The recent judgment in the case of Sanjay Kumar v Elior India Food Services LLP by the Karnataka High Court emphasized that a pure employment contract should not be treated as a commercial dispute by disguising it as a provision of services. Justice M Nagaprasanna expressed concern that if every employment agreement is brought before commercial courts, it would lead to an overwhelming number of cases and defeat the purpose for which the commercial court was established.
The High Court drew on a previous Supreme Court judgment in Ambalal Sarabhai Enterprises Limited v KS Infraspace LLP, which highlighted that non-commercial issues filed before commercial courts solely for the purpose of seeking early resolution, based on high value, should not be entertained.
The case in question originated when the petitioner's employment was terminated by the respondents. The petitioner then sent a legal notice demanding various amounts, including termination allowance as per the employment agreement and the long-term incentive plan. When the firm refused to pay, the petitioner invoked arbitration and subsequently sought interim protection from the commercial court. Both the commercial court and the High Court rejected this application.
Later, an arbitral tribunal was constituted, which directed the securing of the amount claimed by the petitioner. The respondents, dissatisfied with this decision, approached the commercial court. However, the petitioner contested the jurisdiction of the commercial court.
The respondents argued that the petitioner could not invoke the jurisdiction of the commercial court and then dispute it later. However, the single-judge in this case rejected this argument, stating that if a party mistakenly chooses the wrong jurisdiction and the court proceeds with the case without objection from the parties, the jurisdiction does not become binding on subsequent proceedings.
Based on the analysis of the case, the High Court concluded that the dispute between the parties was not a commercial dispute within the meaning of Section 2(1)(c)(xviii) of the Act. Therefore, the commercial court should not have entertained the dispute.
Advocate Nishanth AV appeared for the petitioner, while Senior Advocate KG Raghavan and Advocate Prashanth VG represented the respondents.
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TAGS: Karnataka High Court employment contract commercial dispute provision of services clogging of commercial courts floodgates of litigation Ambalal Sarabhai Enterprises Limited v KS Infraspace LLP termination legal notice arbitration interim protection jurisdiction petitioner respondents Supreme Court judgment Advocate Nishanth AV Senior Advocate KG Raghavan Advocate Prashanth VG.
