Rajiv Puri vs Webneuron Services
2012 Latest Caselaw 2043 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                              Judgment reserved on: 22.03.2012
                              Judgment delivered on:26.03.2012

+     CM(M) 670/2009 & CM No.9732/2009


RAJIV PURI                                            ..... Petitioner
                              Through:   Mr.Rakesh Khanna and Ms.Arzu
                                         Chimni, Advocates.

                     versus


WEBNEURON SERVICES                                  ..... Respondent
                Through:                 Mr.A.S.Mathur and Ms.Shruti
                                         Verma, Advocates.

      CORAM:
      HON'BLE MS. JUSTICE INDERMEET KAUR


INDERMEET KAUR, J.

1 The impugned judgment is dated 11.05.2009 whereby the

application filed by the defendant under Section 8 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as the 'said Act') had

been dismissed.

2 The plaintiff (Webneuron Services Limited) had filed a suit for

recovery of `8,35,356/- against the defendant Rajiv Puri. The averments

made in the plaint are to the effect that the defendant who was an

employee of the company had taken a membership of Jaypee Green

Golf Resort at Noida for which he had availed of a loan of `4 lacs; he

was getting the loan amount deducted from his salary in installments;

the defendant resigned from the services of the company on 05.11.2004;

at that time, an amount of `1,89,998/- out of the total loan of `4 lacs was

yet payable by the defendant; further contention in the plaint is that

under the terms of services of the defendant, the defendant was entitled

to certain leave encashment which amounted to an amount of

`2,86,364/-. However at the time of the relieving of the defendant from

his services, no amount towards leave encashment was paid as the

amount of `1,89,998/- still remained unpaid by the defendant; it was

agreed and understood by the defendant that the amount towards his

remaining loan amount would be adjusted against his leave encashment

and after settlement of all the accounts, remaining balance, if any, would

be paid to him. A second amount of `3,40,636/- in lieu of his not

availing leaves for 31.5 days to which the defendant was entitled has

also been claimed from the defendant; contention being that an amount

of `6,27,000/- had been paid to the defendant as salary for the two

months i.e. for the month of December, 2004 & January, 2005 but he

had willfully absented himself from office during that period and as

such was not entitled to the said amount; after giving him the adjustment

of his leave entitlement, a sum of `3,40,636/- was found due and

payable from him. Both the figures work out to a sum of `5,70,209/-

which is the principal amount; total amount of `8,35,356/- along with

interest has been claimed from the defendant.

3 Written statement had filed. Learned counsel for the petitioner in

the course of the arguments has conceded that the second amount of

`3,40,636/- is an amount which is covered by the arbitration clause

contained in the arbitration agreement entered into between the parties

which is dated 01.07.2004.

4 This agreement dated 01.07.2004 is an agreement between the

employer and employee where the contract of employment, terms and

scope thereto as also the compensation payable to the employee have

been detailed. Para 14 contained the arbitration clause which inter-alia

reads as follows:-

"Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be referred to and

finally resolved by arbitration in India in accordance with the arbitration rules of India for the time being in force which rules are deemed to be incorporated by reference into this paragraph. The law of arbitration shall be the International Arbitration Act."

5 Counsel for the plaintiff does not dispute that the second amount

of `3,40,636/- would in fact be covered by the arbitration clause; his

submission is that the first amount of `1,89,998/- was a loan which had

been given to the defendant and not being covered by the arbitration

clause, the present suit had to be filed; submission being that in view of

judgment of the Sukanya Holdings Private Limited Vs. Jayesh H.

Pandya (2003) 5 SCC 531, a bifurcation of the claim is not permissible

and applying the ratio of the aforenoted judgment since the first figure

of `1,89,998/- is not covered by the arbitration agreement being a loan,

the suit had to be filed for the full amount.

6 Arguments have been refuted. Learned counsel for the respondent

has placed reliance upon a judgment of the Apex Court reported in

(2003) 6 SCC 503 Hindustan Petroleum Corporation Ltd. Vs. Pinkcity

Midway Petroleums; submission being that objections which go to the

root of the jurisdiction have to be dealt with by the arbitrator;

submission being that this claim of `1,89,998/- is in fact a claim

admitted by the plaintiff himself in terms of the averments made in para

5 of the plaint wherein he had himself agreed to adjust this amount of

`1,89,998/- against his leave entitlement and as such this amount even

as per the plaintiff is an amount which is arbitrable before the Arbitrator.

7 Section 8 of the said Act contains a clear mandate that if the

ingredients of the aforenoted provision of law are met with, there is little

option left with the Court but to refer the disputes before the Arbitrator;

wherever there is an arbitration clause in the agreement it is in fact

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.

8 The essential ingredients for the applicability of the aforenoted

Section (1) there is an arbitration agreement, (2) a party to the

agreement brings an action in the Court against the other party, (3)

subject matter of the action is same as the subject matter of the

arbitration agreement and (4) the other party moves the Court for

referring the parties to arbitration before it submits his first statement on

the substance of the dispute.

9 There is no dispute that ingredients No. 1, 2 & 4 have been met

with; the question is whether the subject matter of action in the present

suit is the same as the subject matter of the arbitration agreement. This

question has to be answered.

10 A perusal of the arbitration agreement dated 01.07.2004 shows

that what is contained therein are the terms and conditions of the

employment of the employee i.e. the present petitioner; compensation

which is to be given to him and the leave encashment to which he is

entitled are all contained therein. However this agreement is silent on

the loan, if any, which can or may be availed of by the employee from

the employer. The amount of `1,89,998/- is the balance amount out of

total loan of `4 lacs which has been taken by the employee from the

employer for the purpose of taking a membership of Jaypee Green Golf

Resort at Noida. There is no dispute to the factum that this is a loan

transaction. It does not come within the ambit of the arbitration

agreement and this is clear from the recitals contained in the said

agreement. The submission of the petitioner is that the averments made

in the plaint that this loan can be adjusted against the leave encashment

is an admission by the plaintiff and this becomes an arbitrable amount

does not advance the case of the petitioner. What has to be referred to

the Arbitrator is the subject matter of arbitration agreement which alone

can be referred. Thus a claim in respect of a 'matter' which is not

covered within the scope and ambit of the arbitration agreement can

only be assailed by way of a suit.

11 In this view of the matter, the plaintiff had no option but to seek

his remedy for the recovery of `1,89,998/- (which was part of a loan

transaction) only by way of filing the present suit; the second claim of

`3,40,636/- even if it is covered by the arbitration agreement in view of

the judgment of Sukanya Holdings (Supra) could not have been split up

or bifurcated; two causes of action could not be broken up or separated.

12 In this background, the impugned judgment dismissing the

application under Section 8 of the said Act filed by the defendant suffers

from no infirmity. Petition is without any merit. Dismissed.

INDERMEET KAUR, J MARCH 26, 2012 a