Elements Of Arbitration

There are no conclusive tests to find the answer, but the court attempted to lay down a set of guidelines while deciding whether the agreement was to refer an issue to an expert or whether the parties have agreed to resolve disputes through arbitration.

In the Modi case, a memorandum of understanding was signed between the rival family groups in 1989. Though most issues were settled, a few questions remained. The remaining contentious issues, were to be referred to the chairman of IFCI or his nominees whose decisions would be final and binding on both the groups.

Eventually, disputes arose between the two groups over the scheme of splitting three companies. These were referred to the IFCI chairman. He constituted a committee of experts and gave a detailed decision on the questions referred to him. One family group contended that this was an arbitration award, while the other maintained that it was merely a decision. The issue was then taken to the Delhi High Court and on appeal to the Supreme Court.

 

Thus the question arose whether the MoU constituted an arbitration agreement and whether the decision of the IFCI was an award. The Supreme Court held that that the MoU had no arbitration agreement. The chairmans report was an experts decision and he himself said so in his report.

There was some confusion among the litigants as they had often referred to the reference clause as an arbitration clause. However, the court said that the intention of the parties was not to have any judicial determination on the basis of the evidence led before the chairman. Nor was he required to base his decision only on the material placed before him. He was free to make his own inquires and take the help of experts. He had to act like an expert and not as an arbitrator.

Quoting authorities, the court observed that some of the attributes of an arbitration agreement were:

n The decision will be binding on the parties;

n There must be consent of the parties, and

n The agreement must be intended to be enforceable in law. The construction of the contract is significant to find the right answer.

The Indian courts have thus laid emphasis on the existence of the dispute, choice of a forum to act judicially and the binding nature of the award. The nomenclature used by the parties may not be conclusive. One must examine the true intent of the agreement, the judgment said.

Crime & punishment

The term victimisation is loosely used in labour disputes and in industrial courts. It is not defined in the labour laws. So the courts have to depend on the dictionary meaning when workers allege victimisation. Last week, the Supreme Court attempted to define the term in (Colour-Chem Ltd vs A L Alaspurkar).

In this case, the shift supervisor and about 10 workers on night shift were found sleeping while the machines were working. The management dismissed some of them, who moved the labour court. It reinstated the workers with backwages, upon finding that the punishment was disproportionate to the mistake committed and applying the provisions of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act. On appeal, the Supreme Court dismissed the managements appeal. The court described the dismissal as grossly disproportionate and compared it to killing a fly with a sledge-hammer. The company was held guilty of committing unfair labour practice.

The discussion on the content of victimisation came in this context. The court stated that victimisation could either be factual or legal. Factual victimisation may consist of diverse acts of employers who are out to drive out and punish an employee for no real reason and for extraneous reasons. As for example, a militant trade union leader who is a thorn in the side of the management may be discharged or dismissed for that very reason camouflaged by another ostensibly different reason. Such instances amount to unfair labour practices on account of factual victimisation.

The other type is legal victimisation. In Hind Construction vs Workmen (1965), the court had held that shockingly disproportionate punishment in the light of the misconduct alleged would amount to legal victimisation.

Later, in Bharat Iron Works vs Bhagubhai Patel (1976), the Supreme Court laid down the parameters of the term. Ordinarily a person is victimised if he is made a victim or a scapegoat and is subjected to persecution, prosecution or punishment for no real fault of his own. This is again factual victimisation.

However, victimisation may take various forms for example, pressurising an employee to leave the union or union activities, treating an employee in a discriminatory manner or inflicting a grossly monstrous punishment which no rational person would impose upon an employee and the like the court said in the Bharat Iron Works case.

Applying these principles, the court found that the workers in this case were victimised.