TaxTMI 
TaxTMI 
2019 (8) TMI 1923
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....led O.S.A. No. 59 of 2015 questioning the correctness of the order passed by the learned single Judge in enhancing the compensation amount in relation to claim No. 12. 3. As against the very same order dated 02.09.2014 passed in O.P. No. 463 of 2012, the petitioner therein/claimant has filed O.S.A. No. 181 of 2015 seeking further enhancement of the compensation with respect to disallowed portion of the claim petition. 4. Thus, both these appeals are inter-twined and/or inter-related with each other and therefore, they are taken up for hearing together and disposed of by this common Judgment. 5. For the sake of convenience, the parties shall be referred to as 'appellant' and 'first respondent' as they were arrayed in O.S.A. No. 181 of 2015. 6. A perusal of the claim made by the appellant in her claim petition before the Arbitrator would indicate that she has filed the claim petition seeking compensation under 12 heads to the tune of Rs. 28,88,55,500. The foundation for 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 comp....
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....ring disrepute to the appellant. The duo have issued contradictory instructions to the appellant and had humiliated her with unwarranted remarks. The appellant was also deprived of her upward revision in her salary purportedly by Krishna Srinivasan during March 2007. According to the appellant, she was made to confront numerous difficulties in discharge of her duties by the aforesaid Krishna Srinivasan and Venkatesan purportedly as a measure of punishing the appellant for not responding to their sexual overtures. The appellant also informed the Senior Executives in the company in United States about the sexual harassment to which she was subjected to by Krishna Srinivasan, which was aided and abetted by Venkatesan, however, no action was initiated. The appellant also received several e-mails containing derogatory and indecent remarks from the duo, which made her to inform the management that she was willing to leave the company provided her termination benefits were settled in terms of the Employment 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 ....
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....rection issued by the Honourable Supreme Court on 18.03.2011, the second respondent herein was appointed as an arbitrator to resolve the dispute between the appellant and the first respondent and the second respondent/arbitrator entered into reference on 29.04.2011. 12. Before the second respondent/arbitrator, the appellant filed the Claim Petition for recovery of a total sum of Rs. 28,88,55,500/- under 12 heads. The first respondent company also made counter-claim, claiming a sum of Rs. 4 crores as damages for defamation of four persons employed in the first respondent company and another sum of Rs. 23 crores as damages for loss of reputation of the company and its senior executives. 13. The second respondent/arbitrator, considering the rival claims, rejected the counter claim made by the first respondent/management, while accepting claim Nos. 1 to 4 made by the appellant and awarded a sum of Rs. 2 Crore. In all other respects, the claim made by the appellant under Claim Nos. 5, 6, 7, 9, 11 and 12 were 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....
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....claim No. 5 relates to exemplary damages for non-revision of salary at the end of first year of employment. Even though the arbitrator/second respondent, in para No. 18 and 19 of the award observed that the claimant is entitled to revision of salary it was concluded that claim No. 5 is based on clause 3.3 of the employment agreement and non-consideration of the same by the company is proper. Thus, it is submitted by the learned counsel for the appellant that the arbitrator, despite making a factual finding in favour of the appellant, did not consider the claim to award any amount towards damages. In this context, reference has been made to the decision of the Calcutta High Court in the case of Sheik Jaru Bepari vs. AG Peters & others reported in AIR 1942 Calcutta 493 wherein it was held that if an element of fraud, oppression or malice, is found, law does not envisage payment of compensation merely proportionate to any pecuniary loss actually suffered, but exemplary damages by way of punishment to the wrong doer. When 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 ....
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....hough found that the arbitrator is not correct in rejecting the claim No. 7, failed to correct such error committed by the learned arbitrator. According to the learned counsel for the appellant, public policy demands that when there is an error of law, the Court performing supervisory jurisdiction under Section 34 of the Act has to correct such errors and failure to do so vitiates the findings of the learned single Judge with respect to claim No. 7. 20. The learned counsel for the appellant also would contend that claim No. 10 relates to failure to provide stock under the Employee Stock Option Scheme as per Clause 3.1 and 3.3 of the employment agreement. As per clause 3.1, the employee shall receive equity as per the Company's Stock Option Scheme and clause 3.3 stipulates that the employee shall also receive equity as per the Company's Employees Stock Option Scheme as decided during the first year of employment subject to an increase in the second year. According to the learned counsel, the 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....
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....on 34 of The Arbitration and Conciliation Act, 1996 and modified the well considered award of the learned Arbitrator/second respondent. It is his contention that in exercise of powers conferred under Section 34 of the Act, the learned single Judge is only empowered to either confirm or set aside the award passed by the learned Arbitrator for the reasons to be recorded. However, the learned single Judge has no power to make modifications in the award passed by the arbitrator. But in the instant case, the learned single Judge has erroneously modified the amount under Claim No. 12 by doubling the compensation for non-constitution of a committee as per the direction of the Honourable Supreme Court in Vishaka case. 23. The learned counsel for the first respondent relied on the decision of the learned single Judge himself in the case of R. Narayanan vs. M/s. India Info Line Securities Private Limited pronounced on 13.06.2013 wherein it was held that in exercise of power under Section 34 of The Arbitration 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 singl....
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....e expediency and finality offered by it. 26. The learned counsel for the first respondent relied on the decision of the Delhi High Court in Cybernetics Network Limited vs. Bisquare Technologies Pvt. Ltd., reported in (2012) III AD (Delhi) 161 wherein it was held that under Section 34 (2) of the Act, the Court is empowered to set aside an award on the grounds specified therein. It was further held that remand to the arbitrator under Section 34 (4) is to the limited extent of requiring the arbitral tribunal to eliminate the grounds for setting aside the arbitral award. It was also held that there is no specific power granted to the Court to itself allow the claims originally made before the Arbitral Tribunal where it finds that the Arbitral Tribunal erred in rejecting such claims. If such a power is recognised as falling within the ambit of Section 34 (4) of the Act, then the Court will be acting no different from the appellate Court which would be contrary to the legislative intent behind Section 34 of 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 ....
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.... consequences or damage caused to the appellant by not constituting a committee when the company had provided a safe working of environment to the women employees. However, in para No. 133 of the impugned order, the learned single Judge has recorded the fact that the existence of a grievance redressal committee and an ombudsperson in the first respondent organisation is no substitute for a Vishaka committee. Therefore, it is clear that there are adequate mechanism made available by the first respondent company to ventilate the grievance of the women employee, though not a substitute or in accordance with the directions issued by the Honourable Supreme Court in Vishaka case. In such event, the compensation awarded by the learned single Judge at Rs. 1,68,00,000/- for non-constitution of committee is wholly unjust, arbitrary and unwarranted. Therefore, the learned counsel for the first respondent prayed for setting aside the order passed by the learned single Judge in so far as it relates to award of compensation 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 appea....
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....the higher management, but it is alleged that there was no action taken on her complaint. Ultimately, the appellant was terminated from service by virtue of three letters served to her, one on 17.10.2007, the next on 12.12.2007 and the last was dated 20.12.2007. In the first letter dated 17.10.2007, it was stated that the Management decided to pay to the appellant four months gross salary in lieu of the notice period. By the second letter dated 12.12.2007 it was stated that the employment agreement dated 10.03.2006 stands terminated. By the last letter dated 20.12.2007, it was informed that the letter dated 12.12.2007 stands withdrawn and a revised letter of termination was issued to the appellant subject to certain conditions with respect to the terms of settlement. Shortly thereafter, the appellant launched criminal prosecution, the details of which were narrated hereinabove and they are not required to be elaborated any further as they are not the subject matter of this appeal. This is more so that all the 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 ....
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....claim No. 5 relates to non-revision of salary after the end of the first year of employment. Admittedly, within three months of employment of the appellant, she resigned her employment, however, her resignation was not accepted and she rejoined the employment. Among the claim Nos. 1 to 5, the third claim relates to severance pay out for which the learned Arbitrator has awarded a sum of Rs. 1,68,00,000/- and rounded it off to Rs. 2 crore as compensation. Therefore, we are of the view that the learned Arbitrator as well as the learned single Judge have considered the claim Nos. 1 to 5 and concluded that the sum of Rs. 2 crores awarded is sufficient compensation for the claim Nos. 1 to 5. The learned single Judge has also dealt with claim No. 5 in detail and concluded that there is no error in awarding such amount. We are fully in agreement with such findings arrived at by the learned single Judge. Therefore, we hold that the compensation of Rs. 2 crores awarded by the learned Arbitrator, which was affirmed by the learned single Judge, will be a just and fair compensation for the claim Nos. 1 to 5 made by the appellant. 32. The Claim No. 6 relate to failure of the management to tra....
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....rned single Judge, it was stated that this claim was based on the assumption that if training would have been given to the appellant, it would have benefited her in her career and denial of the same would give rise to a claim for compensation. The learned single Judge, in our view, has rightly found that the training, if any, imparted, would not only benefit the appellant but also the management of the company in getting the work done by the appellant precisely. The reasoning assigned by the learned single Judge that no employer would impart training to an employee at their cost without getting benefited by the outcome of such training through the employee is wholly justifiable. As rightly pointed out by the learned single Judge, by not giving employment training, the employer also would incur loss. Furthermore, within three months of the employment of the appellant in the first respondent company, the relationship between the appellant and the management of the company had strained and in such circumstances also, the management cannot be expected to impart training to the appellant. Therefore, the learned arbitrator as well as the learned single Judge have rightly rejected the cla....
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....se, on the one hand, the appellant claimed compensation under several heads, particularly for breach of employment agreement and she has also partially succeeded in getting compensation. While so, it cannot be gainsaid that the appellant must be compensated for loss of employment opportunity. This aspect was dealt with by the learned arbitrator as well as the learned single Judge and we see no reason to find fault with such conclusion reached by the learned single Judge. Therefore, we hold that the learned single Judge is wholly justified in rejecting the claim for compensation made by the appellant herein under Claim No. 11. 37. The claim No. 12 made by the appellant relates to award of compensation for non-constitution of a committee as directed by the Honourable Supreme Court in Vishaka case to enquire into the allegations relating to sexual harassment during the course of employment of the appellant. The learned Arbitrator had come to the conclusion that the appellant lodged the complaint relating to sexual harassment only after she left the employment even though, according to the appellant, she was subjected to harassment soon after her employment in the first respondent c....
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....s started only by her and she cannot blame the company for the consequence of her not being able to get an alternate job. 28. The Supreme Court recognised the fundamental right of women for safe working environment. Since there is no legislative protection for women, the Supreme Court framed a scheme in the case of Visaka and others vs. State of Rajasthan (AIR 1997 Supreme Court 3011) setting out the minimum standards for maintaining safe working environment. The Court held it shall be the duty of the employer or other responsible persons in work places or other institutions to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment by taking all steps required. 29. The argument of the learned counsel for the claimant is that the respondent company failed to provide a safe environment or set up a committee for resolution of the complaint and therefore compelled the Claimant to seek other remedies. Apart from the fact that as pointed out by the learned counsel for the respondent, the company did have a grievance committee, the absence of a redressal mechani....
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....dered for an enquiry against the offending employee. But, that was not for the benefit of the victim but only for the benefit of the other people working in the organisation. Learned counsel then submitted that even a breach of statutory duty can give rise to damages. Again, such a breach must be shown to have caused an injury. For instance, when there is a statutory duty to fence dangerous machinery and because of lack of such a finance, a worker is physically injured, definitely the injured workman can ask for compensation. But if the workman has not suffered any injury at all, there is no cause of action for claiming damages. 32. In the present case, the Claimant has not alleged or proved any physical, mental or emotional injury on account of receiving the three SMS messages and any inappropriate behaviour. All that she says is that she started prosecuting the directors of the company because of the receipt of SMS messages and improper behaviour of the CEO and he had to incur heavy financial cost and also lose the opportunity of getting an alternate job. We need not go into question whether three SMS messages were offensive or not, because, it is a subjective reaction o....
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....she demanded Rs. 20 crores and then increased it to Rs. 32 crores." 38. Thus, the learned Arbitrator came to the conclusion that there was no committee constituted by the first respondent company as per the decision of the Honourable Supreme Court in Vishaka case, but a grievance committee was constituted by the management where the appellant could have put forth her grievance and accordingly refused to award compensation under claim No. 12. 39. As against this finding of the learned Arbitrator, the learned single Judge concluded that the first respondent management had an obligation to constitute a committee as directed by the Honourable Supreme Court in Vishaka case and their failure to constitute such a committee had caused acute prejudice to the appellant and therefore, awarded a sum of Rs. 1,68,00,000/- under this head. This is strenuously assailed by the learned counsel for the first respondent by contending that under Section 34 of The Arbitration and Conciliation Act, 1996, the learned single Judge has no jurisdiction to modify the award passed by the Arbitrator. By relying upon Section 34 of the Act, it was contended that the learned single Judge can either accept th....
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....ing given by the Arbitrator from paragraph 30 onwards is completely perverse and does not at all reflect the correct position in law. The first conclusion reached by the Arbitrator in paragraph 30 of the award that even if the natural right of an employee to a safe working environment is breached, the measure of damages cannot be more than a year's salary, is certainly not in tune with the Public Policy in India. The fact that a sexually harassed woman employee, has a right, in addition to other rights, to walk out of the company on the ground of breach of contract, is not a ground to hold that the measure of damages cannot be more than that fixed for a breach. This conclusion of the Arbitrator that the petitioner always had a right to go out, is simply akin to affixing a seal of approval upon the decision of Mr. M.F. Hussain to leave the country on the ground that if he did not have a safe living atmosphere in India, it is always open to him to move out. In paragraph 15 of its decision in Vishaka, the Supreme Court quoted its earlier decision in Nilabati Behera vs. State of Orissa [1993 (2) SCC 746], wherein it was held that #an enforceable right to compensation is not alien t....
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....is to be presumed. It was for the first respondent to rebut the presumption. 125. Moreover, all the above issues fall into insignificance in the light of one important fact. The Arbitrator was not called upon to decide whether there was sexual harassment or not. A careful reading of the claim petition would show that the 12th head of claim was actually for damages for non constitution of a committee to enquire into the allegations of sexual harassment. All that was required of the Arbitrator, was just to see whether the requirement of law had been complied with by the first respondent or not and whether the non compliance of the requirement gave rise to a claim for compensation and if so, to what extent. This has been completely lost sight of by the Arbitrator. 126. The fact that no committee was constituted as per the dictate of Supreme Court has become an admitted fact. Therefore, all other issues such as the delay in lodging the first information report, the focus on monetary compensation in the correspondence during the pre-litigation stage and the lack of pleading about the sufferance of an emotional or mental injury etc., were beyond the scope of the actual ....
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....ndent that Vishaka guidelines would cease to exist, after the enactment of the Tamil Nadu Prohibition of Harassment of Women Act, 1998, is wholly unsustainable. A comparison of the guidelines and norms laid down in paragraph 17 of the decision in Vishaka with the object and scheme of the 1998 Tamil Nadu Act would show that the 1998 Act was not intended nor it actually occupied the field, delineated in Vishaka. In paragraph 18 of its decision in Vishaka, the Supreme Court made it clear that the directions issued therein will be binding and enforceable in law, until suitable legislation is enacted to occupy the field. That the 1998 Tamil Nadu Act did not occupy the entire field created by Vishaka, is made amply clear from the very contention of the first respondent before the criminal court and the tacit approval given to the same by the Arbitrator that the expression 'precincts' in Section 5 of the Act is narrow in its scope and ambit. The first respondent cannot approbate and reprobate, by contending on the one hand in a prosecution under the Tamil Nadu Act that the case does not come within its purview and on the other hand in an arbitration, that Vishaka guidelines evapor....
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....on including civil and criminal and the consequent legal harassment to each other. Two things could have happened, had a committee been put in place. The petitioner could have complained to the committee and got her grievance vindicated. If the committee had found her allegations to be untrue, the matter would have ended there. In the first alternative, the petitioner would have continued in employment and the offender thrown out of employment. In the second alternative, the petitioner would have been legally compelled to go out without any legitimate claim against the company. 136. But, the non constitution of the committee, has actually resulted in the damage suffered by the petitioner being unquantifiable. Therefore, all that an Arbitrator could have done, had he arrived at the correct conclusion with regard to the 12th head of claim, is to have awarded an ad hoc amount as compensation, without any scientific formula being available with mathematical precision. What the Arbitrator should have done but failed to do, is what I can do now. 137. Therefore, considering the status occupied and the position in which the petitioner was employed in the first respondent ....
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....he scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside, or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part, or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force; or (ii) the arbitral award is in conflict with the public policy in India Explanation:-Without prejudice to the generality of sub-clause (ii) it is hereby declared for the avoidance of any doubt, that an award is in conflict with the public policy of India, if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or 81 (3) An application for settin....
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....me Court, the rate was modified further to Rs. 250/- per square feet. By placing reliance on this decision, the learned single Judge held that the Court exercising jurisdiction under Section 34 of the Act has power to modify or vary the award passed by the Arbitrator. Similarly, reference was made in para No. 32 of the order of the learned single Judge to the decision of the Honourable Supreme Court in Tata Hydero Electric Power Supply Co Ltd., vs. Union of India 2003 (4) SCC 172 in which also the Honourable Supreme Court, while reversing the judgment of the High Court, interfered with the award passed by the arbitrator in so far as it relates to payment of interest. For the very same proposition that the Court is empowered to modify or vary the award passed by the arbitrator, reliance was placed on the decision of the Honourable Supreme Court in Hindustan Zinc Limited vs. Friends Coal Carbonisation (2006) 4 SCC 445 to drive home the point that the Court has power under Section 34 to modify the award passed by the Arbitrator. We are also in entire agreement with the reasoning of the learned single Judge that merely because the word "modify" or "vary" is not indicated in Section 34 ....