. Notice for payment of gratuity:-
(1) Within fifteen days of the receipt of an application under rule 7 for
payment of gratuity, the employer shall,-
(i) if the claim is found admissible on verification, issue a notice in Form
‘L’ to the applicant employee, nominee or legal heir, as the case may be,
specifying the amount of gratuity payable and fixing a date, not being
later than the thirtieth day after the date of receipt of the application,
for payment thereof, or
(ii) if the claim for gratuity is not found admissible, issue a notice in
Form ‘M’ to the applicant employee, nominee or legal heir, as the case
may be, specifying the reasons why the claim for gratuity is not
considered admissible. In either case a copy of the notice shall be
endorsed to the controlling authority.
(2) In case payment of gratuity is due to be made in the employer’s
office, the date fixed for the purpose in the notice in Form ‘L’ under
clause (i) of sub-rule (1) shall be re-fixed by the employer, if a written
application in this behalf is made by the payee explaining why it is not
possible for him to be present in person on the date specified.
(3) If the claimant for gratuity is a nominee or a legal heir, the employer
may ask for such witness or evidence as may be deemed relevant for
establishing his identity or maintainability of his claim, as the case may
be. In that case, the time limit specified for issuance of notices under
sub-rule (1) shall be operative with effect from the date such witness or
evidence, as the case may be, called for by the employer is furnished to
the employer.
(4) A notice in Form ‘L’ or Form ‘M’ shall be served on the applicant
either by personal service after taking receipt or by registered post with
acknowledgement due.
(5) A notice under sub-section (2) of section 7 shall be in Form ‘L’.
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46) In the present case, no notice of forfeiture of gratuity has
been served on the Respondent. In this regard, reliance by Ms. Patankar
on judgment of this Court in Chairman and Managing Director, Bank of
Maharashtra is apposite in which this Court has held that mere issuance
of a notice in Form-M rejecting the claim for payment of gratuity is not
sufficient, and that the notice must enumerate the basis and extent of the
financial loss claimed by the employer, which is alleged to have been
caused due to the willful disobedience and negligence of the employee.
This Court has held in paras-29, 30 and 32 of the judgment as under:
29. A proper appreciation of the provisions of the Act of 1972, as also
the Rules framed thereunder would show that although Form-M is titled
as a notice, in real terms, it is a decision rejecting claim for payment of
gratuity or information given to the employee that his gratuity stands
forfeited. This view is supported by an observation made by a learned
Single Judge (Rohit Deo, J.) of this Court in the case of General Manager,
HRM and others v. Appellate Authority and others (Writ Petition No. 956
of 2022 decided on 08/04/2022), the relevant portion of the said
judgment reads as follows:
"7. In response to a specific query put by me as to whether prior notice is
issued to the employee before forfeiting the gratuity, the learned
Counsel for the employer Mr. R.N. Sen invites my attention to notice
form dated 15-7-15 which is at Annexure-5 to the memo of the petition.
The said communication, as a fact, is not a show cause notice. Rather, by
the said communication, the employee is only informed the decision of
the employer that the gratuity stands forfeited."
30. This Court is of the opinion that an employer cannot simply issue
notice in Form-M to the employee rejecting claim for payment of
gratuity. This has to be preceded by a show cause notice, because the
gratuity amount to which the employee is otherwise entitled is to be
forfeited, which is a drastic consequence for the employee. Such a notice
would enumerate the basis and extent of financial loss as claimed by the
petitioner-employer, due to the alleged willful omission or negligence of
the employee. An opportunity would also be available for the employee
to contest the same, ensuring fairness of procedure. In the present case,
admittedly show cause notice was not issued to the respondent No. 1
before the said notice rejecting claim for payment of gratuity was
directly issued to him under Form-M on 06/10/2012. The reason stated
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1 September 2026
Neeta Sawant WP-9972 OF 2026
by the petitioner-employer in the said notice for forfeiting gratuity reads
as follows:
"Reasons:-There is a loss to the Bank to the extent of Rs. 69.72
lacs plus unapplied interest thereon on account of your
misconduct."
32. This Court is of the opinion that unless such an exercise was carried
out by the petitioner-employer and on the basis of such material, proper
show cause notice was issued to the respondent No. 1, power under
section 4(6)(a) of the Act of 1972, could not have been invoked to forfeit
the gratuity of respondent No. 1. Merely referring to the contents of the
enquiry report would not suffice and in any event the figure mentioned
in the enquiry report was about Rs. 68.45 Lakhs, while the notice
rejecting claim for payment of gratuity stated the figure as Rs. 69.72
Lakhs plus unapplied interest thereon. As noted above, the respondent
No. 1 already suffered punishment of compulsory retirement on the
basis of five out of the six charges being proved in the departmental
enquiry and therefore, reliance placed on the contents of the enquiry
report for invoking section 4(6)(a) of the Act of 1972, on the part of the
petitioner-employer is not justified.
47) In the present case, Petitioners did not issue notice in Form-
M indicating the reasons for forfeiture of the gratuity. Therefore,
forfeiture of gratuity cannot be lightly or readily inferred.
48) Even otherwise, termination order dated 2 July 2023 does not
state that the gratuity is forfeited. The operative part of the order reads
thus:
For all the reasons stated above, you have rendered yours services liable
to be terminated. Hence, we Mare constrained to immediately terminate
your services.
Moreover, on account of all the infractions notice above, you have
caused serious prejudice and an immeasurable loss to the Trust, which is
presently quantified at Rs. 5,00,00,000.
In the Asstt. Manager Promotion Letter, the Trust is authorised to adjust
such loss against your salary and hence, the your salary from November
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Neeta Sawant WP-9972 OF 2026
2022 onwards till the date of this letter is adjusted against the loss
caused by you of Rs. 5,00,00,000
For the said reasons the Trust cannot consider payment of any ex-gratia
and/or bonus to you.
49) Thus, in the termination letter, Petitioners claimed
sufferance of loss of Rs. 5 crores and far from taking a position that the
gratuity is forfeited, it was stated that “the Trust is authorised to adjust
such loss against your salary and hence, your salary from November 2022
onwards till the date of this letter is adjusted against the loss caused by you
of Rs. 5,00,00,000”. Accordingly, the salary from November 2022 onwards
till the termination was not paid. The Petitioner-Trust also
communicated its decision for non-payment of the gratuity and bonus to
the Respondent. Thus, there is nothing to indicate that the Petitioner-
Trust intended to forfeit the gratuity of the Respondent in any manner.
50) So far as the adjustment of salary from November 2022
onwards against the alleged loss of Rs.5 crores is concerned, the Civil
Court has allowed claim for that salary. Even otherwise, Section 4(6) of
the P.G. Act contemplates forfeiture of gratuity to the extent of the
damage or loss caused, if the services are terminated for any act, willful
omission or negligence causing any damage or loss or destruction of the
property belonging to the employer. In the present case, the allegation
against the Respondent is unauthorized shredding of original records
relating to membership of the Trust. In that sense, the act of the
Respondent does not cause a direct loss to the employer. The loss
contemplated under Section 4(6) is a direct loss suffered by the employer
and not a perceived loss. To illustrate, if an employee is responsible for
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Neeta Sawant WP-9972 OF 2026
loss of any item or stock, or acts in a negligent manner where the
property of the employer is destroyed, gratuity to the extent of such loss
can be forfeited. In the present case, Petitioners have quoted a whimsical
and fanciful amount of Rs. 5 crores. In any case, counterclaim filed by the
Petitioners for recovery of alleged loss of Rs.5 crores has already been
dismissed by the Civil Court. Since First Appeal is pending, this Court is
not going into the aspect of loss suffered by the Petitioners, and they
would be free to agitate the same in the pending appeal. As of now, for
the limited purpose of gratuity, this Court proceeds to hold that the
requirement of Section 4(6)(a) of the P.G. Act is not met, and there is no
forfeiture of gratuity within the meaning of that provision.
51) Thus, even on merits, the Respondent is found to be entitled
to payment of gratuity. The Controlling Authority has rightly allowed the
Application filed by him. Therefore, there is no warrant for interference in
the impugned order passed by the Controlling Authority.
52) Coming to the aspect of interest, the Controlling Authority
has awarded interest @10% p.a.. However the Petitioners have failed to
implement the order of the Controlling Authority despite being served
with copy of the same. This made Respondent incur further expenses in
filing Recovery Application under Section 8 of the P.G. Act. Section 8
specified different and compound rate of interest for recovery of gratuity.
Section 8 provides thus:
8. Recovery of gratuity
If the amount of gratuity payable under this Act is not paid by the employer,
within the prescribed time, to the person entitled thereto, the controlling
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Neeta Sawant WP-9972 OF 2026
authority shall, on an application made to it in this behalf by the aggrieved
person, issue a certificate for that amount to the Collector, who shall recover
the same, together with compound interest thereon at such rate as the Central
Government may, by notification, specify, from the date of expiry of the
prescribed time, as arrears of land revenue and pay the same to the person
entitled thereto:
Provided that the controlling authority shall, before issuing a certificate under
this section, give the employer a reasonable opportunity of showing cause
against the issue of such certificate:
Provided further that the amount of interest payable under this section shall, in
no case exceed the amount of gratuity payable under this Act
By Notification dated 1 December 1987 issued under Section 8 of the P.G.
Act, the Central Government has specified the compound rate of interest
of 15% on unpaid amount of gratuity. Since the Petitioners made
Respondent filed Recovery Application (in which Recovery Certificate with
15% interest is bound to be issued), the Petitioners shall pay to the
Respondent gratuity awarded by the Controlling Authority with 15%
compound interest. This direction is necessary since this Court is
proposing to fix a timeline for payment to avoid any further delay by the
Petitioners by contesting the Recovery proceedings. It should not happen
that specification of timeline by this Court works to the disadvantage of
the Respondent. Therefore what would ultimately be done in the
Recovery proceedings is ensured by directing payment of interest as
specified under Section 8 of the P.G. Act.
53) In fact, the conduct of the Petitioners in denying gratuity to
the Respondent is not appreciated by this Court. Merely because there are
disputes between the two managing committees, the same does not mean
that the Respondent should be denied gratuity for the 23 long years of
service rendered by him. Afterall, gratuity is paid to the employee with a
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Neeta Sawant WP-9972 OF 2026
view to ensure that there is some amount available to look after post-
retirement needs. The services of the Respondent have been terminated 3
years ago and is without any salary and the gratuity is also denied to him.
54) What has disturbed the Court more is the manner in which
Petitioners have conducted themselves ‘before’, ‘during’ and ‘after’
proceedings before the Controlling Authority. The conduct is already
noted above. Petitioners had taken a decision not to pay gratuity to
Respondent under any circumstances, and they went on ignoring the
letters and notices. For the conduct of deliberately not acting on repeated
correspondences made by Respondent and notices issued by the
Authority and for taking a false stand that Petitioners were never aware
about filing of gratuity application and about its outcome, costs deserve
to be imposed on the Petitioners. I deem it appropriate to determine the
costs at Rs. 1,00,000/-. As a matter of fact, the Court has come across
document evidencing withdrawal of Respondent’s gratuity by the
Petitioners after receipt of letters from him thereby depicting deliberate
design to deny gratuity. The amount of costs would have been higher
based on that document, but because the same is produced by the
Respondent during the course of hearing of Petition, I am not considering
that document while determining the quantum of costs. Therefore, the
costs are capped at Rs. 1,00,000/-. It is however clarified that the
observations made in the judgment shall not come in the way of decision
of both the First Appeals filed by the rival parties.
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55) The Writ Petition is accordingly dismissed. Over and above
the gratuity and statutory interest payable to the Respondent, Petitioners
shall pay costs of Rs.1,00,000/- to him. The amount of gratuity with
interest, as well as the amount of costs shall paid to the Respondent
within a period of 6 weeks.
Digitally [SANDEEP V. MARNE, J.]
signed by
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2026.09.01
21:10:23
+0530
_____________________________________________________________________________
PAGE NO. 34 of 34
1 September 2026
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