A) ABSTRACT / HEADNOTE

This case concerns the arbitrability of employment disputes under the Arbitration and Conciliation Act, 1996, particularly in relation to non-payment of wages and termination of employment. The Supreme Court, while adjudicating on the appeal filed by Dushyant Janbandhu against M/s Hyundai Autoever India Pvt. Ltd., examined whether these disputes fell within the purview of arbitration or were statutorily excluded. The Madras High Court had appointed an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, which the Supreme Court later overturned.

The court ruled that employment-related disputes, particularly involving statutory rights under the Payment of Wages Act, 1936 and the Industrial Disputes Act, 1947, were non-arbitrable. The appellant had already approached the statutory authorities before the respondent filed for arbitration, thereby making the latter’s move an abuse of process. The alleged violation of a non-disclosure obligation by the appellant was found to be an afterthought, as it was not mentioned in any charge sheet, inquiry report, or termination order.

The Supreme Court held that civil courts and arbitration tribunals lacked jurisdiction over the disputes which were already pending before the statutory forums. Citing the principles of non-arbitrability laid down in Vidya Drolia v. Durga Trading Corporation [(2021) 2 SCC 1], the court concluded that employment disputes that fall under statutory provisions are not arbitrable. The High Court’s order was set aside, and the arbitration petition was dismissed with costs.

Keywords:

1. Arbitrability of Employment Disputes
2. Non-Payment of Wages
3. Termination of Employment
4. Jurisdiction of Statutory Authorities
5. Abuse of Process in Arbitration

B) CASE DETAILS

i) Judgement Cause Title

Dushyant Janbandhu v. M/s Hyundai Autoever India Pvt. Ltd.

ii) Case Number

Civil Appeal No. 14299 of 2024

iii) Judgement Date

11 December 2024

iv) Court

Supreme Court of India

v) Quorum

Hon’ble Justices Pamidighantam Sri Narasimha and Sandeep Mehta

vi) Author of Judgment

Justice Pamidighantam Sri Narasimha

vii) Citation

[2024] 12 S.C.R. 492; 2024 INSC 966

viii) Legal Provisions Involved

• Section 11(6) of the Arbitration and Conciliation Act, 1996
• Section 15(2), Section 22 of the Payment of Wages Act, 1936
• Section 2(A) of the Industrial Disputes Act, 1947

ix) Judgments Overruled by This Case (if any)

None.

x) Case is Related to Which Law Subjects

• Arbitration Law
• Labour & Employment Law
• Industrial Law
• Corporate Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arose from a dispute concerning the termination and non-payment of wages of the appellant, Dushyant Janbandhu, who had been employed as Assistant Manager at M/s Hyundai Autoever India Pvt. Ltd.. The employment relationship soured when the respondent sought to terminate the appellant’s employment due to alleged absenteeism and non-cooperation. The appellant, however, challenged the legality of termination and sought relief from statutory authorities under the Payment of Wages Act, 1936, and the Industrial Disputes Act, 1947.

The employer, in response, attempted to invoke arbitration proceedings, despite the fact that the appellant had already approached statutory forums. The arbitrator was unilaterally appointed by the respondent without the appellant’s participation. The Supreme Court had to determine whether employment disputes regarding wages and termination could be subject to arbitration, or if they fell within the exclusive jurisdiction of statutory bodies.

D) FACTS OF THE CASE

1. Employment & Termination:

   • The appellant was appointed as Assistant Manager on 15 March 2019.
   • During the COVID-19 pandemic, he was permitted to work from home but was later asked to resume physical attendance.
   • A show cause notice was issued on 4 September 2020, followed by an inquiry that concluded the appellant was absent without authorization.
   • The company terminated his employment on 21 January 2021.

2. Appellant’s Legal Action:

   • Filed a claim under Section 15(2) of the Payment of Wages Act, 1936 for non-payment of wages.
   • Challenged his termination before the Industrial Tribunal under Section 2(A) of the Industrial Disputes Act, 1947.

3. Respondent’s Move for Arbitration:

   • The respondent invoked arbitration proceedings and appointed an arbitrator unilaterally.
   • The appellant objected to this and challenged the jurisdiction of the arbitrator under Section 16 of the Arbitration Act.

4. High Court’s Decision:

   • The Madras High Court appointed an arbitrator under Section 11(6) of the Arbitration and Conciliation Act.

5. Supreme Court’s Verdict:

   • Declared that wage and termination disputes are non-arbitrable.
   • Held that statutory bodies have exclusive jurisdiction.
   • Overturned the High Court’s appointment of an arbitrator.

E) LEGAL ISSUES RAISED

1. Are disputes concerning wages and termination of employment arbitrable under the Arbitration and Conciliation Act, 1996?
2. Does the jurisdiction of statutory authorities under the Payment of Wages Act, 1936, and the Industrial Disputes Act, 1947 override arbitration agreements?
3. Was the arbitration petition filed by the employer an abuse of process?

F) PETITIONER/ APPELLANT’S ARGUMENTS

1. Employment disputes involving statutory rights are non-arbitrable.
2. The Payment of Wages Act and Industrial Disputes Act grant exclusive jurisdiction to statutory authorities.
3. The arbitration clause does not override statutory remedies.
4. The alleged violation of non-disclosure obligations was an afterthought.

G) RESPONDENT’S ARGUMENTS

1. The arbitration clause in the employment agreement binds both parties.
2. The appellant was bound by his contractual obligation to settle disputes through arbitration.
3. The termination and non-payment of wages were contractual issues suitable for arbitration.

H) JUDGEMENT

a. Ratio Decidendi

1. Employment disputes under statutory frameworks cannot be arbitrated.
2. Statutory authorities have exclusive jurisdiction over wage and termination disputes.
3. The arbitration petition was an abuse of process.

b. Obiter Dicta

1. Unilateral appointment of an arbitrator is invalid (Perkins Eastman Architects v. HSCC (India) Ltd.).
2. Jurisdiction of statutory authorities must be respected in employment disputes.

c. Guidelines

1. Employment disputes must be settled by statutory bodies.
2. Employers cannot misuse arbitration clauses to bypass labour laws.

I) CONCLUSION & COMMENTS

The Supreme Court reaffirmed that employment-related statutory disputes are not arbitrable and that employers cannot bypass statutory forums through arbitration clauses. This case strengthens employee protections against contractual exploitation in labour law matters.

J) REFERENCES

a. Important Cases Referred

1. Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1
2. Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd., (2020) 20 SCC 760

b. Important Statutes Referred

1. Arbitration and Conciliation Act, 1996
2. Payment of Wages Act, 1936
3. Industrial Disputes Act, 1947