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It is important for the clients and industry to be clear as to who is the appropriate Government when starting any enterprise or forming an Organization and/or it applies even to existing Organizations.

An Appropriate Government” means:

(i) in relation to an establishment:

(a) belonging to or under the control of, the Central Government,

(b) having branches in more than one State,

(c) of a factory belonging to, or under the control of the Central Government.

(d) of a major port, mine, oilfield or railway company, the Central Government.

(ii) in any other case, the State Government. [Section 2(a)]

It may be noted that many large establishments have branches in more than one State. In such cases, the ‘appropriate Government’ is the Central Government and any dispute connected with the payment or nonpayment of gratuity falls within the jurisdiction of the ‘Controlling Authority and the ‘Appellate Authority’ appointed by the Central Government under Sections 3 and 7.

A Company Secretary or any other Compliance or Legal person should know whether the ‘appropriate Government’ in relation to his establishment is the Central Government or the State Government.

He should also find out who has been notified as to the ‘Controlling Authority’ and also who is the ‘Appellate Authority. It may be noted that any request for exemption under Section 5 of the Act is also to be addressed to the ‘appropriate Government’. It is, therefore, necessary to be clear on this point.

Given below is a recent order where the impugned order passed by the Labour Court is quashed and set aside.  Please see the citation below, for more reading relating to the Appropriate Government, whether it is Central or State.

Bombay High Court

Krantikari Kamgar Union vs Aig Global Asset Management India … on 13 August 2021

Bench: Makarand Subhash Karnik 60. wpl 573.20.doc

Urmila Ingale


Krantikari Kamgar Union …. Petitioner


M/s.AIG Global Asset Management India Pvt. Ltd. and anr. …..

Heard learned Counsel for the Petitioner, learned Counsel for Respondent No.1 and learned Counsel for Krantikari Kamgar Union vs Aig Global Asset Management India … on 13 August 2021

Respondent No.2. A pursis dated 04/12/2017 came to be filed by the Advocate for the Petitioner (2nd party before the Labour Court) in response to the objection raised by the 1st party – Company before the Labour Court that the appropriate government concerning the Reference (IDA) is Central Government and not the State Government.

The Petitioner sought liberty to raise the 60. wpl 573.20.doc dispute before the Central Government and have the same adjudicated by the Central Government Industrial Tribunal.

On the basis of the pursis, the impugned order came to be passed by the Labour Court answering the Reference in the negative and granting liberty to the Petitioner

to raise the dispute before the Central Government. Accordingly, the Petitioner approached the Central Government for referring the matter to the Central Government Industrial Tribunal.

By a communication dated 11/01/2019, the Assistant Labour Commissioner, Central – III, Mumbai informed the Petitioner that Central Government is not an appropriate government

in the instant matter. The Petitioner was advised to raise a complaint before the Commissioner of Labour, Government of Maharashtra. Hence, he has now challenged the impugned order.

  1. Learned Counsel for Respondent No.1 opposed this Petition and submitted that once the Petitioner on his volition withdraws from the Reference, it is now not open for

Petitioner – Union to challenge the order passed by the Labour Court which was passed on the basis of the concession of the Petitioner. Learned Counsel supports the

impugned order. 60. wpl 573.20.doc 3. It is in these peculiar circumstances, the Petitioner has approached this Court challenging the order passed by Labour Court.

No doubt, the order was passed by the Labour Court in view of the pursis moved by the Petitioners. The Petitioner on the basis of the objection raised by the 1st party – Company

appears to have formed an impression that the Central Government is an appropriate government and in these circumstances, requested the Labour Court to dispose of the Reference.

Considering that now the Central Government has informed the Petitioner that the appropriate Government is the State Government, in the interest of justice, it is necessary that the order

impugned in this Court needs to be set aside or else, the Petitioner will be virtually left remediless. 4. Accordingly, the impugned order passed by the Labour Court is quashed

and set aside. The Reference (IDA) 54 of 2012 is remitted to the Labour Court. 5. All the contentions of the parties are left open including the contention of the 1st party

that appropriate Government is the Central Government whose contention if raised will be decided on its own merits and in accordance with law. 60. wpl 573.20.doc 6.

Needless to mention that having regard to the passage of time, the Labour Court will undoubtedly give every opportunity to the parties to submit the additional pleadings and the

reference will be decided on its own merits and in accordance with the law.

The case law is also attached herewith for ready reference.

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