COURSE- ALTERNATIVE DISPUTE RESOLUTION

TITLE: - CONCILIATION AND ITS MECHANISM

UNDER ARBITRATION AND CONCILIATION ACT,
1996.

SUBMITTED BY
SAHEBA KHAN
2021-2022 {B.A LLB SEM-V}
R.NO-01
(FOR INTERNAL ASSIGNMENT)

COURSE CO-ORDINATOR
ADV. TANAYA KAMLAKAR
D.Y. PATIL deemed to be UNIVERSITY SCHOOL OF LAW
AFFILIATED TO D.Y. PATIL UNIVERSITY, NERUL

1
 I
CERTIFICATE

This is to certify that SAHEBA KHAN, has successfully completed her course
in ALTERNATIVE DISPUTE RESOLUTION assignment on CONCILIATION
AND ITS MECHANISM UNDER ARBITRATION AND CONCILIATION
ACT, 1996.

In partial fulfilment of fifth semester of degree course in law, in the

academic year 2021-2022.

Date:
Place: Nerul, Navi Mumbai.

Director Course Co-ordinate

School of law school of law
Nerul Nerul

SCHOOL OF LAW
D.Y. PATIL deemed to be UNIVERSITY, NERUL

2
 II
ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my teacher ADV. TANAYA
KAMLAKAR as well as our DIRECTOR DR. AJAY .W. PATIL, DY PATIL
SCHOOL OF LAW, DY PATIL deemed to be UNIVERSITY who gave me the
golden opportunity to do this wonderful project on the topic CONCILIATION AND
ITS MECHANISM UNDER ARBITRATION AND CONCILIATION
ACT, 1996. Which also helped me in doing a lot of Research and I came to know
about so many new things I am really thankful to them.

Secondly I would also like to thank my parents and friends who helped me a lot in
finishing this project within the limited time frame.

- SAHEBA KHAN

B.A. LLB

SCHOOL OF LAW
D.Y. PATIL deemed to be UNIVERSITY, NERUL

3
 III
ABSTRACT
In the last two or three decades, Alternative Dispute Resolving System i.e. ADR initiatives
have increased in developing and developed countries alike. Conciliation is a dispute
resolution mechanism which is broadly and globally to settle disputes. It is referred to in case
of the desire to reach an amicable way of resolving disputes for example, business disputes
that engage a third party in the process with the consent of the disputants.

This paper include history of ADR, procedure of conciliation, how it is effective, reasons to
uplift with certain case laws.

4
 IV
INDEX

SR.N TOPIC PG.NO

O
1 INTRODUCTION 6-7

2 HISTORY OF ALTERNATIVE DISPUTE 7-8

RESOLUTION IN INDIA

3 ADR IN MODERN INDIA 8

4 HOW CONCILIATION IS BETTER THAN OTHER 9-11

ALTERNATIVE MODES OF DISPUTE RESOLUTION?

5 AMERICAN JUDICIAL SYSTEM AND 11-12

CONCILIATION

6 REASONS TO UPLIFT CONCILIATION IN INDIA 12-13

7 CONCILIATION MECHANISM 13-20

8 CASE LAWS 20-21

9 PROBLEMS FACED BY CONCILIATION IN INDIA 21-22

10 CONCILIATION V. ARBITRATION 22-24

11 CONCLUSION 25

INTRODUCTION

Conciliation means the settling the disputes without litigations. It is a process in which
independent person or persons are appointed by the parties with mutual consent by agreement
to bring about a settlement of their dispute through consensus or by using of the similar
techniques which is persuasive. In the HALSBURY‟S LAWS OF ENGLAND, the terms
„arbitration‟ and „conciliation‟ have been differentiated as under: “The term „arbitration‟ is

5
used in several senses. It may refer either to a judicial process or to a non-judicial process is
concerned with the ascertainment, declaration and enforcement of rights and liabilities, as
they exist, in accordance with some recognized system of law. An industrial arbitration may
well have for its function to ascertain and declare, but not to enforce, what in the parties, and
such a function is non- judicial. Conciliation is a process of persuading parties to reach
agreement, and is plainly not arbitration; nor is the chairman of a conciliation board an
arbitrator” Confidence, trust & Faith are the essential ingredients of conciliation. This
effective means of ADR is often used for domestic as well as international disputes. Some
Significant difference is there while using it for domestic or international disputes.

Part 3 of the Arbitration & Conciliation Act deals with Conciliation. Conciliation means
settling of disputes without litigation. Conciliation is the process by which discussion
between parties is kept going through the participation of the conciliator. S.61 points out that
the process of conciliation extends to disputes, whether contracted or not. But the disputes
must arise out of the legal relationship. It means that the dispute must be such as to give one
party the right to sue and the other party the liability to be sued. The Act of 1940 used the
word difference but in the new Act in place of difference the word dispute has been used.
However, the word ‘Dispute’ has not been defined in the new Act of 1996. The word dispute
under ordinary parameters implies an assertion of right by one party and repudiation by
another party. The word ‘difference’ has a wider meaning but the word ‘dispute’ is more
positive and the difference between the parties when assumed a definite and concrete form
they became dispute. Conciliation involves building a positive relationship between the
parties. The conciliator plays a relatively direct role in the actual resolution of a dispute and
even advises the parties on certain solutions by making proposals for settlement. In
conciliation, the neutral is usually seen as an authority figure that is responsible for figuring
out the best solution for the parties. The conciliator, not the parties, often develops and
proposes the terms of settlement. The parties come to the conciliator seeking guidance and
the parties make decisions about proposals made by conciliators.1

HISTORY OF ALTERNATIVE DISPUTE RESOLUTION IN INDIA

India has had a long history of ADR; the earliest recorded instances date back to several
centuries before Christ. Many of these forms exist with little change in the interiors and rural

1
Preeti singh, legal bites, assessed on 24 jan 2017.
6
India. Bodies such as the panchayat, a group of elders and influential persons in a village
deciding the dispute between villagers are not uncommon even today. There are also
instances of disputes between persons of two different villages being settled by a body of
individuals drawn from the disputants ’villages, a third village or a combination of the two.
The disputants are required to present their cases before the panchayat which will attempt to
resolve the dispute. The working of the panchayat is such that it would be difficult to classify
it as a mediator, a conciliator, an arbitral tribunal or a judicial body. While all disputes are
heard by the panchayat it dons different forms, depending on the circumstances and the
situation. If the facts disclose a clear legal obligation, it would act as a ‘judicial’ body to
decide the rights of the parties and enforce the decision by sanction. On the other hand, it
may persuade one of the parties to act in a particular manner in a situation where the
petitioner has no real claim in law but appeals to the righteousness of action to seek relief.
This may be seen as the first indication of the process of conciliation in India. The disputants
would ordinarily accept the decision of the panchayat and hence a settlement arrived
consequent to conciliation by the panchayat would be as binding as the decision that was on
clear legal obligations. One ought to understand that the decision of the panchayat was
always to be followed, irrespective of the source of the decision. The panchayat has, in the
recent past, also been involved in caste disputes. One may compare some activities of the
panchayat to that of the 18th. Century English guilds since the caste system began with a
classification based on the profession of its members. The Muslim rule in India saw the
incorporation of the principles of Muslim law in the Indian culture. The Kazi was the
designated judicial officer who decided disputes between individuals. There are many
recorded instances where the kazi has decided a case beyond the law by getting the disputants
to agree to a solution that has been arrived at by conciliation, without actually giving that
colour to the decision. Thus the decision from the authority of the kazi would be binding on
the parties before him, it may just be that the decision is more acceptable and the disputants
go back with the feeling that the decision was just and neither lost.
2

ADR IN MODERN INDIA

In the not so distant past too, conciliation has been effectively used in dispute resolution. The
most prominent and effective use of conciliation has been in the Industrial Disputes Act,
2
Nanika, law academic, assessed on 12 September 2018.

7
1947. Conciliation has been statutorily recognised as an effective method of dispute
resolution in relation to disputes between workmen and the management of the industry. The
I.D. Act makes it attractive for disputing parties to settle disputes by negotiation, failing
which by conciliation by an officer of the Government before resorting to litigation. Several
provisions set the scene for conciliation to be successful:

 The conciliation is by an officer of the Labour Department in the Government.

 The parties may not go on strike or declare a lock-out during the period of
conciliation.
 The conciliation officer shall make all efforts to settle the disputes by conciliation.
 The agreement reached in the process of conciliation shall be certified by the
conciliation officer as a fair settlement.
 Such a settlement shall bind all the other trade unions that are party to the dispute and
are invited to participate in the conciliation but prefer to stay away from the
conciliation process.
 The settlement is a self-executing document and the breach of the settlement by the
management is a ground for recovery of dues under a simplified summary process.
 All parties in an industrial dispute that has had the misfortune of being litigated know
that it is a tedious process that could go well beyond the lifetime of some of the
beneficiaries. It is this factor that has contributed greatly to the success of conciliation
in industrial relations. There are however certain abuses of the process and the
benefits of the agreement arrived in the course of conciliation that are used to supress
the trade unions which do not ‘cooperate’ with the management. This however does
not diminish the effectiveness of the process.3

HOW CONCILIATION IS BETTER THAN OTHER ALTERNATIVE

MODES OF DISPUTE RESOLUTION?

Gone are the days when arbitration was considered to be a cheap and efficacious remedy.
Now the situation is completely reversed. Arbitration proceedings have become too technical
and expensive. In this context, reference may be made to judgment of the Supreme Court of
India. In Guru Nanak Foundation V. Rattan Singh & Sons, it was observed: “Interminable,
time consuming, complex and expensive court procedures impelled jurists to search for an

3
Arjun kamble, lawctopus, assessed on 2 feb 2015.

8
alternative forum, less formal more effective and speedy for resolution of disputes avoiding
procedural claptrap and this led to Arbitration Act, 1940.

However, the way in which the proceedings under the Act are conducted and without an
exception challenged in the courts has made lawyers laugh and legal philosophers weep.
Experience shows and law reports bear ample testimony that the proceedings under the Act
have become highly technical accompanied by unending prolixity at every stage providing a
legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of
their disputes has by the decisions of the court been clothed with” legalese‟ of unforeseeable
complexity.” Broadly speaking, there are at least three advantages if the parties are able to
reasonable settlement of their disputes through conciliation,

.1) Quickness-The parties can devote their time and energy for better and useful work.

2) Economic- Instead of spending hard earned money on litigation, one can invest it for
better dividends.

3) Social-The parties go happily to their respective places and stand relieved from bickering,
enmity, which in certain cases might have lingered on for generations.

There is a growing feeling amongst the litigants that they would have been better off if there
had been no arbitration clause so that they could file civil suit, which entails only three steps,.
(1) Filing of the pleadings;

(2) Conduct of the proceedings; and,

(3) Judgment.

As against three stages involved in a civil suit, there are as many as six in an arbitration
matter, (1) appointment of the arbitrator either by the parties or by the court;

(2) Pleadings before the arbitrator;

(3) Proceedings before the arbitrator;

(4) Award;

(5) Filing of the award in the court; and,

(6) Recourse to a court against arbitral award.

9
To overcome the ordeals involved, the best course available to the parties is to look to
reasons, appreciate the viewpoint of the opposite party, not to stand on false prestige and
resolve the controversy in an amicable manner. It does not help either party to pursue
litigation whether in courts or before an arbitral tribunal.

Both parties are losers, at least in terms of time, at the time of final outcome of litigation. It is
at this stage the parties appreciate that they would have been better off had they taken the
path of conciliation. It is not only the fees of lawyers but also of the arbitrators, which have
started pinching the parties. Though presently the number is small but nevertheless a serious
beginning has been made in some cases to settle the matter outside arbitration to avoid
unnecessary expense. The resort to conciliation, directly or through a trusted common person/
institution, is the only remedy to achieve early success.

Conciliation is a better alternative to the formal justice system. For selecting the mode of the
conciliation it is not necessary to enter into a formal agreement. Because where arbitration
clause is included in the agreement it is implied that the matter would be refereed for
conciliation first & if amicable settlement fails then only, it is referred to the arbitration.

The other advantage of choosing conciliation is that though the amicable settlement in
conciliation could not be reached then the evidence leaded, the proposal made during the
conciliation proceedings cannot be disclosed in any other proceedings (in arbitration also)
This protection has been provided by the Arbitration & Conciliation Act itself.

Therefore parties can attempt Conciliation without any risk. It is a non-binding procedure in
which an impartial third party assists the parties to a dispute in reaching a mutually agreed
settlement of the dispute. For effective conciliation, it is necessary that the parties to dispute
should be brought together face to face at a common place where they can interact with each
other & with the conciliator to arrive at a settlement of the dispute. The importance of
conciliation is that in other proceeding decision is given by the presiding authority & it is
binding accordingly. But in conciliation there is amicable settlement where parties
themselves have reached to the decision i.e. settlement & which is binding as per their
decision. Third party i.e. conciliator is just helping to arrive at settlement & not dictating the
term or decision. 4

4
RUCHITA, LEGAL SERVICE INDIA, ACCESSED ON 3 NOV 2017

10
AMERICAN JUDICIAL SYSTEM AND CONCILIATION

Conciliation is now institutionalized in America and other countries too. Conciliation court is
a place where people can go to resolve legal disputes in a simple and informal manner. There
are no jury trials in conciliation court and also there is no adjudication or judicial verdict.
Each person involved in the case tells his or her side of the story to a judge or referee who
then makes a decision about the dispute.

In American judicial system conciliation court is often referred as small claims court or the
people’s courts Conciliation courts are used to decide civil (non -Criminal) disputes. Each
county has its own conciliation court. According to American judicial system it is necessary
to pay a filing fee to bring an action in conciliation court. First party will get its money back
if it wins the case.

It is interesting to note that if party cannot afford to pay the filing fee, the court can allow
proceeding without payment on filling the additional form to show inability to pay the filing
fee. Evidence also can be leaded in conciliation court. If any of the party is disagreeing with
the decision of the conciliation court, party has right to appeal to district court.

In American judicial system many times conciliation & mediation terms are used with the
same meaning. The line of technical or legal differences between mediation & conciliation is
very thin. Mediation & Conciliation are interchangeable expressions.

In both the procedures, successful completion of the proceedings results in a mutually agreed
settlement of dispute between the parties though, in some jurisdictions, mediation is treated
as distinct from conciliation inasmuch as in mediation the emphasis is on more positive role
of the neutral third party than in conciliation.

However, this factor should not make mediation distinct from conciliation because the scope
of the role that a neutral third party can play depends on the nature of the dispute the degree
of willingness of the parties & the skill of the individual neutrals The General Assembly of
the United Nation has adopted Rules of Conciliation through a Resolution on 4th Dec.1980 &
also recommended for the use of the Conciliation Rules in international commercial dispute.
Most of the countries have adopted the model law prepared by United Nations Commission
on International Trade Law (UNCITRAL), on International commercial Arbitration, as well
as Rules of Conciliation & on that basis only in India „The Arbitration & Conciliation Act

11
1996‟ has been enacted. The Inter-National Chamber of commerce has promulgated ICC
Rules of optional conciliation in which rules are set out for the amicable settlement.

REASONS TO UPLIFT CONCILIATION IN INDIA

The importance of conciliation in the present Indian court system is increased as courts are
facing with the problem of mounting arrears of pending cases & there is a serious need of
disposing of them & for that amicable settlement, conciliation is the best alternative. The
Himachal Pradesh High court under took the project of disposing of the pending cases by
conciliation & insisting on pre-trial conciliation in fresh cases.

This idea was based upon the mediation in Canada & Michigan. The said project had great
success in Himachal Pradesh. The Law commission of India in its various reports (77th &
13th) has appreciated the project in Himachal Pradesh and recommended the other States to
follow same path.

The other important point to uplift the Conciliation is that, it has got statutory recognition as
included in Arbitration & Conciliation act 1996 which is based on UNCITRAL Model &
because of that it has Universal familiarity & can be used for settlement of domestic disputes
as well as international commercial disputes.

The Concept of conciliation has received new dimension because of successful Himachal
experiment .The movement of conciliation of awareness of conciliation has started long
before, the only difference is, previously parties were willingly coming together & opting for
conciliation but now, the conciliation on Himachal pattern is a court induced conciliation,
making it mandatory for the parties to attempt a conciliation for settlement of their dispute &
approach the court if conciliation fails.

Maharashtra also Mumbai High court is taking initiative for Himachal pattern i.e. pre- trial
conciliation Therefore it is necessary to study conciliation as an organized procedure for
settlement of dispute through formal proceedings5

5
Nadar, legal bites, assessed on 13 april 2018.

12
CONCILIATION MECHANISM

Conciliation mechanism is stated from sec 61 to sec 81 of Arbitration and conciliation act
1996

SEC 61-Application and Scope

This part shall apply to conciliation of disputes arising out of legal relationship, whether
contractual or not and to all proceedings.

This part shall not apply where by virtue of any law for the time being in force certain
disputes may not be submitted to conciliation.

Section 61 points out that the process of conciliation extends, in the first place, to disputes,
whether contractual or not. But the disputes must arise out of legal relationship. It means that
the dispute must be such as to give one party the right to sue and other party the liability to be
sued. The process of conciliation extends, in the second place, to all proceedings relating to
it. But Part 3rd of the Act does not apply to such disputes as cannot be submitted to
conciliation by virtue of any law for the time being in force.

SEC 62-Commencement of conciliation proceedings

The conciliation proceedings are initiated by one party sending a written invitation to the
other party to conciliate. The invitation should identify the subject of the dispute.
Conciliation proceedings are commenced when the other party accepts the invitation to
conciliate in writing. If the other party rejects the invitation, there will be no conciliation
proceedings. If the party inviting conciliation does not receive a reply within 30 days from
the date he sends the invitation, he may elect to treat this as rejection of the invitation to
conciliate. If he so elects he should inform the other party in writing.

13
SEC 63-Number and Qualifications of Conciliators

Section 63 fixes the number of conciliators. There shall be one conciliator. But the parties
may by their agreement provide for two or three conciliators. Where the number of
conciliators is more than one, they should as a general rule act jointly.

SEC 64-Appointment of Conciliators

If there is one conciliator in a conciliation proceeding, the parties may agree on the name of a
sole conciliator.

If there are two conciliators in a conciliation proceeding, each party may appoint one
conciliator.

If there are three conciliators in a conciliation proceeding, each party may appoint one
conciliator and the parties may agree on the name of the third conciliator who shall act as the
presiding conciliator.

Sub- section (2) of section 64 provides for the assistance of a suitable institution or person in
the appointment of conciliators. Either a party may request such institution or person to
recommend the names of suitable individuals to act as conciliators, or the parties may agree
that the appointment of one or more conciliators be made directly by such institution or
person.

SEC 65-Submission of statements to conciliator

The conciliator may request each party to submit to him a brief written statement. The
statement should describe the general nature of the dispute and the points at issue. Each party
should send a copy of such statement to the other party. The conciliator may require each
party to submit to him a written statement of his position and the facts and grounds in its
support. It may be supplemented by appropriate documents and evidence. The party should
send a copy of such statements, documents and evidence to the other party.

14
SEC 66-Rules of procedure

The conciliator is not bound by the rules contained in the Code of Civil Procedure, 1908 or
the Indian Evidence Act, 1872. Though the conciliator is not bound by the technical rules of
procedure, he should not ignore the principles of natural justice.

SEC 67-Independence and impartiality

The conciliator should be independent and impartial. He should assist the parties in an
independent and impartial manner while he is attempting to reach an amicable settlement of
their dispute.

The conciliator should be guided by principles of objectivity, fairness and justice. He should
take into consideration, among other things, the rights and obligations of the parties, the
usages of the trade concerned, and the circumstances surrounding the dispute, including any
previous business practices between the parties.

In the conduct of conciliation proceedings, the conciliator has some freedom. He may
conduct them in such manner as he may consider appropriate. But he should take into account
the circumstances of the case, the express wishes of the parties, a party’s request to be heard
orally and the need of speedy settlement of dispute.

The role of the conciliator is to assist the parties to reach an amicable settlement of the
dispute. He may at any stage of the conciliation proceedings make proposals for the
settlement of the dispute. Such proposals need not be in writing and need not be accompanied
by a statement of reasons.

SEC 68-Administrative assistance

Section 68 facilitates administrative assistance for the conduct of conciliation proceedings.

The parties and the conciliator may seek administrative assistance by a suitable institution or
the person with the consent of the parties.

15
SEC 69-Conduct of conciliation proceedings

The conciliator may invite the parties to meet him. He may communicate with the parties
orally or in writing. He may meet or communicate with the parties together or separately.
(Sec 69(1))

The parties have freedom to fix by their agreement the place where meetings with the
conciliator are to be held. Where there is no such agreement, the place of meeting will be
fixed by the conciliator after consultation with the parties. In doing so the circumstances of
the conciliation proceedings will have to be considered.

SEC 70-Disclosure of information

When the conciliator receives an information about any fact relating to the dispute from a
party, he should disclose the substance of that information to the other party. The purpose of
this provision is to enable the other party to present an explanation which he might consider
appropriate.

When a party gives an information to the conciliator on the condition that it be kept
confidential, the conciliator should not disclose that information to the other party.

SEC 71-Cooperation of parties with conciliator

The parties should in good faith cooperate with the conciliator. They should submit the
written materials, provide evidence and attend meetings when the conciliator requests them
for this purpose

SEC 72-suggestions by parties

Each party may, on his own initiative or at the invitation of the conciliator, submit to the
conciliator the suggestions for the settlement of the dispute.

16
SEC 73-Settlement

When it appears to the conciliator that there exist elements of a settlement likely to be
accepted by the parties, he shall formulate the terms of a possible settlement and submit them
to the parties for their observations. After receiving the observations of the parties, the
conciliator may reformulate the terms of a possible settlement in the light of such
observations. If the parties reach agreement on the settlement of a dispute, a written
settlement agreement will be drawn up and signed by the parties.

If the parties request, the conciliator draw up or assist the parties in drawing up the settlement
agreements. When the parties have signed the settlement agreement, it becomes final and
binding on the parties and persons claiming under them. The conciliator shall authenticate the
settlement agreement and furnish its copy to each of the parties.

SEC 74-Status and effect of settlement agreement

Section 74 provides that the settlement agreement shall have the same status and effect as an
arbitral award on agreed terms under Section 30. This means that it shall be treated as a
decree of the court and shall be enforceable.

SEC 75-Confidentiality

The conciliator and the parties are duly bound to keep confidential all matters relating to the
conciliation proceedings. Similarly, when a party gives an information to the conciliator on
the condition that it be kept confidential, the conciliator should not disclose that information
to the other party.

SEC 76-Termination of Conciliation Proceedings

Section 76 lays down four ways of the termination of conciliation proceedings. These are:

The conciliation proceedings terminate with the signing of the settlement agreement by the
parties. Here the date of termination of conciliation proceedings is the date of the settlement
agreement.

17
The conciliation proceedings stand terminated when the conciliator declares in writing that
further efforts at conciliation are no longer justified. Here the date of termination of
conciliation proceedings is the date of the declaration.

The conciliation proceedings are terminated by written declaration of the parties addressed to
the conciliator to the effect that the conciliation proceedings are terminated. Here the date of
termination of conciliation proceedings is the date of the declaration.

The conciliation proceedings are terminated when a party declares in writing to the other
party and the conciliator, that the conciliation proceedings are terminated. Here the date of
termination of conciliation proceedings is the date of the declaration.

SEC 77-Resort to Arbitral or Judicial Proceedings

As a general rule, the parties cannot initiate arbitral or judicial proceedings during the
conciliation proceedings in respect of a dispute which is the subject matter of the conciliation
proceedings. But in exceptional cases a party may initiate arbitral or judicial proceedings if in
his opinion such proceedings are necessary for preserving his rights.

SEC 78-Costs

Costs means reasonable costs relating to the following:

The fee and expenses of the conciliator and witness requested by the conciliator with the
consent of the parties

Any expert advice requested by the conciliator with the consent of the parties

Any assistance provided to sec 64(2) (b) and sec 68

Any other expenses incurred in connection with the conciliation proceedings and the
settlement agreement. Sec 78(2)

It is the conciliator who fixes the costs of the conciliation proceedings upon their termination
and gives written notice of it to the parties. Sec78 (1) the costs are borne by the parties in
equal shares. Sec 78(3)

18
SEC 79-Deposits

The conciliator may estimate the costs likely to be incurred and direct each party to deposit it
in advance in an equal amount. During the conciliation proceedings, the conciliator may
demand supplementary deposits from each party. If the require deposits are not paid in full by
both parties within 30 days, the conciliator may either suspend the proceedings or terminate
the proceedings by making a written declaration to the parties.

The termination of proceedings become effective from the date of declaration. Upon
termination of the proceedings, the conciliator shall render to the parties accounts of deposits
received and return the unexpected balance to the parties.

SEC 80-Restrictions on Role of Conciliator

Section 80 places two restrictions on the role of the conciliator in the conduct of conciliation
proceedings:

Clause (a) of Section 80 prohibits the conciliator to act as an arbitrator or as a representative

or counsel of a party in any arbitral or judicial proceeding in respect of a dispute which is
subject of the conciliation proceedings.

Clause (b) of Section 80 prohibits the parties to produce the conciliator as a witness in any
arbitral or judicial proceedings.6

SEC 81-Admissibility of evidence in other proceedings

The parties shall not rely on or introduce as evidence in arbitral or judicial proceedings,
whether or not such proceedings relate to the dispute that is the subject of the conciliation
proceedings-

1. Views expressed or suggestions made by the other party in respect of a possible

settlement of the dispute
2. Admissions made by the other party in the course of the conciliation proceedings
3. Proposals made by the conciliator

6
SERINA, LEGAL MATCH, ACCESSED ON 16 NOV 2018

19
 4. The fact that the other party had indicated his willingness to accept a proposal for
settlement made by the conciliator7

CASE LAWS

Haresh Dayaram Thakur v. State of Maharashtra and Ors. AIR 2000 SC 2281

While dealing with the provisions of Sections 73 and 74 of the Arbitration and Conciliation
Act of 1996 in paragraph 19 of the judgment as expressed thus the court held that-

From the statutory provisions noted above the position is manifest that a conciliator is a
person who is to assist the parties to settle the disputes between them amicably.

For this purpose the conciliator is vested with wide powers to decide the procedure to be
followed by him untrammelled by the procedural law like the Code of Civil Procedure or the
Indian Evidence Act, 1872.

When the parties are able to resolve the dispute between them by mutual agreement and it
appears to the conciliator that their exists an element of settlement which may be acceptable
to the parties he is to proceed in accordance with the procedure laid down in Section 73,
formulate the terms of a settlement and make it over to the parties for their observations; and
the ultimate step to be taken by a conciliator is to draw up a settlement in the light of the
observations made by the parties to the terms formulated by him.

The settlement takes shape only when the parties draw up the settlement agreement or request
the conciliator to prepare the same and affix their signatures to it. Under Sub-section (3) of
Section 73 the settlement agreement signed by the parties is final and binding on the parties
and persons claiming under them.

It follows therefore that a successful conciliation proceedings comes to end only when the
settlement agreement signed by the parties comes into existence. It is such an agreement
which has the status and effect of legal sanctity of an arbitral award under Section 74.

Mysore Cements Ltd. V. Svedala Barmac Ltd. AIR 2003 SC 3493

It was said that Section 73 of the Act speaks of Settlement Agreement. Sub-section (1) says
that when it appears to the Conciliator that there exist elements of settlement which may be
7
PRAVIN MEHTA, LEGAL BITES, ACCESSED ON 01 MARCH 2017.

20
acceptable to the parties, he shall formulate the terms of a possible settlement and submit
them to the parties for their observation. After receiving the observations of the parties, the
Conciliator may reformulates the terms of a possible settlement in the light of such
observations.

In the present case, we do not find there any such formulation and reformulation by the
Conciliator, under Sub- section (2), if the parties reach a settlement agreement of the dispute
on the possible terms of settlement formulated, they may draw up and sign a written
settlement agreement. As per Sub-section

When the parties sign the Settlement Agreement, it shall be final and binding on the parties
and persons claiming under them respectively. Under Sub-section (4), the Conciliator shall
authenticate the Settlement Agreement and furnish a copy thereof to each of the parties. From
the undisputed facts and looking to the records, it is clear that all the requirements of Section
73 are not complied with.
8

PROBLEMS FACED BY CONCILIATION IN INDIA

Although conciliation services are available to civil litigants through the innovation of Lok
Adalats (panels of conciliators) and Conciliation Committees, several problems remain
unsolved. First, India generally lacks obligatory mediation such as early neutral evaluation
utilized in the United States which is especially useful when imposed shortly after litigation is
filed. Conciliation processes in India require the consent of both parties, or the request of one
party and the decision by the court that the matter is suitable for conciliation.

Second, the subject matter of disputes that may be sent to Lok Adalats is limited to auto
accidents and family matters.

Third, the conciliation process normally involves the lawyers, not the disputing parties
themselves.

This problem is particularly acute in writ proceedings in which the government is the
responding party, since counsel frequently claims to lack authority to make decisions about
terms of settlement.

8
KUSHAL, ECONOMICTIMES, ACCESSED ON 22 DEC 2018.

21
Fourth, current conciliation processes do not require the parties to meet and confer prior to
entering either traditional litigation venues or their alternatives. No joint statement of the
specific points of disagreement is required. The absence of meeting, conference and/or joint
statements requirement is required. The absence of meeting, conference or joint statement
requirements allows competing sides to remain insulated from one another.

Fifth, the Lok Adalats themselves have experienced backlog, and some defendants agree to
conciliation as a way of further delaying the litigation process.

Finally, there is no set time or point within the litigation process at which a decision is made,
by the courts, the parties or otherwise regarding referral of the case to some form of
alternative dispute resolution.

CONCILIATION V. ARBITRATION

While one has a choice of ADR techniques in most situations, it may be that some techniques
are better suited for certain situations. A comparison of conciliation and arbitration is sought
to be made to highlight the situations in which conciliation would be preferred to arbitration,
after listing certain characteristics of conciliation that distinguish it from arbitration.

Conciliation is different from arbitration and hence is better suited in certain situations:

1. Decisions of parties in a relationship arising out of ‘non-legal obligations’ situations are

not arbitral.

2. Certain decisions based on the ‘unfettered’, and ‘unrestricted’ rights of the parties affecting
the relationship between them.

3. Minor breaches or breaches of legal obligations that would not normally lead to
termination or large-scale liabilities but cause a loss of faith between the contracting parties
are better dealt with by conciliation than arbitration.

4. Operational issues that are not arbitrable but affect the continuing relationship between the
contracting parties.

5. Operational issues that have become such that lines of difference are drawn and have
turned into unrectractable positions without the other side giving in. Arbitration in such cases
would only make matters worse and only foreclose any possibility of working together.

22
6. The conciliator may not follow the law strictly; he may persuade the parties to come to a
settlement on principles of ex aeque et bono or amiable compositeur.

7. Commercial practices giving rise to actions that have in fact happened but are sometimes
not easy to prove as ‘facts’ in accordance with the rules of evidence in court or arbitration.
Parties may not admit these facts in arbitration or litigation since they know that these cannot
be proved by the other. In conciliation however, these may be admitted and justice may be
done, as it should be.

8. All proceedings in conciliation are confidential. Statements, concessions and admissions

made, and documents produced are to be used only for the conciliation. These may not be
used as the basis of claims in subsequent arbitrations or litigation. In addition, the conciliator
may not be the arbitrator in the same matter and hence a party that admits a position in
conciliation may demand proof of the facts alleged from the other party in arbitration or
litigation.

9. The end result in a conciliation is acceptable to both parties since it is not imposed like an
award/decree.

10. Consequently the possibility of better compliance increases tremendously.

11. Conciliation is more easily acceptable since the outcome of arbitration and/or litigation is
both uncertain and imposes an unwarranted additional expense.

12. Conciliation does not close the option of arbitration or litigation until settlement is signed
by the parties.

13. The settlement is treated on par with a decree of a court and consequently, may be
executed as such.

14. Subsequent to the Act, the cause of action, i.e., the matter in conciliation, may be said to
have merged with the settlement becoming final and therefore, neither of the parties may
resort to litigation or arbitration on those matters, as an afterthought. 9

9
Riya narang, casemine, law education, assessed on 1 nov 2015.

23
CONCLUSION

The process of conciliation as an alternate dispute redressed mechanism is advantageous to

the parties in the sense that it is cost effective and expeditious, it is simple, fast and
convenient then the lengthy litigation procedure and it eliminates any scope of biasness and
corruption.

The parties who wish to settle their disputes they can be provided great intensive by the
process of conciliation. In order to enable the conciliator to play his role effectively ,the
parties should be brought together face to face at a common place where they can interact
face to face and with the conciliator, separately or together without any distraction and with
only a single aim to sincerely arrive at the settlement of the dispute.

24
Conciliation is a boon and it is a better procedure to settle any dispute as in this process it is
the parties who by themselves only come to the settlement of the dispute and the role of the
conciliator is to bring parties together and to make an atmosphere where parties can
themselves resolve their disputes. Conciliation tries to individualize the optimal solution and
direct parties towards a satisfactory common agreement.

In conciliation, the conciliator plays a relatively direct role in the actual resolution of a
dispute and even advises the parties on certain solutions by making proposals for settlement.

REFERENCES

WEBLIOGRAPHY

https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1280&context=ilj

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2145187

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2145187_code1584156.pdf?
abstractid=2145187&mirid=1&type=2

http://ijmcr.com/wp-content/uploads/2014/11/Paper271035-1043.pdf

25
https://www.researchgate.net/publication/301205322_Arbitration_Mediation_and_Conc
iliation_differences_and_similarities_from_an_International_and_Italian_business_per
spective

BIBLIOGRAPHY

ALTERNATIVE DISPUTE RESOLUTION: THE INDIAN PERSPECTIVE

26