Summary
The Supreme Court set aside the High Court's appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 at an employer's instance, holding the petition an abuse of process. The wage and termination disputes were already pending before the Payment of Wages authority and the Industrial Tribunal and were non-arbitrable, while the alleged breach of a non-disclosure clause was an afterthought never raised before termination, so no such dispute existed.
Issues
- Whether an employer could seek appointment of an arbitrator under Section 11(6) for disputes over non-payment of wages and the validity of termination, already pending before the authority under the Payment of Wages Act, 1936 and the Industrial Tribunal.
- Whether a claim of breach of the non-disclosure clause, raised for the first time in the Section 11(6) petition, disclosed an existing arbitrable dispute.
- Whether, despite the restraint in Section 5, the Court should decide the objections itself rather than leave them to the arbitral tribunal.
Provisions considered
- Section 11(6), Arbitration and Conciliation Act, 1996The High Court had appointed an advocate as arbitrator on finding an arbitration agreement. The Supreme Court held the petition to be an abuse of process, as one part covered non-arbitrable disputes already before statutory authorities and the other raised a dispute that did not exist, and dismissed it with costs. (¶¶ 2, 10, 11, 16, 17, 18)
- Section 5, Arbitration and Conciliation Act, 1996The Court acknowledged that judicial restraint under Section 5 would ordinarily require the employee's objections to be raised before the arbitral tribunal, but declined to remit them because the facts showed a clear abuse of the remedial process. (¶ 2)
- Sections 15(2) and 22, Payment of Wages Act, 1936Section 22 bars suits for recovery of wages where the claim is the subject of, or could be recovered by, an application under Section 15. The Court held that the authority under Section 15(2), approached by the employee before termination, exercises jurisdiction to the exclusion of civil courts and the wage dispute is non-arbitrable. (¶¶ 6, 8, 14)
- Section 2A, Industrial Disputes Act, 1947The employee's challenge to his termination was pending before the Industrial Tribunal under this provision; the Court held that this jurisdiction also excludes civil courts and the dispute over the legality of termination is not arbitrable. (¶¶ 9, 15)
Held
- Disputes over non-payment of wages, pending before the authority under Section 15(2) of the Payment of Wages Act, and over the legality of termination, pending before the Industrial Tribunal under Section 2A of the Industrial Disputes Act, fall within those authorities' jurisdiction to the exclusion of civil courts and are non-arbitrable; the Court referred to the fourfold test in Vidya Drolia, including non-arbitrability under mandatory statutes. (¶¶ 14, 15, 17)
- An alleged breach of the non-disclosure clause that did not appear in the show cause notice, inquiry report, charge memo, termination order or the reply notice, and was raised for the first time in the Section 11(6) petition, was an afterthought; no such dispute existed for reference. (¶¶ 5, 6, 12, 13, 17)
- Although objections to jurisdiction would normally be left to the arbitral tribunal in view of Section 5, a Section 11(6) petition filed after the employee invoked statutory remedies, and intended to pressure him for doing so, is an abuse of process which the Court may dismiss outright and with costs. (¶¶ 2, 16, 19)
Result
Appeal allowed; High Court order appointing the arbitrator set aside and the respondent's Section 11(6) petition dismissed; respondent to pay the appellant costs of Rs. 5 lakhs within three months.