Litigation in India can be endless, therefore foreign corporations seeking to
do businesses in India takes adequate precaution at the outset. In any
democratic society for protecting and enhancing the rights of the people, Desire
for quick and affordable justice is universal. Denial of 'timely justice'
amounts to denial of 'justice' itself. Two are integral to each other. Timely
disposal of cases is essential for maintaining the rule of law and providing
access to justice which is a guaranteed fundamental right.
However, as the present report indicates, the judicial system is unable to
deliver timely justice because of huge backlog of cases for which the current
judge strength is completely inadequate. On an average a court takes more than
decade to decide a civil suit, which ultimately results in 'justice delayed is
justice denied.' Since independence, Indian judiciary has suffered from an
overwhelming backlog of cases. Further, complexities and inadequacies of court
redressal mechanism leads to zeal for Alternative Dispute Resolution Mechanism.
It is the judiciary which plays an important role besides legislative and
executive body and India is not an exception. Desire for quick and affordable
justice is universal. Justice should be speedy, simple, cheap, affective and
substantial. Conciliation is an alternative dispute resolution mechanism which
has been given statutory recognition by incorporating provisions in Sections 61
to 81 of Part III of the Arbitration and Conciliation Act, 1996.
Part 3rd of the Arbitration and Conciliation Act, 1996. deals with conciliation.
Conciliation means the settling of disputes without litigation. Conciliation is
a process by which discussion between parties is kept going through the
participation of a conciliator. The main difference between arbitration and
conciliation is that in arbitration proceedings the award is the decision of the
Arbitral Tribunal while in the case of conciliation the decision is that of
parties arrived at with the assistance of the conciliator.
The law relating to conciliation has been codified for the first time in India
on the pattern of UNCITRAL Conciliation Rules.
Conciliation is an alternative dispute resolution mechanism with the help of
conciliator. Conciliator assists the disputing parties to explore potential
solutions and find a mutually acceptable solution by lowering tensions and
improving communications. Conciliation is an alternative dispute resolution
mechanism which has been given statutory recognition by incorporating provisions
in Sections 61 to 81 of Part III of the Arbitration and Conciliation Act, 1996.
Conciliation is a process in which the parties to a dispute, with the assistance
of a dispute resolution practitioner (the conciliator), identify the issues in
dispute, develop options, consider alternatives to reach an agreement. The term
conciliation is not defined in the Act. However, simply put conciliation is a
confidential, voluntary and private dispute resolution process in which a
neutral person helps the parties to reach a negotiated settlement.
- The purpose of conciliation proceedings is to reach an amicable, swift
and cost-efficient settlement of a dispute.
- If the parties to a dispute formally agree to submit it to conciliation,
ICMA assigns a member of its panel of conciliators as conciliator to the
case. The members of this panel are persons of high integrity with wide
experience of the international capital market. They are appointed by ICMA's
executive committee on an annual basis.
- The place of the conciliation proceedings is to be agreed upon by the
parties, failing which it is determined by the conciliator.
- The conciliator hears the case and then recommends a settlement proposal
to the parties. Following a settlement, or, if no settlement can be reached,
the conciliator closes the conciliation proceedings and notifies ICMA and
the parties accordingly.
- The costs of conciliation proceedings, including the remuneration of and
the costs incurred by the conciliator as well as ICMA , are normally borne
in equal parts by the parties concerned.
Conciliation is as old as the Indian history. In Mahabharata when both parties
were determined to resolve the conflict in battle fields, Lord Krishna made
efforts to resolve the conflict. Now also, the panchayat system works in the
villages. The Indian system places a lot of importance on resolution of disputes
by negotiation which is purely conciliatory. Conciliation is essentially a
consensual process. Under the Arbitration and Conciliation Act, 1996, it has the
The best example where conciliation played an integral role is of the highly
politically sensitive case of the Beagle channel dispute over the ownership of
certain islands in the entrance to the channel between Chile and Argentina. The
mediator was the Vatican. The process was remarkable because it was flexible
enough to accommodate the changing political environments in both countries and
the mediator used a range of tools to great advantage. This process served to
protect a fragile peace between the countries and ultimately allowed them to
create an agreement that has lasted until this day.
Provisions relating to Conciliation
The procedure to be followed in the conciliation proceedings are mentioned in
sections 62 to 81 of the Arbitration and Conciliation Act of 1996. We will be
looking at the few important sections to be followed in initial stage of the
Commencement of the proceedings of Conciliation (Section 62)
Section 62 provides for the commencement of proceedings for conciliation. For
the purpose of settling the dispute through the process of conciliation all what
is required is a proposal in writing and its acceptance thereof. When a proposal
is made by one party the other party has the option of the acceptance of
proposal or its rejection.
Rejection does not always have to be expressed it may be implied. If the party
who sends the proposal does not receive any follow up or reply within a period
of thirty days or other stipulated period it shall amounts to rejection and
hence the process of conciliation will not commence.
Number of conciliators (Section 63)
Once the proposal is accepted by the other party the next important step is to
have a conciliator. Section 63 of the 1996 act provides that there under usual
circumstances there will be only one conciliator. And in no case the number of
conciliators shall exceed three [section 63(2)] which is the maximum limit and
the general rule is that they shall act jointly
Appointment of conciliators (Section 64)
There are two ways that are provided for the appointment of conciliators:
- First, the parties may on a mutual agreement appoint the conciliator
according to the guidelines provided in section 64 (I):
- A sole conciliator:The parties may with their understanding mutually agree
upon the name of the sole conciliator;
- Two conciliators: according to this provision each of the party may appoint
- Three conciliators: according to this a third conciliator may be appointed
who will act as the presiding conciliator.
- Second, the parties may take advice and take assistance of an institution or
person for the appointment of conciliators.
Section 65: It deals with Submission of statements by the parties to
Section 66: This section provides that Conciliator is not bound by the
procedures envisaged in CPC , or Evidence Act.
Section 67: This section talks about the role of a Conciliator. These roles
include acting impartially, fairly, independently and strive towards reaching an
amicable resolution of the dispute.
Section 69: This section deals with the communication between the parties and
Section 71: This section provides that that the parties should act in good
faith and co-operate with the Conciliator
Section 73: This section provides for the provision of the Settlement agreement
and its components.
Section 75: This sections deals with the important principle of
Section 76: This section talks about the termination of proceedings which can
be done by the signing of the settlement agreement or by a declaration by a
written declaration of a party to other party.
Section 78: It talks about the costs that are included in the conciliation
Section 81: This section deals with evidence and its admissibility of certain
kinds of evidence which cannot be used in other proceedings like proposals made
by the conciliator or the fact that the other party was willing to accept a
Sections 62: 81 of the Arbitration and Conciliation Act thus provide a complete
and a comprehensive procedure for Conciliation.From initiation of the process of
Conciliation to the settlement of dispute , evidence , roles of Conciliator etc.
are completely covered in the aforesaid sections.
Famous Conciliation Cases in India
- Case: Gujarat Ambuja Cement Pvt. Ltd. v. U.B. Gadh
- Petitioner : Gujarat Ambuja Cement Pvt. Ltd. v/s
Respondent : U.B. Gadh
The petitioner has challenged an award passed by the labour court.
When do the conciliation proceedings begin when ambiguity is there?
There are two separate procedures for conciliation proceedings. The first
instance, where a notice of strike is given by the workers. Rule 76 and 77
provide for the same. Under Rule 76 the conciliation officer attempts to:
- Interview both the employer and employee
- Aim to settle the dispute
Rule 11 covers conciliation proceedings in situations not covered by Rule 76 and
- Case: Subhashbhai Bhanabhai Patel And Others v. State Of Gujarat And Others
- Petitioner : Subhashbhai Bhanabhai Patel
- Respondent : State of Gujarat, Reliance Industries Limited
The conciliation proceedings between the Union and Reliance Industries
Limited did not succeed. Then the Conciliation Officer drew a failure report.
However, the report was not submitted to the third respondent, State of Gujarat.
The dispute was pending. The statutory authority also did not act according to
law. Under section 33A of the Industrial Disputes Act, the authorities refused
to register the complaint. The Industrial Tribunal was to be notified about it.
Under article 226 of the constitution, the respondents filed a writ petition.
The appellants were dismissed from the respondent's company. They were demanding
a higher amount for signing a long-term agreement. A new executive body was
elected in 2002. The appellants did not contest the said election. Thus, they
ceased to be the member of the Executive body. They also misrepresented
themselves in court to get favourable orders.
- Whether prior approval is required to dismiss a workman who was
previously an office-bearer of Union?
The court dismissed the appeal. It was held that "if a workman ceased to
be office-bearer of Union, then his dismissal does not require approval under
section 33(2)(b) of the Act."
- Case: M/S Imi Norgren Herion (Pvt.) Ltd. v. Labour Court, U.P. Noida, And Ors.
- Petitioner : M/S Imi Norgren Herion (Pvt.) Ltd.
- Respondent : Labour Court, U.P. Noida
The petitioner had terminated the respondent's contract. Both the
parties agreed to reconcile. The conciliation proceedings started in 2015. The
respondent withdrew his claim in the conciliation proceedings to avoid
litigation. Both the parties settled the matter. It was also registered.
Additionally, the petitioner paid Rs. 3,45,376 to the respondent for settlement.
Thus, the petitioner contended that by entering into an agreement the respondent
could not start a conciliation case.
- Whether the respondent has any further claim after settlement?
The court referred to various sections of the Payment of Wages Act, 1936. Under
section 6-D of the Act,  the proceedings before the Labour Court or tribunal
shall be deemed to have commenced on the date of reference of the dispute to
adjudication and concluded on the date on which the award becomes enforceable
under section 6-A.
The tribunal has the authority to decide the jurisdiction once the reference for
adjudication is made. Neither the conciliation officer has the authority to
decide the jurisdiction based on the merits of the case. The registered
settlement between the parties denotes that the dispute came to an end. There
lies no merit in the instant petition by the respondent. Thus, the court
dismissed the petition.
Summary and Concluding Remarks
In any democratic society for protecting and enhancing the rights of the people,
it is the judiciary which plays an important role besides legislative and
executive body and India is not an exception. However, for any progressive
society, dispute should be resolved so far as possible at minimum cost both in
terms of money and time and justice should be speedy, simple, cheap, and
substantial. Having dissatisfied with the formal and adversarial justice system
by court, alternative dispute resolution mechanism was evolved which gives
people involvement in the process of resolving their dispute.
Conciliation is extra judicial, means to settle disputes in a friendly manner.
In a developing country like India, where the backlog of the court is keeps on
mounting, conciliation can pay an important role in reducing the burden of the
courts. However, even two decade after enactment of Arbitration & Conciliation
Act 1996, the Act has failed to serve the purpose what its legislators intended
it to be. Besides reducing the burden on the Courts and giving speedy justice to
people, alternative dispute resolution mechanism has been introduced for a
number of other reasons.
Alternative disputes resolution mechanisms are relatively inexpensive in
comparison with the ordinary legal process. These mechanisms, therefore, help
litigants who are unable to meet the expenses involved in the ordinary process
of dispute resolution through Courts. Furthermore, ADR mechanisms enhance the
involvement of the community in the dispute resolution process. Conciliation
offers a more flexible alternative to arbitration as well as litigation, for
resolution of disputes in the widest range of contractual relationships, as it i
is an entirely voluntary process.
Our judicial system is neither ineffective nor alone responsible for huge
backlog of pending cases. We must not forget the increased inflow of cases in
all courts of the country. Litigation is not the only means of resolving
disputes. We need to re-look and strengthen our own available alternative
mechanism with positive framework.
Conciliation is unquestionably a better option than arbitration as the
experience in past few years has shown that arbitration is neither inexpensive
nor time saving. In cases where court has been given the authority to review the
outcome, the advantage does not appear to be real on account of first spending
time before the arbitration tribunals and then in courts. Conciliation is a more
amicable way to settle disputes without harming the personal relations as well.
Thus, the pros of Conciliation are categorically more than arbitration which
asserts my stand that it is for the better.