contract-law india
Is it legal for companies to set up parallel courts?
<p>In India is it legal for a company to set up an internal system of law and order where there shall be a chain of courts under the company  and a formal code of law? Punishments shall range from denial of certain allowances to smll monetary fines. Is this legal? If yes, what are the limitations and to what extent?</p>
<p>I was thinking about the following system:</p>
<ol>
<li>There may be a central court with many subordinate courts in a company.</li>
<li>One employee can file a case against another or the company's employees may be sued by customers.</li>
<li>If a court finds a flaw it may impose a fine, send it to a higher court or order something.</li>
<li>Higher courts decide on serious cases or cases of contempt of lower court orders.</li>
<li>Punishment may range from reduced pay, loss of job, taking the matter to a real court, determining a code of conduct, transferring or shuffling of posts, or imposing a ban from services.</li>
<li>The higher courts can set precedents and rule according to company law set by the CEO or any other person who is above all courts of the company meaning they are immune to prosecution.</li>
</ol>
<p>Is this legal in India?</p>

<p>If you substitute the courts with line managers and HR policies, this is just a description of an internal discipline and grievance process.</p>

<ul>
<li>In most jurisdictions, companies cannot create <strong>courts</strong>. The right to do that is reserved for the state.</li>
<li>People and companies can <strong>agree</strong> (by contract) to use <strong>arbitration</strong> for issues arising from the contract. This may be a contract clause which both sides entered consciously, or part of the terms of service which the user/customer clicked without really reading it.<br />
That makes it difficult to envision precedent from other arbitration panels affecting other arbitration panels. The new panel has the contract to go with, and novel or unusual interpretations might be challenged in a <strong>real</strong> court.</li>
</ul>

<p>Much, if not all, of what you describe already exists in many companies. This mostly takes place in the company's HR department, more serious matters are escalated to a board of directors, and nothing prevents the company from suing the employee in an actual court.</p>
<p>The sued, penalized, or terminated employee may establish that the company departed from its own precedent. However, if the doctrine of at-will employment is applicable in the jurisdiction at issue and the employment contract does not supersede the doctrine, it usually would be unavailing for the employee to allege wrongful termination unless the company's actual reason for termination contravenes public policy.</p>

<p>The judiciary is, as a body, separate to that of companies or corporations. This is by history and by design.</p>
<p>What there are are arbitration, and generally to maintain their independence, they are not linked to any company or corporation. This is merely mediation in the hope that the case doesn't proceed to an expensive lawsuit for all concerned.</p>
<p>What companies have are internal procedures for handling complaints. Obviously, at a certain level, one can charge this as lacking any independence from the company hierarchy.</p>
