Haresh Dayaram Thakur v. State of Maharashtra (2000)

Conciliation under Part III ends, if it succeeds, in a document that the Act treats as if it were an arbitral award on agreed terms — with all the force of enforcement that carries. The obvious question follows at once: which document? Conciliations generate minutes, notes of proposals, and often a conciliator's report recording what the parties appeared to accept. If any of those could be the settlement, a party could be bound by something he never signed.

Haresh Dayaram Thakur fixes the moment of binding force, and it fixes it at the signature of the parties. That is the single most examinable point in the conciliation syllabus.

A conciliation was conducted and the conciliator produced a document recording the outcome. What was absent was a settlement agreement signed by the parties in the manner the Act requires. The question was whether what existed could nonetheless be treated as having the status of a settlement under Part III.

A conciliation ends in a binding settlement only when a settlement agreement signed by the parties comes into existence, and it is that signed agreement which has the status of an arbitral award on agreed terms under s. 74. Minutes of discussions, or a conciliator's report, are not enough.

1. Follow the sequence the Act lays down. Under s. 73 the conciliator formulates the possible terms of a settlement when it appears to him that elements of a settlement exist, reformulates them in the light of the parties' observations, and the parties then draw up and sign the agreement; the conciliator authenticates it and gives a copy to each party.
2. Locate the source of binding force in the parties' consent. The conciliator has no authority to impose anything — under s. 67 he only makes proposals. What binds is therefore the parties' own agreement, evidenced by signature, not the neutral's assessment of where they had reached.
3. Match the consequence to the formality. Section 74 gives the settlement agreement the status and effect of an arbitral award on agreed terms, which means enforceability. A consequence that serious cannot attach to an informal record.
4. Protect the candour the process depends on. Part III shields the process three ways — confidentiality under s. 75, a neutral who cannot later act as arbitrator, representative or witness in the same dispute unless the parties agree (s. 80), and inadmissibility under s. 81 of the other side's settlement views and admissions, the conciliator's proposals and any indicated willingness to accept them. Treating interim minutes as binding would destroy exactly that protection.

It opens the conciliation short note, whose skeleton is: s. 62 (commencement on written acceptance of the invitation); s. 67 (the conciliator's role — he makes proposals and may do so at any stage, orally, without reasons); s. 73 (settlement) and s. 74 (its effect); then ss. 75, 80 and 81 as the confidentiality triangle; and a closing note that the Mediation Act, 2023 carries a Sixth Schedule which would replace ss. 61 to 81 of the 1996 Act — check its commencement before treating Part III as repealed.

It is equally the authority in any problem where one party says a settlement was reached and the other denies it: ask for the signed agreement, and if there is none, there is no s. 74 settlement.

It disposes of the argument that a conciliator's report, or minutes recording apparent agreement, binds the parties.

It does not decide what happens where a pending suit is referred to conciliation under s. 89 CPC: there the settlement is placed before the court, which records it and passes a decree applying Order 23 Rule 3 CPC, with matters outside the suit governed by s. 74 (Afcons). Remember also that a court cannot refer parties to conciliation at all without the consent of all of them.