Calcutta High Court
Balajee Education Private ... vs Niraj Kumar on 11 April, 2023
OD-14
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
AP/20/2023
BALAJEE EDUCATION PRIVATE LIMITED
VS.
NIRAJ KUMAR
BEFORE :
THE HON'BLE JUSTICE SABYASACHI BHATTACHARYYA
Date : 11th April, 2023
Appearance :
Mr. Aniruddha Mitra, Ms. Arijita Ghose, Advs.
.....for petitioner.
Mr. Saikat Roy Chowdhury, Mr. Arindam Bandopadhyay,
Mr. Aritra Ghosh, Advs.
...for respondent.
The Court : - Affidavit in opposition filed in Court today be taken on record.
The present application under section 11 of the Arbitration and Conciliation Act,
1996 is moved on the ground that the endeavour to have a reference to the arbitrator in
the matter has failed.
Learned counsel for the petitioner places reliance on two documents, one an
employment agreement and the other a non-disclosure agreement, both entered into
between the parties on the same date. It is submitted that the employment agreement
itself, in one of its clauses, categorically mentioned that the non-disclosure agreement
would be treated to be a part of the employment agreement. As such, a composite show
cause notice was issued to the respondent and subsequently an invocation under
section 21 of the 1996 Act, followed.
Learned counsel further places reliance on the arbitration clauses of the said two
agreements and submits that an arbitrator be appointed to resolve the dispute between
the parties.
Learned counsel appearing for the respondent submits at the outset that the
present respondent was not a permanent employee of the petitioner Company at any
juncture. As such, in the absence of any confirmation as a permanent employee, the
clause in the employment agreement pertaining to arbitration cannot operate inasmuch
as the respondent is concerned.
That apart, it is submitted that the two agreements in question carry overriding
clauses respectively, which confer precedence on each of the agreements over the other.
The said two agreements contained distinct and different arbitration clauses, which
envisage separate and different procedures. As such, the present application under
Section 11 of the 1996 Act seeking to club both the said arbitration clauses together
and asking for a reference on issues involving both the said agreements is not
maintainable in law.
It is further submitted that the respondent also denies the allegations made by
the petitioner on merits.
Be that as it may, it is clear from the employment agreement itself that under the
heading 'Confidentiality', it is clearly stipulated that the provisions of the said clause
would be in addition to, and not in substitution of, the provisions of the non-disclosure
agreement executed by the parties. It is further provided that the non-disclosure
agreement executed by and between the parties shall be deemed to form a part of the
employment agreement.
In view of such specific provision in the employment agreement, construed in
conjunction with the fact that the two agreements were entered into between the same
parties and on the same date, it has to be deemed that the non-disclosure agreement
forms a part of the employment agreement and cannot be disassociated from the latter.
Although there are clauses in both the said agreements giving overriding effect to
each of the agreements, the said clauses contemplated that the agreements in question
embodies the entire understanding between the parties in respect of the subject matter
of each of the agreements and supersedes any and all 'prior' negotiation,
correspondence, understandings between the parties in respect of the subject matter of
the agreement.
From a plain reading of the said overriding clauses, it cannot but be said that the
said clauses referred to earlier agreements which might have been entered into between
the parties on the subject matter covered by the two. However, since the present two
agreements were entered into on the same date and there is a clause in the employment
agreement deeming the non-disclosure agreement to be a part thereof, it cannot be said
that the overriding effect contemplated in each of the agreements apply to the other.
Inasmuch as the expression "prior" is concerned, the same has been used to
qualify the negotiation, correspondence, etc. which are excluded, it has to be observed
that the said overriding clauses could not operate vis-à-vis the other document in so far
as each of the documents is concerned.
A mere perusal of the show cause notice preceding the invocation notice as well
as the invocation notice under section 21 of the 1996 Act indicates that it was
specifically mentioned in both the notices that the non-disclosure agreement, along with
the employment agreement and the Faculty Member Handbook, were to be collectively
referred to as the employment documents.
Hence, the disputes referred to in both the said notices clearly indicate towards
the employment document having included both the employment agreement as well as
the non-disclosure agreement which, in any event, have been deemed to be part of one
another.
Hence, the objection taken on the score of non invocation in respect of the non-
disclosure agreement cannot be upheld. The Division Bench judgment of the Delhi High
Court reported at 2022 SCC Online Delhi 3412 and the Co-ordinate Bench judgment of
this court reported at 2022 SCC Online Cal 3036, specifically referred to situations
where there was no invocation under section 21 of the 1996 Act at all. However, in the
present case, for the reasons as indicated above, the principle laid down in the said
judgments is not attracted.
In so far as the disputes raised by the parties is concerned, the same pertains to
both the agreements, that is, the employment agreement as well as the non-disclosure
agreement and it cannot but be said that those components, which go on to form the
entire cause of action of the dispute, are inextricable from each other and form a chain
of events by themselves. Hence, relegating the petitioner to a separate proceeding
merely for the purpose of reference of the matter to arbitration would be a futile exercise
inasmuch as both the parties are concerned.
The other point canvassed by the respondent is that the arbitration clauses in
both the documents are distinct and different from each other.
It is seen from the employment agreement that the same contemplates a specific
procedure by which the matter has to be referred to arbitration to a sole arbitrator
appointed by the Director of the petitioner Company in accordance with the 1996 Act,
whereas the arbitration clause in the non-disclosure agreement merely contemplates a
reference by a Company under the 1996 Act itself.
Read in conjunction, there is no substantial difference between the said two
clauses in so far as a reference under Section 11 of the 1996 Act is concerned, since the
procedure envisaged in the arbitration clause of the employment agreement has failed in
view of the respondent having not concurred with the petitioner insofar as the
appointment of arbitrator is concerned. Both the said clauses referred to a proceeding
under the 1996 Act and cannot be distinguished on such general terms. In so far as the
appointment of the "Director" of the Company and the Company itself is concerned,
there is nothing to discern between the two in the present context.
Moreover, since the stages contemplated in the procedures as provided in the
said two agreements have already been exhausted in the absence of any consensus
between the parties regarding the arbitrator to be appointed, the said chapter is a
closed one and it cannot now be said that there is any substantial difference between
the crux of the two arbitration clauses in the two agreements. Hence, the objection as to
maintainability taken by the respondent has to be turned down.
As regards the first point agitated by the respondent is concerned, nothing hinges
on the respondent being or not being a permanent employee of the Company, since the
employment agreement, whatever be its worth regarding permanence of employment of
the respondent, specifically includes an arbitration clause contemplating arbitration in
case of disputes arising within the scope of the said agreement itself. Hence, irrespective
of the nomenclature, it cannot be said that the arbitration clause is to be divorced from
the agreement itself merely on an irrelevant ground of the respondent not being a
permanent employment of the Company, which cannot be factored into the question of
arbitrability.
In such view of the matter and since the dispute raised is otherwise arbitrable
and falls within the purview of the arbitration clauses of the agreements, which have to
be read as one, the power conferred on this Court by authority from the Chief Justice
under Section 11 of the Arbitration and Conciliation Act, 1996 is required to be
exercised.
Accordingly, AP/20/2023 is disposed of by appointing Ms. Nilanjana Addy
(Mobile no. 98317 59707), an advocate practising in this Court, as the sole arbitrator to
resolve the dispute between the parties, subject to obtaining declaration/consent from
her under section 12 of the Arbitration and Conciliation Act, 1996.
It is made clear that the merits of the respective contentions of the parties
regarding the principal dispute have not been gone into by this Court in any manner.
(SABYASACHI BHATTACHARYYA, J.)
pkd/GH.
