UNLESS THERE IS BINDING AGREEMENT BETWEEN THE EMPLOYER AND THE EMPLOYEE THE SUPREME COURT CANNOT EXERCISE ITS JURISDICTION UNDER SECTION 11(6) OF ARBITRATION AND CONCILIATION ACT, 1996

[Mr. M. GOVINDARAJAN]

Section 11(6) of Arbitration and Conciliation Act, 1996 (‘Act’ for short) provides for the appointment of arbitrator by Court.   The said section provides that where, under an arbitration procedure agreed upon by the parties-

• a party fails to act as required under that procedure; or
• the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or
• a person, including an institution, fails to perform any function entrusted to him or it under that procedure, 

a party may request the Chief Justice or any person or institution designated by him to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

If a dispute arises between the employer and the employee the labor law will come there for the settlement of dispute by various modes.   The union may move for arbitration with the administration for settlement of a common dispute.  To invoke the jurisdiction of the Court under Section 11(6) there shall be a binding agreement between the parties.   The same will be applicable in case of employment also.   This has been dealt with in by the Supreme Court in ‘Payal Chawla Singh V. Coca-Cola Co. and another’ – 2015 (7) TMI 1011 - SUPREME COURT.

In the said case the petitioner is a former employee of the respondent.  At the time of joining an agreement was entered into between the petitioner and the company.  While in employment the petitioner complained of gender discrimination and harassment primarily on account of the service conditions relating to pay and emoluments.  The complaint of the petitioner was sought to be redressed by the company by appointing an independent investigator and thereafter through mediation proceedings.   The same did not yield any result.   The petitioner resigned from the company with effect from 28.07.2004.  The resignation has been accepted.   The payment in full and final settlement of the claims had also been tendered and the petitioner received the same.

On 05.12.2006 the petitioner issued a legal notice to the company invoking the arbitration under the ‘solution program’ and claimed compensation against harassment and gender discrimination that she claimed to have suffered during the course of the employment and even after her resignation.  Mr. Aldil Malia, Vice President, HR sent an SMS to the petitioner which resulted in the issue of notice.  The demand of the petitioner was refused by the company on the ground that the ‘solutions program’ was not applicable to the petitioner.   The said is applicable only in USA.  This resulted in the petitioner filing the petition invoking Section 11(6) of the Act.

The petitioner put forth the following arguments:

• the ‘solution program’ is applicable to all employees of Coco-Cola Co., Inc. and its subsidiaries including Coco Cola India;
• even admitting that the arbitration provision in the ‘solution program’ applies only to employees in USA the same has been expressly invoked in the case of the petitioner through correspondence, email etc.,;
• the company had refused to comply with the demand sent by the petitioner for appointment of an arbitrator and therefore the present petition has been filed under the provisions of the Act.

The respondent company submitted the following arguments:

• the employment agreement the petitioner and the company does not contain any arbitration clause;
• the ‘solution program’ is not applicable to employees of subsidiaries of the respondent company outside USA;
• the provisions for arbitration contained in the ‘solution program’ are not incorporated in the petitioner’s employment agreement;
• by amendment of employment agreement it was stipulated that in case of any dispute the jurisdiction to entertain and try such dispute shall vest exclusively in a Court of Bombay;
• even assuming the ‘solution program’ is applicable to the petitioner, the specific reference to the Federal Arbitration Act in the ‘solution program’ and the applicability of the procedure visualized by the National Rules for resolution of employment disputes of the American Arbitration Association would specifically excluded the applicability of Part I of the Act;
• the ‘solution program’ does not contemplate mandatory recourse to arbitration under the Act;
• it is open to an employee to approach the court instead of invoking arbitration.

On considering the arguments of the both sides the Court unhesitatingly came to the conclusion that there is no binding arbitration agreement between the petitioner and her employer so as to enable the court to exercise its jurisdiction under Section 11(6) of the Act.  The attempt of the petitioner to bring in the provision for arbitration contained in ‘solution program’ as a part of the terms of employment with the company remains wholly unsubstantiated.

The Court held that not only the employment contract signed by the petitioner does not contain any specific clause of arbitration or makes the provision for arbitration contained in the solution program applicable to her employment the clause providing for exclusive jurisdiction of the Courts in Bombay specifically negate the claim of the existence of an arbitration clause in the contract of employment of the petitioner.   The Court was of the view that the petitioner is not entitled to invoke the court’s jurisdiction under Section 11(6) of the Act and it dismissed the petition.