State Gratuity Authorities Lack Jurisdiction Where Establishment Has Branches In Multiple States: Delhi High Court

The Delhi High Court has held that State-appointed authorities under the Payment of Gratuity Act, 1972 lack jurisdiction to adjudicate gratuity claims where the establishment has branches in more than one State, as in such cases the Central Government is the “appropriate government” under the Act.Justice Shail Jain observed,“the appropriate Government under the present case would be the Central Government as the Petitioner-company has branches in more than one State, and not the State Government…”The Court was dealing with an employer's plea questioning the jurisdiction of the Controlling Authority (CA) appointed by the Delhi government under Payment of Gratuity Act, 1972, to decide its employee's claim for gratuity.Petitioner submitted that it has offices both in Delhi and NOIDA (Uttra Pradesh). Hence, by virtue of Sections 2 and 3 of the Gratuity Act, the appropriate Government is the Central Government; consequently, the 'CA' ought to be an authority appointed by the Central Government and not by the State Government. Respondent-employee on the other hand argued that he used to work at the Delhi office/branch, and that the NOIDA office/branch merely dealt with official communications, with no technical or substantial functions of the Company ever being performed there. Consequently, it was contended that the application for gratuity was rightly filed before the Controlling Authority at Delhi.Disagreeing, the High Court referred to Section 2(a) which defines 'appropriate Government' and held,“It vests such authority in the Central Government in cases where the establishment or factory belongs to or is under its control, where an establishment has branches in more than one State, or where the undertaking relates to specified sectors such as major ports, mines, oilfields, or railway companies. In all remaining cases, where none of these conditions are attracted, the State Government is designated as the appropriate Government to exercise jurisdiction under the Act.”The Court also noted that the resignation letter of the employee was addressed to the NOIDA office of the company and not to the Delhi office. This fact, the court said, assumes significance, particularly in light of the claimant's own contention that he worked exclusively in Delhi and not at NOIDA, and that Delhi was the appropriate Government competent to adjudicate his claim. “If such a contention were true, the resignation letter ought to have been addressed to the Delhi office. Not only was the resignation letter sent to the NOIDA office, but even the subsequent Legal Notices issued by the claimant were addressed to the NOIDA office alone.”As such, the Court quashed the impugned orders passed by the State gratuity authorities.Appearance: Mr. Saurabh Shandilya , Adv. for Petitioner; Mr. Kailash Sharma and Ms. Pushpanjali Tripathi, Advs. for RespondentsCase title: M/S CSAT System (P) Ltd v. Appellant Authority Under The Payment Of Gratuity Act, 1972 And Ors.Citation: 2026 LiveLaw (Del) 185Case no.: W.P.(C) 11251/2015 Click here to read order

State Gratuity Authorities Lack Jurisdiction Where Establishment Has Branches In Multiple States: Delhi High Court

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