Central Govt Is “Appropriate Government”; State Gratuity Authority Lacks Jurisdiction For Multi-State Establishments: Delhi High Court
Isabella Mariam
The High Court of Delhi Single Bench of Justice Shail Jain has set aside the orders of State-appointed authorities that had allowed a former employee’s gratuity claim against a private employer, holding that they lacked competence to decide the dispute. The Court found that because the establishment operates through branches in more than one State, the Central Government is the “appropriate government” for the purposes of the Payment of Gratuity Act, 1972, and the claim could not be adjudicated by authorities appointed by the Government of NCT of Delhi.
The petitioner company filed a writ petition challenging orders passed by the Controlling Authority and the Appellate Authority under the Payment of Gratuity Act, 1972, directing payment of ₹1,55,769/- towards gratuity with 10% interest from 01.03.2013 to a former employee. The employee had served since 1994 and resigned with effect from 01.03.2013. After resignation, he sought release of gratuity and other dues. The management denied the claim, contending that he had not complied with resignation conditions.
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The employee filed an application under Section 7(4) of the Act before the Controlling Authority, Delhi. The management raised a preliminary objection to jurisdiction. The Controlling Authority framed issues regarding jurisdiction and entitlement to gratuity and allowed the claim. The Appellate Authority dismissed the appeal and directed release of the deposited gratuity amount.
Before the High Court, the petitioner contended that since it had offices in Delhi and NOIDA, Uttar Pradesh, the “appropriate Government” under Section 2(a) of the Act was the Central Government. The respondent contended that the employee worked in Delhi and that objections to jurisdiction were waived.
The Court recorded, “The sole question before this Court at present is: Whether the Controlling Authority & the Appellate Authority appointed by the Government of NCT of Delhi, New Delhi were competent authority to adjudicate the dispute even when Petitioner is a company having branches in more than one state?”
On examining the orders, the Court observed, “The absence of any discussion or finding on jurisdiction renders the orders unsustainable in law.”
With respect to the company’s presence in more than one State, the Court stated, “Thus, it is amply proved on the basis of the documents placed on record that the Petitioner/Company has branches in more than one State and, therefore, the appropriate Government in the case of the Petitioner for the purpose of applicability of Payment of Gratuity Act would be the Central Government.”
The Court noted that the resignation letter and legal notices were addressed to the NOIDA office and recorded that both Delhi and NOIDA addresses were reflected in official documents. It observed, “Therefore, the CA in the present case would be authority appointed by Central government.”
On the reasoning adopted by the Controlling Authority, the Court recorded, “Such reasoning is ex facie flawed, as the location of the registered office by itself cannot confer jurisdiction in the absence of a finding regarding the appropriate Government.”
Addressing waiver, the Court observed, “Therefore, the said authority lacks inherent jurisdiction to entertain and try this case and it is not a case of either want of Pecuniary Jurisdiction or Territorial Jurisdiction, which could be waived.”
The Court further recorded, “The appropriate Government in the present case being the Central Government, the State authorities had no jurisdiction to entertain the dispute.”
The Court directed, “Accordingly, and in consequence of the foregoing reasons, the Impugned Order I and Impugned order II of the Controlling Authority, as also of the Appellate Authority respectively are set aside and are hereby quashed. It is further clarified that this Court has not examined or expressed any opinion on the merits of the case. In terms of the aforesaid observations and directions, the Writ Petition along with pending application, if any, stands disposed of. No order as to costs.”
Advocates Representing the Parties
For the Petitioners: Mr. Saurabh Shandilya, Advocate
For the Respondents: Mr. Kailash Sharma and Ms. Pushpanjali Tripathi, Advocates
Case Title: M/S CSAT System (P) Ltd v. Appellant Authority Under The Payment Of Gratuity Act, 1972 And Ors.
Neutral Citation: 2026: DHC:1036
Case Number: W.P.(C) 11251/2015
Bench: Justice Shail Jain
