Conciliation, Mediation, and Lok Adalats notes — Unit 5

Conciliation is a non-adjudicatory ADR mechanism where a neutral third party (Conciliator) actively assists the parties in reaching an amicable settlement of their dispute.

⇒Commencement (Section 62)

Unlike arbitration, which is triggered by a pre-existing clause, conciliation usually starts when a dispute has arisen. One party sends a written invitation to conciliate. Conciliation proceedings commence ONLY when the other party accepts the invitation in writing. If they reject or ignore it, there is no conciliation.

⇒Number of Conciliators

Usually one, but parties can agree to two or three. In conciliation, multiple conciliators must act jointly (unlike arbitration where they can have dissenting opinions).

⇒An Active Facilitator

The conciliator assists the parties in an independent and impartial manner. They are guided by principles of objectivity, fairness, and justice.

Unlike a mediator (who mostly facilitates dialogue), the conciliator plays a very active role. The conciliator may, at any stage of the proceedings, make proposals for a settlement of the dispute (Section 67(4)).

⇒Communication between Conciliator and Parties

The conciliator may invite the parties to meet him or may communicate with them orally or in writing. He may meet them together or separately (caucus). If a party gives factual information to the conciliator subject to a specific condition of confidentiality, the conciliator shall not disclose it to the other party (Section 70).

If the conciliation succeeds, it results in a Settlement Agreement.

⇒The Process (Section 73)

When it appears to the conciliator that elements of a settlement exist, he shall formulate the terms and submit them to the parties for observations. The conciliator then redraws the settlement based on feedback. If parties agree, they sign the written Settlement Agreement.

⇒Status and Effect (Section 74)

This is the most powerful aspect of statutory conciliation in India. The settlement agreement signed by the parties shall have the same status and effect as if it is an arbitral award on agreed terms.

(Meaning: If one party breaches the settlement agreement, the other party does not have to file a fresh lawsuit for breach of contract. They can take the settlement agreement straight to court and execute it like a civil court decree under Section 36).

⇒Confidentiality (Section 75)

Everything that happens in conciliation is strictly confidential. The conciliator and the parties must keep all matters relating to the proceedings confidential. This applies even to the settlement agreement, except where disclosure is necessary for implementation.

⇒Admissibility in other proceedings (Section 81)

To ensure parties speak freely, Section 81 states that parties shall NOT rely on or introduce as evidence in arbitral or judicial proceedings:

• Views expressed or suggestions made by the other party.
• Admissions made by the other party during conciliation.
• Proposals made by the conciliator.
• The fact that a party was willing to accept a proposal for settlement.

⇒Role of Conciliator in other proceedings (Section 80)

Unless otherwise agreed, the conciliator cannot act as an arbitrator or as a counsel for a party in any arbitral or judicial proceeding regarding the same dispute. He also cannot be presented as a witness.

Mediation is highly similar to conciliation, but typically, a mediator plays a slightly less evaluative role than a conciliator. A mediator facilitates the conversation, helping parties identify underlying interests, but rarely suggests the final settlement terms themselves.

⇒Court-Annexed Mediation

In India, mediation has gained massive traction through Court-Annexed Mediation Centers. Under Section 89 of the CPC, judges routinely refer pending civil/matrimonial cases to trained mediators working in the court complex. If mediation succeeds, the settlement is brought back to the judge, who passes a decree based on it. If it fails, the trial resumes.

⇒The Mediation Act, 2023

India recently enacted a standalone Mediation Act to formalize the process, making pre-litigation mediation mandatory in civil and commercial disputes before filing a lawsuit, and ensuring mediated settlement agreements are directly enforceable like court judgments.

Lok Adalat is a uniquely Indian ADR mechanism, rooted in the Gandhian principles of gram panchayats. It is governed by the Legal Services Authorities Act, 1987.

⇒What is it?

It is a forum where disputes/cases pending in the court of law or at pre-litigation stage are settled/compromised amicably. Lok Adalats are organized by State or District Legal Services Authorities.

⇒Composition

A Lok Adalat panel generally consists of a sitting or retired judicial officer (as the chairman), accompanied by two other members (usually a lawyer and a social worker). They do not adjudicate; they persuade parties to compromise.

⇒Types of Cases

Motor Accident claims, matrimonial disputes (non-criminal), land acquisition disputes, labor disputes, bank recovery cases, and compoundable criminal offences.

⇒Status of the Award

Under the Legal Services Authorities Act, every award made by a Lok Adalat shall be deemed to be a decree of a civil court. It is final and binding on all the parties to the dispute.

⇒No Appeal

Because the award is based purely on the mutual consent/compromise of the parties, no appeal lies to any court against the award of the Lok Adalat. If parties are unhappy during the Lok Adalat, they can simply walk away, and the case returns to the regular court. But once they sign the compromise, it is final.

⇒Court Fee Refund

As an incentive, if a pending court case is settled at a Lok Adalat, the entire court fee originally paid by the plaintiff is refunded to them.

A regular Lok Adalat cannot force a decision. If parties don't compromise, the case fails. To fix this for critical public services, Chapter VIA was added to the Legal Services Authorities Act to create 'Permanent Lok Adalats' (PLA).

⇒Jurisdiction

PLAs deal specifically with disputes relating to Public Utility Services (transport, postal/telegraph, power/water supply, hospitals, insurance). The pecuniary jurisdiction is up to ₹1 Crore.

⇒The Unique Power of PLA

When a dispute is brought to the PLA, it first tries conciliation. If parties reach a settlement, an award is passed. However, if the parties fail to reach a settlement, the PLA has the power to decide the dispute on merits (provided the dispute does not relate to any offence). This makes the PLA a hybrid of conciliation and adjudication.

⇒Summary of Master Concepts

• Conciliation: Active facilitation. Settlement agreement is enforceable like a court decree (Sec 74).
• Confidentiality (Sec 81): Admissions/offers in conciliation cannot be used in court if conciliation fails.
• Mediation: Less evaluative, highly successful through Court-Annexed centers. Now governed by Mediation Act, 2023.
• Lok Adalat: Compromise forum. Award is a civil decree. No appeal. Court fee is refunded.
• Permanent Lok Adalat: For Public Utility Services. Has the unique power to adjudicate on merits if conciliation fails.

⇒University Exam Tips for this Unit (Premium Advice)

• Lok Adalat Award: Always emphasize that the award of a Lok Adalat is final and NO appeal lies against it, because it is based on consent. Highlight the refund of court fees as a major incentive.
• Conciliation Settlement: Mention Section 74 of the Arbitration and Conciliation Act. The fact that a conciliation settlement is treated as a binding arbitral decree is its most important feature.
• Regular vs Permanent Lok Adalat: Understand the critical difference. Regular Lok Adalat fails if parties don't agree. Permanent Lok Adalat (for public utilities) can force a decision on merits even if parties don't agree.