New Delhi, Dec 12
The Supreme Court has imposed Rs 5 lakh costs on an employer for dragging a wage dispute and legality of termination of an employee to arbitral proceedings.

A bench of Justices B.R. Gavai and K.V. Viswanathan said the application filed under Section 11 of the Arbitration and Conciliation Act, 1961 was a clear abuse of the remedial process.

The appellant, Dushyant Janbandhu, contended that the dispute with the respondent-employer is governed by statute under the Payment of Wages Act, 1936 and the Industrial Disputes Act, 1947.

The appellant was appointed as an Assistant Manager in March 2019. After the Covid-19 pandemic, when Hyundai AutoEver India directed the employee to resume physical attendance, he refused to comply. He was issued a charge memo for violation of certain contractual clauses, including non-cooperation and absenteeism and ultimately, an order of termination was passed in January 2021.

During the pendency of disciplinary action, as the appellant was not paid his salary, he issued a legal notice for payment of wages under the Payment of Wages Act, 1936 and filed a petition before the concerned authority.

As a counterblast, the employer issued a notice alleging that the disputes must be settled through arbitration and proceeded to unilaterally appoint an arbitrator.

When the unilaterally appointed arbitrator commenced the arbitral proceedings, the employee filed an application calling upon the arbitrator to rule on his competence.

The arbitrator himself held that the constitution of the arbitral tribunal was not in accordance with or in consonance with the provisions of Section 11 of the Arbitration and Conciliation Act and closed the arbitral proceedings.

The appellant contended that the claim related to the stoppage of payment of wages was within the jurisdiction of the authority under the Payment of Wages Act, 1936.

The employer moved a petition before the Madhya Pradesh High Court under Section 11(6) of the Arbitration and Conciliation Act in August 2022 seeking the appointment of an arbitrator.

In its impugned order, the MP High Court proceeded to appoint an advocate as the arbitrator.

Quashing the impugned decision, the Supreme Court ruled that the appellant approached the authority under the Payment of Wages Act, 1936 much before the order of termination and the said authority would exercise jurisdiction under Section 15(2) of the PW Act to the exclusion of civil courts and these disputes are non-arbitrable.

“Equally, legality of the order of termination dated 21.01.2021 is within the jurisdiction of the Industrial Tribunal under Section 2(A) of the Industrial Disputes Act and it is important to mention that the jurisdiction of the Industrial Court is also to the exclusion of the civil courts and is not arbitrable,” it added.

Considering the factual background in which the Section 11(6) petition has been filed, the apex court said it was an “abuse of process” and was clearly intended to threaten the appellant for having approached the statutory authorities.

“We allow the Civil Appeal and set aside the judgment and the order passed by the High Court and dismiss the petition under Section 11(6) filed by the respondent under the Arbitration and Conciliation Act. The appellant will also be entitled to cost quantified at Rs 5 lakhs payable within a period of 3 months,” it ordered.

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SC imposes Rs 5 lakh costs on employer for taking wage and termination dispute to arbitration