Case Note & Summary
The applicant, Akshat Madan, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to adjudicate disputes with his former employer, M/s. Darashaw & Co. Pvt. Ltd. The applicant was a student at Goa Institute of Management Studies (GIMS) and was shortlisted by the respondent in December 2012. He was made aware of the terms of the employment contract, including Clause 19(iii) which stipulated that if he resigned within two years, he would be liable to pay Rs. 4 lacs, and Clause 20 which required him to hand over a cheque of Rs. 4 lacs as a precondition of employment. The applicant issued a letter on 10th December 2012 confirming his awareness and acceptance of the terms. On 8th January 2013, he confirmed acceptance of the offer. The respondent disputed the reference to arbitration, arguing that the employment contract had ended and a full and final settlement had been reached, with the applicant receiving his dues without protest. The court examined the arbitration clause and the alleged settlement. It held that the arbitration clause is independent and survives the termination of the contract. The court also noted that the existence of a dispute regarding the full and final settlement itself is a matter for the arbitrator to decide. Accordingly, the court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Headnote
A) Arbitration Law - Survival of Arbitration Clause - Section 11 of the Arbitration and Conciliation Act, 1996 - The court considered whether an arbitration clause survives termination of the contract and whether a full and final settlement bars arbitration. The court held that the arbitration clause is independent and survives termination, and that the existence of a dispute regarding the settlement itself requires arbitration. (Paras 1-5)
Issue of Consideration
Whether an arbitration clause in an employment contract survives after the contract has come to an end and after an alleged full and final settlement between the parties.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration clause survives termination of contract
- Full and final settlement does not bar arbitration if disputes exist
- Section 11 of the Arbitration and Conciliation Act
- 1996
