Delhi High Court: While hearing a writ petition filed under Articles 226 and 227 of the Constitution seeking quashing of order dated 10-12-2014 (‘impugned order I’) passed by the Controlling Authority appointed by the Government of NCT of Delhi (‘CA’) and the order dated 21-10-2015 passed by the Appellate Authority (‘impugned order II’) under the Payment of Gratuity Act, 1972 (‘Act’), the Single Judge Bench of Shail Jain held that both the CA and the appellate authority lacked the inherent jurisdiction to adjudicate upon the claims of payment of gratuity where the establishment had branches in multiple States.
Accordingly, the Court set aside and quashed the impugned orders.
Background
The petitioner is a company incorporated under the Companies Act, 1956, having its registered office at Delhi and its head office in Noida, Uttar Pradesh. It was engaged in the manufacture of Automatic Data Processing machines and development of Information Technology software and operated through offices in more than one State.
Respondent 3 (‘claimant’) had been employed with the petitioner since 1994 as a System Executive and had last drawn wages of Rs. 15,000 per month. He had resigned from service with effect from 1-3-2013. Subsequently, he had sought release of gratuity and certain other dues. The petitioner had denied his claims, including gratuity, contending that he had not complied with the requisite conditions of resignation and was therefore not entitled to any payment.
The claimant thereafter had filed an application under Section 7(4) of the Act before the CA, claiming Rs. 1,64,423 towards gratuity along with other dues. The petitioner had raised a preliminary objection specifically challenging the jurisdiction of the CA.
The CA, vide the impugned order I, had held that it had jurisdiction on the ground that the registered office of the management was situated in Delhi, as reflected in the reply filed by the management and on its letterheads. On merits, it had held that the resignation was not disputed and that no statutory ground had been shown to disentitle the claimant from gratuity. Accordingly, it awarded gratuity for 18 years amounting to Rs. 1,55,769 along with interest at 10 per cent per annum from 1-3-2013 till actual payment, while rejecting the remaining claims as beyond its jurisdiction.
Aggrieved, the petitioner had preferred an appeal before the appellate authority. The appellate authority, vide impugned order II, had dismissed the appeal and remanded the matter to the CA with a direction to release the gratuity amount deposited by the petitioner in favour of the claimant in terms of impugned order I.
The petitioner thereafter filed the present writ petition challenging the jurisdiction of the CA and the appellate authority, contending that in view of its operations in more than one State, the appropriate Government under the Act was the Central Government, and therefore the authorities appointed by the Government of NCT of Delhi lacked competence to adjudicate the dispute.
Analysis, Law and Decision
The Court noted that Section 2(a) of the Act defines ‘appropriate Government’ and, inter alia, vests such authority in the Central Government in relation to an establishment having branches in more than one State. In all other cases, the State Government is designated as the appropriate Government. Thus, the statutory scheme makes a clear distinction based on the nature and geographical spread of the establishment, not on the situs of employment of an individual employee.
The Court observed that the petitioner had offices at Delhi and Noida. The gratuity application itself mentioned both addresses; the resignation letter of the claimant as well as subsequent legal notices were addressed to the Noida office. These documents established that the establishment had branches in more than one State within the meaning of Section 2(a)(i)(b) of the Act.
The Court held that the case squarely attracted Section 2(a)(i)(b) of the Act, and therefore the Central Government was the ‘appropriate Government’. The CA could not assume jurisdiction merely because the claimant asserted that he had worked in Delhi. Jurisdiction under the Act is founded on the statutory designation of the appropriate Government and not on the place of posting of the employee.
The Court further clarified that the defect was not one of territorial or pecuniary jurisdiction capable of waiver. It was a case of inherent lack of jurisdiction. An authority appointed by an incompetent Government under the Act could not derive jurisdiction by consent or acquiescence of parties.
Accordingly, it was held that the CA and the appellate authority lacked inherent jurisdiction to entertain and decide the application under Section 7(4) of the Act and the appeal under Section 7(7) of the Act. Thus, the Court declared the impugned orders to be without jurisdiction and, consequently, null and void.
[CSAT System Pvt. Ltd. v. Appellant Authority, W.P. (C) No. 11251 of 2015, decided on 10-2-2026]
Advocates who appeared in this case:
For the Petitioner: Saurabh Shandilya, Advocate
For the Respondents: Kailash Sharma, Pushpanjali Tripathi, Advocates
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