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IN THE HIGH COURT OF DELHI AT NEW DELHI
Navin Chawla, J.
M/s Fiitjee Ltd. – Appellant
Versus
Ashish Khare & Anr. – Respondents
Arb.P. 1221 of 2022
Decided On : 22-02-2023
Arbitration - Employment Dispute - Arbitration and Conciliation Act, 1996 - Section 11 - 36(a) of the Service Rules - Summary of Acts and Sections: Arbitration and Conciliation Act, 1996, Section 11, 14, 21 - The court discussed the applicability of Section 11 and 14 of the Arbitration and Conciliation Act, 1996, and the interpretation of Clause 36(a) of the Service Rules in appointing a Sole Arbitrator for adjudicating disputes arising from an employment agreement.
Fact of the Case:
The petitioner sought the appointment of an Arbitrator for disputes arising from the employment of the respondent no.1. The respondent no.1 had left the services of the petitioner and co-founded a competitor academy, leading to a dispute over the invocation of the Arbitration Agreement.
Finding of the Court:
The court found that the respondent no.1's employment status and the invocation of the Arbitration Agreement were in dispute. The court held that the petitioner was entitled to appoint a Sole Arbitrator under Section 11 of the Act, and appointed Mr. Davinder Singh as the Sole Arbitrator.
Issues: The issues included the applicability of the Arbitration Agreement, the termination of the mandate of the earlier Arbitrator, and the validity of the full and final settlement executed by the respondent no.1.
Ratio Decidendi: The court held that the petitioner was entitled to appoint a Sole Arbitrator under Section 11 of the Act, and the disputes should be adjudicated by the appointed Arbitrator. The court refrained from deciding on the validity of the full and final settlement, leaving it to the Arbitrator to determine.
Final Decision: The court appointed Mr. Davinder Singh as the Sole Arbitrator and directed the Arbitrator to undertake the arbitration proceedings afresh, with all objections of the respondents remaining open for determination.
JUDGMENT
Navin Chawla, J. (Oral)--This petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the `Act.) seeking ksappointment of an Arbitrator for adjudicating the disputes that have arisen between the parties in relation to the employment of the respondent no.1 with the petitioner as a faculty member in the Department of Math on 17.04.2010.
2. It is the case of the petitioner that the respondent no.1 was, during his employment with the petitioner, transferred to M/s USA UNIVQUEST with effect from 01.05.2016. The said M/s USA UNIVQUEST amalgamated with the petitioner Company on 03.04.2019. In the meantime, the respondent no.1 left the services of the petitioner on 05.02.2018.
3. It is the case of the petitioner that the respondent no.1 thereafter co-founded a competitor academy namely `Venkateshwara Academy' and started working there as Founder, Mentor and Director. The petitioner claims that the same was in violation of the Service Rules.
4. The petitioner, thereafter, vide notice dated 19.02.2019, invoked the Arbitration Agreement as contained in Clause 36(a) of the Service Rules for the Employees of M/s FIITJEE Ltd (Faculty Members) (hereinafter referred to as the `Service Rules.). As the Arbitration Agreement granted a right to the petitioner to appoint the Sole Arbitrator, a Sole Arbitrator was appointed by the petitioner. Certain proceedings also took place before the Sole Arbitrator so appointed. Details of the same are not relevant for the purpose of the present petition.
5. The respondent thereafter filed an application under Section 14 of the Act seeking termination of the mandate of the Arbitrator so appointed by the petitioner, being OMP(T)(COMM) 17/2021. By an order dated 14.03.2022, the learned District Judge (Commercial-02), South District, Saket, New Delhi was pleased to hold the Sole Arbitrator appointed by the petitioner to be de-jure ineligible to act as an Arbitrator and accordingly terminated his mandate. The petitioner thereafter filed the present petition seeking appointment of an Arbitrator.
6. The learned counsel for the respondents submits that in terms of Section 14 of the Act, it would be for the Court which terminates the mandate of the earlier Arbitrator to appoint a substitute Arbitrator. He submits that the petitioner cannot invoke the provision of Section 11 of the Act, having failed to pray for appointment of a substitute Arbitrator before the learned District Judge.
7. He further submits that in the present case, the purported invocation of the arbitration agreement by the petitioner itself cannot be relied upon. He submits that the petitioner has invoked the Arbitration Agreement as contained in Service Rules. The said Service Rules were applicable when the respondent no.1 was in employment with the petitioner. He submits that the respondent no.1 had left such employment and joined M/s USA UNIVQUEST on 01.05.2016, and was thereafter governed by the `Corrigendum and Addendum' dated 12.05.2016 between the respondent no.1 and the said company. The said Corrigendum contained a separate Arbitration Agreement, which has not been invoked by the petitioner. He submits that a notice under Section 21 of the Act is a sine qua non for initiating a proceeding under Section 11 of the Act. The same having not properly been given, the present petition is not maintainable. In support, he places reliance on the judgment of this Court in Alupro Building System Pvt. Ltd. v. Ozone Overseas Pvt. Ltd., 2017 SCC OnLine Del 7228, and of the High Court of Bombay in D.P. Construction v. Vishvaraj Environment Pvt. Ltd., 2022 SCC OnLine Bom 1410.
8. The learned counsel for the respondent submits that Clause 36(a) of the Service Rules would not be attracted even though the Corrigendum executed with the M/s USA UNIVQUEST states that the respondent no.1 shall be bound by all the terms and conditions of the Service Rules signed at the time of joining the pet
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