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TMI Blog2019 (8) TMI 1923X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (8) TMI 456 - SUPREME COURT] is to be regarded as a statutory violation and contravention of public policy prevailing in India and therefore, the appellant is entitled for a just and fair compensation. The learned single Judge, having held that the Court is empowered to modify or vary the award passed by the arbitrator, rightly, proceeded to conclude as to what would be the compensation payable to the appellant under claim No. 12. In order to arrive at the quantum of compensation the learned single Judge proceeded to discuss the material evidence available to conclude that there is a breach on the part of the Management in not constituting a committee. The learned single Judge has not made any arithmetical calculation while awarding compensation under Claim No. 12. Even though the learned Arbitrator has awarded a sum of Rs. 2 crores under Claim No. 3 towards severance compensation, the learned single Judge proceeded to award a sum of Rs. 1,68,00,000/- towards non-constitution of a committee as directed by the Honourable Supreme Court in Vishaka case. The Court, in exercise of jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996 shall vary or modify the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the appellant to file the claim petition is elucidated in the following paragraphs. 7. According to the appellant, she entered into an employment agreement with the first respondent company on 10.03.2006, as per which she was appointed as Vice President (M&A Integration Strategy) with effect from 27.04.2006. As per the said agreement, the first respondent company would impart training to the appellant in various subjects such as general management, finance, business strategy and project management during the first year of employment. The agreement also contemplates that during the first year of employment, the appellant has to work in Chennai and thereafter, she would be transferred to United States of America. The agreement also contains an arbitration clause, with the seat of Arbitration at Chennai. Clause 6 of the employment agreement deals with procedure for termination of employment, while Clause 6.2 stipulates that the employer is entitled to terminate the employment agreement by giving notice to the other party (120 days in advance) in writing and a severance compensation equivalent to one year's gross salary inclusive of maximum bonus payouts at the time of severanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Agreement dated 10.03.2006. As there was no response, the appellant sent an e-mail dated 14.12.2017 to the Management along with the earlier e-mails she had sent to Krishna Srinivasan and Venkatesan. In the meantime, two letters of termination were issued by the first respondent company on 17.10.2007 and 12.12.2007. Subsequent to the e-mail dated 14.12.2017 of the appellant, one more letter of termination dated 20.12.2007 was also sent by the first respondent. According to the appellant, the Management, instead of responding to her e-mails, denied admission to her into the office on 21.12.2007 and escorted her out of the office in full view of her co- workers. In this context, the appellant has filed a complaint before the R-4, Pondy Bazaar Police Station, T. Nagar, Chennai against the Chairman and Director of the Company based on which a case in Crime No. 824 of 2007 was registered for the offences of sexual harassment, cheating, criminal breach of trust, misappropriation of company funds and criminal intimidation etc., On the basis of such complaint, the appellant was enquired by the Police officials and she had narrated in her statement the manner in which she was subjected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re rejected. 14. Aggrieved by the rejection of the counter-claim, the first respondent has not filed any Original Petition under Section 34 of The Arbitration and Conciliation Act, 1996. However, the appellant/claimant has filed O.P. No. 463 of 2012 under Section 34 of the said Act before the learned single Judge questioning the correctness of the award passed by the Arbitrator/second respondent herein in so far as it relates to disallowing the claim Nos. 5, 6, 7, 9, 10, 11 and 12 made by her. In so far as the claim Nos. 8 is concerned, the counsel for the appellant, who appeared before the learned single Judge, has not pressed the same and it was also recorded by the learned single Judge in para No. 14. Therefore, what was questioned by the appellant in the Original Petition is with reference to rejection of claim Nos. 5, 6, 7, 9, 10, 11 and 12 by the arbitrator. 15. The learned single Judge independently considered the various heads under which the appellant made her claim. With reference to claim Nos. 1 to 4, the learned single Judge found that the claim under the head 1 to 4 was already considered by the learned Arbitrator in para No. 19 of the award. 16. As far as other cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the employment agreement clearly envisages that the employee shall receive a minimum annual remuneration of USD 150,000.00 from the second year onwards, the findings of the second respondent/arbitrator in not considering the fraud, oppression and malice committed by the first respondent company is contrary to clause 3.3 of the employment agreement. Despite such an express understanding, the arbitrator as well as the learned single Judge erred in holding that claim No. 5 is legally not sustainable. Similarly, the claim No. 6 relates to damages for non-relocation of the appellant to U.S.A. during the second year of employment and when such a breach has been clearly established by the appellant, she is entitled for damages for non-relocation. In fact, in Para No. 20 of the award, the Arbitrator has held that " ..... No doubt, it is possible to regard the failure to transfer her to US as a breach of the contract. By remaining in India she had at that point condoned the breach. Even assuming that such condonation was only temporary and she was still expecting to be transferred to USA, the failure to transfer her to USA could at best be regarded as a breach of the agreement by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first respondent made a false representation in the above clauses when in fact, there is no such stock option scheme in vogue. Even the learned Arbitrator, in para No. 26 of the award, recorded that such a scheme does not exist. In fact, in the e-mail dated 14.11.2007 of the appellant addressed to the Chief Executive Officer of the Company, it was clearly stated that "Believing your words and trusting in you, I gave up my HIB US Visa and came to ISGN with promised assurance that I will do very well in my career, receive significant wealth (USD 1 million) in the form of stock options and continue with my US lifestyle after a year of working with ISGN India." This letter dated 14.11.2007 was sent by the appellant much before the invalid termination notice dated 20.12.2007. In any event, the appellant relied on the promise of the stock options to take up employment with the first respondent company, but the first respondent company committed breach of such assurance and therefore, the appellant is entitled for damages for a sum of USD 1 million which is equivalent to Rs. 4,50,00,000/- at the exchange rate prevailing at the time of filing the claim. 21. As far as claim No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and Conciliation Act, the Court has no power even to remit the matter back to the Arbitrator and therefore allowed the petition. Further, in yet another decision of the learned single Judge himself rendered in A. Chandrasekaran vs. Yoha Securities Limited, it was held that the Court can either set aside the award or sustain it. While so, the learned single Judge grossly erred in modifying the award in relation to claim No. 12 by assuming the role of the arbitrator in making an independent assessment of the claim. 24. The learned counsel for the first respondent further submitted that the learned single Judge grossly erred in seeking corroboration for a pre-conceived notion of interfering with the arbitrator's award to the extent of not seeking to modify any claim adjudicated upon by the Arbitrator but to assume the role of the arbitrator in making independent pronouncement. In this context, the learned counsel for the first respondent relied on the decision of the Honourable Supreme Court in (i) Gautam Constructions and Fisheries Limited vs. National Bank for Agricultural and Rural Development reported in (2000) (6) SCC 518 wherein the Honourable Supreme Court interfered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. By quoting the above decision, the learned counsel for first respondent would contend that the learned single Judge can either uphold or reject the award but ought not to have modified the award. The allowing or disallowing of the award is within the domain of the Arbitrator and the court while exercising the powers under Section 34 of the Act has no jurisdiction to do so. Even if the arbitrator did not allow any one of the claims or allowed the claim partially than what was claimed, the Court can set aside the award and in that event it does not imply that the entire claim amount stands allowed. It only means that the award to the extent of the claim not allowed by Arbitrator stands quashed leaving the parties to institute further arbitral tribunal for settlement of the balance portion of the claims or else be satisfied with the amount awarded by the Arbitrator. For this purpose, the learned counsel for the first respondent relied on the decision of the Division Bench of this Court in the case of Central Warehousing Corporation vs. A.S.A. Transport reported in 2008 (3) MLJ 382 Madras (DB) wherein it was held that the Court can only uphold or quash the award or a portion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of Rs. 1,68,00,000/- for non-constitution of a committee as per the directions of the Honourable Supreme Court in Vishaka case. 28. We have heard the learned counsel appearing for both sides at length and also perused the materials placed on record. Admittedly, the appellant was appointed in the first respondent company on 27.04.2006 in an executive position and the terms and conditions of such appointment of the appellant is preceded by an employment agreement dated 10.03.2006. The employment agreement dated 10.03.2006 stipulate several conditions governing the employment of the appellant with the first respondent company. Prominent among the conditions are Clause 3.1 which contemplates employment of the appellant during the first year at India and the remuneration payable to her during the first year. Clause 3.3 relates to relocating the appellant to United States in the second year of her employment and the remuneration payable thereof. Clause 6.2 indicates that the employment of the appellant is terminable by giving notice 120 days in advance, in writing and in such event severance compensation equivalent to one year's gross salary, inclusive of minimum bonus, will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criminal proceedings initiated by the appellant as well as the management against each other have been set aside by the Honourable Supreme Court in the order dated 18.03.2011 and as per the directions of the Honourable Supreme Court, the second respondent/arbitrator was appointed to resolve the dispute between the parties. 30. Before the Arbitrator, the appellant filed her claim petition containing 12 claims, which are tabulated by the learned single Judge in para No. 7 of the order dated 02.09.2014, which is impugned in these appeals. For the purpose of clarity, the claims made by the appellant is reiterated hereunder:- S.No. Nature of Claim Amount claimed 1. Bonus for completion of the first year Rs. 21,60,000.00 2. Arrears in Salary Rs. 11,62,500.00 3. Severance payouts Rs.1,17,00,000.00 4. Bonus for the second year of employment Rs. 18,00,000 5. Non-revision of salary after the end of the first year of employment Rs. 67,50,000 6. Failure of the Respondent to transfer the Claimant to the Unites States of America Rs. 3,51,00,000 7. Non-compliance of procedures by Respondent while purportedly terminating the Claimant Rs. 3,51,00,000 8. Not providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant. 32. The Claim No. 6 relate to failure of the management to transfer to United States of America. As we could infer from the pleadings, even before completion of one year of employment, the appellant herself sent an e-mail dated 21.03.2007 agreeing that re-location can be postponed or dropped for some time. Therefore, the learned arbitrator as well as learned single Judge, by relying on the e-mail dated 21.03.2007 sent by appellant herself, concluded that when the appellant herself wanted to be retained in India, there cannot be any breach on the part of management in not sending her to United States of America. The intention of the appellant to retain her in India is also reiterated in her subsequent e-mail dated 23.04.2007, which was marked as Ex. C-15 before the learned Arbitrator. The learned single Judge also elaborately pondered over this documentary evidence to conclude that there was no breach on the part of the management warranting them to pay compensation to the appellant. We are also, therefore, of the view that the appellant is not entitled to any compensation for not sending her to United States of America by the first respondent management. 33. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrator as well as the learned single Judge have rightly rejected the claim of the appellant under this head. 35. Similarly, for claim No. 10, which relates to failure to provide stock under the employee stock option scheme, as per clause 3.1 of the employment agreement, the learned Arbitrator rejected the same by concluding that there was no such scheme in vogue at the relevant point of time. The learned single Judge concluded that even though clause 3.1 indicates that the structure of salary and relevant components shall be defined by the employer in a separate annexure and agreed to by both sides, there was no such annexure enclosed in the agreement of employment. At any rate, it was held that when the agreement does not indicate any such option to be exercised by the employee/appellant herein, the consequential breach of such clause will not arise. This aspect has been rightly dealt with by the learned Arbitrator as well as the learned single Judge by relying upon clause 3.1 of the employment agreement. Therefore, we do not find any reason to interfere with such conclusion of the learned single Judge. 36. The 11th claim made by the appellant is with respect to loss of empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to harassment soon after her employment in the first respondent company. Therefore, it was concluded that the appellant had in fact prosecuted the Directors and other officers of the first respondent company only to extract higher amount. In para Nos. 32 of the award, the learned Arbitrator held as follows:- "27. The last two claims are 1) for Rs. 5,76,00,000 for loss of employment opportunity and 2) for Rs. 9,07,00,000 for damages for non-constitution of a committee to enquire into allegations of sexual harassment. According to the Claimant she was sexually harassed by CEO of the company and she had made a complaint to 8 persons shown as members of Board of Directors in the website of company and they had not taken any action. Consequently, she had to initiate prosecution of those people under the Tamilnadu Prohibition of Harassment of Woman Act. It is claimed that because of involvement in consequential litigation and the failure of the company to give a No Objection Certificate, she was not able to get any further employment till now. It is also claimed that she had to spend a lot of time and money on the litigation which has been consequence of a failure of the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rievance committee, the absence of a redressal mechanism does not indicate any injury to the claimant. 30. There is a natural right to a safe working environment for any worker and if it is not provided, the worker can claim that there is a fundamental breach of contract and terminate the employment on failure to provide safe environment and seek damages. Considered in this light also the measure of damages cannot be more than a year's salary as discussed earlier and cannot be given in addition to the severance pay already given as the consequence of termination is only one even if there are several breached. 31. Even if look outside the contract and there is no statutory law, there is always a common law of torts which recognizes the duty of care by the employer to the employees and right of the employee for seeking damages, if there is a failure on the part of the employer to discharge that duty to take care, results in some injury. In the case of harassment by a co-worker the direct liability can only be of that of the offending co-worker. There is no question of vicarious liability on the part of employer, unless the offense was committed by the offending employee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, it is a subjective reaction of the Claimant. Even if she felt offended by the SMS message, she had not made any complaint in May 2006 itself when she received them, but filed the FIR only in December 2007, one week after she left the job. The case of the claimant is that the behaviour of CEO of the company was improper even from the beginning and she had even resigned in May 2007, but later withdrew the resignation because he had apologised and promised to improve behaviour. But there is no proof of the covering letters supposed to have been sent by her withdrawing the resignation. On the other hand the trailing email messages from that date onwards indicates that there was a continuing discussion about the compensation payable for termination. As seen from Article 6.2, had she resigned, she would not have been eligible for any compensation at all. In all probability, that was the reason why she had withdrawn the resignation as she was willing to leave the company with some compensation particularly because she was not sent to USA. The email message from May 2007 and particularly from October 2007 till the date of termination shows that there was a continuous discussion about h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single Judge can either accept the award of the Arbitrator in entirety or set aside it and he has no jurisdiction to partially or fully modify a claim which was rejected by the Arbitrator. Before dealing with this issue, we are inclined to verbatim extract the relevant portion of the order passed by the learned single Judge with respect to claim No. 12, which reads as follows:- 113. The 12th head of claim is for compensation of Rs. 9.07 Crores towards exemplary damages for non compliance with the law laid down by the Supreme Court of India in Vishaka. According to the petitioner, she suffered harassment at the hands of her superior by name Mr. Krishna Srinivasan, which actually forced her to tender her resignation on 24.7.2006. It was the case of the petitioner in her claim statement before the Arbitrator that the sexual harassment given to her by Mr. Krishna Srinivasan never stopped. The petitioner sent a mail dated 14.12.2007 to the Board of Directors complaining about the inappropriate behaviour of Mr. Krishna Srinivasan. But, the company did not constitute a Complaint's Committee as required by the decision of the Supreme Court in Vishaka. ..... 114. In the reply sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concept of enforcement of a guaranteed right. Therefore, the finding that the measure of damages is to be limited to the one provided in the contract for its breach, is to belittle the guaranteed right to a safe working environment. 119. Similarly, the finding with regard to vicarious liability in paragraph 31 of the award is not in tune with the Public Policy in India. As a matter of fact, the very directions contained in the judgment of the Supreme Court in Vishaka impose an obligation upon every employer to have a committee constituted for the redressal of the grievances of women employees. If the finding with regard to vicarious liability given by the Arbitrator in paragraph 31 of his award is accepted, then no employer need to constitute any committee, since a victim can always be directed to take recourse individually against the offending employee. .... 123. Likewise, the finding of the Arbitrator that the delay on the part of the petitioner in lodging a criminal complaint, especially after moving out of the company, indicated that she was only interested in compensation, is completely perverse. If the company had failed in its legal duty imposed in terms of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no committee constituted as per the law declared by the Supreme Court in Visakha, the Arbitrator ought to have addressed himself only to the question as to whether such non constitution resulted in an injury to the petitioner and as to whether she is entitled to any compensation on account of such non constitution of the committee. 128. The claim of the first respondent that there was an ombudsman and that there was a grievance committee, deserves to be simply thrown out of the window. If the law requires a particular act to be done in a particular manner, it shall be done only in that manner and not otherwise. No ombudsman can be a substitute for a committee as required by the Supreme Court to be constituted. 129. As per the decision of the Supreme Court in Vishaka (paragraph 17.7), the committee to enquire into such complaints, is to consist of the following persons: (i) Should be headed by a woman; (ii) Not less than half of its members should be women; and (iii) Should contain a third party either NGO or other body, who is familiar with the issue of sexual harassment. ..... 132. Therefore, it is clear (i) that the constitution of a committee as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and proof regarding any physical, mental or emotional injury suffered by the petitioner, goes completely contrary to the accepted notions of sexual harassment of woman. The entire process of reasoning of the Arbitrator in paragraph 32 was also completely faulty. Merely because the petitioner laid stress on compensation in all her correspondence till the date of termination of the contract and merely because she launched prosecution only after the termination, the complaint of sexual harassment cannot be rejected or belittled. The existence of a grievance redressal committee and an ombudsperson in the organisation, is no substitute for a Vishaka committee. Therefore, the findings of the Arbitrator with regard to the 12th head of claim, are contrary to the Public Policy, as per the definition of the expression #Public Policy# enunciated in paragraph 31 of the decision in ONGC Vs. Saw Pipes. The non constitution of a Vishaka committee is illegal. The finding that the 12th head of claim is taken care of in the stipulation contained in the clause relating to termination, is contrary to justice and morality. Since the Supreme Court held in ONGC that an award will be contrary to public po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of an amount equivalent the severance benefit of Rs. 1,68,00,000/-, as compensation towards the 12th head of claim, would be appropriate. 40. It is evident that the learned single Judge concluded that non-constitution of a committee, by the first respondent, as directed by the Honourable Supreme Court in Vishaka case, had prejudiced the appellant. It was further concluded that had it been constituted, the appellant could have ventilated her grievance before such committee. At the same time, the learned single Judge also rejected the argument of the first respondent management that constitution of a grievance committee and Ombudsperson is no substitute for constitution of a committee as directed by the Honourable Supreme Court in Vishaka's case. Thus, by concluding that the non-constitution of a committee is a breach on the part of the first respondent management, a sum of Rs. 1,68,00,000/- was awarded as compensation. Whether the learned single Judge is entitled to make such a modification of the award of the arbitrator in exercise of powers conferred under Section 34 of The Arbitration and Conciliation Act, 1996 has to be examined. Therefore, it is necessary to look into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en disposed of by the arbitral tribunal; provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months, it may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award." 41. It is no doubt true that the legislators did not intend to use the word "modify" anywhere in Section 34 of the Act but what was contemplated is only to "set aside" an award passed by the Arbitrator if it falls within the realm of Section 34 of the Act. It is trite that an arbitrator being a Judge chosen by the parties, his decision would ordinarily be final unless one or the other conditions contained in Section 34 of the Act is satisfied for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Court, it will only lead to multiplicity of proceedings, which is not intended by the legislature while framing Section 34 of the Act. A reasonable interpretation to Section 34 would only lead to an irresistible conclusion that the Court can modify or vary the award of the arbitrator if it is contrary to the material evidence adduced by the parties. Even otherwise, as contemplated under Section 34 (2) (v) (b) (ii) of the Act, when the award passed by the Arbitrator is in conflict with the public policy in our Country, reversal or modification of such award passed by the arbitrator is well within the provisions contained under Section 34 of the Act itself. In the present case, as rightly observed by the learned single Judge, the non-constitution of a committee as per the direction of the Honourable Supreme Court in Vishaka case is to be regarded as a statutory violation and contravention of public policy prevailing in India and therefore, the appellant is entitled for a just and fair compensation. 43. The learned single Judge, having held that the Court is empowered to modify or vary the award passed by the arbitrator, in our opinion, rightly, proceeded to conclude as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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