Civil Appeals Nos
36 to 54 of 1971
Appeals by special leave from the judgment and order dated 25 8 1970 of the Labour Court Hyderabad in Civil Misc
Petitions Nos
133 to 147 and 165 to 168 of 1970
AND Civil Appeal No 1153 of 1972
Appeal by special leave from the judgment and order dated 20 10 71 of the Labour Court Hyderabad in Misc
Petition No 6471
AND Civil Appeal No 312 of 1973
Appeal by special leave from the judgment and order dated 11 2 1972 of the Labour Court Hyderabad in Misc
Petition No 23970
AND Civil Appeals Nos
325 to 339 of 1973
Appeals by special leave from the judgment and order dated 7th 9th 11th and 15th February 1972 of the Labour Court Hyderabad in Misc
Petitions Nos
231 23870 and 240 24670
LN Sinha Sol
General of India and B Parthasarthy for the appellants
G Narayana Rao and KS Ramanujacharyulu for the respondents
The Judgment of the court was delivered by BEG J
A number of appeals filed by the Andhra Pradesh State Road Transport Corporation are before us by grant of special leave under Article 136 of the Constitution of India against orders of a Labour Court passed under section 33C2 of the 
The facts of the first of these appeals may be stated to illus trate the kind of circumstances in which a common question of law involved in these appeals arises
The respondent P Venkateswara Rao who was employed on 6th October 1933 retired on 10th February 1958 after putting in more than 34 years of service
As he was a former employee of the Nizam s State Railway his service condi tions were governed by the provisions of the Government of Hyderabad Railway Department Establishment Code of 1949 hereinafter referred to as the Code 
He claimed that he was entitled to receive a gratuity at a half month s salary for 18 1003 SCI 76 250 each year of qualifying service subject to a maximum of 15 months  salary as laid down in Rule 801 of the Code which says 801
Condition of eligibility
Gratuity is granted at the discretion of Government in the Railway Department as a reward for good efficient continuous and faithful service to a permanent railway servant if he is not a subscriber to the Provident Fund or to the Guaranteed Provident Fund on his quitting the service or in the event of his death before receipt of gratuity to his widow or widows andor dependent children
For pur poses of this rule a monthly paid railway servant borne on the temporary establishment whose pay is charged to open line capital and revenue works on which he is employed shall be deemed to be a perma nent railway servant only after he had rendered 4 years  continuous service  railway servants be longing to the category of workshop staff employed otherwise than in a supervisory capacity shall also be considered as permanent railway servants only after they have rendered 4 years  continuous service
The other rules which seemed to have a bearing on the question before us are as follows 802
A gratuity cannot be claimed as of right
No gratuity shall be granted to a railway servant who has been removed from service by reason of any misconduct on his part save with the ex press sanction of the authority competent to sanc tion the gratuity
Qualifying service
Except where otherwise provided for in these rules service must be con tinuous and must also in the opinion of the Gener al Manager be good efficient and faithful service to qualify for the gratuity
A gratuity may be granted on the fulfilment of the following conditions  i Completion of thirty years  service or ii Attainment of the age of fifty five years provided not less than fifteen years  serv ice has been completed or iii Retirement or resignation after fifteen years  service on grounds admitted by the authori ty competent to sanction the gratuity as good and sufficient from the point of view of the Adminis tration or ivRetirement with less than fifteen years  service due to a permanent physical or mental incapacity or b abolition of appointment if other suitable employment cannot be found for the railway servant
251 812
The maximum period of service qualifying for gratuity is thirty years
A railway servant who is retired in service after he has attained the age of fifty five years may be permitted to count the whole of his service subject to the limit of thirty years as qualifying for gratuity
Service for which a railway servant has already received a retiring gratuity or special contribution to the provident fund or to the guaranteed provident fund counts as qualifying service for the purpose rule 805 but it shall be excluded in calculating the amount of gratuity admissible under rule 819
When a railway servant is injured in the performance of his duty and is obliged to leave the service he may be given the gratuity he had earned under these rules in addition to any compensation gratuity awarded to him on account of his injury
Breaks in service i Ordinarily a break in the service of a railway servant entails forfeiture of his past service but in deserving cases this rule may be relaxed under orders of the Government in the Railway Department or in cases of breaks not exceeding fifteen days in respect of railway servants other than Class I or Class II under the orders of the General Manager the period of break whether in permanent or temporary service or both being treat ed as dies non
ii A railway servant who has been discharged from the service may subject to the other conditions of these rules on re employment on the Railway be permitted to add the period of his former qualifying service to his future service for the purpose of determining the gratuity admissible to him
Amount of gratuity
The amount of gratuity admissible shall be as follows i In cases of less than fifteen years  qualify ing service falling under rule 805iv above a gratuity limited ordinarily to half a month s pay and in special cases where circumstances warrant to one month s pay for each year of qualifying service subject to a maximum of six months pay in all
ii In all other cases falling under the rules in this chapter half a month s pay for each year of qualifying service subject to a maximum of fifteen months  pay 252 The respondent claimed Rs 396250 as gratuity
The defence of the appellant was inter alia that a sum of Rs 3962 had already been paid to the respondent on 13th March 1968 as a special con tribution to Provident Fund
It was urged that no employee is entitled to any grant at all if he is a subscriber to Provident Fund
It is pointed out that Rule 801 set out abOve made a claim of pay ment of gratuity admissible in those cases where the employee was not a subscriber to the Provident Fund
On the face of it this contention which has been repeated before us seems to be sound and unanswerable
The Labour Court had however over ruled the main defence of the appellant on the strength of a previous proceeding under section 152 of the Payment of Wages Act in which the respondent had claimed a payment out of his gratuity to the extent of 2000  on the ground that the gratuity claimable fell within the definition of wages under the Payment of Wages Act
It had been held that he was entitled to such payment although he was a subscriber to a Provident fund
In that case the respondent had applied only for deducting Rs 125679 due from him to the Co operative Credit Society of the appellant Corporation from the gratuity which would have become payable to him on retirement
He was declared entitled to Rs 1630only
The two issues framed in that case were as follows 1
Whether gratuity is wages within the meaning of payment of Wages Act  2
Whether the Corporation had the discretion to refuse to pay the gratuity to the respondent and whether it cannot be questioned  The case had gone up to the High Court of Andhra Pradesh in revision under Section 115 Civil Procedure Code
The High Court while rejecting the objection advanced on behalf of the appellant Corporation in a case arising out of the proceeding under the Payment of Wages Act had observed that Rule 815 indicated that Rule 801 did not stand in the way of awarding gratuity to a person who is also entitled to the Provident Fund
We are unable to read Rule 815 in the same way as the High Court had done it in the earlier case
We think that Rule815 only explains how Rule 805 was to be applied in certain cases
It lays down that the period for which gratuity of retirement or contribution to the Provident Fund had been received will count towards the qualifications laid down in Rule 805
It then clarifies that this period will not however affect the calculation of the amount of gratuity under Rule 819
The obvious intention of Rule 815 was that the amount already received either as gratuity or contribution to the Provident Fund will not be paid again to the employee
The period for which payments had already been made which may happen in certain cases such as those of broken service or of anticipatory payments like the one to satisfy debt of the respondent P Venkates wara Rao to the Cooperative Society would nevertheless count towards the qualifying period prescribed by Rule 805
253 On the strength of the judgment of the High Court in the previous proceeding which was the basis of the decision of the Labour Court Learned Counsel for the respondent had put forward a preliminary objection that the matter cannot be reagitated
It is clear that the provisions of Section 11 CPC have no application to such a case
The nature of the proceedings and of authorities before which the claims were made were different
It is however urged that the principles of res Judicata should bar raising the same question once again in a subsequent proceeding
It is true that the High Court had made observations which had a clear bearing on the question to be decided subsequently but it will be noticed that the question now before us was not directly the subject matter of the issues framed in the previous proceeding which have been set out above
Nevertheless an objection was taken on behalf of the appel lant
that a basic condition for the eligibility of a claim for gratuity had not been satisfied inasmuch as the re spondent was a subscriber to a Provident Fund
This objec tion had been over ruled
It was held that the gratuity could be claimed as of right
We do not know what direction was exactly given in that case
The finding however that the petitioner was entitled to a payment of gratuity as of right to the extent of Rs 1630  appears to have been given as a result of the decision that he was entitled to the payment of this much gratuity and no more for the purposes of the claim made in the proceedings under the Payment of Wages Act
It seems to us that when gratuity was awarded in a previous proceeding as a part of Wages in the teeth of the clear provision of Rule 801 imposing a condition precedent which was not satisfied to eligibility for it it is diffi cult to hold that such a patently illegal view could or should be held to be binding on the parties in a subsequent claim for gratuity on the same footing before the Labour Court
We find that even if we were to hold as we think we must as the matter was not taken further that the declaration of entitlement to Rs 1630 in the previous proceeding should be held to be binding between parties we cannot apply the same reasoning to the subsequent claim made before the Labour Court which is now before us
The Labour Court had not even deducted the amount already awarded earlier from the amount awarded by its judgment now before us
The most we can say is that the previous recog nition of a claim to gratuity practically in excess of jurisdiction to do so debars the Labour Court from going into the question whether the respondent was rightly paid that amount as gratuity in the past
We have already set out the rule which disentitles him from being eligible for the award of gratuity when he contributes to a provident fund also
We have also interpreted the rule which was misunderstood earlier by the High Court
We need not here set out the relevant provident fund rules contained in Chapter 7 of the Code
It is true that the whole idea of the Provident Fund to which the employer also contributes seems to be different from a gratuity to which good continuous efficient and faithful servant may entitle an employee yet we are unable to hold 254 that the employee is able to claim the benefit of both a guaranteed or other Provident Fund to which the employer contributes as well as to gratuity as of right in the face of the provisions of Rule 801 and 802 of the gratuity rules set out above
Although we have held that a claim to gratuity as of right cannot be put forward under the Code by an employee who gets the benefit of a Provident Fund also yet illegal payments of gratuity in the past will not affect legal claims to
Provident Fund
In Civil Appeal No 1153 of 1972 the amount awarded to an employee was in respect of payment due towards the guaranteed Provident Fund which had nothing to do with a claim for gratuity
This claim was therefore rightly allowed
Civil Appeals No 36 to 54 of 1971 and Civil Appeals Nos
325 to 339 of 1973 involve only claims to gratuity by persons who are entitled to Provident Fund
These claims according to the view taken by us are not admissible under the law
Similar is the position in Civil Appeal No 312 of 1973
For the reasons given above we allow Civil Appeals Nos
36 to 54 of 1971 and Civil Appeal No 312 of 1973 and Civil Appeals Nos 325 to 339 of 1973 and dismiss the claims under Section 33C 2 of the  of the respondents in these appeals
We however dismiss the Civil Appeal No 1153 of 1972
The parties will bear their own costs
SR CAs 36 5471 31273 and 329 33973 allowed
No 115372 dismissed


Summary:
In APSRTC vs Rammohan Rao Civil revision petition No 15981968 dated April 25 1969 the High Court of Andhra Pradesh held i that wages under section 2ivd of the Payment of Wages Act included gratuity and ii that Rule 801 of the Hyderabad Government Railway Establishment Code 1949 did not stand alone and read with Rule 815 it meant that an employee who has received the Provident Fund was not disentified to gratuity
Following the said deci sion the labour court in a11 the appeals allowed the claims of the respondents to gratuity in addition to Provident Fund vide its order dated August 25 1970
Dismissing the appeals by special leave the Court HELD i Rule 815 of the Hyderabad Government Railway Establishment Code 1949 cannot be read in the same manner as the Andhra Pradesh High Court had done it in the earlier case
Rule 815 only explains that the how Rule 805 was to be applied in certain cases
Rule 805 lays down that the period for which gratuity on retirement or contribution to the provident Fund has been received will count towards the qualifications in Rule 805 and further clarifies that the period will not however affect the calculation of the amount of gratuity under Rule 819
The obvious intention of Rule 815 was that the amount already received either as gratuity or contribution to the Provident Fund will not be paid again to the employee
The periods for which payments had already been made which may happen in certain cases would nevertheless count towards the qualifying period prescribed by Rule 805
242F H 2 When gratuity was awarded in a previous proceeding as a part of wages in the teeth of the clear provision of Rules 801 imposing a condition precedent which was not satisfied to eligibility for it the contention that such a patently illegal view could or should be held to be binding on the parties in a subsequent claim for gratuity on the same tooting is unacceptable
The most the court can say is that the previous recognition of a claim to gratuity prac tically in excess of jurisdiction to do so debars the labour court from going into the question whether the respondent was rightly paid that amount as gratuity in the past
In the instant ease the provisions of section 11 of the CPC have no application
253 D G 3 It is true that the whole idea of the Provident Fund to which the employer also contributes seems to be
different from a gratuity to which good
continuous effi cient and faithful service may entitle an
employee yet he cannot claim the benefit of both the guaranteed or other Provident Fund to which the 249 employer contributes as well as to gratuity as of right in the face of the provisions of Rule 801 and 802 of the Gratuity rules
Illegal payments of gratuity in the past will not affect legal claims to Provident Fund
253 H 254 A Andhra Pradesh State Road Transport Corporation vs
M Rammohan Rao Civil Revision Petition No 15981968 decided on April 25 1969 AP over ruled