Delhi District Court
Yateendra Arya vs Aakash Educational Services Pvt. Ltd on 31 May, 2019
IN THE COURT OF SH. HARGURVARINDER S. JAGGI,
ADDL. DISTRICT JUDGE - 02, SOUTH WEST, DWARKA
COURTS, NEW DELHI
ARBTN. No.: 51645/2016
CNR No.: DLSW01-007250-2016
IN THE MATTER OF:
1. Yateendra Arya
S/o Puran Chand Mittal
R/o Parishkar -- 1, Near Khokra Circle
Mani Nagar, Ahmedabad
Pin - 380008 ...Petitioner
Versus
1. Aakash Educational Services Pvt. Ltd.
Having its registered office at
Aakash Towers, Plot No.4
Sector 11, Dwarka, New Delhi - 110075
Through its Authorized Representative
Sh P.N.Arora
ARBTN. No. 51645/2016
Page No. 1/43
2. Sh Rajesh Kumar
Retd. ADJ & ASJ / Sole Arbitrator
Aakash Educational Services Pvt Ltd Ltd.
8/13, G.F. Roop Nagar
Delhi - 110007 ... Respondents
Date of filing of petition: 30.09.2016
Date of arguments & reserved for 03.04.2019
order:
Date of pronouncement of order: 31.05.2019
JUDGMENT
1. A petition under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter "the Act") has been moved by the petitioner namely, Yateendra Arya (hereinafter "petitioner") against arbitral award dated 06.05.2016 (hereinafter "impugned award") passed by the respondent No. 2, namely, Sh. Rajesh Kumar, Addl. District & Sessions Judge, (Retd.) (hereinafter "sole arbitrator") in the dispute having arisen between the petitioner and the respondent No. 1, namely, Aakash Educational Services Pvt. Ltd. (hereinafter "respondent No. 1").
2. The impugned award has been passed by the sole arbitrator against the petitioner, wherein the claim of the respondent No. 1 was allowed for an amount of ₹88,091/- (Rupees Eighty eight thousand ARBTN. No. 51645/2016 Page No. 2/43 and ninety one only) along with interest @9% p.a. and costs of ₹35,000/- (Rupees Thirty five thousand only).
3. The respondent No.1, namely, Aakash Educational Services Pvt. Ltd., is a private limited company duly incorporated under the Companies Act, 1956 (now repealed) and runs various coaching institutes under the name and style of Aakash Institute / Aakash IIT- JEE, wherein education and training is imparted to students, who are preparing for IIT-JEE, engineering entrance examinations and various competitive examinations.
4. The petitioner No.1, namely, Yateendra Arya on 04.02.2014, joined the respondent, as a faculty member i.e. Associate Professor Grade - II, in the Physics department. As per the appointment letter dated 05.02.2014 issued by the respondent No. 1, the date of joining of the petitioner was 11.02.2014 and a probation for a period of 1(one) month started from 11.02.2014 or from the date of joining.
5. The petitioner joined the services with the respondent No. 1 on 05.02.2014 and the services of the petitioner were governed by the Service Rules Manual for the Employees, which was also signed by the petitioner on 05.02.2014. As per the terms and conditions of the services in the Service Rules Manual for the Employees, the petitioner shall work for a minimum period of 2(two) years for the respondent No. 1 w.e.f. 11.02.2014 to 10.02.2016. The petitioner was posted at Chandkheda Branch, Ahmedabad, Gujarat of the respondent No. 1 vide letter dated 11.03.2014. The petitioner was transferred to Maninagar ARBTN. No. 51645/2016 Page No. 3/43 Branch, Ahmedabad of the respondent No. 1 through letter dated 07.03.2015. The petitioner last attended the respondent No. 1's institute at Maninagar Branch on 29.03.2015. On 01.04.2015, the petitioner was promoted to Senior Associate Professor Grade - II.
6. The petitioner No. 1 left the services of the respondent No. 1 on 29.03.2013 (sic). It is the case of the respondent No. 1 that the petitioner No. 1 left the services in contravention of the written contract enshrined in the Salary and Terms & Conditions dated 05.02.2014. Subsequently, the respondent No. 1 issued notice dated 04.05.2015 to the petitioner, wherein it was stated that since the petitioner No. 1 deserted the post and his services, 10 months and 12 days, prior to the completion of the mandatory contract period of two years, the respondent No. 1 stated that an amount of ₹7,28,804/- (Rupees Seven lakhs twenty eight thousand eight hundred and four only) from the petitioner with regard to the mandatory unserved employment period and towards non-submission of the identity card remains unpaid. The respondent No. 1 in the said notice apprised the petitioner that the respondent No. 1 has adjusted the petitioner's salary for the month of March 2015 i.e. ₹59,059/- (Rupees Fifty nine thousand and fifty nine only) and the cheque issued by the petitioner at the time of joining the services of the respondent for an amount of ₹2,10,000/- (Rupees Two lakhs and ten thousand only) had also been adjusted, thus the petitioner owed the respondent No. 1 a sum of ARBTN. No. 51645/2016 Page No. 4/43 ₹4,59,745/- (Rupees Four lakhs fifty nine thousand seven hundred and forty five only).
7. The respondent No. 1 presented the cheque No. 001501 dated 09.05.2015 for an amount of ₹2,10,000/- issued by the petitioner drawn upon Axis Bank Ltd. The said cheque was dishonored for insufficiency of funds.
8. The respondent No. 1 subsequently issued a notice dated 16.09.2015 for arbitration to the petitioner, informing him that Sh. Rajesh Kumar, Addl. District & Sessions Judge (Retd.) having his office at 8/13 Roop Nagar, Ground Floor, Behind Police Station Roop Nagar, Delhi - 110007 has been appointed, as the Sole Arbitrator by the respondent No. 1 for adjudication of the dispute, as per the provisions of the Act. The said notice was dispatched by the respondent No. 1 to the petitioner through speed post and email.
9. The respondent No. 1 issued a letter dated 18.09.2015 to the Ld. sole arbitrator (respondent No. 2 herein) requesting him to commence the arbitration proceedings and also apprise the respondent No. 1 and the petitioner about the date, place and time of the arbitration proceedings. It is observed that the copy of the letter dated 18.09.2015 was marked to the petitioner and forwarded by speed post receipt dated 21.09.2015 - Ex.PW1/21 and also through email dated 19.09.2015 - Ex.PW1/22. The sole arbitrator issued a notice of arbitration proceedings dated 23.09.2015 to the petitioner and the respondent No. 1 through speed post - vide postal receipt dated 29.09.2015.
ARBTN. No. 51645/2016 Page No. 5/4310. The respondent No. 1 filed its statement of claim dated 15.10.2015 before the sole arbitrator. The sole arbitrator issued notice of the statement of claim to the petitioner. The petitioner failed to file appearance and the arbitrator issued a notice apprising the petitioner that on failure of the petitioner to file appearance, the petitioner may be proceeded ex parte. With no appearance on behalf of the petitioner before the sole arbitrator, the petitioner was proceeded ex parte vide order dated 28.11.2015. Thereafter, the respondent No. 1 led ex parte evidence.
11. The sole arbitrator passed the impugned award against the petitioner and allowed the claim of the respondent No. 1 for an amount of ₹88,091/- (Rupees Eighty eight thousand and ninety one only) along with interest @9% p.a. and costs of ₹35,000/- ( Rupees Thirty five thousand only). Hence, the present petition under Section 34 of the Act moved by the petitioner assailing the impugned arbitral award dated 06.05.2016.
12. Before, I proceed further, I would deal with an application moved by the respondent No. 1 on 05.12.2017, citing no provision of law, seeking dismissal of the petition for want of territorial jurisdiction. The petitioner filed reply to the said application on 05.02.2018.
13. Sh. Vidur Sikka, Ld. counsel for the respondent No. 1 advanced submissions in tandem with the averments in the application. Ld. counsel submitted that not only the arbitration proceedings were held at Roop Nagar, Delhi - 110007 but also the impugned award was ARBTN. No. 51645/2016 Page No. 6/43 passed by the sole arbitrator (respondent No. 2 herein) at Roop Nagar, Delhi - 110007. Ld. counsel further submitted that Roop Nagar, Delhi is not situated within the territorial jurisdiction of this Court and thus, the petition moved by the petitioner ought to be dismissed.
14. Sh. Sikka, Ld. counsel for the respondent No. 1 placed heavy reliance upon the judgment passed by the Apex Court in Bhandari Udyog Limited v. Industrial Facilitation Council and Another - II(2015) SLT 492, wherein it was held that the arbitration proceeding has been conducted within the jurisdiction of Raichur Court, which has jurisdiction as per Section 20 of the Code of Civil Procedure, 1908 and thus the challenge to award before the Hon'ble High Court of Bombay is not maintainable and would run contrary to Section 42 of the Act.
15. Sh. Sikka, Ld. counsel for the respondent No. 1 also placed reliance upon the Constitution Bench judgment of Hon'ble Supreme Court in State of Jharkhand & Ors. v. Hindustan Construction Co. Ltd. - II(2018) SLT 304, on the proposition that the competent Court to decide the petition under Section 34 of the Act would be the Court under whose territorial jurisdiction the arbitration proceedings were convened and arbitral award was passed. Ld. counsel also submitted that the cause of action had arisen in Roop Nagar, Delhi and not within the South West District.
16. Ms. Ankita Chaudhary, Ld. counsel for the petitioner vehemently opposed the application moved by the respondent No. 1. Ms. Chaudhary submitted that the courts in South West District, Delhi are ARBTN. No. 51645/2016 Page No. 7/43 the competent court as the registered office of the respondent No. 1 is situated within the territorial jurisdiction of this Court.
17. Ms. Chaudhary, Ld. counsel for the petitioner submitted as per Section 20 of the Code of Civil Procedure, 1908, the cause of action had arisen under the territorial jurisdiction of this Court and mere conduction of arbitral proceedings and passing of arbitral award at Roop Nagar, Delhi - 110007 would not oust the jurisdiction of this Court and vest the same in Courts where Roop Nagar is situated in Delhi.
18. Ld. counsel for the petitioner submitted that the respondent No. 1 is a private limited company and it has the registered office within the South West District. Ld. counsel placed reliance upon the judgment of the Apex Court in Shriram City Union Finance Corporation Ltd. v. Rama Mishra (2002) 9 SCC 613 and submitted that where two or more courts have jurisdiction to try a suit, parties can by an agreement choose one of such courts for adjudication of their dispute. Ld. counsel further submitted that in case of an express agreement vesting jurisdiction exclusively in a court, a suit filed before a different Court would be invalid. Ld. counsel submitted that Clause 49 of the Salary and Terms & Conditions unequivocally states that the arbitration proceedings shall be conducted at New Delhi and only the Courts at Delhi shall have the jurisdiction over the matter.
19. The parties are not at dispute that Roop Nagar is not situated within Delhi. The parties are at loggerheads qua whether this Court can ARBTN. No. 51645/2016 Page No. 8/43 entertain the petition moved by the petitioner under Section 34 of the Act challenging the impugned award.
20. With all due deference, the reliance placed by the Ld. counsel for the respondent No. 1 is not only distinguishable but also misplaced. A petition under Section 34 of the Act was preferred before the District Court at Latur, whereas a petition under Section 11 of the Act was moved before the Hon'ble High Court of Karnataka. The arbitration proceedings were conducted in Raichur, Karnataka.
21. It is observed that in Bhandari Udyog Limited v. Industrial Facilitation Council and Another (supra) the Apex Court placed reliance upon the Three Judge Bench judgment in State of West Bengal & Ors. v. Associated Contractors -- (2015) 1 SCC 32 and held the a petition under Section 34 of the Act would not be maintainable before the District Court at Latur and Hon'ble High Court of Bombay because the parties vested exclusive jurisdiction in Courts at Raichur, which is a subordinate Court to the Hon'ble High Court of Karnataka and therefore, the award cannot be challenged before the District Court, Latur. The Apex Court also observed that the Hon'ble High Court of Karnataka entertained the application under Section 11 of the Act and thus to entertain an application outside the exclusive jurisdiction of the Court would be contrary to Section 42 of the Act.
22. It is observed that the clear distinguishable fact in the present case is that the case before this Court is not inter-se States rather it is a case of intra state. The South West District Court and the Court under ARBTN. No. 51645/2016 Page No. 9/43 whose territorial jurisdiction Roop Nagar is situated are subordinate Courts to the Hon'ble High Court of Delhi.
23. Similarly, the ratio of State of Jharkhand & Ors. v. Hindustan Construction Co. Ltd. (supra) does not come to the aide of the respondent No. 1. In State of Jharkhand & Ors. v. Hindustan Construction Co. Ltd. (supra), the Apex Court dealt with a question, whether the Apex Court can entertain an application for making the award as Rule of the Court even if it retains seisin over arbitral proceedings. The Constitution Bench of the Apex Court overruled the decisions rendered in Guru Nanak Foundation v. Rattan Singh & Sons - (1981) (SLT Soft.) 591 and State of Madhya Pradesh v. Saith and Skelton -- 1972 (SLT Soft.) 343 and held that they do not lay down the correct position of law. The Apex Court held that the jurisdiction of a Court conferred under a statute cannot be allowed to shift or become flexible because of a Superior Court's interference in the matter in a different manner. It is humbly observed that the ratio of State of Jharkhand & Ors. v. Hindustan Construction Co. Ltd. (supra) is not applicable to the present case and the reliance by the respondent No. 1 is misplaced.
24. The submissions advanced by the Ld. counsel for the respondent No. 1 do not impress me much for three reasons. Firstly, the intention of the respondent No. 1 to incorporate Clause 49 and vesting the jurisdiction in Courts Delhi is from the view point of having its registered office in Delhi. It is not disputed by the respondent No. 1 ARBTN. No. 51645/2016 Page No. 10/43 that the registered office of respondent No. 1 is not situated within the jurisdiction of the South West District, Delhi. Secondly, the respondent No. 1 has its coaching institutions in multiple States and thus vesting the jurisdiction in Courts in Delhi is from the backdrop of where its registered office is situated. Thirdly, to read that the jurisdiction is vested in Delhi from the view point where the arbitration proceedings were conducted and the arbitral award was passed would be myopic and hollow. It is a bottomless argument that the territorial jurisdiction is vested in the Court where the arbitration proceeding was conducted and where the arbitral award was passed i.e. Roop Nagar, Delhi, merely for the reason that the respondent No. 1 never knew at the time of signing the Salary and Terms & Conditions, particularly the arbitration agreement in the present case i.e. on 05.02.2014 that the arbitration proceedings would be conducted at Roop Nagar, Delhi. The sole intention of the respondent No. 1 to mention in Clause 49 of the Salary and Terms & Conditions that the courts at 'Delhi' only shall have the jurisdiction over the matter can be safely hinged to the South West District Delhi, as not only the registered office of the respondent No. 1 is situated within the South West District but also substantial cause of action arose within the South West District, Delhi. Thus, the submissions advanced by the Ld. counsel for the respondent No. 1 that the Courts at South West District do not have territorial jurisdiction to entertain the petition under Section 34 of the Act is unacceptable and untenable in the eyes of law.
ARBTN. No. 51645/2016 Page No. 11/4325. In view of the above discussions and observation it is held that this Court has jurisdiction and is competent to hear and decide the petition moved by the petitioner under Section 34 of the Act. The application moved by the respondent No. 1 is dismissed, accordingly.
26. Ms. Chaudhary, Ld. counsel for the petitioner unleashed the challenge to the impugned award on the main plant that the impugned award is against the public policy and violates Section 34(2) of the Act and the same is liable to be set aside.
27. Ms. Chaudhary, Ld. counsel for petitioner further submitted that the entire arbitration proceedings were held against the principles of natural justice. Ld. counsel further submitted that no proper notice be it notice of arbitration, notice for appointment of arbitrator and of statement of claim were sent to the petitioner. Ld. counsel for the petitioner further submitted that the petitioner resides at Ahmedabad and it is unexplainable that why the notices were sent by the respondent No. 1 to the Kota, Rajasthan address. The petitioner gained knowledge about the impugned award and thereafter moved an application before the respondent No. 2 on 31.08.2016 seeking certified copy of the impugned award. The petitioner received the certified copy of the impugned award on 07.09.2016 and thereafter the petitioner preferred the present petition on 30.09.2016.
28. Ld. counsel for the petitioner further submitted that the arbitration proceedings were conducted by the respondent No. 2 against the petitioner in haste and without adhering to the basic norms.
ARBTN. No. 51645/2016 Page No. 12/43It was submitted that the respondent No. 1 purportedly sent a letter dated 16.09.2015 - Ex.PW1/15 through speed post dated 21.09.2015 - Ex.PW1/17 to the Kota address of the petitioner invoking the arbitration agreement and apprising the petitioner about the appointment of respondent No. 2 and seeking a claim of ₹6,69,745/- (Rupees Six lakhs sixty nine thousand seven hundred and forty five only). Ld. counsel further submitted that the said notice was purportedly sent by the respondent No. 1 to the petitioner through email dated 19.09.2015. Ld. counsel further submitted that the respondent No. 1 did not even wait for the expiry of the reasonable period and through a notice dated 18.09.2015 requested the sole arbitrator to commence the arbitration proceedings. Ld. counsel further submitted that the sole arbitrator purportedly issued a notice dated 23.09.2015 to the petitioner through post and proceeded further. Ld. counsel further submitted that the haste shown by the respondent No. 1 and the respondent No. 2 to commence the arbitration proceedings when the service of notice(s) was not even duly effected upon the petitioner in the accordance with law speaks for itself.
29. Ms. Chaudhary, Ld. counsel for the petitioner submitted that the impugned award is against the public policy. Ld. counsel further submitted that not only the arbitral award is an ex parte award but also the same was passed behind the back of the petitioner without adhering to basic compliance of principles of natural justice. Ld. counsel ARBTN. No. 51645/2016 Page No. 13/43 submitted that the petitioner had no knowledge about the passing of the arbitral award until 04.08.2016.
30. Ld. counsel for the petitioner further submitted that the Service Rules Manual is a one-sided contract and the same lacks consensus ad- idem. Ld. counsel further submitted that the impugned award of ₹88,091/- (Rupees Eighty eight thousand and ninety one only) along with interest @9% p.a. and costs of ₹35,000/- (Rupees Thirty five thousand only) passed against the petitioner is contrary to law and the same is liable to be set aside.
31. Ms. Chaudhary, Ld. counsel for the petitioner submitted that though the sole arbitrator died during the pendency of this legal proceedings but the the sole arbitrator appointed by the respondent No. 1 in the arbitration proceedings was an arbitrator for the respondent No. 1 in more than 20(twenty) arbitration proceedings. Ld. counsel for the petitioner submitted that regardless the sole arbitrator failed to adhere to the provisions of the Act, as per the amendment of the Act having retrospective effect from 23.10.2015. Ld. counsel drew attention of the court to the arbitral record and submitted that the sole arbitrator not only lacked independence and fairness but also his appointment is questionable and against the mandate of the Act. Ld. counsel for the petitioner once again submitted that though the sole arbitrator has died but his appointment and the manner of convening the arbitration proceedings is contrary to law.
ARBTN. No. 51645/2016 Page No. 14/4332. Ld. counsel for petitioner for the submitted that the Service Rules Manual for the Employees is in utter disregard and violation of the law of the land. Ld. counsel strenuously argued that Clauses 12(h),
(g), (j), Clause 13(a), Clause 14(b), Clause 14(d) and (e) are overtly contrary to the public policy and it is for that reason the arbitral award is liable to be set aside.
33. Ms. Chaudhary, Ld. counsel for the petitioner to buttress her arguments relied upon the judgment passed by the Hon'ble High Court of Delhi passed by the Hon'ble High Court of Delhi in the case of Vivek Rai v. Aakash Institute - OMP No.561/2014, judgment dated 04.03.2015. Ld. counsel also placed reliance upon the judgment dated 15.07.2016 in case titled as Hemant Kumar v. FIIT JEE Ltd. - CS No. 536/2015 passed by Ld. ADJ-02, Central District, Tis Hazari Court, Delhi; Prashant Jain v. FIIT JEE Ltd. - ARB. No. 225/2014 decided on 18.01.2014 by Ld. ADJ-05, South District, Saket Courts, New Delhi and also the judgment passed by this court in Rajat Goyal & Anr. v. FIIT JEE Ltd. - ARBTN. No. 51638/2016 decided on 23.02.2019.
34. Per contra, Sh. Vidur Sikka advanced arguments on behalf of the respondent No. 1. Ld. counsel submitted that none of the grounds urged by the petitioner in the petition are within the purview of Section 34 of the Act. Ld. counsel further submitted that neither the terms of the contract conflict with the fundamental pubic policy of the country, law nor the arbitral award passed by the sole arbitrator is contrary to law.
ARBTN. No. 51645/2016 Page No. 15/4335. Ld. counsel for respondent No.1 further submitted that the notice was duly served upon the petitioner and it is the petitioner who did not appear before the sole arbitrator despite service of notice. Thus, the petitioner challenging the arbitral award on the pretext that he remains unserved and the award has been passed without adherence to the due process of law is self-serving and untenable.
36. Sh. Sikka, Ld. counsel for the respondent No. 1 further submitted that the notices and correspondences were duly sent to the address of the petitioner, particularly, the Rajasthan address and the same were received back unserved with report and remark 'refusal.' Ld. counsel further submitted that refusal to accept service is deemed service and thus it does not lie in the mouth of the petitioner to state that neither the respondent No. 1 nor the sole arbitrator adhered to the due process of law.
37. Sh. Sikka, Ld. counsel for the respondent No. 1 stressed that the notice duly stands served upon the petitioner through email. Ld. counsel submitted that not only the notice dated 16.09.2015 - Ex.PW1/15 but also the notice of appointment of arbitrator dated 18.09.2015 - Ex.PW1/19 were sent through email to the petitioner. Ld. counsel further submitted that the petitioner refused to accept notice of the statement of claim and it is the petitioner who chose to stay away from the arbitration proceedings and filed no response be it to the notice(s) and/or the statement of claim filed by the respondent No. 1 against the petitioner. Sh. Sikka, further submitted that the non-
ARBTN. No. 51645/2016 Page No. 16/43appearance and non-contest of the statement of claim by the petitioner were intentional and thus it does not lie in the mouth of the petitioner to cry foul play once a reasoned award has been passed against the petitioner by the sole arbitrator and rightfully fastening the petitioner's liability.
38. Ld. counsel for the respondent No. 1 submitted that the letter signed by the petitioner at the time of interview and his selection is taken, as a standard practice across the industry and there is no illegality in seeking the same. Ld. counsel further submitted that the petitioner signed the letter with open eyes and there is no question of lack of consensus ad-idem, thus, the plea urged by the petitioner at this stage is an after thought.
39. Ld. counsel for the respondent No. 1 submitted that the submissions advanced by the petitioner that no opportunity was given to respond to the notice and thereafter the arbitrator was appointed within 2 days is also self-serving and does not take the case of the petitioner any far. Sh. Sikka, Ld. counsel for the respondent No. 1 submitted that the submissions advanced by the Ld. counsel for the petitioner are blowing hot and cold in the same breath. Ld. counsel submitted that on one hand the petitioner submits no receipt of the notice and on the other hand, the petitioner submits that the petitioner was not granted sufficient time to respond to the notice. Ld. counsel for the respondent No. 1 further submitted that the notice was duly sent to the last known address and also through email to the petitioner, thus, ARBTN. No. 51645/2016 Page No. 17/43 the question of petitioner not being served with the notices is false and contrary to record.
40. Ld. counsel for the respondent No. 1 submitted that the arbitration proceedings were initiated by the sole arbitrator prior to the Amendment of 2015 of the Act, therefore, the submissions advanced by the Ld. counsel for the petitioner with regard to the lack of fairness and independence of the sole arbitrator are self-serving and without any basis.
41. With regard to the Clause 14 of the Service Rules Manual for the Employees being violative, Ld. counsel for the respondent No. 1 submitted that none of the Clauses have been invoked by the sole arbitrator, thus no scope to challenge the award on the said Clauses has been made out by the petitioner. Ld. counsel further submitted that there is no scope to challenge the award, regardless of the impugned award being an ex parte award.
42. Sh. Sikka, Ld. counsel for the respondent No. 1 submitted that the judgement relied upon by the petitioner i.e. Vivek Rai v. Aakash Institute - OMP No.561/2014, judgment dated 04.03.2015 is clearly distinguishable. Ld. counsel further submitted that the judgement in Vivek Rai's case (ibid) was passed with regard to a franchisee model and the same is distinguishable because the service upon the petitioner is deemed service, as the petitioner refused to accept notice(s) issued by the respondent No. 1 and the sole arbitrator. Ld. counsel for the respondent No. 1 further submitted that the sole arbitrator calculated ARBTN. No. 51645/2016 Page No. 18/43 the amount and passed a well reasoned and speaking award. Ld. counsel for the respondent No. 1 further submitted that the copy of Service Rules Manual was duly served upon the petitioner, the petitioner never complained about the service rules during the course of his employment and such challenge to the Service Rules in a petition under Section 34 of the Act, is untenable and impermissible in law. Ld. counsel submitted that the ratio of Vivek Rai's (ibid) judgement is not applicable to the facts of the present case.
43. Ld. counsel for the respondent No. 1 relied upon the judgment passed in NHAI v. Progress Construction - 240 (2017) Delhi Law Times 253 (DB) on the settled position in law that in proceedings under Section 34 of the Act, the Court does not sit in appeal over the award. Thus, an arbitral award passed by an arbitrator shall not be interfered with lightly. Ld. counsel laid great emphasis that this Court can neither sit in appeal nor reassess or re-appreciate the evidence. Ld. counsel submitted that an arbitral award can only be interfered with grounds stipulated in Section 34(2) of the Act and in the present case the petitioner miserably fails to make out a case for an interference by this Court.
44. Ld. counsel for the respondent No. 1 also placed reliance upon the judgment passed in MCD v. M/s Harcharan Dass Gupta Construction - 253 (2018) DLT 721 on the proposition that this Court does not sit as a Court of appeal over the findings of fact recorded by the sole arbitrator and also there are no valid grounds flagged by the ARBTN. No. 51645/2016 Page No. 19/43 petitioner to challenge the arbitral award under the realm of Section 34 of the Act. Ld. counsel also placed reliance upon the landmark judgment of the Apex Court in Associated Builders v. Delhi Development Authority - (2015) 3 SCC 49.
45. Ms. Choudhary, Ld. counsel for the petitioner rejoined her arguments. Ld. counsel submitted that assuming for the sake of the argument the arbitrator's appointment is prior to the 2015 Amendment of the Act, yet the sole arbitrator failed to adhere to Section 12(1) of the Act, as the same is evident from the perusal of the notice dated 23.09.2015 issued by the sole arbitrator to the petitioner, which constitutes the part of the arbitral record. Ld. counsel further submitted that a person cannot be appointed, as an arbitrator in more than two matters.
46. With regard to the service aspect on the petitioner through email, Ld. counsel submitted that the letter dated 16.09.2015 and letter dated 18.09.2015 were not sent by email, as no correspondence during the course of employment were exchanged between the parties through email. Ld. counsel further submitted that on termination of services and employment, the emails are blocked by the respondent No. 1 and thus the question of effecting service of notices and/or any other correspondences through email does not arise.
47. Ld. counsel for the petitioner submitted that the service of notice is bad in law and not in accordance with law. Ld. counsel further submitted that with regard to the postal packet(s) received back ARBTN. No. 51645/2016 Page No. 20/43 unserved, particularly, notices dated 04.05.2015, 16.09.2015 and 18.09.2015 on the pretext refusal to accept service, the respondent No.1 led no evidence. Thus, the miscarriage of justice is evident nay apparent and grave prejudice has been caused to the petitioner by passing of an ex parte arbitral award against the petitioner. Ld. counsel for the petitioner further submitted that no notice through substituted mode be it publication has been served upon the petitioner.
48. Ld. counsel for the petitioner concluded her arguments on the note that the submissions advanced by the respondent No. 1 that it is the best interest of the students, which is paramount for the respondent No. 1, is nothing but a ruse. Ld. counsel submitted that the respondent No. 1 is engaged in a pure commercial venture and students are looked as money generating units by the respondent No. 1. Ld. counsel for the petitioner drew attention of the Court to Clause 1 and 2 of the Salary and Terms & Conditions, which are intentionally left blank and also to Clause 37, as the same depict the intention and conduct of the respondent No. 1.
49. The arbitration agreement is enshrined in the Clause 49 of the Salary and Terms & Conditions entered between the respondent No. 1 and the petitioner is reproduced, as under:
"49. In case of any dispute or difference between you and the company regarding payment or non payment of any claim(s), tenure of services, transfer of employees, termination of services, compensation and any other dispute arising out or relating to the contract whether arising during the ARBTN. No. 51645/2016 Page No. 21/43 services or thereafter shall be referred to sole arbitrator appointed by the chairman of M/s Aakash Educational Services Ltd.
If the arbitrator to whom the matter is originally referred becomes de jure or defacto, unable to perform his duties or refused to act for any reason whatsoever the chairman AESL as aforesaid at the time of such inability to act shall appoint any other person to act as an arbitrator in accordance with the term and conditions of the agreement. Such person shall be entitled to proceed with the reference from the stage at which it was left by his predecessor, if both the parties consent to this effect, failing which the Arbitrator will be entitled to proceed denovo.
The proceedings shall be conducted at New Delhi subject to the provisions of Arbitration & Conciliation Act 1996 and the courts at Delhi only shall have the jurisdiction over the matter."
50. The relevant extracts of the Salary and Terms & Conditions of the aforesaid agreement, particularly, Clause 12, 13 and 14 are reproduced as under:
"12. The academic year is defined as ; from 1 st June to 31st May of the next year.
13.(a) The company will be investing huge sum of money for your training programme apart from paying the salary as agreed during the period, therefore, you are required to work with the company at least for two years i.e. from 11/Feb/2014 to 10/Feb/2016. The contract is not ARBTN. No. 51645/2016 Page No. 22/43 liable to be terminated by efflux of time i.e. after the expiry of initial two years period from the date of joining, three months notice or and completion of academic year in terms of clause (9), (12) & 14(b) above shall be an absolute and must.
(b) After expiry of agreed period of tow years as mentioned in clause 13(a), the contract shall be considered automatically renewed for a period of another term of two years and so on unless the contract is terminated by either parties to this agreement as per the provisions of this manual.
14.(a) During probation or after confirmation of service as stipulated herein above, you will be under a contractual obligation to serve the organization continuous & uninterruptedly as per clause (13). It is made abundantly clear that you will be under similar contractual obligation to give continuous & uninterrupted service for subsequent terms of two years each time, unless the contract is terminated in letter & spirit of this agreement, meeting all the provisions of this manual. This condition is imposed primarily to attain continuity of teaching/ coaching to the students and to maintain & keep up the high standards maintained by our organization in imparting training & assistance to our students in taking up IITJEE, AIPMT, AIEEE, DPMT, AFMC & other other engineering & medical entrance exams. It is essential that in no manner the interests of the students get affected or jeopardized. An AESL faculty must maintain highest level of ethics & value system so that ARBTN. No. 51645/2016 Page No. 23/43 he/she becomes an inspiration to the young students.
(b) In the event an employee wishes to leave 'Aakash Educational Services Ltd.' after completion of two years, is required to give notice in writing giving clear 3 months time to AESL so that such period coterminates with expiry of the academic session. The said notice is required to be delivered through the Centre Director/Incharge or your Head of the Department at the office of the Managing Director of AESL at Delhi and obtain a valid receipt so that there would be no ambiguity regarding the contents of you notice and it's serving upon AESL. The notice for 3 months can be given only between 15th February to 28th February in any year after completion of two years. If any employee gives notice at any time other than specified, it will not be accepted and will be treated as invalid as per the terms and conditions of appointment. If any faculty member does not submit notice between 15th February to 28th February, it will be assumed he/she is going to complete the coming next session.
(c) During the notice period of 3 months, the faculty shall perform as normal as while in the job earlier. If it is found that the faculty is performing poor, feedback starts going low/down, attitude becomes antiorganization or his actions become detrimental to the interest of the company, then this notice period shall be considered invalid and his/her resignation will be treated as null & void and it will be presumed that the faculty voluntarily ARBTN. No. 51645/2016 Page No. 24/43 deserted the job without serving any prior notice to the company hence provision as mentioned under clause 14(d) shall be applied thereof.
(d) In case you are unable to adhere to the said mandatory notice period, you would be liable to pay AESL -
(i) A minimum preestimated & predeterminated damage to the tune of grosssalary for the unexpired notice period or the remaining period of the academic year/contract period of two years, whichever is higher or as per discretion of Chairman/Managing Director/Director of the Company e.g. if a person quits on 31st October, he/she will be required to pay 7 x (x) rupees as damages to AESL (the value of (x) will be gross monthly salary). The damages are not punitive but only a part compensation for the huge loss of face, reputation, brand equity, mind equity, future business losses due to you're quitting without completing the academic year and leaving the students in a lurch.
(ii) It is made clear that training expenses as stated above are payable only in case of leaving the AESL during the initial period of contract of two years but not in case of extended period of contract as stipulated in clause 13 (b) of this manual.
Such liability mentioned under clause 14(d)(i) &
(ii) would be automatically incurred once the breach is committed by the employee & no notice in this regard would be served upon you to claim ARBTN. No. 51645/2016 Page No. 25/43 the said predetermined & preestimated damages.
You would be severally liable to pay the same within 7 (seven) days of your leaving. If AESL does not receive the payments within 7 days of leaving towards the damages as stated above, AESL shall have the right to recover the same along with interest @ x p.a. through legal process (x = PLR + 3% ; where PLR is Prime Lending Rate of AESL Bankers).
(e) After expiry of the initial & minimum contract period, this contract will continue subject to clause 13(b) above and till the person attains the age of superannuation i.e. 58 years, subject to terms and conditions contained in this manual. After the superannuation, some people with extraordinary achievements may be given extension to continue for such period the candidate is capable of rendering effective services solely at the discretion of Managing Director.
(f) Corollary of clause (13) and 14 (b) if in the last year of the contract period or extension thereof at AESL, an employee does not submit his resignation between 15th February to 28th February, it will be assumed that he/she is willing to continue his/her job for another term of two years subject to the conditions contained in this manual.
(g) It is agreed and undertaken by you that the present service manual is meant to be complied with and the terms & conditions stated there in are towards compliance, to ensure continuity of ARBTN. No. 51645/2016 Page No. 26/43 coaching to the students, upholding AESL tradition in high ethics & values, rather than committing breach of any of its terms.
You will submit two undated cheques in favour of 'Aakash Educational Services Ltd.' The first cheque submitted by you shall be towards the total training expenses incurred by the company on you as explained under clause (4) & 14 (d) (ii) and the second cheque equivalent to 3 months gross salary of confirmed employee if appointed on confirmed services as per the offer/calculation of salary sheet, towards a part discharge of liabilities towards damages as per clause 14 (d) of this agreement.
You hereby authorize AESL for filling up of the date on the cheques and thereafter to encash the said cheques. In case of non compliance of the contract terms contained in this manual, the cheques become payable immediately. That the said cheques shall not be treated as security cheques for legal or any other purposes as it is issued by you in order to discharge of your liability which may occur on account of damages as mentioned under clause 14 (d) of the agreement.
I YATEENDRA ARYA undertake to keep sufficient balance in my bank account on which the above mentioned cheques are drawn to ensure the encashment of the said cheques. Cheque nos are 001501 and ............... drawn on Axis Bank of ARBTN. No. 51645/2016 Page No. 27/43 amount of Rs.2,10,000/ And Rs................ Signature.................
In case, the above said cheque(s) get/s dishonored on its presentation to the banker for the reason of insufficient funds, a/c closed, stop payment or any other reason, you shall be deemed to commit an offence u/s 138 N.I. Act and the appropriate proceedings shall be initiated against you before the appropriate courts of law.
AESL is further authorised to take appropriate legal action to recover the balance amount if any. Willful & intentional breach of this contract would attract liability upon the employee for compensatory & exemplary damages in addition to contractual liabilities mention in clause 14 (d) and 14(k) and under any other provision of this manual.
(h) In the event of your default, noncompliance or willful breach of the contract or sudden termination of the contract and /or your leaving the institute without following the proper procedure, as laid down in this manual, and the employee's refusal to meet his/her obligation towards AESL in letter and spirit of the service rules, and the matter becoming subjudice, the employee shall be responsible for the entire litigation expenses including arbitration proceedings, organizing hearing in the arbitration and other legal proceedings if any required to be initiated to facilitate arbitration proceedings. Needless to say, litigation expenses are subjective.
ARBTN. No. 51645/2016 Page No. 28/43However, such expenses cannot be less than Rs.10000/ per hearing either before the court or before the arbitrator apart from the other expenses as elucidated above.
(I) In addition to whatever has been agreed by you by way of the present service manual, it is clearly agreed & understood that you would work in the interest of the organization and would not do any act, omission or performance directly or indirectly which could affect the interest of the organization and its students. Noncompliance of this service manual would tantamount to causing irreparable loss both to the organization and the students apart from the pecuniary loss which has far reaching consequences. Needless to say, you have all freedom to work for betterment of your career, but this approach has to be within the parameters of this agreement of this agreement which does not take away legitimate rights of enforcement of this contract or prevent damage being caused to AESL and its students.
Management reserved the right of not accepting your resignation, if you are handling an assignment other than regular teaching work which is of importance to AESL and your leaving the same will have adverse effects then you may be asked by the management to continue for a reasonable period of time beyond your notice period.
(j) After leaving the company for any reason whatsoever, you shall not compete in nay manner directly or indirectly with AESL or shall not accept ARBTN. No. 51645/2016 Page No. 29/43 any employment or association with any organization i.e. competitors of AESL for a period of not less than one year from the date of your leaving the company.
(k) If employee commits any act in violation to th provision of clause 14 (j) of the agreement, with intend to cause wrongful loss to AESL, shall be held liable to pay a fixed sum of Rs.2 Lacs to AESL towards damages besides other demand raised by the company.
51. On careful perusal of the petition, objections, documents filed by the parties and also of the arbitral record and deliberating over the submissions advanced by Ld. counsels for parties, this court observes that the arbitration proceedings invoked by the respondent No. 1 against the petitioner were in regard to enforcing the terms & conditions of salary and terms & conditions dated 05.02.2014.
52. The Apex Court in the landmark judgment of Associate Builders v. Delhi Development Authority - (2015) 3 SCC 49 while setting aside the judgment passed by the Division Bench of Hon'ble High Court of Delhi culled out the legal principles after traversing the judicial pronouncements passed by the various High Courts and the Apex Court.
53. The Apex Court in Associate Builders V. DDA (supra) observed that it is important to note that the 1996 Act i.e. the Act, was enacted to replace the Arbitration Act, 1940 in order to provide for an arbitral ARBTN. No. 51645/2016 Page No. 30/43 procedure which is fair, efficient and capable of meeting the needs of arbitration and also to provide that the tribunal gives reasons for an arbitral award; to ensure that the arbitral tribunal remains within the limits of its jurisdiction and to minimize the supervisory role of courts in the arbitral process.
54. The Apex Court in the case of ONGC Ltd. v. Saw Pipes - (2003) 5 SCC 705 held that the phrase 'public policy of India' used in Section 34 of A&C Act in context is required to be given wider meaning. The Apex Court further held that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest, has varied from time to time.
55. It is settled position in law that an award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or (b) the interest of India; or (c) justice or morality, or (d) in addition, if it is patently illegal.
56. The illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that the award is against the public policy. Award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the court. Such an award is opposed to public policy and is required to be adjudged void.
ARBTN. No. 51645/2016 Page No. 31/4357. In Associate Builders v. DDA (supra), the Apex Court observed that it must be clearly understood that when a court is applying the "public policy" test to an arbitration award, it does not act, as a Court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster, as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus, an arbitral award based on little evidence or no evidence which does not measure up in quality to a train legal mind would not be held to be invalid on this count.
58. In paragraph No. 42 of the judgment passed in Associate Builder vs. DDA (supra) held that in the 1996 Act, the principle of patent illegality contains 3 sub heads:
(a) a contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature;
(b) a contravention of the arbitration act itself would be regarded, as a patent illegality - for example if an arbitrator gives no reason for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside, and
(c) equally, the third sub head of patent illegality is really a contravention of Section 28(3) of the Arbitration Act which pertains to the Rules applicable to substance of dispute.ARBTN. No. 51645/2016 Page No. 32/43
59. This court observes on perusal of the complete arbitral record that the judgment passed by the Hon'ble High Court of Delhi in the case of Vivek Rai v. Aakash Institute - OMP No.561/2014, judgment dated 04.03.2015 the same is distinguishable and not applicable to the facts of the present case.
60. I, am of the considered view that the service of the notices issued by the respondent No. 1 and also by the respondent No. 2 through post had been duly effected upon the petitioner in accordance with law. It is an admitted case that the petitioner was posted in Ahmedabad by the respondent No. 2 and even during the term of the employment the petitioner was transferred within Ahmedabad. The transfer orders were delivered by hand. The address of Kota, Rajasthan i.e. 121 - UIT Scheme Kunhari, Kota PIN - 324008 to which the respondent No. 1 addressed all the notices and even the sole arbitrator is the permanent address of the petitioner mentioned in the Joining Proforma filled by the petitioner herein. The address 121 - UIT Scheme Kunhari, Kota, PIN - 324008 is also the same in the driving licence and a copy of the same was tendered by the petitioner to the respondent at the time of joining the employment with the respondent No. 1.
61. Interestingly, the respondent No. 1 had also sent the same notices to the petitioner throught email on the email address [email protected]. It is observed that all the emails placed by the respondent No. 1 on the arbitral record were destined to not reach the petitioner herein, as the email address of the petitioner not only ARBTN. No. 51645/2016 Page No. 33/43 mentioned in the Joining Proforma but also on the first page of the statement of claim filed by the respondent No.1 is [email protected].
62. With the 'period' missing in the email address of the petitioner, to which the respondent No. 1 had been sending the emails, the service through emails cannot be held to be duly served. It is observed that the affidavit of service - Ex.PW1/23 filed by the respondent No. 1 before the sole arbitrator during the arbitration proceeding is also defective only with regard to service through emails. In Ex.PW1/23, the deponent Sh. P.N. Arora stated that the letter of appointment was emailed through the HR department on the email address provided by the petitioner. The email dated 15.10.2015 states the address of the petitioner as [email protected]. Thus, it can be safely concluded that the service effected upon the petitioner through email is not proper service.
63. However, not only the notice of arbitration proceedings dated 23.09.2015 issued by the sole arbitrator to the petitioner and the respondent No. 1 through speed post - vide postal receipt dated 29.09.2015 bearing RD510039027IN stands delivered to the petitioner but also the statement of claim dispatched through the speed postal receipt dated 19.10.2015 bearing ED743954468IN duly stands delivered upon the petitioner, as per the print out of the tracking report the service of the same was duly effected upon the petitioner - Yateender Arya on 23.10.2015. I, find no reason to disbelieve the Ld. ARBTN. No. 51645/2016 Page No. 34/43 counsel for the respondent No. 1 that the service was duly effected upon the petitioner. It is observed that the notices sent prior to the statement of claim dispatched via speed post on 19.10.2015 were received back unserved 'Refused', whereas the one sent through speed post records duly served upon the petitioner namely, Yateendra Arya on 23.10.2015. The postal address to which the respondent No. 1 and respondent No. 2 dispatched notices, statement of claim and even the arbitral award is the very same postal address which had been furnished by the petitioner to the respondent No. 1 at the time of joining the services and also the service of statement of claim on 23.10.2015 duly stands effected upon the petitioner himself. It is observed that the Ld. arbitrator proceeded the petitioner as ex parte only on 18.12.2015 and the same had been done in accordance with law.
64. Regardless, of the service effected upon the petitioner on 23.10.2015, the petitioner knowingly stayed away from the arbitration proceedings and only by way of the present petition under Section 34 of the Act challenged the arbitral award dated 06.05.2016. Once a party stays away from the proceedings without any plausible explanation and/ or sufficient cause, he/she does run the risk of being proceeded, as ex parte and consequentially uncontroverted, unrefuted pleadings, ex parte evidence lead by the opposite party, and penultimately an ex parte arbital award.
ARBTN. No. 51645/2016 Page No. 35/4365. This court observes that the petitioner has miserably failed to disclose how he gained knowledge about the arbitral award being passed against him. There is no averment with regard to the knowledge of the arbitral award by the petitioner.
66. This court further observes that the petitioner has placed heavy reliance upon the judgment passed by Hon'ble High Court of Delhi in the case of Vivek Rai v. Aakash Institute (supra), wherein His Lordship, S.Muralidhar J., set aside the arbitral award passed by the sole arbitrator in the favour of Aakash Educational Services Limited and against the faculty member, is not applicable to the facts of the case at hand.
67. Hon'ble High Court of Delhi in Vivek Rai v. Aakash Institute (supra) held that reliance on the terms & conditions of such contracts, which are illegal clauses, in a mechanical manner and the same forming the very basis of an arbitral award stirs the judicial conscience and such arbitral award are liable to be set aside.
68. The relevant paragraphs of the judgment passed in Vivek Rai v. Aakash Institute (supra) are reproduced as under:
"14. The above clauses appear to the Court to be wholly unconscionable and opposed to public policy and, therefore, hit by Section 23 of the Contract Act. An award based on the above clauses which promise the Respondent to recover an unconscionable sum would be clearly opposed to the public policy of India and likely to be interfered with under Section 34 (2) (b) (ii) of the Act.ARBTN. No. 51645/2016 Page No. 36/43
15. Clauses 7 (h) and 7 (k) read as under:
"7(h) In the event of your default, noncompliance or wilful breach of the contract or sudden termination of the contract and/or your leaving the institute without following the proper procedure, as laid down in this manual, and the employee's refusal to meet his/her obligation towards Aakash Institute (Lucknow Centre) in letter and spirit of the service rules, and the matter becoming subjudice, the employee shall be responsible for the entire litigation expenses including, arbitration proceedings, organizing hearing in the arbitration and other legal proceedings if any required to be initiated to facilitate arbitration proceedings. Needless to say, litigation expenses are subjective. However, such expenses cannot be less than Rs.10,000/- per hearing either before the Court or before the arbitrator apart from the other expenses as elucidated above.
"7(k) Whoever commits any act in violation to the provision of clause 7(j) of the agreement, with intend to cause wrongful loss to Aakash Institute (Lucknow Centre), shall be held liable to pay a fixed sum of Rs.5 lacs to Aakash Institute (Lucknow Centre) towards damages."ARBTN. No. 51645/2016 Page No. 37/43
16. The above clauses clearly constitute an unconscionable restraint on the right of one of the parties to seek legal redress. The clauses are hit by Section 28 of the Contract Act. What is even strange is that even a copy of the said agreement is not made available to the other party. The Petitioner was only allowed to see/read the agreement. The Petitioner was required to contact the Centre Director with prior appointment. In fact, it is the Petitioner's case that he was not even given a copy of the agreement.
17. It shocks the judicial conscience that the Arbitrator mechanically proceeded to pass an Award in favour of the Respondent on the basis of the aforementioned patently illegal clauses of the contract. The Court is unable to sustain the impugned Award of the learned Arbitrator.
Accordingly, the impugned Award is hereby set aside. The petition is allowed but in the circumstances with no order as to costs."
69. With all due deference to the judgment passed by the Hon'ble High Court of Delhi in Vivek Rai v. Aakash Institute (supra), I am of the view that the same is clearly distinguishable and its ratio is not applicable to the facts of the present case. In Vivek Rai v. Aakash Institute (supra) what shook the conscience of the Court was that not only the terms and conditions were violative of Section 28 of the Contract Act, 1872 but also neither the copy of the agreement was provided nor the petitioner therein was allowed to read the same. The Hon'ble High Court also observed that the petitioner therein could not ARBTN. No. 51645/2016 Page No. 38/43 meet the Centre Director without a prior appointment. Thus, curtailment of legal redress by the via media of the terms and conditions in the agreement shocked the judicial conscience and the arbitral award passed by the arbitrator in a mechanical manner was set aside.
70. Whereas, the petitioner in the present case has lodged his protest with regard to Clause 13(a), 13(b); Clause 14(b), 14(d), 14(e), 14(g), 14(h) and 14(j) are contrary to the public policy and therefore the arbitral award passed by the sole arbitral be set side.
71. On perusal of the statement of claim filed by the respondent No.1 before the sole arbitrator, it is observed that the respondent No.1 sought 4 (four) different claims against the petitioners. The first claim of ₹6,69,745/- (Rupees Six lakhs sixty nine thousand seven hundred and forty five only) towards leaving the job without giving proper notice, as per the Service Rules Manual for the Employees until the completion of contractual period; the second claim of ₹2,00,000/- (Rupees Two lakhs only) against the petitioner for accepting employment or association with organisation - competitors of the respondent No. 1 after leaving the employment with the respondent No.1; the third claim raised by the respondent No.1 against the petitioners is qua interest on the basis of Clause 14(d)(ii) of Service Rules Manual for the employees. The fourth claim of the respondent No.1 against the petitioner was towards the cost of arbitral proceedings @ ₹10,000/- (Rupees Ten thousand only) per hearing, as per Clause ARBTN. No. 51645/2016 Page No. 39/43 14(b). Thus the respondent No.1 in total made a money claim of ₹8,69,745/- (Rupees Eight lakhs sixty nine thousand seven hundred and forty five only) alongwith pendente lite interest and future interest on the amount claimed.
72. It is observed that the Ld. sole arbitrator has duly considered the terms and conditions of the employment entered between the employee (petitioner herein) and the employer (respondent No. 1 herein) and has rightly allowed the first claim of the respondent No. 1 on the basis that the petitioner left the services of the respondent No. 1, 2(two) months and 3(three) days prior to the completion of academic period. It is observed that the sole arbitrator has rightfully negated the claim of the respondent No.1 for the period of 10(ten) months and 12(twelve) days and allowed the claim on the basis of 2(two) months and 3(three) days prior to the completion of the academic period. It is also observed that there is no dispute urged by the petitioner with regard to the date of him quitting the employment of the respondent No. 1. It is observed that the sole arbitrator has rightly held that the unserved period by the petitioner ought to be taken as co-terminus with the academic year. Hence, the period of 2(two) months and 3(three) days has been correctly considered by the sole arbitrator. I, find no perversity in the findings of the sole arbitrator with regard to the first claim. The claim of ₹88,091/-(Rupees Eighty eight thousand and ninety one only) allowed by the sole arbitrator is upheld.
ARBTN. No. 51645/2016 Page No. 40/4373. The sole arbitrator declined the claim of ₹2,00,000/- (Rupees Two lakhs only) sought by the respondent No. 1 from the petitioner, on the ground that the petitioner herein had joined / accepted employment with the competitor of the respondent No. 1. It is observed that the sole arbitrators regardless of drawing an adverse inference against the petitioner herein for not obtaining a no-dues certificate from the respondent No. 1, the sole arbitrator declined the claim of the respondent No. 1 and held that the respondent No. 1 did not prove that the petitioner has joined the employment or association with an organisation, competitor of the respondent No. 1. Regardless, of the position in law that non-compete clauses particularly in the case of an individual, the same are frowned upon by the Courts of Justice, as they run foul of Section 27 of the Contracts Act, 1872. I, observe that the sole arbitrator rightly declined the second claim of the respondent No. 1 herein and thus there is no merit in the submissions advanced by the Ld. counsel for the petitioner on this count.
74. This court also observes that there is no illegality in the arbitral award with regard to the award of costs of ₹35,000/- (Rupees Thirty five thousand only) to the respondent No. 1. The sole arbitrator did not consider the Clause 14(h) of the Salary and Terms & Conditions, wherein the costs have been benchmarked at ₹10,000/- (Rupees Ten thousand only) per hearing.
75. This court cannot lose sight of the fact that the petitioner herein regardless of the service of statement of claim upon him on 23.10.2015 ARBTN. No. 51645/2016 Page No. 41/43
- (Vide affidavit of service filed by Sh P.N. Arora) stayed away from the arbitration proceedings without any sufficient cause preventing him to appear and defend the statement of claim. This court also finds no irregularity with regard to service upon the petitioner herein through post, as the address of the petitioner to which the notices were dispatched by the respondent No. 1 and the respondent No. 2, was the very same address, which was furnished by the petitioner himself at the time of joining the services/employment with the respondent No. 1. The Kota, Rajasthan address of the petitioner is corroborated by the driving licence of the petitioner, which was also tendered by the petitioner to the respondent No. 1.
76. I would like to add that the challenge to the various clauses of the Salary and Terms & Conditions under the present petition i.e. Section 34 of the Act is not tenable. It is observed that the petitioner never lodged any protest be it in writing or oral with regard to the terms and conditions of his employment with his employer i.e. respondent No. 1 herein. To challenge the same by way of a petition under Section 34 of the Act on the ground that the same lacked consensus ad-idem smacks of cunningness and makes the petitioner nothing but a fence sitter.
77. In view of the above observations and discussions, I find no reason to interfere with the arbitral award dated 06.05.2016 and the same is upheld. All pending interim application stand disposed of as infructuous. Parties to bear their own costs.
ARBTN. No. 51645/2016 Page No. 42/4378. Accordingly, the petition stands dismissed. File be consigned to record room only after due compliance, necessary action and as per Rules.
Digitally signed by HARGURVARINDER HARGURVARINDER SINGH JAGGI
SINGH JAGGI
Date: 2019.05.31
16:33:12 +0530
Pronounced in the open (Hargurvarinder S. Jaggi)
court on 31.05.2019 Addl. District Judge-02 South West
Dwarka Courts Complex
New Delhi
ARBTN. No. 51645/2016
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