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Judicial Review of Awards With Reference To Arbitration and Conciliation Act

It is necessary to understand ambit of award to be defined for judicial review. The court left open the question whether the order granting interim relief by the adjudicator would be a ward, within the meaning of Sec. 2 (b).

This question assumes importance in view of the law that if it is an award, it requires publication by the appropriate Government under S.17 as a condition precedent for its enforceability. There is a conflict of opinion on this question among various High Courts. The Patna[1]Punjab [2]Delhi[3]and Calcutta[4] High Courts had taken the view that an order granting interim relief must take the form of an award, requiring publication under S. 17 of the Act. But the High Court of Karnataka held that “interim relief like a direction to pay subsistence allowance to a dismissed workman during the pendency of a dispute concerning the validity of his dismissal, or any other interim relief which the Tribunal/Labour Court has the power to grant, need not and should not be made in the form of an award".

Voluntary Reference of Dispute To Arbitration[5]
The arbitrability of labour disputes first arose in Kingfisher Airlines v. Captain Prithvi Malhotra and others [6](“Captain Prithvi Malhotra”). This case arose out of various labour recovery proceedings instituted by pilots and other staff members of the now defunct Kingfisher Airlines, Kingfisher filed an application invoking Section 8 of the Arbitration and Conciliation seeking reference to arbitration in terms of the employment agreements. The labour court rejected the application and retained jurisdiction over the proceedings.

Kingfisher thereafter moved the Bombay High Court to challenge the correctness of the order passed by the labour court. The Bombay High Court affirmed the order of the labour court and held that labour disputes were not arbitrable under the Arbitration and Conciliation Act, 1996. The Court holds that the inquiry is not solely whether the claim being urged is in personem or in rem (as was held by the Supreme Court in Booz Allen & Hamilton v. SBI Home Finance[7]), but whether the resolution of the claim has been exclusively reserved for adjudication by a particular court or tribunal for public policy reasons. The Court holds that the resolution of labour and industrial disputes has been reserved for resolution before the judicial fora constituted under the Industrial Disputes Act, 1947. By drawing upon the preamble of the Act as well as the scheme of resolution of labour disputes, the Court holds that strong public policy reasons support such a conclusion.

The Court in Captain Prithvi Malhotra [8]also goes further than merely determining the arbitrability of labour disputes. It examines the scheme of the Industrial Disputes Act, 1947 and concludes that the Act provides for a unique process for arbitration of collective labour claims. It therefore concludes that if there were to be adjudication of labour and industrial claims outside of the courts and tribunals constituted under the Act, the reference to and resolution by arbitration would have to be governed by the specific provisions of the Industrial Disputes Act, 1947 (and the attendant rules made thereunder) and not the Arbitration and Conciliation Act, 1996. The Court therefore concludes two crucial issues: claims under the Industrial Disputes Act, 1947 are not arbitrable under Arbitration and Conciliation Act, 1996 and by extension, where it is arbitrable, it must be in conformity with the requirements and procedure under the Industrial Disputes Act. It is therefore important to remember that labour and industrial claims are not per se non-arbitrable, but are instead only arbitrable in the manner and to the extent permitted by the Industrial Disputes Act, 1947.

A similar question arose five years later in Rajesh Korat v. Innoviti [9](“Rajesh Korat”) before the Karnataka High Court. In this case, when an application for reference to arbitration was made before the labour courts, the application was allowed and parties were referred to arbitration in terms of the arbitration agreement (in contrast to Captain Prithvi Malhotra where the labour court rejected the application and retained jurisdiction).

The reasoning in Rajesh Korat greatly resembles the reasoning in Captain Prithvi Malhotra. The Court concludes that there are strong and compelling public policy reasons to ensure that labour and industrial disputes are exclusively resolved by courts and tribunals under the Industrial Disputes Act. In Rajesh Korat, the Court goes slightly further in concluding that the Industrial Disputes Act is a self-contained code, and to that extent the Arbitration and Conciliation Act, does not have any application to matters governed by the Industrial Disputes Act. Although it does not expressly address this question, Rajesh Korat impliedly endorses the proposition that any arbitration of labour disputes would have to be in conformity with the procedure under the Industrial Disputes Act, 1947 and not the Arbitration and Conciliation Act, 1996.

Captain Prithvi Malhotra and Rajesh Korat are both decided correctly and they independently reach the right conclusion. Both decisions examine the nature and larger scheme of the Industrial Disputes Act and pay close attention to the various categories of judicial and quasi-judicial fora established under the Act. After undertaking this analysis both decisions correctly conclude that labour and industrial claims are non-arbitrable under the Arbitration and Conciliation Act, 1996, and where they can be submitted to arbitration, such reference and resolution must be in compliance with the procedure under the Industrial Disputes Act.

End-Notes
[1] Punjab National Bank Ltd. v. A. N. Sen, AIR 1952 Punj 143
[2] Mehr Singh v. Delhi Administration, ILR (1973) I Delhi 732
[3] Jeevanlal (1929) Ltd. v. State ofWest Bengal, (1975) Lab. I. C. 1162 (Cal)
[4] Jeevanlal (1929) Ltd. v. State ofWest Bengal, (1975) Lab. I. C. 1162 (Cal)
[5] Section 10 IDA act 1947
[6] 2013 (7) Bom CR 738
[7] (2011) 5 SCC 532
[8] Supranote 13
[9] 7 IJAL (2018) 120  

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