SETTLEMENT AGREEMENT

(SECTION 73,74)

SETTLEMENT AGREEMENT
- SECTION 73 -

SECTION 73 – BARE PROVISIONS

 Procedure – If it appears to the arbitrator that there is scope for the parties arraign
at a settlement agreement he may formulate one and ask the parties to consider
the same.
 Post Settlement – If the parties agree to the settlement agreement, they may draw
up a written settlement agreement and sign the same.
 Binding – When the parties sign the agreement, it shall be final and binding.
 Authentication – The conciliator shall authenticate the agreement once it is
signed by the parties.

FRAMING OF SETTLEMENT AGREEMENT

 The main objective and duty of the conciliator is to assist the parties to reach an
amicable settlement.
 Section 73 has been inserted in furtherance of the same objective.
 Conditions – It must appear to the conciliator that there exists an element of
settlement which may be acceptable to the parties.
 Contents – The settlement agreement can be made on the basis of notes taken
by the conciliator, written statements of the parties, documents and evidence
advanced by the parties during the proceedings.
 Forward a draft to the Parties – Once the conciliator formulates the settlement, it
shall forward a draft to all the concerned parties for their observation and scrutiny.
 Reformulate the settlement – If the parties after pursuing the first draft of the
settlement agreement find out that there are certain changes to be made, they
can inform the conciliator and he can accordingly reformulate the settlement
agreement.
 Authentication – Once the parties are ad idem to the settlement agreement
formulated by the conciliator they shall sign it and after that the conciliator shall
authenticate the same.
 Same effect as an Arbitral Award – Once the settlement agreement is signed and
authenticated it has the same effect as an Arbitral Award.

BINDING EFFECT OF SETTLEMENT AGREEMENT

The following elements in a settlement agreement make it final and binding:
 Terms of settlement voluntarily agreed in writing;
 Parties must have signed the settlement agreement;
 Conciliator shall have authenticated the agreement;

STAMP DUTY PAYABLE ON SETTLEMENT AGREEMENT

 A settlement agreement shall be deemed to be an arbitral award.

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  It shall have the same status and effect as any other arbitral award, therefore as
per such a legal fiction, the stamp duty shall be paid on the settlement
agreement also.
STATUS & EFFECT OF SETTLEMENT AGREEMENT
- SECTION 74 -

APPLICABILITY AND SCOPE

 The settlement agreement shall not only have a final and binding effect between
the parties claiming under it.
 It shall also have the same effect as an Arbitral Award on agreed terms on the
substance of dispute, rendered by a duly constituted arbitral tribunal u/s. 30 of
the Act.

SETTLEMENT AGREEMENT ONLY BINDING IF IT IS SIGNED BY THE PARTIES

 A successful conciliation only comes to end when it is duly signed by the parties.
 Therefore, if a conciliator holds meetings in secrecy with one of the parties, arrives
at a decision and sends back to the Court the same in a sealed cover, withut
bearing the signatures of the party, the same cannot be given recognition as a
settlement agreement.
 Therefore, it implies that if a statute provides a particular procedure, it shall be
followed in such a way.