The Court rules that only the Central Government has jurisdiction in cases involving companies with branches in multiple states.
In a significant ruling, the Delhi High Court has set aside orders from the Controlling Authority and the Appellate Authority under the Payment of Gratuity Act, 1972, asserting that jurisdiction in cases involving companies with branches across multiple states lies with the Central Government. The case involved M/s CSAT System (P) Ltd, which challenged the orders mandating it to pay gratuity to a former employee, claiming the state authorities lacked jurisdiction.
The court examined the Payment of Gratuity Act, 1972, particularly Section 2(a), which defines the "appropriate Government." It concluded that the Central Government is the competent authority when an establishment operates in more than one state. The judgment emphasized that the orders passed by the state-appointed authorities were null and void due to an inherent lack of jurisdiction.
The petitioner, M/s CSAT System (P) Ltd, argued that the company had branches in multiple states and thus, the Central Government was the appropriate authority. The company had contested the orders from the state authorities, which had directed it to pay Rs. 1,55,769 with interest as gratuity to a former employee. The High Court upheld this argument, stating the state authorities' lack of jurisdiction could not be cured by consent or waiver.
The court's decision underscores the importance of jurisdictional competence in legal proceedings under the Payment of Gratuity Act, 1972, and clarifies the role of the Central Government in cases involving multi-state operations.
Bottom Line:
Payment of Gratuity Act, 1972 - Competent jurisdiction for adjudicating disputes involving companies with branches in multiple states lies with Controlling Authority appointed by the Central Government, not the State Government.
Statutory provision(s): Payment of Gratuity Act, 1972 Sections 2(a), 2(d), 7(4)(d)
