Judgment Case ID: 3546

Judgment:
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. 64/71. 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. 239/70. 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. 231 238/70	 and 240 246/70. L.N. Sinha	 Sol. General of India and B. Parthasarthy	 for the appellants. G. Narayana Rao and K.S. 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 33C(2) 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 8.01 of the Code	 which says: "8.01. 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 and/or 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: "8.02. 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 (iv)Retirement 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 8.12. 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 8.05 but it shall be excluded in calculating the amount of gratuity admissible under rule 8.19. 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 8.05(iv) 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. 3962.50 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 8.01 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 15(2) of the Payment of Wages Act	 in which the respondent had claimed a payment out of his gratuity	 to the extent of 2	000/ 	 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. 1256.79 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. 1630/only. 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 8.15 indicated that Rule 8.01 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 8.15 in the same way as the High Court had done it in the earlier case. We think that Rule8.15 only explains how Rule 8.05 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 8.05. It then clarifies that this period will not	 however	 affect the calculation of the amount of gratuity under Rule 8.19. The obvious intention of Rule 8.15 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 8.05. 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 C.P.C. 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 8.01 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 8.01 and 8.02 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. S.R. C.As. 36 54/71	 312/73 and 329 339/73 allowed. No. 1153/72 dismissed.

Summary:
In APSRTC vs Rammohan Rao (Civil revision petition No. 1598/1968	 dated April 25	 1969)	 the High Court of Andhra Pradesh held: (i) that wages under section 2(iv)(d) of the Payment of Wages Act included gratuity and (ii) that Rule 8.01 of the Hyderabad Government Railway Establishment Code	 1949	 did not stand alone and read with Rule 8.15 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 8.15 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 8.15 only explains that the how Rule 8.05 was to be applied in certain cases. Rule 8.05 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 8.05 and further clarifies that the period will not	 however	 affect the calculation of the amount of gratuity under Rule .8.19. The obvious intention of Rule 8.15 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 8.05. [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 8.01 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 too.ting 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 C.P.C. 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 8.01 and 8.02 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. 1598/1968 decided on April 25	 1969)	 (A.P.)	 over ruled.