Conciliation

• Conciliation is a non-binding procedure in which an impartial third party, the

conciliator, assists the parties to a dispute in reaching a mutually agreed
settlement of the dispute. Mediation and Conciliation are interchangeable
expressions.
• Conciliation is a non-contentious and non -binding procedure in which an
impartial third party the conciliator assists in reaching an amicable settlement
of dispute. Conciliation is a process of persuading parties to reach a mutually
agreed settlement of their dispute.
• The conciliator makes no decision. He only assists the parties to reach at a
settlement of their dispute.
Arbitration:-
• it is a binding procedure where the dispute is submitted for adjudication by
an arbitral tribunal consisting of a sole arbitrator or an odd number of
arbitrators which gives decision in the form of award and is binding upon the
parties.
• The following are some of the advantages of resolution of disputes by conciliation:-
• 1. It offers a more flexible alternative, for a wide variety of disputes, small as well as
large.
• 2. It obviates the parties from seeking recourse to the court system
• 3 It reserves the freedom of the parties to withdraw from conciliation without
prejudice to their legal position inter se at any stage of the proceedings.
• 4. It is committed to maintenance of confidentiality throughout the proceedings and
there after, of the dispute, the information exchanged, the offers and counter offers of
solutions made and the settlement arrived at.
• 5.It is cost effective and produces quicker resolution of dispute
• 6.It facilitates the maintenance of continued relationship between the parties ever
after the settlement or at least during the period when the settlement is attempted at.
• There is no scope for corruption or bias.
Conciliation Proceedings:-
Sections 61 to 81 of the Arbitration and Conciliation Act, 1996 deal with
settlement of disputes by Conciliation Proceedings.
Commencement of Conciliation Proceedings:-
i) If one of the parties to a dispute, which arose out of legal relationship,
whether contractual 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.
ii) If the other party accepts in writing the invitation to conciliate, the
conciliation proceedings commence on such acceptance.
iii) if the other party rejects the invitation, there will be no conciliation
proceedings.
iv) If the party initiating conciliation does not receive a reply within 30days 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 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 conciliator, they ought to act jointly.
Appointment of Conciliators:-
In conciliation proceedings with one conciliator, the parties may agree on the name
of a sole conciliator.
In conciliation proceedings with two conciliators, each party may appoint one
conciliator.
In Conciliation proceedings with three conciliators, 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.
Submission of Statements to Conciliators:-
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 deems appropriate. The party
shall send a copy of such statement, document and other 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 principles of objectivity, fairness and
justice.
He shall give consideration to the rights and obligations of the parties, the
usages 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
proposals for a settlement of the dispute. Such proposals need not be in
writing and need not be accompanied by a statement of the reasons for it.
• Communication between Conciliator 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 meetings with the conciliator are to
be held. If the parties do not agree upon the place of meetings, the place of
meetings 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 that information to the
other party.
Co-opration of Parties with Conciliator:-
The parties shall In good faith co-operate with the conciliator and shall endeavor to
comply with requests by the conciliator to submit written materials, provide
evidence and attend meetings. Suggestions by Parties for Settlement of Dispute
Each party may, on his own initiative 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 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 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 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 Tribunal.
• In Haresh Dayaram Thakur v. State of Maharashtra (2000) 6 SCC
dispute arose between the appellant and his brother(third respondent)in
connection with ownership of a flat. Allotment of the flat had been
regularised in favor of the appellant, who had purchased it for a consideration
of Rs. 3,45,000. The case of the brother( third respondent) that he had
contributed Rs.1,25,000 towards purchase price of the flat was rejected by
the Development Authority. Third respondent filed a writ petition before the
High Court seeking allotment in his favour. The High Court, upon obtaining
consent of the third respondent and the appellant, appointed a conciliator,
and the conciliator send a report after conducting conciliation without
obtaining the signature of the parties and without disclosing the terms of
agreements to the parties.
This was challenged by the appellant , high court rejected that challenge
against that he approached supreme court.
• The Supreme Court held that from a reading of sections 61, 64,67,69,70,72
to 77 and 30 of the Arbitration and Conciliation 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 decide the procedure to be followed by him untrammeled
(unhampered: not taking away the freedom of action) by the procedural
law like the Code of Civil Procedure 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 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 betaken
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
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 signatures on the same. The position is well settled that if the statute
prescribes a procedure for doing a thing, a thing has to be done according to that procedure.
Thus the order passed by the High Court confirming the settlement agreement received from
the conciliator is wholly unsupportable.
• Accordingly, the appeal was allowed. The order passed by the High Court was set aside. The
settlement agreement filed before the High Court was also set aside. The High Court was
directed to dispose of the writ petition afresh on merits in accordance with law.