1. Court’s decision
The Bombay High Court (Kolhapur Bench) dismissed the writ petition filed by a state-level cooperative marketing federation challenging the Appellate Authority’s refusal to accept its gratuity pre-deposit. The Court held that Section 7(7) of the Payment of Gratuity Act, 1972 imposes a mandatory jurisdictional condition: the employer must deposit the entire gratuity amount within 120 days from receipt of the Controlling Authority’s order, and this deposit must accompany the presentation of the appeal.
Since the petitioner deposited the amount more than three years later, long after the 120-day limit, the Appellate Authority correctly refused to entertain the application. Consequently, the writ petition was dismissed.
2. Facts
The employee initiated proceedings under Section 7 of the Payment of Gratuity Act seeking gratuity of ₹5,47,000 with 20% interest. The Controlling Authority, by order dated 9 February 2015, allowed the claim and directed the employer to pay gratuity with 9% interest from 31 March 2010.
The employer received the certified copy on 24 February 2015 and filed an appeal on 11 June 2015, i.e., beyond the standard 60-day period but within the outer limit of 120 days, accompanied by a delay-condonation application.
However, the employer did not deposit the mandatory gratuity amount either with the Controlling Authority or the Appellate Authority at the time of filing the appeal. Instead, it tendered a demand draft only on 5 October 2018, more than three years after the statutory deadline. The Appellate Authority refused to accept the belated deposit and dismissed the employer’s application.
3. Issues
The High Court considered:
• Whether the second proviso to Section 7(7) requires deposit only before the appeal is admitted, or at the time of filing the appeal;
• Whether deposit can be postponed until after delay is condoned;
• Whether non-deposit within 120 days extinguishes the right of appeal;
• Whether the Appellate Authority was justified in rejecting the employer’s request to accept the deposit belatedly.
4. Petitioner’s arguments
The employer argued that the Appellate Authority misinterpreted Section 7(7). According to it, the statute does not require deposit at the time of filing the appeal but only before admission, meaning the Authority should have accepted the demand draft tendered later.
The petitioner contended that since its delay was condoned, the appeal ought to have been processed on merits and the deposit should have been accepted thereafter. It also argued that the impugned order lacked reasons and was therefore unsustainable.
5. Respondent’s arguments
The employee, relying on Pharma Base India Pvt. Ltd. v. State of Maharashtra (2009) and Changunabai Sambhaji Gaware (2016), argued that the second proviso to Section 7(7) is explicit:
No appeal shall be admitted unless, at the time of preferring the appeal, the employer either produces a certificate of deposit or deposits the gratuity amount with the Appellate Authority.
Thus, the employer’s failure to deposit within 120 days stripped the Appellate Authority of its jurisdiction to hear the appeal. The three-year delay made the appeal non-maintainable.
6. Analysis of the law
The Court applied the statutory text and binding precedent. Section 7(7) contains a mandatory pre-deposit requirement. The second proviso states that deposit must occur “at the time of preferring the appeal.”
The Division Bench in Pharma Base India held unequivocally that:
• Deposit or production of certificate must accompany the appeal,
• It cannot be postponed,
• The Appellate Authority has no jurisdiction to entertain an appeal if deposit is not made within 120 days.
The High Court endorsed this principle, rejecting the petitioner’s interpretation that deposit may occur anytime before admission. Delay-condonation does not revive a right already lost due to failure to satisfy jurisdictional pre-conditions.
7. Precedent analysis
Pharma Base India Pvt. Ltd. (2009 Mh LJ 688)
The Division Bench held that deposit is mandatory at the time of filing and cannot be postponed. It expressly disagreed with the Allahabad view permitting later deposit. The High Court treated this as binding and directly applicable.
Changunabai Sambhaji Gaware (2016 Bom CR 385)
Reaffirmed that Section 7(7) pre-deposit is a condition precedent to the right of appeal.
The Court applied both cases to conclude that the employer’s appeal became non-maintainable once it failed to deposit gratuity within 120 days of the Controlling Authority’s order.
8. Court’s reasoning
The Court emphasised key findings:
• The employer received the order on 24 February 2015;
• The latest permissible date for complying with Section 7(7) was 24 June 2015 (120 days);
• The employer deposited the amount only on 5 October 2018;
• Such extraordinary delay extinguished the right of appeal.
The Court held that the statutory mandate is absolute and cannot be diluted on equitable considerations. The petitioner’s argument—that deposit could be made after delay-condonation—was rejected as contrary to the statutory scheme and binding precedent.
Accordingly, the Appellate Authority rightly refused to entertain the appeal or accept the deposit.
9. Conclusion
The High Court dismissed the writ petition, holding that:
• Pre-deposit under Section 7(7) is jurisdictional and mandatory;
• Deposit must be made while preferring the appeal and within 120 days;
• Appeal filed without such deposit is non-maintainable;
• Belated deposit after three years cannot cure the defect.
The petition was dismissed with no relief granted.
10. Implications
• Employers appealing gratuity orders must strictly comply with pre-deposit requirements; failure is fatal.
• Appellate Authorities have no power to accept late deposits or revive defective appeals.
• Delay-condonation does not override jurisdictional prerequisites.
• The ruling strengthens employees’ statutory rights by preventing employers from indefinitely postponing gratuity payments through procedural manoeuvres.
• Section 7(7) now stands reaffirmed as one of the strongest pre-deposit provisions in social-welfare legislation.
CASE LAW REFERENCES
Pharma Base India Pvt. Ltd. v. State of Maharashtra (2009 Mh LJ 688)
Held deposit must accompany appeal; appellate authority lacks jurisdiction otherwise. Applied directly.
Changunabai Sambhaji Gaware (2016 (4) Bom CR 385)
Reaffirmed mandatory nature of pre-deposit under Section 7(7).
FAQ SECTION
1. Can the gratuity pre-deposit under Section 7(7) be made after filing the appeal?
No. The deposit must be made when preferring the appeal, and in any case within 120 days of the Controlling Authority’s order.
2. Can delay in filing an appeal cure failure to make pre-deposit?
No. Delay-condonation cannot override a mandatory jurisdictional requirement; the right of appeal is lost once the 120-day window expires.
3. What happens if the employer deposits gratuity years later?
The appeal remains non-maintainable, and the Appellate Authority cannot accept late deposit or hear the appeal.
