2014 (4) TMI 1312 - HC - Indian Laws

Maintainability of suit for recovery of unpaid salary under Order 37 CPC - application for leave to defend - territorial jurisdiction of the court - HELD THAT - It cannot be lost sight of that there is really no denial or dispute raised by the defendant to the claim of the plaintiff for recovery of arrears of his salary. There is thus really no dispute for adjudication by arbitration. There are no reason to deny to the plaintiff in this suit the relief of recovery of money which admittedly is due to the plaintiff and the chances of recovery whereof, even if a decree were to be passed in favour of the plaintiff, are remote and to compel the plaintiff to spend more monies in invoking the arbitration clause when there is really nothing for arbitration. Without thus intending this to be precedent, in the facts and circumstances of the present case, the argument of the defendant also rejected. The application for leave to defend does not disclose any ground in so far as the claim for recovery of arrears of salary is concerned. The application is accordingly dismissed.

Summary

Issues:
1. Suit for recovery of unpaid salary under Order 37 CPC
2. Defendant's application for leave to defend raising objections:
a. Suit not maintainable under Order 37
b. Lack of original Appointment Letter
c. Arbitration clause in the Appointment Letter
d. Territorial jurisdiction
e. Breach of contract terms by the plaintiff
f. Counterclaim by the defendant
g. Liquidated damages and Leave Encashment disputes
h. Gratuity claim
3. Consideration of defendant's objections by the court
4. Jurisdiction and arbitrability issues
5. Validity of plaintiff's claim for salary arrears
6. Dismissal of defendant's application for leave to defend
7. Decree in favor of the plaintiff for salary arrears and interest

Detailed Analysis:

1. The plaintiff filed a suit under Order 37 of the CPC for recovery of unpaid salary amounting to Rs. 25,68,676/- with interest. The defendant filed an application for leave to defend raising various objections, including the suit's maintainability, lack of original documents, arbitration clause, territorial jurisdiction, breach of contract terms, counterclaim, and disputes regarding liquidated damages, Leave Encashment, and gratuity.

2. The court noted that the defendant did not dispute the salary amount or period for which it was due. The court also clarified that the defendant having a counterclaim is not a ground for granting leave to defend. The plaintiff abandoned claims for Leave Encashment and gratuity after realizing inconsistencies with the employment terms.

3. The court considered the defendant's objections regarding territorial jurisdiction and arbitrability. It found that the exclusive jurisdiction clause did not grant Mumbai courts jurisdiction, and the defendant did not file an application under the Arbitration and Conciliation Act, 1996.

4. The court emphasized that there was no real dispute for arbitration as the defendant did not contest the salary arrears claim. It rejected the argument to compel arbitration when there was no need for it. The court also highlighted similar cases where arbitration clauses were absent.

5. The defendant raised an objection regarding the notary public attestation on the plaintiff's affidavit. The court referenced a previous judgment to dismiss this argument.

6. Ultimately, the court dismissed the defendant's application for leave to defend as it did not present valid grounds against the claim for salary arrears. A decree was passed in favor of the plaintiff for the salary amount with interest.

7. The court decreed the recovery of Rs. 13,00,000/- with interest at 10% per annum for the salary arrears. The plaintiff was awarded costs of the suit, and the defendant was allowed to make counterclaims if entitled to do so.