The Supreme Court, in Dushyant Janabandhu v. Hyundai AutoEver India Pvt. Ltd., condemned Hyundai AutoEver India Pvt. Ltd. for abuse of process, setting aside the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, and imposing costs of ₹5 lakh upon the respondent.

The appellant, a former Assistant Manager at Hyundai AutoEver India Pvt. Ltd., was terminated on January 21, 2021, on allegations of absenteeism and non-cooperation. The termination proceedings, as noted, did not raise any issues pertaining to a breach of confidentiality under Clause 19 of the employment agreement. During disciplinary proceedings and in the termination order, there was no invocation of this clause.

The appellant subsequently approached statutory authorities under the Payment of Wages Act, 1936 (PW Act) for unpaid wages and under the Industrial Disputes Act, 1947 (ID Act) challenging the legality of the termination. Hyundai AutoEver, in response, unilaterally initiated arbitration and appointed an arbitrator, despite the disputes being non-arbitrable in nature. The arbitrator ceased proceedings, holding that the unilateral appointment was invalid as per the Supreme Court's precedent in Perkins Eastman Architects DPC v. HSCC (India) Ltd.

Undeterred, Hyundai approached the Madras High Court under Section 11(6) of the Arbitration Act, which appointed an arbitrator based on the existence of an arbitration clause. Aggrieved, the appellant challenged this appointment before the Supreme Court.

The Supreme Court, presided over by Justices P.S. Narasimha and Sandeep Mehta, held that the disputes in question—non-payment of wages and validity of termination—fell within the exclusive jurisdiction of statutory authorities under the PW Act and the ID Act, thereby rendering them non-arbitrable. The Court observed that Section 22 of the PW Act explicitly bars civil court jurisdiction in matters concerning wage recovery, stating: “The jurisdiction of the Authority under the PW Act and the Industrial Tribunal under the ID Act is to the exclusion of civil courts and is not arbitrable.”

The Bench further criticized Hyundai AutoEver for its belated invocation of Clause 19 to claim ₹14.02 lakh in damages, observing that such a claim was “an afterthought.” The Court noted that the clause was not cited in the show cause notice, inquiry report, chargesheet, or termination order, rendering the claim non-existent. The Bench remarked, “There is no basis for invoking Clause 19 when that fact situation did not arise.”

The Court characterized Hyundai AutoEver’s actions as a misuse of legal remedies, stating: “Having considered the factual background in which the Section 11(6) petition has been filed, we are of the opinion that it is an abuse of process. It was clearly intended to threaten the appellant for having approached the statutory authorities under the PW Act and the ID Act.”

Accordingly, the Supreme Court allowed the appeal, set aside the Madras High Court’s order appointing the arbitrator, and dismissed the Section 11(6) petition. The Court awarded costs of ₹5 lakh to the appellant, directing Hyundai AutoEver to pay the same within three months.

The appellant was represented by advocates Anurag Ojha, Kamlesh K. Mishra, Dipak Raj, and Vipul Kumar, while the respondent was represented by advocate Jaikriti Jadeja.

Case Title: Dushyant Janbandhu Vs M/S HYUNDAI AUTOEVER INDIA PVT LTD.

Case No: CIVIL APPEAL NO. 14299 OF 2024 ; SLP (CIVIL) NO. 29929 OF 2024

Bench: Justice P.S. Narasimha and Justice Sandeep Mehta