Safiya malik

The Bombay High Court has appointed a sole arbitrator to adjudicate the dispute between a former executive and HealthAssure Private Limited, arising from alleged unpaid dues and employment-related grievances. The court rejected objections raised by the respondent regarding procedural aspects of the arbitration application and imposed costs for delaying tactics.

The matter involved an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to resolve disputes emanating from an employment contract. The applicant, a former Chief Distribution Officer at HealthAssure Private Limited, alleged non-payment of salary and other dues following his resignation, despite multiple attempts at resolution.

The applicant was appointed on July 1, 2021, under a letter of appointment issued by HealthAssure Private Limited. In addition, a Memorandum of Understanding was executed between the parties on July 1, 2021, governing the employee stock options that the applicant would be entitled to. The applicant’s employment continued until December 31, 2022, following his resignation. According to the applicant, there were delays in salary payments, and despite repeated requests, his dues remained unpaid.

Several emails were sent by the applicant from February 3, 2023, to May 29, 2023, seeking resolution, but these efforts were unsuccessful. Consequently, the applicant filed a petition under Section 9 of the Arbitration and Conciliation Act before the Bombay High Court, seeking interim relief. By an order dated December 15, 2023, a learned Single Judge granted ad interim reliefs, directing the respondent to issue the relieving letter and Form 16 under the tax laws. The respondent initially resisted these reliefs but was granted time to file a reply. However, the respondent failed to submit any reply even when the matter was considered on March 28, 2024.

On March 28, 2024, the court ordered the respondent to deposit Rs. 9,18,648/- in court, corresponding to the salary amount claimed by the applicant. The respondent again sought time to file a reply and resisted the deposit order unsuccessfully. Subsequently, the applicant invoked arbitration on July 5, 2023, suggesting three names for arbitrators. The respondent did not deny the existence of an arbitration agreement but proposed a three-member arbitral tribunal instead of selecting an arbitrator from the applicant’s list.

Justice Somasekhar Sundaresan, while adjudicating the Section 11 application, observed that the existence of an arbitration agreement was undisputed. The appointment letter explicitly contained an arbitration clause stating that disputes would be resolved through arbitration subject to the jurisdiction of courts in Mumbai. The court noted that despite acknowledging the arbitration agreement, the respondent had attempted to delay proceedings by insisting on a three-member arbitral tribunal without contractual basis.

The court recorded: "There is no prejudice caused to the Respondent by the citing of Section 11(6) instead of Section 11(5) of the Act. The Respondent has always been aware of the nature of the dispute, the precise content of the dispute, and the attempt to expand the size of the arbitral tribunal having failed."

The court observed that the arbitration agreement did not specify the number of arbitrators, and therefore, as per Section 10(2) of the Arbitration and Conciliation Act, a sole arbitrator must be appointed. It was noted that the respondent’s argument that a three-member tribunal was required lacked merit and was merely a delaying tactic.

The court further recorded: "The Respondent has repeatedly sought time to file replies but has failed to do so. This pattern of conduct demonstrates an intent to prolong the matter and delay arbitration proceedings unnecessarily. The Respondent’s objections are not only frivolous but also without legal basis."

The court stated that the arbitration process had already been delayed significantly. The applicant had invoked arbitration in July 2023, yet arbitration had not commenced due to the respondent’s resistance. The court found that the respondent’s objections were aimed at frustrating the arbitration process and preventing resolution of the dispute.

The High Court appointed Ms. Nandini Singh Modi as the sole arbitrator to adjudicate the dispute. The court directed the applicant’s counsel to communicate the order to the arbitrator within one week of its upload.

"A copy of this Order will be communicated to the Learned Sole Arbitrator by the Advocates for the Applicant within a period of one week from uploading of this order on the website of this Court. The Applicant shall provide the contact and communication particulars of the parties to the arbitral tribunal along with a copy of this Order."

The court further directed that the arbitral tribunal’s costs and fees shall be borne equally by both parties initially, subject to the final award.

Additionally, considering the respondent’s repeated delays in the proceedings, the court imposed costs of Rs. 10,000 on the respondent, to be paid to the applicant within two weeks.

The court also noted that given the respondent’s conduct in the Section 9 petition—where it failed to file replies and resisted orders directing the release of the relieving letter and Form 16—there was a consistent pattern of procedural delay. The court stated that such conduct warranted the imposition of costs to discourage similar tactics in future arbitration-related litigation.

Case Title: Pankaj Madaan v. HealthAssure Private Limited
Case Number: Commercial Arbitration Application No. 137 of 2024
Bench: Justice Somasekhar Sundaresan

[Read/Download order]