IMPORTANT POINT
The court emphasized the non-arbitrable nature of the dispute under the Industrial Disputes Act and the importance of adhering to the limitation period for invoking arbitration, as well as the impact of accepting a compensation package on challenging its adequacy.

JUDGMENT :

BIREN VAISHNAV, J.

1. This petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred to as ‘the Arbitration Act’ for short) has been filed by Group of Former Employees of General Motors India Private Limited with a prayer that an Arbitrator be appointed to adjudicate upon the dispute that arose between itself and the respondent General Motors India Private Limited.

2. Brief facts leading to the filing of the petition are as under:

2.1 It is the case of the petitioners that the dispute between the petitioner and the respondent is with regard to the payment of fair and just differential amount of compensation reckoned and paid to the petitioners under the Voluntary Severance Scheme - Hourly 2017, executed between the petitioners and the respondent.

2.2 It is the case of the petitioners that the respondent company on 29.07.2015 announced plans to restructure its manufacturing operations in India through closure of its manufacturing plants situated at Halol, Gujarat. Pursuant to the said decision, the VSS Scheme was launched to reduce the strength of the permanent employees. An eligible employee was entitled to compensation as per the formula under the scheme. It is the case of the petitioners that due to inadvertence caused in calculation of compensation for the petitioners under the scheme and its rule, the petitioners were compelled to accept compensation as per their Free-LTS-2016 WAGES. It is their case that as per the memorandum of the settlement arrived at between the parties in the year 2017, the petitioners were eligible for obtaining compensation post the Long Term Settlement - 2016 wages. In this way, the petitioners suffered financial loss despite being legally eligible for the same.

3. Mr. Arjunbhai Dabhi learned advocate appearing for the petitioners would submit that in the settlement entered into between the parties, there was an arbitration clause which provided that all disputes between the parties arising out of or relating to the agreement, shall be referred to arbitration. He would therefore submit that in terms of the settlement arrived at under Section 12(3) of the Industrial Disputes Act, 1947, the petitioners were entitled to compensation being calculated on the revised effective salary and allowances with effect from 01.02.2017 and not salary as on 01.04.2016. Accordingly, a notice was given to the respondent on 20.08.2020 invoking the arbitration clause in terms of Para 6 of the agreement. Mr. Dabhi would therefore submit that it would be just and proper for this Court to appoint an arbitrator so as to settle the dispute.

3.1 Mr. Arjunbhai Dabhi would rely on the following decisions:

(i) Lords Inn Hotels and Developers Ltd. vs. Raysons Residency Pvt. Ltd. Petition Under Arbitration Act No. 23 of 2019

(ii) Babanrao Rajaram Pund vs. Samarth Builders and Developers and Another, AIR 2022 SC 4161

(iii) Malaysian Airlines Systems Bhd vs. Stic Travels Private Limited, 2001 AIR (SC) 0-358

4. Mr. Aspi Kapadia learned advocate appearing with Mr. Parth S. Shah learned advocate for the respondent-company submits that the contentions raised by the arbitrator-petitioner are misconceived. He would submit that the petitioners having voluntarily opted for VSS and having received the total amount of monthly compensation and having accepted the same, cannot now turn around and seek arbitration on the ground that there was a mistake in computation of compensation. The VSS was purely a contractual arrangement.

4.1 Relying on the affidavit in reply filed to the arbitration petition, Mr. Kapadia would submit that the dispute is non-arbitrable as it is essentially a dispute between the workmen and the management of the company under the Industrial Disputes Act. He would submit that Section 10A of the Industrial Disputes Act provides for a detailed mechanism on how arbitration shall proceed. Essentially, the dispute that is sought to be raised by the petitioners is an ‘industrial dispute’