Dushyant Janbandhu vs M/S Hyundai AutoEver India Pvt. Ltd.
Background
During the Covid-19 pandemic, an Assistant Manager at Hyundai AutoEver India was directed to resume office attendance, refused, and was issued a show-cause notice, an inquiry, a charge memo, and ultimately terminated in January 2021, all without any allegation that he had breached his employment contract's confidentiality clause. When his wages went unpaid, he sought relief before the statutory Payment of Wages authority and later challenged his termination before the Industrial Tribunal. In response, the employer unilaterally appointed an arbitrator and, when that arbitrator himself closed the proceedings citing the Supreme Court's Perkins Eastman ruling on biased appointments, the employer approached the Madras High Court under Section 11(6) of the Arbitration Act to get a court-appointed arbitrator, for the first time also alleging a breach of the confidentiality clause.
Decision Breakdown
The Supreme Court allowed the employee's appeal and set aside the High Court's order appointing an arbitrator, dismissing the employer's Section 11(6) petition with costs of Rs. 5 lakh. It held that the confidentiality-clause allegation was a fabricated afterthought never mentioned in the show-cause notice, inquiry report, charge memo, or termination order, so no real dispute existed on that count. On the genuine disputes, non-payment of wages and validity of termination, the Court held these fell exclusively within the statutory jurisdiction of the Payment of Wages Act authority and the Industrial Tribunal respectively (per Section 22 of the PW Act and settled law on non-arbitrability, applying the four-fold test from Vidya Drolia v. Durga Trading Corporation), and were therefore not arbitrable at all. The Court found the arbitration petition was essentially retaliatory, filed to intimidate the employee for using statutory remedies.
Lesson Learnt
Disputes over unpaid wages and wrongful termination that fall under specific labour statutes (like the Payment of Wages Act and Industrial Disputes Act) cannot be forced into private arbitration merely because an employment contract contains an arbitration clause, and courts will penalize attempts to misuse arbitration proceedings to pressure an employee who has gone to the proper statutory forum.