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A2Z Infraservices Limited v. Assistant Labour Commissioner & Ors.

Delhi High Court · 11 Aug 2025 · 2025:DHC:7658
Tara Vitasta Ganju
W.P.(C) 14953/2022
2025:DHC:7658
labor petition_allowed Significant
AI Summary

The Delhi High Court set aside a recovery certificate issued under the Payment of Gratuity Act for failure to provide the employer a proper show cause notice with proof of receipt, emphasizing mandatory procedural compliance.

Full Text
Translation output
W.P.(C) 14953/2022
HIGH COURT OF DELHI
Date of Decision: 11.08.2025
W.P.(C) 14953/2022, CM APPL. 46105/2022, CM APPL.
17041/2024 & CM APPL. 19238/2025 A2Z INFRASERVICES LIMITED .....Petitioner
Through: Mr. Tushar Mudgil, Advocate.
VERSUS
ASSISTANT LABOUR COMMISSIONER & ORS. .....Respondents
Through: Mr. Vijay Joshi, Advocate for R-1.
CORAM:
HON'BLE MS. JUSTICE TARA VITASTA GANJU TARA VITASTA GANJU, J.: (Oral)
JUDGMENT

1. The present Petition has been filed on behalf of the Petitioner seeking to challenge an office order bearing No.ALC-III/36/RC to 134/2020-SK dated 02.03.2022 [hereinafter referred to as the “Office Order”] and the recovery certificate dated 09.09.2022[2] bearing Memo No.1872/DRA [hereinafter referred to as the “Recovery Certificate”] issued against the Petitioner for recovery of an amount of Rs.62,94,754/-.

2. The grievance of the Petitioner as articulated in the Petition is that although the demand was raised against on the Petitioner, the recovery certificate was issued without following the procedure as laid down in Section 8 of the Payment of Gratuity Act, 1972 [hereinafter referred to as “Act”] as well as Rules 17 and 19 of the Payment of Gratuity (Central) Rules, 1972 which mandates issue of a show cause notice before issue of a recovery certificate. It is the case of the Petitioner that no such show cause notice was ever received by the Petitioner.

3. This Court, on 24.01.2023, after examining the matter, had passed the following directions:

“6. Issue notice. Learned counsel for the respondent no.1 accepts notice and submits that since the only grievance of the petitioner is that the recovery certificate has been issued without issuance of any show-cause notice to it, he may be granted time to obtain instructions as to whether the said respondent would be willing to recall the recovery certificate with liberty to issue a fresh recovery certificate after due show-cause notice to the petitioner in accordance with law. 7. It is expected that till the next date, the respondents will not take any coercive steps against the petitioner.”

3.[1] Thereafter, the Respondent No.1 filed a Short Affidavit dated 19.07.2023 [hereinafter referred to as the “Affidavit”] to set out that the show cause notices were duly issued to the Petitioner at all addresses on 24.12.2021 in terms of the Annexure A-1 (Colly) to the Affidavit.

4. Learned Counsel for the Petitioner submits that no show cause notices were ever received by the Petitioner. In addition, it is contended that the Annexure A-1 (Colly) which has been filed along with the Short Affidavit shows that show cause notices were sent out to the Petitioner at the same addresses, however he submits, that the speed post number for each of these show cause notices is the same being ED 956733845IN.

5. Learned Counsel for the Respondent No.1 submits the show cause notices were sent and that the relevant extract of the dispatch register has also been placed on record.

6. It is the case of the Respondent that several Claim Petitions were filed under the Act against the Petitioner. On receipt of these claims, notices were issued to the parties and show cause notices were issued to the Petitioner at its address as well. The Affidavit also states that the details of the show cause notices are annexed to the Affidavit as well as the extract of the dispatch register. 6.[1] It is apposite to set out paragraph 7 and 8 of the Short Affidavit, below:

“7. Thereafter, Show Cause Notices were issued to M/ s. A2Z Infra Services Ltd. at all the addresses which have been detailed above, with the request to show cause within 15 days from the date of receipt of Show Cause Notices as to why recovery certificate should not be issued against the Non-Applicant. The details of Show Cause Notices issued to the Petitioner by the Respondent No. 1 as per office records along with copies of the same are as per ANNEXURE A-1 (COLLY). 8. That the relevant pages of the Despatch Register as maintained by the concerned office have been attached as ANNEXURE A-2 (COLLY).” [Emphasis Supplied]

7. Annexure A-1 to the Affidavit is a tabular chart which sets out 264 entries stated to be show cause notices dated 24.12.2021 dispatched on 31.12.2021. 132 of these entries have been sent to the Petitioner at one address and under speed post no. ED956733845 while the remaining notices from 133 to 264 have also dated 24.12.2021 stated to be dispatched on 31.12.2021 at second address and under speed post no. ED 956733845IN. It is apposite to extract Annexure A-1 as reproduced in the Affidavit which is below: Sl No. Show Cause Notice No. Date of Show Cause Date of Despatch Address of Non-Applicant Speed Post NO. 1. ALC- III/36/36/2020 24.12.2021 31.12.2021 M/s A2Z Infra Services Ltd., Plot No. B-38, Industrial Area, Sec-32, Jharsa Chowk, Gurugram, Haryana ED

2. ALC- III/36/37/2020 ED

3. ALC- III/36/38/2020 ED

4. ALC- III/36/39/2020 ED

5. ALC- III/36/40/2020 ED

6. ALC- III/36/41/2020 ED

16,633 characters total

7. ALC- III/36/42/2020 ED

8. ALC- III/36/43/2020 ED

9. ALC- III/36/44/2020 ED

10. ALC- III/36/45/2020 ED

11. ALC- III/36/46/2020 ED

12. ALC- III/36/47/2020 ED

13. ALC- III/36/48/2020 ED

14. ALC- III/36/49/2020 ED

15. ALC- III/36/50/2020 ED

16. ALC- III/36/51/2020 ED

17. ALC- III/36/52/2020 ED

18. ALC- III/36/53/2020 ED

19. ALC- III/36/54/2020 ED

20. ALC- III/36/55/2020 ED

21. ALC- III/36/56/2020 ED

22. ALC- III/36/57/2020 ED

23. ALC- III/36/58/2020 ED

24. ALC- III/36/59/2020 ED

25. ALC- III/36/60/2020 ED

26. ALC- III/36/62/2020 ED

27. ALC- III/36/63/2020 ED

28. ALC- III/36/64/2020 ED

29. ALC- III/36/65/2020 ED

30. ALC- III/36/66/2020 ED

31. ALC- III/36/67/2020 ED

32. ALC- III/36/68/2020 ED

33. ALC- III/36/69/2020 ED

34. ALC- III/36/70/2020 ED

35. ALC- III/36/71/2020 ED

36. ALC- III/36/72/2020 ED

37. ALC- III/36/73/2020 ED

38. ALC- III/36/74/2020 ED

39. ALC- III/36/75/2020 ED

40. ALC- III/36/76/2020 ED

41. ALC- III/36/77/2020 ED

42. ALC- III/36/78/2020 ED

43. ALC- III/36/79/2020 ED

44.

45. ALC- III/36/80/2020 ED

46. ALC- III/36/81/2020 ED

47. ALC- III/36/82/2020 ED

48. ALC- III/36/83/2020 ED

49. ALC- III/36/84/2020 ED

50. ALC- III/36/85/2020 ED

51. ALC- III/36/86/2020 ED

52. ALC- III/36/87/2020 ED

53. ALC- III/36/88/2020 ED

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55. ALC- III/36/90/2020 ED

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57. ALC- III/36/92/2020 ED

58. ALC- III/36/93/2020 ED

59. ALC- III/36/94/2020 ED

60. ALC- III/36/95/2020 ED

61. ALC- III/36/96/2020 ED

62. ALC- III/36/97/2020 ED

63. ALC- III/36/98/2020 ED

64. ALC- III/36/99/2020 ED

65. ALC- III/36/100/2020 ED

66. ALC- III/36/101/2020 ED

67. ALC- III/36/102/2020 ED

68. ALC- III/36/103/2020 ED

69. ALC- III/36/104/2020 ED

70. ALC- III/36/105/2020 ED

71. ALC- III/36/106/2020 ED

72. ALC- III/36/107/2020 ED

73. ALC- III/36/108/2020 ED

74. ALC- III/36/109/2020 ED

75. ALC- III/36/110/2020 ED

76. ALC- III/36/111/2020 ED

77. ALC- III/36/112/2020 ED

78. ALC- III/36/113/2020 ED

79. ALC- III/36/114/2020 ED

80. ALC- III/36/115/2020 ED

81. ALC- III/36/116/2020 ED

82. ALC- III/36/117/2020 ED

83. ALC- III/36/118/2020 ED

84. ALC- III/36/119/2020 ED

85. ALC- III/36/120/2020 ED

86. ALC- III/36/121/2020 ED

87. ALC- III/36/122/2020 ED

88. ALC- III/36/123/2020 ED

89. ALC- III/36/124/2020 ED

90. ALC- III/36/125/2020 ED

91. ALC- III/36/126/2020 ED

92. ALC- III/36/127/2020 ED

93. ALC- III/36/128/2020 ED

94. ALC- III/36/129/2020 ED

95. ALC- III/36/131/2020 ED

96. ALC- III/36/132/2020 ED

97. ALC- III/36/133/2020 ED

98. ALC- III/36/134/2020 ED

99. ALC- III/36/135/2020 ED

100. ALC- III/36/136/2020 ED

101. ALC- III/36/137/2020 ED

102. ALC- III/36/138/2020 ED

103. ALC- III/36/139/2020 ED

104. ALC- III/36/140/2020 ED

105. ALC- III/36/141/2020 ED

106. ALC- III/36/142/2020 ED

107. ALC- III/36/143/2020 ED

108. ALC- III/36/144/2020 ED

109. ALC- III/36/146/2020 ED

110. ALC- III/36/148/2020 ED

111. ALC- III/36/149/2020 ED

112. ALC- III/36/150/2020 ED

113. ALC- III/36/151/2020 ED

114. ALC- III/36/152/2020 ED

115. ALC- III/36/153/2020 ED

116. ALC- III/36/154/2020 ED

117. ALC- III/36/155/2020 ED

118. ALC- III/36/156/2020 ED

119. ALC- III/36/157/2020 ED

120. ALC- III/36/158/2020 ED

121. ALC- III/36/159/2020 ED

122. ALC- III/36/160/2020 ED

123. ALC- III/36/161/2020 ED

124. ALC- III/36/162/2020 ED

125. ALC- III/36/163/2020 ED

126. ALC- III/36/164/2020 ED

127. ALC- III/36/165/2020 ED

128. ALC- III/36/166/2020 ED

129. ALC- III/36/167/2020 ED

130. ALC- III/36/168/2020 ED

131. ALC- III/36/169/2020 ED

132. ALC- III/36/170/2020 ED

133. ALC- III/36/36/2020 24.12.2021 31.12.2021 M/s A2Z Infra Services Ltd., O- 116,Arjun Marg, DLF City,-1, ED 956733845I N

134. ALC- III/36/37/2020 ED N

135. ALC- III/36/38/2020 ED N

136. ALC- III/36/39/2020 ED N

137. ALC- III/36/40/2020 ED N

138. ALC- III/36/41/2020 ED N

139. ALC- III/36/42/2020 ED N

140. ALC- III/36/43/2020 ED N

141. ALC- III/36/44/2020 ED N

142. ALC- III/36/45/2020 ED N

143. ALC- III/36/46/2020 ED N

144. ALC- III/36/47/2020 ED N

145. ALC- III/36/48/2020 ED N

146. ALC- III/36/49/2020 ED N

147. ALC- III/36/50/2020 ED N

148. ALC- III/36/51/2020 ED N

149. ALC- III/36/52/2020 ED N

150. ALC- III/36/53/2020 ED N

151. ALC- III/36/54/2020 ED N

152. ALC- III/36/55/2020 ED N

153. ALC- III/36/56/2020 ED N

154. ALC- III/36/57/2020 ED N

155. ALC- III/36/58/2020 ED N

156. ALC- III/36/59/2020 ED N

157. ALC- III/36/60/2020 ED N

158. ALC- III/36/62/2020 ED N

159. ALC- III/36/63/2020 ED N

160. ALC- III/36/64/2020 ED N

161. ALC- III/36/65/2020 ED N

162. ALC- III/36/66/2020 ED N

163. ALC- III/36/67/2020 ED N

164. ALC- III/36/68/2020 ED N

165. ALC- III/36/69/2020 ED N

166. ALC- III/36/70/2020 ED N

167. ALC- III/36/71/2020 ED N

168. ALC- III/36/72/2020 ED N

169. ALC- III/36/73/2020 ED N

170. ALC- III/36/74/2020 ED N

171. ALC- III/36/75/2020 ED N

172. ALC- III/36/76/2020 ED N

173. ALC- III/36/77/2020 ED N

174. ALC- III/36/78/2020 ED N

175.

ALC- ED N

176.

ALC- ED N

177. ALC- III/36/80/2020 ED N

178. ALC- III/36/81/2020 ED N

179. ALC- III/36/82/2020 ED N

180. ALC- III/36/83/2020 ED N

181. ALC- III/36/84/2020 ED N

182. ALC- III/36/85/2020 ED N

183. ALC- III/36/86/2020 ED N

184. ALC- III/36/87/2020 ED N

185. ALC- III/36/88/2020 ED N

186. ALC- III/36/89/2020 ED N

187. ALC- III/36/90/2020 ED N

188. ALC- III/36/91/2020 ED N

189. ALC- III/36/92/2020 ED N

190. ALC- III/36/93/2020 ED N

191. ALC- III/36/94/2020 ED N

192. ALC- III/36/95/2020 ED N

193. ALC- III/36/96/2020 ED N

194. ALC- III/36/97/2020 ED N

195. ALC- III/36/98/2020 ED N

196. ALC- III/36/99/2020 ED N

197. ALC- III/36/100/2020 ED N

198. ALC- III/36/101/2020 ED N

199. ALC- III/36/102/2020 ED N

200. ALC- III/36/103/2020 ED N

201. ALC- III/36/104/2020 ED N

202. ALC- III/36/105/2020 ED N

203. ALC- III/36/106/2020 ED N

204. ALC- III/36/107/2020 ED N

205. ALC- III/36/108/2020 ED N

206. ALC- III/36/109/2020 ED N

207. ALC- III/36/110/2020 ED N

208. ALC- III/36/111/2020 ED N

209. ALC- III/36/112/2020 ED N

210. ALC- III/36/113/2020 ED N

211. ALC- III/36/114/2020 ED N

212. ALC- III/36/115/2020 ED N

213. ALC- III/36/116/2020 ED N

214. ALC- III/36/117/2020 ED N

215. ALC- III/36/118/2020 ED N

216. ALC- III/36/119/2020 ED N

217. ALC- III/36/120/2020 ED N

218. ALC- III/36/121/2020 ED N

219. ALC- III/36/122/2020 ED N

220. ALC- III/36/123/2020 ED N

221. ALC- III/36/124/2020 ED N

222. ALC- III/36/125/2020 ED N

223. ALC- III/36/126/2020 ED N

224. ALC- III/36/127/2020 ED N

225. ALC- III/36/128/2020 ED N

226. ALC- III/36/129/2020 ED N

227. ALC- III/36/131/2020 ED N

228. ALC- III/36/132/2020 ED N

229. ALC- III/36/133/2020 ED N

230. ALC- III/36/134/2020 ED N

231. ALC- III/36/135/2020 ED N

232. ALC- III/36/136/2020 ED N

233. ALC- III/36/137/2020 ED N

234. ALC- III/36/138/2020 ED N

235. ALC- III/36/139/2020 ED N

236. ALC- III/36/140/2020 ED N

237. ALC- III/36/141/2020 ED N

238. ALC- III/36/142/2020 ED N

239. ALC- III/36/143/2020 ED N

240. ALC- III/36/144/2020 ED N

241. ALC- III/36/146/2020 ED N

242. ALC- III/36/148/2020 ED N

243. ALC- III/36/149/2020 ED N

244. ALC- III/36/150/2020 ED N

245. ALC- III/36/151/2020 ED N

246. ALC- III/36/152/2020 ED N

247. ALC- III/36/153/2020 ED N

248. ALC- III/36/154/2020 ED N

249. ALC- III/36/155/2020 ED N

250. ALC- III/36/156/2020 ED N

251. ALC- III/36/157/2020 ED N

252. ALC- III/36/158/2020 ED N

253. ALC- III/36/159/2020 ED N

254. ALC- III/36/160/2020 ED N

255. ALC- III/36/161/2020 ED N

256. ALC- III/36/162/2020 ED N

257. ALC- III/36/163/2020 ED N

258. ALC- III/36/164/2020 ED N

259. ALC- III/36/165/2020 ED N

260. ALC- III/36/166/2020 ED N

261. ALC- III/36/167/2020 ED N

262. ALC- III/36/168/2020 ED N

263. ALC- III/36/169/2020 ED N

264. ALC- III/36/170/2020 ED N

8. Thus, as contended by the Respondent, 264 notices have been sent by two speed post communications bearing ED 956733845 and ED 956733845IN. As proof of dispatch, an extract of the dispatch register has also been placed on record. However, no delivery receipts are present.

9. The Petitioner has contended that he did not receive any of these notices. The Respondent, on the other hand, has only been able to place on record the dispatch details without any acknowledgment or delivery proof. The Affidavit filed also does not contain any dates when these notices were stated to have been delivered to the Petitioner.

10. The first proviso to Section 8 of the Act sets out that the controlling authority, before issuing a notice for recovery of gratuity shall give the employer a reasonable opportunity of showing cause against such certificate in the following terms: “Section: 8 Recovery of gratuity. If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at such rate as the Central Government may, by notification, specify, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto: Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate…” [Emphasis supplied] 10.[1] Rule 17 of the Payment of Gratuity (Central) Rules, 1972 also sets out that when the controlling authority finds that the applicant is entitled to payment of gratuity, a notice shall be issued to the employer concerned in Form ‘R’ specifying the amount payable and stating that the payment shall be made within 30 days from the date of the receipt of the notice. Thus receipt is built in to the provision. Rule 17 of the Payment of Gratuity (Central) Rules, 1972 is set out below:

“17. Direction for payment of gratuity - If a finding is recorded under sub- rule (4) of rule 11 that the applicant is entitled to payment of gratuity under the Act, the controlling authority shall issue a notice to the employer concerned in Form 'R' specifying the amount payable and directing payment thereof to the applicant under intimation to the controlling authority within thirty days from the date of the receipt of the notice by the employer. A copy of the notice shall be endorsed to the applicant employee, nominee or legal heir, as the case may be.” [Emphasis supplied]

10.[2] A combined reading of these provisions shows that the controlling authority/Respondent herein is required to send notices at two stages. One notice to show cause at the stage when the claim application is received and thereafter, once the claim is adjudicated upon, another notice is to be sent for recovery if the employer fails to make payment of the gratuity due.

11. The Affidavit as filed does not set out whether the compliance in terms of proviso to Section 18 of the Act or the Rule 17 of the Payment of Gratuity (Central) Rules, 1972 has been carried out prior to issuing of the recovery certificate. No other details are forth coming in the hearing either.

12. In the absence of such material particulars renders insufficient to establish that due service of show cause notices was effected on the Petitioner as is the Short Affidavit thus cannot be relied upon in support of the contentions of the Respondent No.1.

13. Accordingly, in view of what is stated above, the Office Order and consequent Recovery Certificate are accordingly set aside. All consequential orders flowing therefrom are also set aside.

14. The Respondent No.1 is however at liberty to take appropriate steps in accordance with law to effect recoveries from the Petitioner, if due. The rights and contentions of both parties shall be left open in this behalf.

15. The Petition is allowed. All pending Applications stand closed.

TARA VITASTA GANJU, J AUGUST 11, 2025/ ha/pa

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