Ms Kosamattam Finance LTD vs Deputy Labour Commissioner & Anr 2026 KER 11529
Synopsis
This judgment addresses the jurisdictional competence of Controlling Authorities appointed under the Payment of Gratuity Act, 1972, to adjudicate gratuity claims of employees working in establishments operating in multiple states. The core legal controversy revolves around whether a State Government-appointed Controlling Authority has jurisdiction to decide the gratuity claim of an employee who served in a branch located in another state, when the employer is an establishment having branches in more than one state. The Kerala High Court held that under Section 2(a) read with Section 2(d) of the Payment of Gratuity Act, 1972, only the Controlling Authority appointed by the Central Government has jurisdiction over establishments operating in multiple states. The court further held that the failure of the employer to raise the jurisdictional objection before the State Authority is not fatal, as jurisdiction cannot be conferred by consent, and an authority must suo motu decline jurisdiction when lack thereof is apparent from the record. The court also reiterated that the existence of an alternative remedy is not a bar to exercising writ jurisdiction when an order is challenged on the ground of lack of jurisdiction.
Case Analysis:
M/S. Kosamattam Finance LTD.vs. Deputy Labour Commissioner & Anr
Citation: 2026:KER:11529
Court: High Court of Kerala at Ernakulam
Coram: Hon'ble Mr. Justice Gopinath P.
Date of Judgment: February 9, 2026
Court Registry: WP(C) NO. 34801 OF 2025
1. Proper Heading of the Judgment
M/s. Kosamattam Finance Ltd. V. Deputy Labour Commissioner & Anr.
Court: High Court of Kerala at Ernakulam
Coram: Hon'ble Mr. Justice Gopinath P.
Judgment Date: February 9, 2026
Petition: Writ Petition (Civil) No. 34801 of 2025 under Article 226 of the Constitution of India
2. Legal Framework
2.1. Principal Legislation
The Payment of Gratuity Act, 1972 – A social security legislation providing for payment of gratuity to employees.
Section 2(a) – Defines "appropriate Government" – Central Government for establishments having branches in more than one State; State Government for all other establishments.
Section 2(d) – Defines "Controlling Authority" as an authority appointed by the appropriate Government under Section 3.
Section 3 – Empowers the appropriate Government to appoint Controlling Authorities.
Article 226 of the Constitution of India – Confers writ jurisdiction on High Courts.
2.2. Related Precedents
The court relied on the following Supreme Court authorities:
Sewalal Daga v. CIT [(1965) 55 ITR 406 (SC)] – Jurisdiction cannot be conferred by consent.
Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India) (P) Ltd. [AIR 1963 SC 90] – Consent cannot confer jurisdiction where none exists.
Suleman Noormohamed v. Umarbhai Janubhai [(1978) 2 SCC 179] – Jurisdiction must be found from the statute itself.
Dodsal (P) Ltd. v. Delhi Electric Supply Undertaking [(2001) 9 SCC 339] – Order passed without jurisdiction is void ab initio.
2.3. Precedent Distinguished
Unreported Judgment dated 13.06.2024 in W.P.(C) No.11133/2021 (Kerala HC) – Held to be fact-specific and not a binding precedent.
3. Relevant Facts of the Case
3.1. The Petitioner-Employer
M/s. Kosamattam Finance Ltd. is a non-banking financial company with registered office in Kottayam, Kerala. It is an establishment having branches in more than one State, including a branch at Theni in Tamil Nadu.
3.2. The Respondent-Employee
The second respondent, John Thomas, was employed by the petitioner vide appointment letter dated May 2, 2013 (Exhibit P1). He rendered service at the petitioner's Theni branch in Tamil Nadu.
3.3. Proceedings Before Controlling Authority
On November 24, 2022, the second respondent filed an application (Form-I) before the first respondent (Deputy Labour Commissioner, Kottayam) claiming gratuity (Exhibit P2).
The petitioner filed a written statement on October 4, 2023 (Exhibit P3).
The first respondent passed order dated March 12, 2025 (Exhibit P7) allowing the claim, followed by a correction order dated May 31, 2025 (Exhibit P8).
3.4. The Challenge
The petitioner challenged Exhibits P7 and P8 before the High Court on the ground that the first respondent, being a State-appointed authority, lacked jurisdiction to entertain the claim as the petitioner is a multi-state establishment falling under Central Government jurisdiction under Section 2(a) of the Payment of Gratuity Act.
3.5. Respondent's Objections
The petitioner never raised the jurisdictional objection before the first respondent – failure is fatal (relying on unreported judgment in W.P.(C) No.11133/2021).
The petitioner has an effective alternative remedy under the Act and should not be permitted to bypass it.
4. Issues Before the High Court
4.1. Primary Issue
Whether the State Government-appointed Controlling Authority has jurisdiction to adjudicate the gratuity claim of an employee who served in a branch located in another State, when the employer is an establishment having branches in more than one State?
4.2. Subsidiary Issues
Whether failure to raise jurisdictional objection before the authority operates as waiver or estoppel?
Whether existence of alternative remedy bars writ jurisdiction when order is challenged on ground of lack of jurisdiction?
5. Ratio Decidendi
5.1. Interpretation of Section 2(a)
Section 2(a) of the Payment of Gratuity Act provides that the "appropriate Government" is:
Clause (i): Central Government – for establishments belonging to or under control of Central Government OR establishments having branches in more than one State.
Clause (ii): State Government – for all other establishments.
Since the petitioner admittedly has branches in Kerala and Tamil Nadu (more than one State), it falls under clause (i). Therefore, the appropriate Government is the Central Government, and only a Controlling Authority appointed by the Central Government has jurisdiction.
5.2. Jurisdiction Cannot Be Conferred by Consent
The court held, relying on Supreme Court precedents, that:
"Jurisdiction cannot be conferred by consent, and even a party's consent cannot confer jurisdiction where none exists and the jurisdiction to pass a particular order must be found from the provisions of the statute itself."
The first respondent lacked inherent jurisdiction. His orders are void ab initio. The petitioner's failure to object before him is not fatal, as a void order can be challenged at any stage.
5.3. Duty of Authority to Examine Jurisdiction
The court observed that even the second respondent's application (Exhibit P2) indicated that he had served at the Theni branch in Tamil Nadu. This fact alone should have put the first respondent on notice that the petitioner is a multi-state establishment. The first respondent ought to have suo motu concluded that he had no jurisdiction.
5.4. Alternative Remedy Not a Bar
Where an order is challenged on the ground of lack of jurisdiction, the existence of an alternative remedy is not a bar to the exercise of writ jurisdiction under Article 226. Jurisdictional errors go to the root of the matter and render proceedings void.
5.5. Unreported Judgment Not Binding
The unreported judgment in W.P.(C) No.11133/2021 relied upon by the respondent proceeds on its own facts and cannot be treated as a binding precedent. It does not lay down any principle of law that would override the settled position regarding jurisdiction.
6. Legal Principles Established/reaffirmed
6.1. Clear Jurisdictional Divide Under Gratuity Act
Establishments having branches in more than one State fall exclusively under Central Government jurisdiction for gratuity matters, regardless of where the employee served or where the claim is filed.
6.2. Jurisdictional Limits Are Absolute
Jurisdictional limits cannot be relaxed or waived. An authority cannot assume jurisdiction over matters statutorily assigned to another authority, even with consent of parties.
6.3. Duty to Suo Motu Examine Jurisdiction
Statutory authorities must examine their own jurisdiction at the threshold. Where lack of jurisdiction is apparent from the record, they must decline to entertain the matter even if no objection is raised.
6.4. Exception to Alternative Remedy Rule
Where an order is challenged on jurisdictional grounds, the High Court can entertain a writ petition directly under Article 226 without requiring exhaustion of alternative remedies.
6.5. Distinction Between Waiver of Procedural Rights and Substantive Jurisdiction
Procedural irregularities can be waived, but substantive lack of jurisdiction cannot be cured by consent, waiver, or acquiescence.
7. Court's Analysis and Examination
7.1. Textual Analysis
The court examined the plain language of Section 2(a), noting the disjunctive "or" in clause (i), which creates two separate categories: (a) establishments under Central control, and (b) establishments having branches in more than one State. The petitioner fell under the second category.
7.2. Examination of the Application
The court noted that Exhibit P2 (the gratuity application) itself disclosed that the second respondent had served at the Theni branch in Tamil Nadu. This fact should have alerted the first respondent to the petitioner's multi-state character.
7.3. Application of Supreme Court Precedents
The court applied the line of Supreme Court authorities holding that:
Orders without jurisdiction are void.
Consent cannot confer jurisdiction.
Void orders can be challenged at any stage.
7.4. Rejection of the Unreported Judgment
The court held that the unreported judgment relied upon by the respondent was fact-specific and not binding. It did not lay down any principle that would override the settled law on jurisdiction.
7.5. Analysis of Alternative Remedy Objection
The court held that requiring the petitioner to exhaust alternative remedies before authorities that themselves lack jurisdiction would be futile. Jurisdictional errors must be corrected at the earliest stage.
8. Critical Analysis of the Judgment
8.1. Strengths
Doctrinal Clarity: The judgment provides clear guidance on the division of jurisdiction between Central and State Controlling Authorities under the Payment of Gratuity Act.
Faithful Adherence to Precedents: The court correctly applied settled Supreme Court principles on jurisdiction.
Protection of Statutory Scheme: By holding that authorities must suo motu examine jurisdiction, the judgment protects the integrity of the statutory scheme.
Balanced Approach: While quashing the orders, the court protected the employee's substantive rights by permitting him to approach the appropriate Central Authority and directing expeditious disposal.
8.2. Potential Concerns
Hardship to Employee: The second respondent must now file a fresh application before the Central Authority, causing delay. The judgment does not address limitation issues.
Potential for Abuse: Employers may deliberately refrain from raising jurisdictional objections before the authority, only to raise them after an adverse order. While legally correct, this may encourage a "wait and watch" approach.
Lack of Guidance on "Branches": The judgment does not define what constitutes a "branch" for purposes of Section 2(a).
Limitation Issue Unaddressed: The court did not address whether the employee's claim before the Central Authority would be within limitation, given that the original application was filed in 2022.
8.3. Broader Implications
For Multi-State Employers: All gratuity claims must be adjudicated by Central Controlling Authorities.
For Employees: Claims must be filed before Central Authorities even if employee served exclusively in one state.
For State Authorities: Must examine jurisdiction at threshold and transfer matters to Central Authorities where applicable.
For Administrative Law: Reinforces that jurisdictional limits are not mere technicalities but go to the root of adjudicatory power.
9. Final Outcome
The High Court:
Allowed the writ petition.
Quashed Exhibits P7 and P8 (orders of the State Controlling Authority).
Clarified that this does not prevent the second respondent from raising his claim before the Central Controlling Authority.
Directed the Central Controlling Authority to decide any such claim without undue delay.
Disposed of the writ petition accordingly.
The effect is that the proceedings before the State Authority are void for lack of jurisdiction. The employee must initiate fresh proceedings before the appropriate Central Authority.