Full Judgment Text
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PETITIONER:
ANDHRA PRADESH STATE ROAD TRANSPORT CORP.
Vs.
RESPONDENT:
P. VENKATESWARA RAO ETC.
DATE OF JUDGMENT19/08/1976
BENCH:
ACT:
Gratuity, entitlement to--Whether a former employee of
the Nizam’s State Railway can claim gratuity as of right in
addition to Provident Fund--Government of Hyderabad Railway
Establishment Code, 1949, Rule 8.01, 8.02, 8.05, 8, 12,
8.13, 8.15, 8.16, 8.17 and 8.19 read with para 17 Chapter
VII..--Inter practice of
Code of Civil Procedure, Act V of 1908--Section
11--Principle of res judicata--Applicability when gratuity
was awarded in a previous proceedings under the Payment of
Wage Act in the teeth of the clear provision of Rule
8.01--Scope of Rule 8.01.
Provident Fund--Illegal payment of gratuity in the past
will not affect legal claims to Provident Fund.
HEADNOTE:
In APSRTC v.. Rammohan Rao (Civil revision petition
No. 1598/1968, dated April 25, 1969), the High Court of
Andhra Pradesh held: (i) that wages under s. 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
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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 s. 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 v.M.
Rammohan Rao (Civil) Revision Petition No. 1598/1968 decided
on April 25, 1969), (A.P.), over-ruled.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: 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 Industrial Disputes Act, 1947. 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
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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.
8.04. 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.
8.05. 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.
8.13. 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
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for, gratuity.
8.15. 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.
8.16. 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.
8.17. 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.
8.19. 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"
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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
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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 Industrial Disputes Act,
1947, 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.
C..4. No. 1153/72 dismissed.
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255