Calcutta High Court
Balajee Education Private ... vs Chandra Pratap on 17 April, 2023
OD 1
AP/18/2023
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
BALAJEE EDUCATION PRIVATE LIMITED
VS
CHANDRA PRATAP
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date: 17th April, 2023.
Appearance:
Mr. Aniruddha Mitra, Adv.
Ms. Arijita Ghosh, Adv.
...for the petitioner
Mr. Saikat Roy Chowdhury, Adv.
Mr. Aritra Ghosh, Adv.
...for the respondent
The Court: 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 contain 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
dissociated from the latter.
Although there are clauses in both the said agreements giving overriding
effect to each of the agreements, the said clauses contemplate that the agreement
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 refer 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, considering that 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
refer to situations where there is 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 are concerned, those pertain
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 for 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 the 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 refer 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, 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" employee 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/18/2023 is disposed of by appointing Ms. Senjuti
Sengupta (Mobile No. - 9433665266), 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.)
B.Pal
