Shri Ravi Aggarwal vs Shri Anil Jagota
2009 Latest Caselaw 2107 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          EFA (OS) No. 19 of 2009


                                      Date of Decision : May 18, 2009



SHRI RAVI AGGARWAL                                       .......Appellant
                           Through:    Mr. Sanjeev Palli, Advocate


                                  Versus


SHRI ANIL JAGOTA                                      .......Respondent
                           Through:    Mr. Girish Aggarwal, Advocate
                                       For the respondent/caveator.


CORAM :


       HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
       HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA


1.     Whether Reporters of local papers may be allowed to see the
       judgment?

2.     To be referred to the Reporter or not?

3.     Whether the judgment should be reported in the Digest?

SANJAY KISHAN KAUL, J. (ORAL)

Caveat No. 42/2009 in EFA(OS) No. 19/2009

Learned counsel for the respondent/caveator has entered

appearance, thus the caveat stands discharged.

CM APPL. No. 7178/2009 (Exemption) in EFA(OS) No. 19/2009

Allowed subject to just exceptions.

+ EFA (OS) No. 19/2009

1. The present appeal in fact raises an interesting question of law

as to how a settlement recorded in a private mediation should be

enforceable.

2. The factual matrix of the case is set out. The parties were

partners in M/s. Plywood Traders. There were some disputes and

the matter was taken up for mediation by one Mr.Virender Taneja,

who was known to both the parties. A settlement was arrived at

between the parties.

3. The appellant filed a petition under Section 8 read with

Section 11 of the Arbitration and Conciliation Act on the ground that

certain disputes had arisen between the parties and on account of

there being an arbitration clause in the Partnership Deed, reference

should be made to an arbitrator. The respondent took a preliminary

objection that the disputes between the parties stood resolved in a

private mediation where the mediator has been jointly appointed by

the parties and thus nothing remained to be adjudicated.

Respondent also took a stand that he has no objection if the

settlement is implemented and acted upon. In fact the stand in

those proceedings of the respondent was that the settlement had

already been acted upon though this position was disputed by the

appellant. The appellant also stated that he had no objection if the

settlement was acted upon. The learned Single Judge thus by an

order dated 25.10.2005, found that there was no need to appoint an

arbitrator and in case the plea of the appellant was that "the

settlement/award had not been implemented fully", it was open to

seek enforcement thereof by resorting to appropriate legal

proceedings.

4. The appellant thereafter proceeded to file an execution

petition seeking enforcement of the settlement. This execution

petition has been held to be not maintainable in terms of the

impugned order dated 26.03.2009. The reason for the same is that

the parties had settled their disputes through a mediator and the

Court had not appointed either an arbitrator or mediator. No decree

had been passed in terms of Section 2(2) of the Civil Procedure

Code which could be executable. We may notice that though the

stand of the appellant was that the settlement arrived at between

the parties was in the nature of an arbitral award and executable.

The learned Single Judge found that no award had been passed by

any arbitrator under the said Act.

5. Learned counsel for the appellant drew our attention to the

provisions of Section 30 of the said Act in support of his case that

even a settlement mutually arrived at in arbitration between the

parties is enforceable and can be executed as a decree. The said

provision reads as under:

"30. Settlement. - (1) It is not incompatible with an arbitration agreement for an arbitral tribunal to encourage settlement of the dispute and, with the agreement of the parties, the arbitral tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.

(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that it is an arbitral award.

(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute."

6. We are unable to accept the submission of the learned

counsel for the appellant for the reason that sub-section (1) of

Section 30 of the said Act provides for a duly constituted arbitral

Tribunal to encourage settlement. In case such a settlement is

arrived at, the settlement is to be recorded in the form of an arbitral

award on agreed terms. It is then only that the award becomes

executable. Thus, it is not the settlement per se which is

executable but an award made by a duly constituted Arbitral

Tribunal based on a settlement which is executable. The facts of

the present case show that no Arbitral Tribunal was constituted but

undoubtedly a third party was put in the picture to arrive at a

settlement who only acted as a mediator.

7. Learned counsel has also drawn our attention to the provisions

of Sections 73 and 74 of the said Act which read as under:

"73. Settlement agreement. - (1) When it appears to the conciliator that there exist 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.

(2) 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.

(3) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively.

(4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.

74. Status and effect of settlement agreement.

- The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30."

8. The said provisions fall in Part III of the said Act dealing with

conciliation. Conciliation proceedings had to be initiated in terms of

Section 62 of the said Act. The settlement agreement envisaged

under Section 73 of the said Act has to be one which is in pursuance

to a duly constituted conciliation proceedings as per Section 62 of

the said Act. If such a settlement comes about then that

settlement is enforceable as an arbitral award in terms of Section 74

of the said Act. The legislature in its wisdom has not considered it

appropriate to provide for a mediation settlement privately arrived

at to be enforced as a decree de hors Part III of the said Act.

9. The result of the aforesaid is that though there is a valid

settlement arrived at between the parties in mediation proceedings,

which is undisputed by both the parties, the question is of

implementation of that settlement and thus it partakes the

character of a private agreement which is sought to be enforced by

one of the parties alleging a breach while the other party is alleging

due compliance.

10. We are thus of the considered view that the remedy of

execution is not available to the appellant. The appellant has been

endeavouring to seek different remedies under provisions of the

said Act but will have to initiate appropriate legal proceedings in

accordance with law for seeking enforcement of the settlement in

the form of a private agreement.

11. Learned counsel for the appellant states that in view of his

bona fide endeavour to seek enforcement of the settlement

agreement and the legal proceedings initiated in pursuance thereto

the period of limitation for enforcement of that agreement should be

extended. This is a matter to be examined by the Court where such

proceedings are initiated, if any.

12. The appeal is dismissed with the aforesaid observations.

SANJAY KISHAN KAUL, J.

MAY 18, 2009                         SUDERSHAN KUMAR MISRA, J.
rd