Original Petition No. 463 of 2012. Case: Gayatri Balaswamy Vs ISG Novasoft Technologies Ltd.. High Court of Madras (India)
| Case Number | Original Petition No. 463 of 2012 |
| Counsel | For Appellant: Arvind P. Datar, Senior Counsel for HLC Associates and For Respondents: Arun Khosla for S.K. Chandrakumar, Advs. |
| Judges | V. Ramasubramanian, J. |
| Issue | Arbitration Act, 1940 [Repealed] - Sections 15, 30, 34; Arbitration and Conciliation Act, 1996 - Sections 11, 2(c), 31(3), 31(3)(iii), 31(6), 33, 34, 34(1), 34(2), 34(2)(a), 34(2)(b), 34(2)(b)(ii), 34(4), 37, 37(1)(b), 43, 45, 47, 48, 49, 50, 51, 51(2); Code of Civil Procedure, 1908 (CPC) - Section 115; Constitution of India - Articles 14, 15(1... |
| Citation | 2014 (5) LW 97 |
| Judgement Date | September 02, 2014 |
| Court | High Court of Madras (India) |
Order:
V. Ramasubramanian, J.
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Not satisfied with the quantum of compensation awarded by the sole Arbitrator, who is the second respondent herein, the petitioner has come up with this petition under section 34, challenging the Award of the Arbitrator. I have heard Mr. Arvind P. Datar, learned Senior Counsel for the petitioner and Mr. Arun Khosla, learned counsel for the first respondent.
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The petitioner entered into an Employment Agreement with the first respondent-company on 10.3.2006. Under the said agreement, the petitioner was to be appointed as Vice President (M&A Integration Strategy) with effect from 27.4.2006. The agreement contemplated the imparting of training to the petitioner in Courses relating to General Management, Finance, Business Strategy and Project Management during the first year of employment. It also contemplated that the petitioner would be stationed at Chennai during the first year of employment and would be transferred to U.S.A., thereafter. The agreement contained an Arbitration Clause, with the seat of arbitration at Chennai.
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It appears that within a few months of the commencement of the contract of employment, some untoward incidents happened, as a consequence of which, the petitioner claims to have tendered a resignation on 24.7.2006. But, the resignation did not take effect for reasons which I would not go into.
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After a year, 3 letters of termination followed in succession. The first was dated 17.10.2007, the next was dated 12.12.2007 and the last was dated 20.12.2007.
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Thereafter, the petitioner lodged a criminal complaint on 26.12.2007 against two Officers of the Company for alleged offences under the Indian Penal Code and the Tamil Nadu Prohibition of Harassment of Women Act, 1998. The company also filed criminal complaints of defamation and extortion against the petitioner. Eventually, when both the petitioner and the first respondent landed up at the Supreme Court, the Supreme Court referred the parties to the second respondent herein for the resolution of all their disputes through arbitration.
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Before the Arbitrator, the petitioner filed a Statement of Claim for recovery of a total amount of Rs. 28,88,55,500/- under 12 different headings. The various heads of claim and the amount claimed by the petitioner before the Arbitral Tribunal are extracted as follows:--
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The first respondent filed a counter to the claim of the petitioner on 2.9.2011. Apart from filing a counter to the claim of the petitioner, the first respondent also filed an independent Statement of Counter Claim on the very same date. In the Counter Claim, the first respondent sought the following reliefs:
(i) To declare that the Employment Agreement dated 10.3.2007 is null and void ab initio and the Claimant is liable to refund all payments (Rs. 93,50,948) received by her during her employment with the Respondent Company along with interest calculated at the rate of 9% per annum from the dates of various payments till refund is made.
(ii) To direct the Claimant to refund the deposit made by the Respondent Company with her in the sum of Rs. 1.55 crore along with interest calculated at the rate of 9% per annum from the dates of various payments till refund is made and
(iii) To direct the Claimant to pay the Respondent the sum of Rs. 32,00,00,000/- along with interest calculated at the rate of 9% per annum from the date of the institution of the instant claim till payment.
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The petitioner filed a counter to the first respondent's counter claim and the first respondent filed a rejoinder to the petitioner's counter.
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Thereafter, the second respondent-Arbitrator commenced the proceedings at Chennai. A preliminary meeting was held on 21.11.2011 for the purpose of marking the documents on either side and for the process of admission and denial. On the date of the preliminary hearing, both parties agreed that there would be no oral evidence and that the matter will be decided only on mutually accepted documentary evidence.
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On the next date of hearing viz., 17.3.2012, the learned counsel on both sides argued the question of admissibility of the documents denied by the first respondent. Thereafter, the Arbitrator decided to proceed to hear the arguments on merits, keeping the objections relating to admissibility of documents in mind. The learned Arbitrator decided to take up the question of admissibility whenever the disputed documents came up for consideration and they became relevant for any particular claim. Eventually, the Arbitrator passed an Award directing payment of a sum of Rs. 2 Crores as compensation to the petitioner, together with interest at 18% per annum from 1.4.2012, on the amount that was remaining unpaid after adjustment of a deposit already made. All the counter claims filed by the first respondent were rejected by the Arbitrator by his Award dated 21.3.2012.
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In order to appreciate the manner in which the Arbitrator arrived at the award amount, under each head of claim made by the petitioner, it is necessary to present the same in a tabular form. Hence it is made as follows:--
In other words, the Arbitrator accepted only one head of claim, namely severance benefit and awarded a sum of Rs. 1,68,00,000/-. However, the Arbitrator also stated that since the first respondent retained this benefit with them, he was rounding off the amount to Rs. 2.00 Crores. Since the first respondent had already deposited some amount, in pursuance of the order of the Supreme Court, the Arbitrator directed the said amount to be deducted and the balance to be paid with interest at 18% per annum from 01.4.2012. The first respondent was also directed to give a no objection certificate indicating that it was a contractual termination as recognised in the industry, so as not to come in the way of the petitioner's future employment.
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Aggrieved by the rejection of all the heads of claim except one, by the Arbitrator, the petitioner has come up with the above petition under Section 34. The first respondent has not chosen to challenge either the Award passed in favour of the petitioner or the rejection of all their counter claims by the learned Arbitrator. With this brief outline, let me now proceed to minute details.
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The grievance of the petitioner can be summarised as follows:--
"(i) The claims under Serial Nos. 1 to 4 in the table given above, have been admitted by the Arbitrator and hence the petitioner has no grievance in respect of the same.
(ii) The fifth head of claim, according to the petitioner, was not considered by the Arbitrator at all. But the first respondent claims that what was awarded under the first four heads of claim includes the fifth claim also.
(iii) The sixth head of claim for compensation for failure of the company to transfer the petitioner to USA, was rejected by the Arbitrator, on the ground that though there was a breach of contract, no separate compensation other than the severance payments could be allowed.
(iv) The seventh head of claim relating to non-compliance with the procedure prescribed for termination of services, was rejected by the Arbitrator.
(v) The eighth head of claim, which relates to bonus in the second year of employment, was rejected by the Arbitrator, but the petitioner is not pressing this claim before this Court.
(vi) The ninth head of claim relates to the failure of the first respondent to provide learning and training opportunities. This claim is rejected on the ground that there was no specific agreement in this regard between the parties.
(vii) The tenth head of claim, which relates to the employee's stock option, was rejected by the Arbitrator on the ground that there was no evidence to show the existence of a stock option scheme.
(viii) The eleventh head of claim related to the loss of employment opportunity for the petitioner, but the same was rejected on the ground that clause 6.2 of the contract bars the award of any damages other than severance payments.
(ix) The twelfth head of claim was with regard to the failure of the first respondent to constitute a Committee to inquire into allegations of sexual harassment of women employees, as mandated by the Supreme Court in its decision in Vishaka vs. State of Rajasthan [1997-2-L.W. (Crl.) 604: 1997-3-L.W. 104 S.N.: AIR 1997 SC 3011]. This claim is rejected on the ground that there was an ombudsman and a Grievance Committee in the company and that the petitioner failed to approach them. In addition, the Arbitrator also held that in any case, he cannot award anything more than the severance payments in view of Clause 6.2.
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Before going into the grounds of challenge to the award, it is my duty, as pointed out by Mr. Arun Koshla, learned counsel for the first respondent, to keep in mind the well settled principles of law that constitute the banks, within which, the flow of jurisdiction under Section 34, like a river, should be confined. While I cannot allow the river to overflow causing a breach of its banks, I should also ensure that it does not get dried up for the fear of the banks.
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Unlike the Arbitration Act of 1940, the jurisdiction of the Court to interfere with an Arbitral Award is now statutorily restricted by certain well defined parameters stipulated in Section 34. Under Section 30 of the 1940 Act, an Award can be set aside when (i) an Arbitrator or umpire misconducted himself or misconducted the arbitration proceedings; (ii) an Award was made after a Court had superseded the arbitration or after the arbitration proceedings had become invalid; and (iii) an award had been improperly procured or otherwise invalid. With so many expressions such as "misconducted", "improperly procured" and "invalid", Section 30 of the 1940 Act, allowed the imagination of Courts to run riot, while dealing with a petition to set aside an Award.
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But under the 1996 Act, an arbitration Award can be set aside in terms of Section 34(2)(a), if the party approaching the Court, furnishes proof that any...
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