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16 January 2025

HSA | Dispute Resolution & Arbitration Monthly Update | January 2025

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In 2019, the Appellant was appointed as Assistant Manager by the Respondent. Amid the COVID-19 pandemic, the Appellant worked from home from March 22, 2020...
India Litigation, Mediation & Arbitration

Dushyant Janbandhu vs. Hyundai Autoever India Pvt. Ltd.

2024 INSC 966

Background facts

  • In 2019, the Appellant was appointed as Assistant Manager by the Respondent. Amid the COVID-19 pandemic, the Appellant worked from home from March 22, 2020, to January 6, 2021. Despite the Respondent's directive to resume physical attendance from August 2020, the Appellant's refusal led to disciplinary proceedings, including the issuance of a show-cause notice, an inquiry, and a charge memo. The Appellant's employment was ultimately terminated on January 6, 2021.
  • During the pendency of disciplinary action, the Appellant was not paid his salary, prompting him to file a claim under Section 15(2) of the Payment of Wages Act, 1936 ("PW Act"). The Respondent countered by issuing an arbitration notice and unilaterally appointing an arbitrator. Additionally, the Respondent filed an application before the Authority under the PW Act, seeking reference of the dispute to arbitration. However, the Authority dismissed the application, holding that under Section 23 of the PW Act, an arbitration agreement cannot impede the statutory claim for illegally deducted wages.
  • wages. ▪ Subsequently, the Respondent approached the Madras High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 ("A&C Act"), seeking the appointment of an arbitrator. The High Court, noting the existence of an arbitration agreement, appointed an advocate as the arbitrator. Aggrieved by this decision, the Appellant filed a Special Leave Petition ("SLP") before the Hon'ble Supreme Court.

Issue(s) at hand

  • Are disputes concerning non-payment of wages and the legality of termination arbitrable?
  • Was the Respondent's invocation of arbitration an abuse of legal process?

Findings of the Court

  • The Supreme Court held that disputes related to non-payment of wages and termination legality are non-arbitrable, falling exclusively within the jurisdiction of statutory authorities under the PW Act and the Industrial Disputes Act, 1947 ("ID Act"). The Court referred to the fourfold test of arbitrability established in Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1.
  • The Court criticized the Respondent's conduct as a deliberate misuse of the arbitration process, aimed at bypassing statutory frameworks and exerting undue pressure on the Appellant. It observed that invoking arbitration for disputes already pending before statutory authorities under the PW Act and ID Act violated the statutory scheme, undermining the exclusive jurisdiction of these authorities. This attempt was deemed a tactic to deter the Appellant from exercising lawful remedies, warranting the imposition of costs on the Respondent.
  • Consequently, the Court found the Section 11(6) petition to be an abuse of process aimed at intimidating the Appellant for seeking statutory remedies. It set aside the High Court's order appointing an arbitrator and imposed a cost of ₹5 Lakhs on the Respondent.

Rajendra Kumar Barjatya and another Vs. U.P. Avas Evam Vikas Parishad & Ors.

2024 SCC OnLine SC 3767

Introduction

  • The Supreme Court's judgment in the case of Rajendra Kumar Barjatya & Anr. v. U.P. Avas Evam Vikas Parishad & Ors. establishes a strict stance against illegal constructions. Unauthorized constructions cannot be legitimized solely due to administrative delays, the passage of time, or monetary investments. A series of directions were issued to curb illegal constructions. The case involved unauthorized commercial constructions on a residential plot in Meerut, Uttar Pradesh, in blatant violation of urban planning regulations. A bench comprising Justices J.B. Pardiwala and R. Mahadevan upheld the Allahabad High Court's order to demolish the illegal structures and issued directions to curb unauthorized constructions.

Background facts

  • The case of Rajendra Kumar Barjatya and Another vs. U.P. Avas Evam Vikas Parishad & Ors. revolves around the issue of unauthorized construction of commercial spaces on land allotted by the U.P. Housing and Development Board in urban areas, highlighting the conflict between individual rights and public welfare.
  • The appellants had constructed commercial shops and spaces without adhering to approved building plans and statutory requirements under urban development laws. Despite prolonged occupancy and significant financial investments, these constructions were deemed illegal.
  • Public officials were found to have either colluded or been negligent in granting wrongful permissions, such as completion and occupation certificates, which emboldened the appellants. The matter raised critical questions about the accountability of officials, the legal consequences of unauthorized constructions, and the balancing of hardships faced by individuals with the need to uphold the rule of law and urban planning integrity.
  • The Allahabad High Court ordered the demolition of the illegal structures, which was challenged by the appellants based on long-standing occupancy and alleged lapses by authorities. This case ultimately led the Supreme Court to establish stringent directives to combat illegal constructions and ensure strict compliance with urban development norms.

Issue(s) at hand?

  • Whether unauthorized constructions, despite prolonged occupancy and financial investment, can be regularized?
  • Whether administrative inaction or negligence by authorities can be used as a defense for illegal constructions?
  • What measures can be taken to ensure accountability of public officials involved in granting wrongful permissions?

Findings of the Court

  • Supreme Court's Observations on Illegal Constructions
    • Strict Adherence to Laws: 

      The Supreme Court emphasized that illegal constructions, irrespective of their age, the extent of investments involved, or occupancy status, cannot be regularized under any circumstances. The Court underscored the necessity of adopting a zero-tolerance approach to uphold urban planning laws and ensure disciplined urban development. It noted that allowing any leniency in enforcing such laws would lead to chaos in urban governance and incentivize disorderly development. Courts, as the custodians of justice, are duty-bound to curb illegal constructions "with iron hands" to establish a strong deterrence against future violations.
    • No Legalization by Passage of Time: 
      The Court reiterated the principle of law encapsulated in the legal doctrine Ex turpi causa non oritur actio, which means no legal right arises from a wrongful act. In this context, it held that mere delay by authorities in initiating action against illegal constructions does not grant any legal sanctity to such violations. Unauthorized structures, irrespective of the time that has passed since their construction, must be demolished to prevent a culture of impunity, uphold the rule of law, and maintain urban order.
    • Accountability of Officials: 
      The Supreme Court also brought to light the accountability of officials who enable illegal constructions through the issuance of wrongful permissions, completion certificates, or occupation certificates. The Court directed that such officials must face stringent departmental proceedings to ensure that such malpractices are not repeated. It observed that allowing regularization of unauthorized constructions would create a perilous precedent, emboldening violators and encouraging more widespread disregard for planning laws.

Directions Issued by the Supreme Court

  • For Builders and Developers
    • Builders and developers must provide undertakings ensuring that possession of constructed units is handed over to buyers only after obtaining valid completion/occupation certificates in accordance with approved plans.
    • Approved building plans must be prominently displayed at construction sites throughout the construction period to promote transparency and adherence to regulations.
    • Any deviations from approved plans detected during or after construction must be rectified before completion/occupation certificates are issued to prevent unauthorized modifications.
  • For Authorities
    • Authorities are mandated to conduct periodic inspections of construction sites during the building process and maintain detailed records of such inspections to monitor compliance with approved plans.
    • Utilities such as electricity, water, and sewage connections must be provided only after completion/occupation certificates are produced, ensuring that structures meet all regulatory standards.
    • Authorities must take immediate corrective actions against detected deviations, including those identified after the issuance of completion certificates, to maintain the sanctity of urban planning laws.
    • Departmental proceedings must be promptly initiated against officials found responsible for issuing wrongful permissions, completion certificates, or occupation certificates, thereby upholding accountability and deterring future malpractices.

This detailed framework highlights the Supreme Court's commitment to preserving the rule of law, promoting orderly urban development, and curbing the menace of unauthorized constructions through a strict and uncompromising approach.

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