The Delhi High Court in the case Piyush Kumar Dutt v. Vishal Mega Mart Pvt. Ltd observed and 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 comprising of Justice Neena Bansal Krishna observed and has held that in view of Section 11(6-A) the justiciability of claims and the defences can only be determined through adjudication by the arbitrator.
FACTS OF THE CASE
An application was filled by the petitioner for the appointment of an arbitrator to settle the dispute between the parties that arose out of the Employment Agreement dated 14.01.2019. In the respondent company, the petitioner was serving as the Chief Human Resource Officer till his resignation on 31.05.2021.
The petitioner during the course of employment, 17. 05,023 stocks came to be vested for a period of 10 years with the petitioner. The petitioner also had 8,41,844 equity shares and 4,26,381 equity shares as an performance-based options.
It was stated by the petitioner in his resignation letter that its intention to retain the stocks in the company. However, between the parties a dispute arose related to the disposal of the said shares as the it was contended by the respondent that it has a call option over the shares held by the petitioner.
OBJECTIONS MADE BY THE PARTIES
It was objected by the respondent to the maintainability of the petition on the following grounds:
The parties in the employment agreement does not have an arbitration clause.
In annexure, the arbitration clause contained is extremely narrow and only disputes arising out of or in relation to the provisions of ESOP Plan is covered under the agreement, however, the dispute arising out between the parties of the Employment Agreement cannot be referred to arbitration.
Therefore, the petitioner has failed to exercise its stock options, he is ceased to be entitled to the same.
It was stated that the respondent has a call option over the shares of the petitioner.
COURT ANALYSIS
It was held by the Court that the agreement between the parties apparently makes a reference to the annexure which contains an arbitration clause, thus, the argument raised by the respondent was that both are independent of each other is without any merit.
Further, 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 stated that if the main agreement makes reference to the annexure or the annexure explains or defines the manner in which a right in the agreement is to be exercised and then the arbitration agreement contained in the annexures would be binding on the parties.
It was held by the court that in view of Section 11(6-A) the justiciability of claims and the defences can only be determined through adjudication by the arbitrator. Accordingly, the arbitrator was appointed by the court.
