ANDHRA PRADESH STATE ROAD TRANSPORT CORP v. P. VENKATESW ARA RAO ETC

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 Disputt<S Act, 1947. The facts of the first of these appeals may be stated to illustrate the ki!ad 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 conditions were governed by the provisions of the Government of Hyderabad, Railway Department ES'tablishment Code of 1949 (hereinafter referred to as 'the Code'). He claimed that he was entitled to receive a gratuity at a half month'~ salary for 18-1003 SCil76 G H 250 SUPREME COURT REPORTS [ 1977] 1 S.C.R. • A oach 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.

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 perma:aent 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 de'ilth before receipt of gratuity to his widow or widows and/ or dependent children. For purposes 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 permanent railway ser vant only after he had rendered 4 years' continuous service, railway servants belonging 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' oontinuous service". The other rules which seemed to h•ave a bearing on the question be fore us are as follows : "8.

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 mis cCJ1,1duct on his part, save with the express sanction of the authority competent to sanction the gratuity.

8.05. Qualifying service.-Except where otherwise provided for in these rules, service must be continuous and must also, in the opinion of the General Manager, be "good", "efficient" and "faithful" service to qualify for the gratuity. A gratuity may be granted on the fulfilmetnt of the following conditions : - (i) Completion of thirty years' service; or (ii) Attainment of the age of fifty-five years, provid ed not less than fifteen years' service has been completed; or (iii) Retirement or resignation after fifteen years' service, on grounds admitted by the authority competeii1t to sanction the gratuity as good and sufficient from the point of view of the Adminis tration; or (iv) Retirement with less tlran 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. B c D E F G H .. r • A. P. ROAD TRANSPORT V. P. VENKATESWARA RAO (Beg, J.) 25 l

8.12. The maximum period of service qualifying gratuity is thirty years. A

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 for, gratuity.

8.15. Service for which a railway servant has already re ceived a retiring graturty or special contribution to the provident fund or to the guaranteed providoot fund counts as qualifying service for the purpose 0f 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 performanct< of his duty and is obliged to leave the service, he may be given the groatuity 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 llie service of a railway servant entails forfeiture of his past service, but, in deserving cases, this rule may be relaxed under orders of the Goverinment 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 treated as dies non. (ii) A railway servant who has been discharged from the service may, subject to the other coinditions 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 deter mining the gratuity admissible to him.

8.19. Amount of gratuity.-The amount of gratuity oadll, lis sible shall be as follows : (i) In cases of less than fifteen years' qualifying service falling under rule 8.05{iv) above, a gratuity limited ordinariJy 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 moaximum of fifteen months' pay". B c D F G H , ' I .... •, • 252 SUPREME COURT REPORTS [1977] 1 S.C.R. A B c D 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 respondeat on 13th March, 1968, as a special contri It was urged that no employee is entitled bution to Provident Fund. 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 payment of gratuity admissible in those cases where the employee was not a subscriber to the Provident Fund. On the face of it, this cOiatention, 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 pre~ious 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. that he was entitled to such payment although he was a subscriber to a Provident In that case, the respondent had applied only for deducting fund. RJS. 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 : It had been held

1. Whether gratuity is wages within the meaning of pay ment 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 Rule 8.15 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 qua lifications laid down in Rule 8.05.

It then clarifies that this period will not, howev, er, 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 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. Venka teswara Rao, to the Cooperative Society, would, nevertheless, count towards the qualifying period prescribed by Rule 8.05. E F G H I A. P. ROAD TRANSPORT V. P. VENKATESWARA RAO (Beg, J.) 253 On the strength of the judgment of the High Court, in the pre- A vious proceeding, which was the basis of the decision of the Labour Court, Learned Counsel for the respondent had put forward a pre It is clear liminary objection that the matter cannot be reagitated. 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 It is, however, urged which the claims were made were different. that the principles of res judicata should bar raising the same ques- B It is true that the High tion once again in a subsequent proceeding. Court had made observiations which had a clear bearing on question to be decided subsequently, but, it will be noticed that the question now before us was not directly the subject matter of th~ 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 C had not been satisfied inasmuch as the respondent was a subscriber It was to a Provident Fund. This objection had been over-ruled. 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 D of the decision that he ~as entitled to the payment of this much gratuity and no more for the purposes of the claim made in the pro ceedings under the Payment of Wages Act. It seems to us that, when gratuity was awarded in a previous pro ceeding, as a part of Wages, in 'the teeth of the clear provision of Rule 8.01 imposing a condition precedent, which was not satisfied, E to eligibility for it, it is difficult to hold that 1such a patently illegal view could or should be held to be binding on the parties in a subse quent 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 entitle ment to Rs. 1630/- in the previous proceeding should be held to be binding between parties, we cannot apply the same reasoning to the F subsequent claim made before the Labour Court which is now before us.

The Labour Court had not even deducted the amount already judgment now awarded earlier from the amount awarded by before us. The most we can say is that the previous recognition of a claim to gratuity, practically in excess of 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 G 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. jurisdiction We need not here set out the relewint provident fund rules con tained in Chapter 7 of the Code. 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 It is true that the whole idea of H 254 SUPREME COURT REPORTS [1977] 1 S.C.R. A 8 c 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 ito gratuity, as of right, can not 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. Civlil 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. Simila.I'. is the posi tion in Civil Appeal No. 312 of 1973. For the reasons given above, we allow Civil Appeals Nos. 36 to D 54 of 1971, and Civil Appeal No. 312 of 1973, and CiWl 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.A. No. 1153/72 dismissed.