Sowmiya Rajendrakumar
Published on: 04 August 2022 at 20:15 IST
The Delhi High Court has held that an arbitration clause contained in the annexure to the main agreement would be binding on the parties to that agreement.
The Bench of Justice Neena Bansal Krishna held that in view of Section 11(6-A) the justifiability of claims and the defences can only be determined through adjudication by the arbitrator.
The petitioner filed an application for the appointment of an arbitrator to settle the dispute between the parties that arose out of the Employment Agreement dated 14.01.2019.
The petitioner was serving as the Chief Human Resource Officer in the respondent company till his resignation on 31.05.2021.
During the course of the employment of the petitioner, 17. 05,023 stocks came to be vested with the petitioner for a period of 10 years. He also had 8,41,844 equity shares and 4,26,381 equity shares as performance-based options.
In his resignation letter, the petitioner stated its intention to retain the stocks in the company. However, a dispute arose between the parties related to the disposal of the said shares as the respondent contended that it has a call option over the shares held by the petitioner.
The respondent objected to the maintainability of the petition on the following grounds: The Employment Agreement between the parties does not have an arbitration clause.
The Arbitration Clause contained in the Annexure is extremely narrow and only disputes arising out of or in relation to the provisions of ESOP Plan is covered under the agreement, therefore, the dispute arising out of the Employment Agreement cannot be referred to arbitration.
The petitioner has failed to exercise its stock options, therefore, he is ceased to be entitled to the same.
The respondent has a call option over the shares of the petitioner.
The Court held that the agreement between the parties apparently makes a reference to the Annexure which contains an arbitration clause, therefore, the argument of the respondent that both are independent of each other is without any merit.
The Court held that an arbitration clause contained in the annexure to the main agreement would be binding on the parties to that agreement.
The Court held that in view of Section 11(6-A) the justifiability of claims and the defences can only be determined through adjudication by the arbitrator.