Bombay High Court

Kingfisher Airlines Limited vs Residing At A-702 on 20 November, 2012

Bench: R.P. Sondurbaldota

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY
               ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                
                 WRIT PETITION NO. 2585 OF 2012




                                                        
     Kingfisher Airlines Limited
     Having its Registered Office at
     The Qube, CTS No. 1498, A/2,
     4th Floor, M.V. Road, Marol, 




                                                       
     Andheri (E), Mumbai-400 059                  ....Petitioner
             V/s.
     Capt. Prithvi Malhotra
     Instructor (Employee Code No........)




                                          
     Residing at A-702, Raj Classic, 
     Off. Yari Road, Versova, Mumbai-400 061    .......Respondent
                        
                              ALONGWITH
                       
                    WRIT PETITION NO. 2586 OF 2012

     Kingfisher Airlines Limited
     Having its Registered Office at
      


     The Qube, CTS No. 1498, A/2,
     4th Floor, M.V. Road, Marol, 
   



     Andheri (E), Mumbai-400 059                                  ....Petitioner
             V/s.
     Capt. Samir Sheopari
     Instructor (Employee Code No........)





     Residing at 803/902, Silver Nest
     Mhada, S.V.P. Nagar, Andheri West,
     Mumbai-400 061                                        .......Respondent





                              ALONGWITH
                    WRIT PETITION NO. 2587 OF 2012


     Kingfisher Airlines Limited
     Having its Registered Office at
     The Qube, CTS No. 1498, A/2,




                                                        ::: Downloaded on - 09/06/2013 19:24:17 :::
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     4th Floor, M.V. Road, Marol, 
     Andheri (E), Mumbai-400 059                      ....Petitioner




                                                                                
             V/s.
     Capt. Carl Wykes




                                                        
     Instructor (Employee Code No.............)
     Residing at 1101 Aakansha Apartments,
     A Wing, Punch Marg,
     Yaari Road, Versova, Mumbai-400 061          .......Respondent




                                                       
                                   * * * * *




                                          
     Mr. N.H. Seervai, Senior Advocate a/w. Mr. Rohan Cama 
     and Mr. Navraj Jalota i/by. Bachubhai Munim & Co., 
                        
           Advocate for the petitioner.
     Mr. S.C. Naidu with Mr. Saurabh Kulkarni i/by. C.S. & Co., 
           Advocate for the respondent.
                       
                           CORAM :-         SMT. R.P. SONDURBALDOTA, J.

20th November, 2012.

JUDGMENT :-

1). The common question of law, that arises for

consideration in the above three petitions is, whether a

industrial dispute or a dispute relating to enforcement of a

right or an obligation created under the Industrial Disputes

Act, ("the I.D. Act" for short) is arbitrable, i.e. capable of

being adjudicated by a private forum of an arbitrator.

2). The petitioner in all the petitions is a public limited

company and a "air transport industry". The respondent

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in each petition is employed by the petitioner as a Pilot.

All the respondents have filed applications under Section

33(C)(2) of the I.D. Act read with Rule 62(2) of the Industrial

Disputes (Central) Rules, 1957 in CGIT-cum-Labour Court for

recovery of their earned wages. They also seek interest on

the earned wages at the rate of 18% p.a. from the date the

wages become due and payable under the Payment of

Wages Act read with Rules framed thereunder. After

entering its appearance in the proceedings, the petitioner

filed identical applications under Section 8 of the

Arbitration and Conciliation Act, 1996 ("Arbitration Act " for

short) for referring the parties to arbitration in view of

Clause-17 in the respective letters of appointment of the

respondents. The CGIT-cum-Labour Court by its reasoned

order dismissed the applications of the petitioner, which

dismissal has led to the present petitions.

3). Clause-17 referred to above reads as follows :

"17.

DISPUTE RESOLUTION All disputes relating to the validity, interpretation, enforcement or breach of the terms and conditions of appointment arising between you and the Company shall be decided by arbitration in

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accordance with the provisions of the Arbitration and Conciliation Act, 1996, as substituted or

amended from time to time. The Chief Operating Officer or such official of the Company or any

third party as may be nominated by the Chief Operating Officer shall be the sole arbitrator. The venue of arbitration shall be at Mumbai or any other place designated by the Chief Operating

Officer of the Company. The award of the arbitrator shall be binding."

4). Though, the only respondent to the present petitions

is the employee of the petitioner, the applications filed by

the respondents before the CGIT are directed not only

against the petitioner, but also against three more persons.

They are, the Chairman and Director, Executive Vice-

President and Chief Executive Officer of the petitioner-

Company. There is no explanation offered by the

petitioner for omitting the three persons from the petitions.

In their complaints before the CGIT, the respondents have

contended that the Payment of Wages Act, mandatorily

requires that payment of wages is made within the time

stipulated i.e. before the expiry of the seventh day after the

last day of the wage period, within which the wages are

payable. Non-payment of salary within the stipulated time

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attracts not only payment of penalty and compensation, but

also interest at the rate of 18% p.a. on the amount due,

under the Payment of Wages (Air Transport Services) Rules,

1968. The Chairman and Director, Executive Vice-President

and Chief Executive Officer are employers within the

meaning of the provisions of Payment of Wages Act and

the Rules framed thereunder and as such under legal

obligation to pay wages on the date notified for payment.

They are thus jointly and severally liable to make payment

alongwith the petitioner.

5) The respondents opposed the applications filed

by the petitioner under Section 8 of the Arbitration Act,

on several grounds, which grounds have been agitated

before this Court also. The respondents contended that

the subject matter of the dispute between them and the

petitioner, has been exclusively reserved by the legislature,

as a matter of public policy, for adjudication by the special

courts established under the I.D. Act. Therefore, Section 8

of the Arbitration Act, by necessary implication, has no

application. Further, the powers exercised by the Courts

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constituted under the I.D. Act, cannot be exercised by a

private forum of an arbitrator. Therefore, the proceedings

pending before the Labour and Industrial Court cannot be

referred to private arbitration outside the provisions of the

I.D. Act. In addition, all the parties to the application filed

by the respondent are not parties to the arbitration

agreement contained under Clause-17 of the letter of

appointment.

6). The CGIT-cum-Labour Court by the impugned

order, has held that in the light of Section 10-A(5) of the

I.D. Act, it is clear that a special scheme for arbitration is

prescribed under Section 10-A of the I.D. Act. Therefore,

the provisions of the Arbitration Act, would not be

attracted to an industrial dispute. The Learned Presiding

Officer, has also observed that a proceeding under Section

33(C)(2) of the I.D. Act, is an execution proceeding filed for

recovery of the amount of salary due and payable to the

respondent. Under that provision, the claim is not

expected to be adjudicated. It is merely an execution

proceeding and an execution proceeding need not be sent

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to arbitrator as it requires, no further adjudication.

7). Mr. Seervai, the learned Senior Counsel

appearing for the petitioner, submits that, the importance of

arbitration as an alternate mechanism for resolution of the

disputes has been duly acknowledged and stressed upon by

the Apex Court in several of its decisions. The process of

arbitration is intended to ensure speedy, efficient and fair

resolution of the disputes between parties unhampered by

cumbersome procedure of the Courts and technicalities of

provisions. Therefore, by Section 8, the Arbitration Act

provides for power to a judicial authority to refer parties

to arbitration where there is an arbitration agreement. He

submits that, the Court is obliged to refer the parties to

arbitration where an arbitration agreement exists. In

order to support his submission that Section 8 of the

Arbitration Act is peremptory in nature, Mr. Seervai relies

upon the decision of the Apex Court in the case of

Hindustan Petroleum Corporation Limited V/s. Pinkcity

Midway Petroleums reported in (2003) 6 SCC page 503,

wherein it has been held :

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"14. This Court in the case of P. Anand Gajapathi Raju v. P.V.G. Raju, (2 (2000) 4 SCC 539) has held that the

language of Section 8 is peremptory in nature. Therefore, in cases where there is an arbitration

clause in the agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action after such an

application is made except to refer the dispute to an arbitrator. Therefore, it is clear that if, as contended by a party in an agreement between the parties before the civil court, there is a clause for

arbitration, it is mandatory for the civil court to refer the dispute to an arbitrator. "

He points out that there is no dispute between the parties

as regards the existence of Clause-17 in the letter of

appointment issued to the respondents. The dispute of

non-payment of wages, would be covered by Clause-17 and

as such the CGIT had infact no alternative, except to refer

the parties to the arbitrator under Clause-17 for resolution

of the dispute between them. It is also his submission

that, the question of arbitrability of the dispute can be left

to the arbitrator since an arbitrator is empowered to

decide the question of his own jurisdiction.

8). Placing heavy reliance upon another decision of

the Apex Court in the case of Booz Allen and Hamilton

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Inc. V/s. SBI Home Finance Limited and Others,

reported in (2011) 5 SCC page 532, Mr. Seervai submits

that, every civil or commercial dispute is, in principle,

capable of being adjudicated by arbitration, unless the

jurisdiction of the Arbitral Tribunals is excluded either

expressly or by necessary implication. There is no express

exclusion of industrial dispute from the purview of

arbitration. Such a dispute is also not covered by the

"excepted matters" enumerated and elaborated by the

Apex Court in the judgment cited. Mr. Naidu, the learned

Counsel for the respondents, counters with a submission

that, an industrial dispute is excluded from the jurisdiction

of Arbitral Tribunal by necessary implication since the

specified Courts i.e. Industrial Court and Labour Court have

been conferred jurisdiction to resolve industrial disputes.

He seeks to draw support for his submission from (i) The

Rajasthan State Road Transport Corporation and

another etc. Vs. Krishna Kant etc. reported in AIR 1995

S.C. page 1715, (ii) D.P. Maheshwari V/s. Delhi

Administration and Ors. reported in AIR 1984 S.C. page

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153 and (iii) unreported decision of Nagpur Bench of this

Court in the case of General Manager, Western Coalfields

Ltd, Wani North Area, At post-Ukni, Tq. Wani, Dist.

Yavatmal and anr. Vs. 1. Shri. Sumit Mullick, Div.

Commissioner, Amravati Division, Amravati, passed in

Writ Petition No. 2613 of 2001 dated 28 th September,

2012.

9).

Before touching upon the merits of the issue of

arbitrability, it would be appropriate to find out as to who

should decide that issue. Should it be decided by the

court before whom the judicial proceedings are pending, or

should it be left to the decision of the Arbitrator. The

answer to this question is found in the decision of the

Apex Court in Booz cited by Mr. Seervai. In

Allen (supra)

the decision, the Apex Court has quoted with approval its

earlier decisions in Haryana Telecom Ltd Vs. Sterlite

Industries (India) Ltd. reported in (1999) 5 SCC page 688

and SBP Company Vs. Patel Engineering Ltd, reported

in (2005) 8 SCC page 618, wherein it has been held that,

what can be referred to the arbitrator is only that dispute

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or matter which the arbitrator is competent or empowered

to decide. The judicial authority, in the absence of a

restriction in the Arbitration Act, has to necessarily decide

whether, infact there is any existence of a valid agreement

and whether the dispute that is sought to be raised before

it, is covered by the arbitration clause. The judicial

authority is not expected to act mechanically while

deciding application under Section 8 of the Arbitration Act.

This has been further been elaborated at paragraphs-32 and

33 of the decision which read as follows :

"32. The nature and scope of issues arising

for consideration in an application under Section 11 of the Act for appointment of arbitrators, are far

narrower than those arising in an application under Section 8 of the Act, seeking reference of the parties to a suit to arbitration. While considering an application under Section 11 of the Act, the Chief

Justice or his designate would not embark upon an examination of the issue of "arbitrability" or appropriateness of adjudication by a private forum, once he finds that there was an arbitration

agreement between or among the parties, and would leave the issue of arbitrability for the decision of the Arbitral Tribunal. If the arbitrator wrongly holds that the dispute is arbitrable, the aggrieved party will have to challenge the award by filing an application under Section 34 of the Act, relying upon sub-section 2(b)(i) of that section."

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"33. But where the issue of "arbitrability" arises in the context of an application under Section

8 of the Act in a pending suit, all aspects of arbitrability will have to be decided by the court

seized of the suit, and cannot be left to the decision of the arbitrator. Even if there is an arbitration agreement between the parties, and even if the dispute is covered by the arbitration agreement, the

court where the civil suit is pending, will refuse an application under Section 8 of the Act, to refer the parties to arbitration, if the subject matter of the suit is capable of adjudication only by a public forum or

the relief claimed can only be granted by a special court or Tribunal."

10). It is thus seen that the Apex Court has drawn

clear distinction between the provisions of Sections 8 and

11 of the Arbitration Act to hold that in case of an

application under Section 8 filed in a pending suit, all

aspects of arbitrability will have to be decided by the

Court seized of the suit. In the light of this specific

decision of the Apex Court, in my considered opinion, the

CGIT has correctly gone into the issue of arbitrability of

the dispute between the parties and not left it to the

decision of the arbitrator.

11). In the case of Booz Allen (supra), the Apex Court

was required to consider arbitrability of a mortgage suit

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for sale of the mortgaged property. At paragraphs-35 and

36, it noted the general position in law on the issue of

arbitrability and cited examples of non-arbitrable disputes.

The Apex Court has observed :-

"35. The Arbitral Tribunals are private for a chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public fora constituted under the laws of the

country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided

by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded

either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other categories

of cases, though not expressly reserved for adjudication by public fora (courts and tribunals),

may by necessary implication stand exclude from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the Court where a suit is pending, will refuse to refer the parties to

arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes."

"36. The well-recognised examples of non-arbitrable disputes are : (I) disputes relating to rights and liabilities which give rise to or arise out criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (ii) guardianship matters ; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters of administration and succession

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certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys

statutory protection against eviction and only the specified courts are conferred jurisdiction to grant

eviction or decide the disputes."

12). Mr. Seervai, argues that "industrial dispute" is

not found in examples of non-arbitrable disputes

enumerated in the decision by the Apex Court. He has

extensively submitted that, action-in-rem alone can be

justifiably put in the category of non-arbitrable disputes, it

being concerned with a right exercisable against the world

at large. The dispute in the proceedings between the

petitioner and the respondent, according to him, is an

action-in-personam in which the rights and interests of the

parties themselves in the subject matter of the case, are

determined. Therefore, the dispute between the parties is

arbitrable.

13). In my opinion, the test to be applied for the

disputes of the nature in the present proceedings is not,

whether, the action therein is in-rem or in-personam. The

test would be whether adjudication of such disputes is

reserved by the legislature exclusively for public fora as a

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matter of public policy. Because even an action-in-

personam, if reserved for resolution by a public fora as a

matter of public policy would become non-arbitrable. For

that purpose, it will be necessary to look into the object, as

well as, broad scheme of the I.D. Act.

14). The preamble of the I.D. Act, shows that it is

enacted to provide a machinery and forum for the

investigation of industrial disputes and for the settlement

thereof and for the purposes analogous and incidental

thereto. If one goes through the scheme of the I.D. Act, it

becomes clear that it's object is to improve the service

conditions of the industrial workers and to bring about

industrial peace which in turn can accelerate productive

activity in the country resulting in its prosperity. In other

words, the I.D. Act is a beneficial legislation, This aspect

of the legislation has been noted by the Apex Court in its

decision in Life Insurance Corporation of India V/s. D.J.

Bahadur, 1980 Lab IC page 1218 as follows :

". The personality of the whole statute, ......has a welfare basis, it being a beneficial legislation which

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protects labour, promotes their contentment and regulates situations of crisis and tension where production may be

imperiled by untenable strikes and blackmail lockouts. The

mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential,

between managements and workmen. Its goal is amelioration of the conditions of workers, tempered by a practical sense of peaceful co-existence, to the benefit of

both-not as in a neutral position, but with restraints on

laissez faire and concern for the welfare of the weaker lot."

15). The different authorities established for resolution

of the disputes under the I.D. Act are,(i) Works Committee

consisting of representatives of the employers and workmen

engaged for the establishment in the establishment specified

under Section 3, (ii) Conciliation Officers appointed by

appropriate government (Section 4), (iii) Board of Conciliation

appointed by the appropriate government (Section 5), (iv)

Courts of enquiry constituted by the appropriate government

(Section 6), (v) Labour Courts (Section 7) and (vi) Industrial

Tribunals (Section 7A). Section 10 provides for reference of

disputes to the Board, Courts and Tribunals. The procedure for

making a reference is to make an application, in the prescribed

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form to the appropriate Government. The reference could be

of an existing industrial dispute or of the one which is

apprehended. Section 13 casts duty upon the conciliation

officer to hold conciliation proceedings in case of the

industrial dispute that exists or is apprehended. The duty

is mandatory where the dispute relates to a public utility

service. He is required to try to promote a settlement

between the parties. If he succeeds in his attempt, he

sends a report to the appropriate government alongwith

memorandum of settlement signed by the parties to the

dispute. In case of failure in promoting settlement, he

submits a failure report setting forth the steps taken by

him for ascertaining the facts and circumstances relating to

the dispute and for bringing about the settlement. The

report is also required to state the reasons on account of

which, in his opinion, a settlement could not be arriverd at.

On receipt of the failure report from the conciliation

officer, the appropriate government, if satisfied, makes a

reference either to a Board or to the Labour Court or to

the Industrial Tribunal or National Tribunal. Section 12(6)

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provides that report under Section 12 shall be submitted

within 14 days from the commencement of the conciliation

proceedings which time can be extended by the agreement

between the parties to the dispute. Similarly, Sections 14

and 15 require the Court of Enquiry, the Labour Courts and

the Industrial Tribunals to complete the proceedings before

them within the specified time. Sections 16 to 19 provide

for submission of the Award by Courts, it's publication and

it's effect. Chapters V, VA, VB and VC covering Sections 22

to 25U, create rights and obligations and Chapter VI deals

with penalties. Section 10A of the I.D. Act provides for

voluntary reference of an industrial dispute to arbitration

with a separate and specific procedure prescribed for it.

The scheme of the I.D. Act thus indicates that, an

otherwise private dispute between the employer and

employee, has been placed on a different plane. The

obvious reason therefor is that, the dispute and it's

resolution, impacts not just the concerned individual

employee, but has a potential to impact the other

employees and consequently the industry. Therefore, the

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emphasis under the I.D. Act is for resolution of dispute by

conciliation.

16). As has been submitted by Mr. Naidu, the Apex

Court has already placed industrial disputes in a category

separate from the suits tried in a Civil Court in its decision

in Rajasthan S.R.T. Corporation (supra). The core question

arising for consideration of the Apex Court in that case

was : Where a dispute between the employer and

employee involves the recognition or enforcement of a

right or obligation created by I.D. Act and where such

dispute amounts to industrial dispute within the meaning

of I.D. Act, whether civil court's jurisdiction to entertain a

suit with respect to such dispute is barred. The Apex

Court, after referring to the principles enunciated in its

decision in Dhulabhai Vs. State of M.P. reported in AIR

1969 S.C. page 78 for deciding questions of jurisdiction,

observed as follows :-

". At the same time, we must emphasise the policy of law underlying the Industrial Disputes Act and the host of enactments concerning the workmen made by Parliament and State legislatures. The whole idea has been to provide a speedy, inexpensive

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and effective forum for resolution of disputes arising between workmen and their employers. The idea has

been to ensure that the workmen do not get caught in the labyrinth of Civil Courts with their layers upon

layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill afford. The procedures followed by Civil Courts, it was thought, would not facilitate a prompt and effective

disposal of these disputes. As against this, the Courts and Tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or

revisions. Because of their informality, the workmen and their representatives can themselves prosecute

or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the

punishment in many cases. They can make and re- make the contracts, settlements, wage structures and what not. Their awards are no doubt amenable to jurisdiction of the High Court under Article 226 as

also to the jurisdiction of this Court under Article 32, but they are extra-ordinary remedies subject to

several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a Civil Court. That is

the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the Courts in interpreting these enactments and the

disputes arising under them."

17). There are two more distinctive features of the

trial of industrial disputes by the fora provided under the

I.D. Act. The Act empowers the adjudicating authorities

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under it, to give reliefs such as, reinstatement of wrongfully

dismissed or discharged workmen, which may not be

permissible in common law or for that matter not justified

under the terms of the contract between the employer and

the employee. Therefore, the types of the remedies that

the arbitrator can award in the matters of industrial

disputes is also required to be looked into, whether the

remedies that can be awarded by him is limited by

considerations of public policy and whether the remedies

that can be awarded by him are same as the remedies that

can be awarded by an Industrial Court. In case of an

industrial dispute relating to dismissal or discharge of an

employee, the arbitrator would be powerless in granting

the relief of reinstatement, outside of I.D. Act.

18). The second distinctive feature, is the voluntary

arbitration provided for under Section 10A of the I.D. Act.

Section 10A provides, a detailed procedure on how the

arbitration thereunder shall proceed, which includes

mandatory forwarding of the arbitration to the appropriate

government and the Conciliation Officer. It also includes,

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publication of notification thereafter so that the employers

and workmen not parties to the arbitration agreement, but

are concerned in the dispute, get an opportunity of

presenting their case before the arbitrator. The Section does

not entirely leave the matter in the hands of the parties to

the arbitration agreement and the private fora of their

choice. This shows that an industrial dispute is not

treated solely as an individual dispute, but is always

approached from the context of the larger picture of the

industry as a whole. The status of the arbitrator appointed

under Section 10A of the I.D. Act, is also different. To put

it in the words of the learned Single Judge of this Court

from Nagpur Bench in the unreported decision in Western

Coalfield's case (supra), he falls "within the rainbow of

statutory tribunals". The relevant observations from the

decision read as follows :

"The Act seeks to achieve social justice on the basis of collective bargaining. Collective bargaining is a technique by which dispute as to conditions of employment is resolved amicably by agreement rather than coercion. The dispute is settled peacefully and voluntarily although reluctantly between labour and management. The voluntary

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arbitration is a part of infrastructure of dispensation of justice in the industrial

adjudication. The arbitrator thus falls within the rainbow of statutory tribunals."

Further, Section 10A(5) of the I.D. Act, specifically excludes

application of the Arbitration Act to the arbitrations under

the Section.

19). In the decision in the Western Coalfield's case

(supra), the learned Single Judge of this Court was

considering challenge to an arbitration Award on the

ground of non-compliance with the procedure envisaged by

Section 10A(3) and (3A) of the I.D. Act. One of the

arguments made before the Court, was that it was required

to be challenged by filing proceedings before the District

Court under Section 34 of the I.D. Act for setting the same

aside. The argument was held to be misconceived with an

observation that the Award could not be treated as an

Award under the Arbitration Act and that the industrial

dispute cannot be settled in any other mode or manner or

de-hors Section 10A of the I.D. Act. In the same decision, at

paragraph-22 the learned Single Judge after noting the

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decision of the Apex Court in Rajasthan S.R.T. Corporation

(supra) has held that an industrial dispute cannot be

subject to the Arbitration Act. The observations read as

follows :-

"This judgment of the Hon'ble Apex Court, therefore shows that the Industrial Dispute between parties before this Court could not have been placed before the Civil Court under Section 9 of the Code of Civil

Procedure. It is, therefore obvious that the said dispute could not have been subjected even to the

Arbitration and Conciliation Act, 1996. The Industrial Dispute and its resolution is the exclusive province and necessary mechanism including forums therefor

are provided under the Industrial Disputes Act, 1947."

20). It is thus seen that, adjudication of industrial disputes

is reserved by the legislature exclusively for the authorities

established under the I.D. Act, as a matter of public policy.

Therefore, by necessary implication the same stands

excluded from the purview of the private fora of the

arbitrator. Consequently, the industrial dispute is rendered

inarbitrable outside the I.D. Act. In such a case, the Court

where the dispute is pending, must refuse to refer the

parties to arbitration, under Section 8 of the Arbitration

Act, even if they have agreed upon arbitration as the

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forum for settlement of disputes between them.

21). It has been the contention of the respondent

that, there can be no reference of the dispute in their

applications to the arbitration under Section 8 of the

Arbitration Act because Opponents No.2 to 4 to their

application are not parties to the arbitration agreement

contained under Clause 17 of the letter of appointment.

Mr. Naidu, submits that the Apex Court in its decision in

Sukanya Holdings Pvt. Ltd Vs. Jayesh H. Pandya and

another, reported in AIR 2003 S.C. page 2252, has held

that when the Court is required to refer the parties to

arbitration, the reference must be in respect of the entire

subject matter of the suit. There can be no bifurcation of

the cause of action, as also the bifurcation of the

proceedings between parties, who are parties to the

arbitration agreement and others. The relevant

observations of the Apex Court are found at paragraph-16

of the judgment.

"16. The next question which requires consideration is- even if there is no provision for partly referring the dispute to arbitration, whether such a course is

Rane * 26 * WP-2585,2586&2587-2012 20Nov,2012

possible under Section 8 of the Act ? In our view, it would be difficult to give an interpretation to

Section 8 under which bifurcation of the cause of action that is to say the subject matter of the suit

or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the

Act. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it

follows that bifurcation of the subject matter of an action brought before a judicial authority is not

allowed."

The decision in Sukanya Holdings (supra) have been approved

and confirmed by the Apex Court in paragraph 52 of the

decision in Booz Allens case. As already seen above,

opponents no. 2 to 4, who are not parties to the arbitration

agreement are parties to the complaint filed by the

respondents. In that circumstance, there cannot be

bifurcation of the proceedings between the petitioner on

the one hand and opponents no. 2 to 4 on the other. Mr.

Seervai seeks to submit that opponents no. 2 to 4 are

infact not necessary parties to the complaint. They have

been impleaded to the proceedings for the purpose of

defeating the arbitration clause in the letter of