Supreme Court imposes ₹5 lakh costs on Hyundai's subsidiary for abuse of law

The Supreme Court recently set aside the appointment of arbitrator in a dispute between Hyundai AutoEver India Pvt. Ltd. and its former assistant manager and also imposed costs of ₹5 lakh on the former for abusing the process of law (Dushyant Janabandhu Vs Hyundai AutoEver Pvt Ltd)."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," a Bench of Justices PS Narasimha and Sandeep Mehta ruled while ordering Hyundai to pay costs of ₹5 lakh to the employee. .Hyundai AutoEver India Pvt. Ltd, a subsidiary of the Hyundai Motor Group, specialises in IT services, digital solutions, and technology integration, supporting Hyundai's operations across industries. The company provides tailored software solutions and IT infrastructure management..The case stemmed from allegations against an employee who was terminated on January 21, 2021. The company cited absenteeism and non-cooperation as reasons for termination, though no allegations of breach of confidentiality under Clause 19 of the employment agreement were mentioned at any stage of disciplinary proceedings or in the termination order. In 2021, the employee approached statutory authorities under the Payment of Wages Act (PW Act) for unpaid wages and the Industrial Disputes Act (ID Act) regarding the termination. Meanwhile, Hyundai AutoEver attempted to commence arbitration and unilaterally appointed an arbitrator. However, the arbitrator ceased proceedings, citing lack of jurisdiction to rule on this dispute ..Subsequently, Hyundai approached the Madras High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of arbitrator. The High Court, having found the existence of an arbitration clause, passed an order appointing the arbitrator. The employee approached the Supreme Court against this order of the Madras High Court. .The Supreme Court found that the dispute was non-arbitrable as they were covered under statutory adjudication. "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 apex court said, citing Section 22 of the PW Act and principles of non-arbitrability outlined in Vidya Drolia v. Durga Trading Corporation.The Court also criticised Hyundai AutoEver’s last-minute invocation of Clause 19 for compensation of ₹14.02 lakh and said that it was an afterthought. "There is no basis for invoking Clause 19 when that fact situation did not arise," the Bench said while dismissing the claim as non-existent.Hence, it proceeded to grant relief to the employee and set aside the High Court order."The appellant will also be entitled to cost quantified at ₹ 5 lakhs payable within a period of 3 months from today," the Court directed..The former employee was represented by advocates Anurag Ojha, Kamlesh K Mishra, Dipak Raj and Vipul Kumar. Hyundai AutoEver was represented by advocate Jaikriti Jadeja.[Read Judgment]