Seeking Expert Advice: How to Handle a Company Ignoring Arbitration Notice and Challenging Court Jurisdiction?

I had sent a legal notice to the company against illegal termination. As per the Arbitration and Conciliation Act 1996, which is mentioned in the appointment letter, I told the company to appoint an arbitrator and reply to the legal notice within 30 days.

However, the company didn't respond to this legal notice within the timeframe. They also didn't provide any information regarding arbitrator appointments. Finally, the case is filed in the labor court. The company sent two proxy advocates in the first two hearings. Now, in the third hearing, the company has moved an application to challenge court jurisdiction by saying that this case should be solved by the Arbitration and Conciliation Act 1996, under section 8.

I am looking for an expert opinion regarding this.

Legal Rights and Arbitration

The company, having failed to avail itself of the provision of arbitration, cannot now take refuge under it. At any rate, the Labour Court has the jurisdiction to deal with the matter. Such legal rights cannot be taken away by a mutual agreement. So you may put up your defense accordingly.

It seems the company is trying to delay the matter and tire you out.

Dear Prerna,

You have not disclosed in what capacity you were employed, i.e., workman, supervisory, or managerial at the time of your alleged illegal termination.

Had you been employed in any of the latter two cadres to escape the ambit of the definition of the term 'workman' as defined under section 2(s) of the Industrial Disputes Act, 1947, and if you had already agreed to arbitration under the Arbitration and Conciliation Act, 1996 subject to meeting the requirements of section 7 of the A&C Act, 1996, the contention of your management would be maintainable.

On the contrary, had you been employed as a workman, the contention of the management is not at all tenable in view of the ratio decidendi of the judgment of the Supreme Court in Rajesh Korat v. Management, Innoviti Embedded [2017 SCC Online kar 4975] and that of the Bombay High Court in Kingfisher Airlines v. Captain Malhotra & Others [2013 (7) Bom CR 738]. The indisputable reason is that the IDA, 1947 is a self-contained Code and to that extent, the A&C Act, 1996 does not have any application to matters governed by the IDA, 1947. Besides, even the provisions of the A&C Act, 1996 would not be applicable to the voluntary arbitration provided under section 10-A of the IDA, 1947.

Coming to your case, had you not been employed in the workman category, my opinion would be that you can submit to arbitration under the A&C Act as you had already agreed. Otherwise, you will have to approach a Civil Court only.

Thank you all for the assistance. I was employed as a workman, with the designation of Technical Support Executive in a BPO company. A case is filed under Section 2A(2) in the labor court for reinstatement and payment of back wages. After sending proxy advocates, the company is now challenging the court's jurisdiction by stating that this case should be resolved under the Arbitration and Conciliation Act 1996, specifically under Section 8.

As per the Arbitration and Conciliation Act 1996, which is referenced in the appointment letter, I personally informed the company to appoint an arbitrator and respond to the legal notice within 30 days. However, the company did not respond to this legal notice within the given timeframe. They also did not provide any information regarding the appointment of an arbitrator, so the case was ultimately filed in the labor court.

Is it fair practice to keep sending proxy advocates repeatedly?

Under which section of the Arbitration Act 1996 can I challenge and dismiss the company's application?

Dear Prerna,

If your statement that you are a workman under section 2(s) of the Industrial Disputes Act, 1947 is correct, then the employer's contention that the Labor Court constituted under the IDA, 1947 has no jurisdiction due to your contract of employment providing a clause for arbitration under the Arbitration and Conciliation Act, 1996, which you agreed to at the time of your appointment, is not maintainable. When a similar question arose before the Bombay High Court in Kingfisher Airlines Vs. Captain Malhotra & Others, the Bombay High Court affirmed the order of the Labor Court and categorically held that labor disputes were not arbitrable under the A&C Act, 1996. The same judicial conclusion was confirmed further with the observation by the Karnataka High Court about the exclusive jurisdiction of the IDA, 1947, as mentioned in my previous post.

You should file a counter citing the above judgments in the Labor Court and pray for the dismissal of the petition by the employer.