Karnataka High Court
Rajesh Korat vs Management Innoviti Embedded on 21 April, 2017
Author: G.Narendar
Bench: G.Narendar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF APRIL 2017
BEFORE
THE HON'BLE MR.JUSTICE G.NARENDAR
WRIT PETITION No. 34537/2015 (L-TER)
BETWEEN
RAJESH KORAT
AGED ABOUT 32 YEARS,
17, 19TH CROSS, 24TH MAIN,
OPP. PLAY HOUSE, JP NAGAR,
5TH PHASE, BANGALORE-560078. ... PETITIONER
(BY SMT. K SAROJINI MUTHANNA, ADV.)
AND
MANAGEMENT,
INNOVITI EMBEDDED SOLUTIONS PVT. LTD.,
NGR THE EDGE, NO.4, 2ND & 3RD FLOOR,
3RD MAIN, 5TH CROSS, SAIBABA MANDIR ROAD,
CAMBRIDGE LAYOUT, HALASURU,
BANGALORE-560008,
BY ITS CEO. ... RESPONDENT
(BY SHRI. SMARAN SHETTY, ADV.
FOR KEYSTONE PARTNERS, ADVS. )
THIS WP IS FILED UNDER ARTICLE 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE
IMPUGNED ORDER DT. 2.7.2015 AT ANNEX-D PASSED BY
THE II ADDL. LABOUR COURT ON I.A.NO.1 IN I.D.NO.87/2014
WITH A DIRECTION TO PROCEED WITH THE DISPUTE IN
ACCORDANCE WITH THE INDUSTRIAL DISPUTE ACT 1947
ETC.
THIS WP COMING ON FOR 'ORDERS' THIS DAY, THE
COURT MADE THE FOLLOWING:
2
ORDER
Heard the learned counsel for the petitioner and respondent.
2. With the consent of the counsels the matter is taken up for final disposal.
3. The petitioner is before this court being aggrieved by the order passed by the II Addl. Labour Court, Bengaluru dated 2.7.2015 in I.D. No.87/2014 whereby it was pleased to allow I.A. No.1 preferred under Section 8 of the Arbitration and Conciliation Act, 1996.
4. It is contended by the petitioner's counsel that the petitioner joined the services of the respondent on 26.12.2012 and that he was designated as a Programme Manager. It is further contended that he had to execute work only as per the instructions of the Reporting Manager and that the CEO of the company was his Appointing Authority. It is contended that the petitioner had put in a blemishless service and has, in fact, been working overtime and this effort has been appreciated by the Reporting 3 Manager himself. It is further contended that his good work has also been appreciated by the customers. It is this appreciation of the customers, it is claimed soured the relationship between the petitioner and the respondent Manager and that the management construed him as a potential competitor and from then on, the management started harassing him in order to force him to voluntarily quit and thereby escape its legal liabilities. The petitioner has also detailed the harassment meted out to him which is not relevant for determination of the point that arises in this petition.
5. The learned counsel for the petitioner would also detail the various safeguard and security system adopted by the respondents to prevent unauthorized dissipation of their business processes. That the petitioner by letter dated 20.04.2015 addressed to the management and set out the reasons for failure of certain ventures and in that he contended that he alone cannot be fastened with the liability of the failures and the burden has to be borne by the entire team and thereafter he expressed his desire 4 to resign. That on 14.03.2014 he received a mail from the management stating that he needs to be put on a performance improvement plan which the petitioner construed as a precursor to his removal and by the said mail he was also put on notice that if he was not able to meet the PIB target he was required to leave the organization. It is submitted that the petitioner was frustrated and tendered his formal resignation on 18.04.2014 in compliance with the terms and conditions of his appointment. Despite the tendering of the resignation letter, the respondent Management continued the harassment and that they neither relieved him nor gave a letter of acceptance. That instead the respondent proceeded to alter his service condition by re-designating him as a Operations Manager which was protested to by the petitioner stating that they could not have altered the job profile without his consent. That on 22.04.2014 the petitioner received a communication from the respondent asking him to return the company assets including laptop, mobile, Access Card, I.D. Card and companies confidential information and that he was accused of gross indiscipline 5 and acting against the companies interest and it was also alleged that he had stolen companies confidential information and hence, the respondent management was compelled to initiate disciplinary action. Thereafter, the management, without considering the replies and explanations offered by the petitioner, proceeded to issue a termination letter and also got filed a complaint with the local police authorities and that one employee of a company orally agreed to issue the formal relieving order withdrawal of the police complaint and payment till 10th of January 2014 and also a letter recalling the termination order dated 23.04.2014 and on the said promise the petitioner handed over the companies assets in his possession. That the respondent management issued a stigmatic order of termination without holding any enquiry or affording any opportunity and that as a consequence of the said stigmatic order, the petitioner's chances of reemployment was totally wiped out.
6. Aggrieved he approached the Labour Commissioner and that despite several conciliation 6 meetings held, the efforts failed due to the non-cooperative attitude of the management and a failure report dated 21.08.2014 came to be issued.
7. Thereafter, the petitioner approached the Labour Court under the provisions of Section 10 (4-A) read with Section 2 A (2) of the Industrial Disputes Act and the same is registered as I.D. No.87/2014. That on the first date of hearing, the management indicated settlement of the dispute and on the next date of hearing also the management adopted the same stand. The said offer was also made during the conciliation proceedings. But, as the offer constituted only 50% of the sum that he had legally earned the petitioner declined the same and it is thereafter the management filed its counter statement on the 3rd hearing i.e. on 22.12.2014. Thereafter, the application I.A. No.1 came to be filed invoking the provisions of Section 8 of the Arbitration and Conciliation Act, 1996.
8. Per contra, the learned counsel for the respondent would contend that the Labour Court has rightly appreciated the contention and upheld the 7 applicability of the provisions of Section 8 of the Arbitration and Conciliation Act, 1996 to the proceedings before the Labour Court. He would contend that the Arbitration and Conciliation Act is a special enactment and it applies in all vigor in any proceedings before any judicial authority and that the Labour Court undoubtedly being a judicial authority, the provisions of Section 8 of the Act squarely applies to the proceedings pending before the labour court.
9. He would also contend that the respondent is a market leader in the payment solution industry and as such, is required to cautiously guard its trade secrets including internal technology and business methods and he also rejects the allegation of harassment or illegal termination.
10. The learned counsel for the respondent would contend that the impugned order is supported by sound reasoning and hence, does not call for any intervention. The learned counsel for the respondent would also rely on catena of judgments and more particularly the law laid 8 down by the Apex Court in Booz Allien and Hamilton Inc vs. SBI Home Finance Limited and Others and he would contend that the law laid down by the Apex Court that all issues or disputes relating to right-in-rem alone are required to be adjudicated by the courts and tribunals and also right-in-personam are suitable for adjudication by arbitration and he would draw the attention of this court to para 35 and 36 wherein the Hon'ble Apex Court has enumerated certain variety of disputes which are amenable to the jurisdiction of the Arbitration and Conciliation Act. He even contends that the present dispute between the petitioner and the respondent is one such which meets the parameters of suitability of adjudication by Arbitration.
11. In the above background of facts and circumstances and law, the question that falls for determination is;
Whether the provisions of Section 8 of the Arbitration and Conciliation Act, 1996 apply to proceedings pending before the labour court?
OR 9 Whether the provisions of Section 10 A (5) of the Act ousts the jurisdiction of the Arbitration Act in respect of proceedings pending before the labour court.
12. The Industrial Disputes Act, 1947 and the Arbitration and Conciliation Act, 1996 are no doubt special enactments. But, on a comparative basis it is seen that the Industrial Disputes Act is restricted in its operation and relates only to issues revolving around and involving a workman. A perusal of the Act would demonstrate that the Act is a beneficial piece of legislation and a social legislation enacted for the purpose of ameliorating the conditions of a workman. In fact, the object of the Act as stated is as follows:-
"An Act to make provision for the investigation and settlement of Industrial
Disputes and for certain other purposes.
Whereas it is expedient to make provision for the investigation and settlement of Industrial Disputes, and for certain other purposes herein after appearing."
10It is hereby enacted as follows:-
Thus what can be gleaned from the stated objective of the Act is that the purpose of the enactment is to make provisions for investigation and settlement of Industrial Disputes which form a class of litigation, by themselves.
Further, a reading of the various provisions under the various chapters of the Act would reveal that the Act has made provisions which govern every facet that is required to achieve the stated objective.
13. The Chapter-1 provides the definitions under Section-2 and Section 2-A a deeming provision which came to be inserted by Act 35 of 1955 states that the dismissal of an individual workman shall be deemed to be an Industrial Dispute.
14. Chapter-2 provides for conciliation, appointment of conciliation officers, constitution of Courts of Enquiry, constitution of Labour Courts, Tribunals, National Tribunals and qualification for the purpose of selecting Presiding Officers and filling up of vacancies etc. 11 Chapter-2B provides for a setting up of a Grievance Redressal Machinery.
15. Chapter-3 provides for the reference of disputes to the Boards, Courts or Tribunals by the appropriate Government and also voluntary reference of disputes of arbitration under provisions of Section 10-A. It is also interesting to note that Sub-Section 5 of Section 10-A specifically ousts the application of the provisions of the Arbitration Act, 1940 to Arbitration under the said section.
16. The Act also provides for the procedure, powers and duties of the various authorities under the Act. It also defines various offences and also provides for the penalties. Chapter-7 provides for miscellaneous aspects under the Act including vesting powers on the Courts/Tribunal to enforce the orders passed by the Court. Thus, not only is the Courts/Tribunal constituted under the Act is conferred with original jurisdiction but, additionally vested with the powers of an Executive Court. To state in a nutshell, the Act is a self contained Act irrespective of the nature of dispute and once the dispute 12 answers the description of an Industrial Dispute, the provisions of the Industrial Disputes Act, 1947 become applicable. This conclusion, draws sustenance from a combined reading of the provisions of Section 2-B, 2-E and 2-F to mean a Conciliation Officer appointed under this Act, a conciliation proceeding to mean a proceeding held by a Conciliation Officer or Board under the Act and finally defines a Court to mean a Court of Inquiry constituted under the Act. Thus, the Act not only provides for the entire mechanism for addressing the issue of Industrial Dispute but the legislature has proceeded further and has specifically provided for the exclusion of the application of the Arbitration Act to disputes raised under the Industrial Disputes Act.
17. The learned counsel for the petitioner would also place reliance on the rulings of the Hon'ble Apex Court reported in 1983 LAB. I. C. 1694 in the case of Jai Bhagwan V. Management of the Ambala Central Co- operative Bank Ltd., wherein the Hon'ble Apex Court has held as follows:-
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"Shri Rohatgi, learned counsel for the Respondent Bank, was unable to contend that there was even a remote compliance with the principles of natural justice. He was also unable to urge that the Industrial Tribunal had truly applied his mind to the case. He, however, argued that the appellant had a remedy against the order of termination of services by way of an appeal to the Board of Management and that his failure to pursue that remedy barred him from raising any Industrial dispute. He also attempted to connect the order of termination of services with the absence of the workman from the bank on August 13 and 14, 1974, on days when his signature was found in the attendance register. We see no substance in either of the submissions. Raising an industrial dispute is a well recognized and legitimate mode of redress available to a workman, which has achieved statutory recognition under the Industrial Disputes Act and we fail to see why the statute-recognised mode of redress should be denied to a workman because of the existence or availability of another remedy. Nor are we able to understand how 14 an Industrial Tribunal to whom a dispute has been referred for adjudication can refuse to adjudicate upon it and surrender jurisdiction which it undoubtedly has to some other authority. While the Government may exercise their discretion in deciding whether to refer or not to refer a dispute for adjudication, the Tribunal to whom the dispute has been referred has no discretion to decide whether to adjudicate or not. Once a reference has been properly made to an Industrial Tribunal, the dispute has to be duly resolved by the Industrial Tribunal. Resolution of the dispute cannot be avoided by the Tribunal on the ground that the workman had failed to pursue some other remedy. The attempt of Shri Rohatgi to connect the order terminating the appellant's services with his absence from the bank on August 13 and 14, 1974 is an attempt made before us for the first time. At no earlier stage was the order of termination of services sought to be sustained on the basis of the absence of the workman from the bank on August 13 and 14, 1974. It cannot be done now."15
18. From the above it can be discerned that the full bench of the Hon'ble Apex Court has laid down two prepositions of law, one that a workmen cannot be driven to seek redress elsewhere because of the existence or availability of another remedy and raising an Industrial Dispute is a well recognized and legitimate mode of redress and is one which has achieved statutory recognition under the Industrial Disputes Act; secondly, no discretion is vested in the Industrial Tribunal to avoid resolution of the dispute once the reference is validly made.
19. Per contra, the learned counsel for the respondent has placed reliance on the catena of judgments to underscore the point of applicability of the provisions of Arbitration and Conciliation Act, 1996 in respect of proceedings pending before the Industrial Tribunal and would endeavour to sustain the order passed on I.A. No.1 whereby the Industrial Tribunal has stayed its own proceedings in order to enable the respondent to refer the matter to Arbitration.
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20. He firstly relied on the ruling of the Hon'ble Apex Court in the case of Rashtriya Ispat Nigam Ltd. V. Verma Transport Co. reported in (2006) 7 SCC 275. In the said judgment the Hon'ble Apex Court was examining the scope of Section 8(1) of the Arbitration and Conciliation Act, 1996 and was pleased to hold that the objection regarding restriction to invoke Section 8(1) of the Arbitration and Conciliation Act, 1996 is up to the point of filing of the first statement on the substance of the dispute. It is seen that the issue was a matter arising out of a commercial contract relating to illegal termination of the contract. In the facts and circumstances and the law involved therein finding is rendered without reference to the provisions of the Industrial Disputes Act. In the second ruling reported in (2000) 4 SCC 539 in the case of P. Anand Gajapathi Raju and Others Vs. P.V.G. Raju (Dead) and Others, the Hon'ble Apex Court was pleased to hold that where the matter is subject matter of Arbitration agreement, the said subject matter is required to be adjudicated by arbitration and once the reference is made 17 to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The proceedings in civil action stands disposed off and that there is no question of stay of pending conclusion of the arbitration. It is to be noted that the impugned order is contrary to the very ruling itself. It is not in dispute that the tribunal has no power to stay its own proceedings nor is it vested WITH the jurisdiction to refer the dispute to arbitration and on the contrary, in the light of the authoritative pronouncement of the Hon'ble Apex Court in the case of Jai Bhagwan V. Management of the Ambala Central Co-operative Bank Ltd., and Jai Bhagwan Vs State of Haryana and another, it is mandatory upon the Industrial Tribunal to hear and decide the reference. Yet again the reliance is placed on other ruling of the Hon'ble Apex Court i.e. in (2003) 6 SCC 503 in Hindustan Petroleum Corpn. Ltd. Vs. Pinkcity Midway Petroleums by the said ruling the Hon'ble Apex Court has held that once the existence of an Arbitration Clause brought to the notice of the civil court, it was mandatory upon the civil court to refer the dispute to 18 Arbitration. The civil court has no jurisdiction to continue with the suit once the application under Section 8 of the Arbitration and Conciliation Act, 1996 has been filed. The Hon'ble Apex Court was dealing with the case arising out of Weights and Measures (Enforcement) Act, 1985 similar are the rulings reported in (2007) 3 SCC 686 in the case of Agri Gold Exims Ltd. Vs Sri. Lakshmi Knits & Wovens and Others. The said rulings have been rendered without reference to the bar proclaimed under the Industrial Disputes and law settled by the Hon'ble Apex Court with regard to the scope and jurisdiction of the Industrial Tribunal with regard to a validly made reference. Hence in the humble opinion of this court, are inapplicable to the case on hand.
21. The learned counsel for the respondent would place reliance on other ruling of the Hon'ble Apex Court reported in (2011) 5 SCC 532 in Booz Allean and Hamilton Inc. Vs. SBI Home Finance Limited and Others, where the Hon'ble Apex Court had the occasion to define the "Arbitrability" of dispute and it was pleased to hold that all 19 disputes related to rights in rem are required to be adjudicated by the courts and public tribunals, being unsuited for (private) arbitration. It further held that right in personam can be adjudicated by the Arbitral Tribunal. It is useful to refer to the observations of the Hon'ble Apex Court at paragraph 34, 35 and 36.
"34. The term "arbitrability" has different meanings in different contexts. The three facets of arbitrability, relating to the jurisdiction of the Arbitral Tribunal, are as under:
(i) Whether the disputes are capable of adjudication and settlement by arbitration? That is, whether the disputes, having regard to their nature, could be resolved by a private forum chosen by the parties (the Arbitral Tribunal) or whether they would exclusively fall within the domain of public fora (courts).
(ii) Whether the disputes are covered by the arbitration agreement? That is, whether the disputes are enumerated or described in the arbitration agreement as matters to be decided by arbitration or whether the disputes fall under the "excepted matters" excluded from the purview of the arbitration agreement.20
(iii) Whether the parties have referred the disputes to arbitration? That is, whether the disputes fall under the scope of the submission to the Arbitral Tribunal, or whether they do not arise out of the statement of claim and the counterclaim filed before the Arbitral Tribunal. A dispute, even if it is capable of being decided by arbitration and falling within the scope of arbitration agreement, will not be "arbitrable" if it is not enumerated in the joint list of disputes referred to arbitration, or in the absence of such joint list of disputes, does not form part of the disputes raised in the pleadings before the Arbitral Tribunal.
35. The Arbitral Tribunals are private fora chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non- contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication.
Adjudication of certain categories of proceedings are reserved by the legislature exclusively for 21 public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public fora (courts and tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.
36. The well-recognised examples of non- arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes." [emphasis supplied by me].
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22. From a reading of para 36 it can be safely inferred that even in respect of certain rights in personam like tenancy rights etc. the Hon'ble Apex Court has deemed it fit and necessary that they be decided by the specified courts. It is not in dispute that the arbitrary removal or dismissal of workmen from service or changing of service conditions is against public policy as envisioned by the legislature in the form of Industrial Disputes Act and other labour related enactments. Further more, if such an interpretation is accepted it would not only be contrary to the bar under the provisions of the Industrial Disputes act but would also amount to defeating the very objective and spirit of the Industrial Disputes Act which is not only special enactment but also a social legislation.
23. The learned counsel for the respondent would attempt to convince the court regarding the applicability and invocation of Section 8 of the Arbitration and Conciliation Act in respect of proceedings before the Industrial Tribunal. In this regard he would place the ruling of the Hon'ble Apex Court reported in 1963 23 Supplement (1) SCR 625 in the case of Engineering Mazdoor Sabha and Another Vs Hind Cycles Limited. That was a case where the parties had voluntarily referred the dispute to the arbitrator under the provisions of Section 10
(a) of the Industrial Disputes Act. In the said case the court was dealing with the issue of maintainability of the appeal by Special Leave by invoking the provisions of Article 136 as against an award by an Arbitrator passed under Section 10 (a) of the Industrial Disputes Act.
24. It is seen that the respondent has not called in question the reference made by the Government by invoking the provisions of Industrial Disputes Act and the order of reference has become final by the respondent accepting the same. Assuming for argument sake that the dispute between the parties was in fact arbitrable, the said right existed only till the date of passing of the order by the Government, referring the dispute to the Tribunal. Once the order of reference was made by the Government and in the light of the law laid down by the Hon'ble Apex Court as stated supra in Jai Bhagwan V. Management of the Ambala 24 Central Co-operative Bank Ltd., the Industrial Tribunal has no scope to entertain a prayer under Section 8 of the Arbitration and Conciliation Act as it is mandated by the Hon'ble Apex Court that the Tribunal must pass an award either way resolving the dispute.
Hence, the following :-
ORDER
1) The writ petition is allowed.
2) Order passed by the II Addl. Labour Court, Bengaluru dated 02.07.2015 on I.A. No.I in I.D. No.87/2014 is set aside and the II Addl. Labour Court, Bengaluru is directed to continue the proceedings from the stage on which order dated 02.07.2015 came to be passed.
Sd/-
JUDGE CT-HR Chs*