Conciliation Proceeding

Section 61 to Section 81 of the Arbitration and Conciliation Act, 1996 deal with settlement of disputes
by conciliation proceedings.
Commencement of Conciliation Proceedings :a. If one of the parties to a dispute, which arose out of
legal relationship, whether contracted or not, wants to settle the dispute amicably with the mediation
of a conciliator, he has to send the other party a written invitation to conciliate the dispute. The written
invitation should briefly state the subject of the dispute. b. If the other party in writing accepts the
invitation to conciliate, the conciliation proceedings commence on such acceptance. c. If the other
party rejects the invitation, there will be no conciliation proceedings. d. If the party initiating
conciliation does not receive a reply within 30 days from the date on which he sends the invitation, he
may elect to treat this as a rejection of the invitation to conciliate and if he so elects, he shall inform in
writing to the other party accordingly.
Number of Conciliators - There shall be one conciliator unless the parties agree that there shall be
two or more conciliators. If there are more than one conciliators, they ought to act jointly.
Appointment of Conciliators ● In conciliation proceedings with 1 conciliator, the parties may agree
on the name of Sole Conciliator. ● In conciliation proceedings with 2 conciliators, each party shall
appoint one conciliators ● In conciliation proceedings with 3 conciliators, each party may appoint one
conciliator and the third conciliator is appointed by the parties by mutual consent.
Submission of Statement to Conciliator: ● The conciliator, upon his appointment, may request each
party to submit to him a brief written statement describing the general nature of the dispute and the
points at issue. Each party shall send a copy of such statement to the other party. ● The conciliator
may request each party to submit to him a further written statement of his position and the facts and
grounds in support of it and any documents or other evidence that such party deem appropriate. The
parties shall send a copy of such statement, document or evidence to the other party. ● At any stage of
the conciliation proceedings, the conciliator may request a party to submit to him such additional
information as he deems appropriate.
Role of Conciliator: ● The conciliator shall assist the parties in an independent and impartial manner
in their attempt to reach an amicable settlement of their dispute. ● The conciliator shall be guided by
the principles of objectivity, fairness and justice. ● He shall give consideration to the rights and
obligations of the parties, the usage of the trade concerned and the circumstances surrounding the
dispute, including previous business practices between the parties. ● The conciliator may, at any stage
of the conciliation proceedings, make proposal for a settlement of the dispute. Such proposal need not
be in writing and need not be accompanied by a statement of the reasons for it.
Communication between Concilitors and Parties: The conciliator may invite parties to meet him or
may communicate with them orally or in writing. He may meet or communicate with the parties
together or with each of them separately. The parties may agree upon the place of meeting with the
conciliator are to be held. If the parties do not agree upon the place of meeting, the place of meeting
shall be determined by the conciliator after consulting the parties.
Disclosure of Information :When the conciliator receives factual information concerning the dispute
from a party, he shall disclose the substance of that information to the other party. If a party gives any
information to the conciliator with a specific condition that it be kept confidential, the conciliator shall
not disclose the information to the other party.
Co-operation of Parties with Conciliator ● The parties shall in good faith co-operate with the
conciliator and shall endeavour to comply with requests by the conciliator to submit written materials,
provide evidence and attend meetings. Suggestion by Parties for settlement of disputes - Each party
may, on his own initiation or at the invitation of the conciliator, submit to the conciliator suggestions
for the settlement of the dispute.
Settlement Agreement: ● When it appears to the conciliator that there exists such elements of a
settlement which may be 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 observation of
the parties, the conciliator may reformulate the terms of a possible settlement in the light of such
observations. ● If the parties reach an agreement on a settlement of the dispute, they may draw up and
sign a written settlement agreement. ● If requested by the parties, the conciliator may draw up or
assist the parties in drawing up the settlement agreement. ● When the parties sign the settlement
agreement, it shall be final and binding on the parties and persons claiming under them. ● The
conciliator shall authenticate the settlement agreement and furnish a copy of it to each of the parties.
Status and Effect of Settlement Agreement - The settlement agreement shall have the same status
and effect as if it is an award on agreed terms on the substance of the dispute rendered by an Arbitral
Award.
CASE:Haresh Dayaram Thakur v. State of Maharashtra (2000)(SC) Facts: Dispute arose between the
appellant and his brother (third respondent) in connection with the ownership of a flat. Allotment of
the flat had been regularized in favour of the appellant, who had purchased it for a consideration of
Rs. 345,000. The third respondent’s case is that he had contributed Rs. 125,000 towards the purchase
price of the flat - This was rejected by the Development authority. The third respondent filed a writ
petition before the High Court seeking allotment in his favor. The High Court, on obtaining consent of
the third respondent and the appellant, appointed a conciliator and the conciliator sent a report after
conducting conciliation without obtaining the signature of the parties. This was challenged by the
appellant - High Court rejected the Challenged - Appellant approached the Supreme Court against the
rejection. Held: ● From a readng of Section 61, 64, 67, 69, 70, 72 to 77, and 30 of the Act, it is
manifest that a conciliator is a person who is to assist the parties to settle the dispute between them
amicably. For this purpose the conciliator is vested with wide powers to decided the procedure to be
followed by him unhampered by the procedural law like CPC and when the parties are able to resolve
the dispute between them by mutual agreement and it appears to the conciliator that there exists an
element of settlement, which may be acceptable by 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 observation, 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 term formulated by him. ● The settlement term
takes shape only when the parties draw up the settlement agreement or request the conciliator to
prepare the same and affix their signature to it. Under Section 73(3), the settlement agreement signed
by the parties is final and binding on the parties and persons claiming under them. “A successful
conciliation proceeding comes to an 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 of the Act. ● It was held that the conciliator and the learned judge
who passed the impugned order failed to take note of the provisions of the Act and the clear
distinction between an arbitration proceeding and a conciliation proceeding. The learned judge in
passing the impugned order failed to notice the apparent illegalities committed by the conciliator in
drawing up the so called settlement agreement, keeping it secret from the parties and sending it to the
court without obtaining their signature on the same. The position is well settled that of the statute
prescribed a procedure for doing a thing has to done according to the procedure. Thus the order
passed by the High Court confirming the settlment agreement was set aside and so was the settlement
agreement. The appeal was allowed by the Supreme Court and the High Court was directed to dispose
of the writ petition afresh on merits in accordance with law.