Sunday 22 February 2015

Procedure to be followed by court when case is settled in Mediation


When the parties come to a settlement upon a reference
made by the court for mediation, as suggested by the Committee
that there has to be some public record of the manner in which the
suit is disposed of and, therefore, the court has to first record the
settlement and pass a decree in terms thereof and if necessary
proceed to execute it in accordance with law. It cannot be accepted
that such a procedure would be unnecessary. If the settlement is
not filed in the court for the purpose of passing of a decree, there
will be no public record of the settlement. It is, however, a
different matter if the parties do not want the court to record a
settlement and pass a decree and feel that the settlement can be
implemented even without a decree. In such eventuality, nothing

prevents them in informing the court that the suit may be dismissed
as a dispute has been settled between the parties outside the court.”

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
CMPMO No. 75 of 2014.

Decided on: September 06, 2014.
Jiwan Lal Sharma Vs
.......Respondent.
Coram
The Hon’ble Mr. Justice Rajiv Sharma, Judge.
Citation;AIR2015(NOC)187HP

Key facts, necessary for the adjudication of the petition
are that the petitioner (hereinafter referred to as the plaintiff ) has
filed a suit against the respondent-defendant (hereinafter referred
to
as
the
defendant)
for
permanent
prohibitory
injunction
restraining the defendant from forcibly occupying and raising
construction work over the best portion of three storey building as
detailed in the plaint. The defendant filed the written statement
and contested the claim of the plaintiff. The plaintiff also moved
an application for grant of ad-interim injunction. The trial Court
vide order dated 5.5.2011, directed the parties to maintain status
quo. The defendant challenged the order dated 5.5.2011 before the
learned District Judge, Shimla. The appeal was dismissed by the
learned District Judge on 18.8.2012. The trial Court during the
pendency of the Civil Suit, under Section 89 of the Code of Civil
Procedure and the Rules framed by this Court, with the consent of

the parties, referred the matter to the Mediator for resolving the
Sh. Pawan Thakur, Advocate, was
Settlement was prepared on 11.1.2011.
The Deed of
appointed as Mediator vide order dated 4.1.2011.
dispute between the parties.
The parties signed the
Deed of Settlement (Annexure P-4). The Mediator submitted the
report dated 12.1.2011 to the learned trial Court. The defendant
filed objections to the settlement vide Annexure P-6 dated
21.2.2011. The plaintiff filed reply to the objections vide Annexure
The trial Court passed the order dated

P-7 dated 3.5.2011.
28.12.2013. The learned Civil Judge (Sr. Divn.), Shimla, came to
the conclusion that the compromise arrived at between the parties
through mediation was not binding upon the parties and the
objections were also not maintainable. The learned Civil Judge (Sr.
Divn.), Shimla, listed the matter for framing of issues on 4.3.2014.
In these circumstances, the plaintiff has filed the present petition
challenging the order dated 28.12.2013.
3.
I have heard the learned Senior Advocates for the
parties and gone through the pleadings and impugned order
carefully.
4.
The trial Court has erred by holding that the time limit
for completion of the mediation in the instant case has expired.
The learned trial Court has quoted Section 6 of the Civil Procedure
Mediation Rules, 2005 (hereinafter referred to as the Rules), while
coming to this conclusion. Infact, it is Rule 18 of the Rules, which
prescribes that on the expiry of sixty days from the date fixed for
the first appearance of the parties before the mediator, the
mediation shall stand terminated unless the Court which referred
the matter enter suo motu or upon request by the mediator or any
of the parties, and upon hearing all the parties, is of the view that

extension of time is necessary or may be useful, but such
extension shall not be beyond a further period of thirty days.
The
order was passed by the learned trial Court referring the matter to
the Mediator on 4.1.2011. The Deed of Settlement was prepared
on 11.1.2011. The Mediator submitted the report dated 12.1.2011
to the trial Court.
According to Rule 17 of the Rules, the parties must
5.
understand that the Mediator only facilitates in arriving at a

decision to resolve disputes and that he would not and cannot
impose any settlement nor does the Mediator give any warranty
that the mediation will result in a settlement. The Mediator cannot
impose any decision upon the parties.
In the instant case, the
parties have arrived at a settlement on 4.1.2011. They have signed
the statements. The report, as noticed hereinabove, was furnished
to the trial Court
by the Mediator on 12.1.2011.
According to
Rule 24, where an agreement is reached between the parties in
regard to all the issues in the suit or some of the issues, the same
is to be reduced in writing and signed by the parties or their power
of attorney and if any counsel have represented the parties, they
are required to attest the signature of their respective clients. The
agreement of the parties duly signed and attested is to be
submitted to the Mediator who shall, with a covering letter signed
by him, forward the same to the Court where the suit is pending.
The trial Court, as per sub rule (1) of Rule 25, within 7 days of the
receipt of any settlement, is required to issue notice to the parties
fixing a date for recording the settlement and such date should not
be beyond a further period of 14 days from the receipt of the
settlement. Thereafter, as per sub rule (2) of Rule 25, the Court is
required to pass a decree in accordance with the settlement so

recorded if the settlement disposes of all the issues in the suit.
The trial Court has not followed Rule 25 of the Rules. There is no
provision for filing the objections against the settlement which is
arrived at between the parties duly signed by them.
The only
requirement after the receipt of the settlement is that the Court,
which is seized of the matter, shall issue notice to the parties fixing
The defendant has not raised
date for recording the settlement.
any objection at the time of settlement dated 11.1.2011. The trial

Court immediately after the completion of the formalities required
under Rule 24, was to take necessary steps as provided under Rule
25, by giving notice and hearing the parties to effect compromise
and pass a decree in accordance with the terms of settlement
6.
accepted by the parties.
Salem Advocate Bar Association, T.N. vrs. Union of
case of
Their lordships’ of the Hon’ble Supreme Court in the
India, reported in (2005) 6 SCC 344, have held that Section
89(2)(d) only means that when mediation succeeds and parties
agree to the terms of settlement, the Mediator will report to the
Court and the Court, after giving notice and hearing to the parties,
“effect” the compromise and pass a decree in accordance with the
terms of settlement accepted by the parties.
Their lordships’ have
further held that when the parties come to a settlement upon a
reference made by the Court for mediation and the parties want
the same, there has to be some public record of the manner in
which the suit is disposed of and, therefore, the Court must first
record the settlement and pass a decree in terms thereof and, if
necessary, proceed to execute it in accordance with law.
If the
parties do not want the Court to record a settlement and pass a

decree, there will be no public record of the settlement.
Their
A doubt has been expressed in relation to clause (d) of
“57
lordships’ have held as follows:
Section 89(2) of the Code on the question as to finaliasation of the
terms of the compromise. The question is whether the terms of
compromise are to be finalized by or before the mediator or by or
before the court. It is evident that all the four alternatives, namely,
arbitration, conciliation, judicial settlement including settlement
through the Lok Adalat and mediation are meant to be the action of
persons or institutions outside the court and not before the court.

Order 10 Rule 1-C speaks of the “Conciliation Forum” referring
back the dispute to the court. In fact, the court is not involved in
the actual mediation/conciliation. Clause (d) of Section 89(2) only
means that when mediation succeeds and parties agree to the terms
of settlement, the mediator will report to the Court and the Court,
“effect” the
after giving notice and hearing to the parties,
compromise and pass a decree in accordance with the terms of
settlement accepted by the parties. Further, in this view, there is no
question
of
the
court
which
refers
the
matter
to
mediation/conciliation being debarred from hearing the matter
where settlement is not arrived at. The Judge who makes the
reference only considers the limited question as to whether there
are reasonable grounds to expect that there will be a settlement,
and on that ground he cannot be treated to be disqualified to try the
suit afterwards, if no settlement is arrived at between the parties.
62.
When the parties come to a settlement upon a reference
made by the court for mediation, as suggested by the Committee
that there has to be some public record of the manner in which the
suit is disposed of and, therefore, the court has to first record the
settlement and pass a decree in terms thereof and if necessary
proceed to execute it in accordance with law. It cannot be accepted
that such a procedure would be unnecessary. If the settlement is
not filed in the court for the purpose of passing of a decree, there
will be no public record of the settlement. It is, however, a
different matter if the parties do not want the court to record a
settlement and pass a decree and feel that the settlement can be
implemented even without a decree. In such eventuality, nothing

prevents them in informing the court that the suit may be dismissed
as a dispute has been settled between the parties outside the court.”
Accordingly, order dated 28.12.2013 is set aside. The
7.
trial Court is ordered to proceed with the matter strictly as per
Rule 25 of the Civil Procedure Mediation Rules, 2005, by issuing
notice to the parties and after hearing the parties effect the
compromise and pass a decree in accordance with the terms of the
settlement arrived at between the parties.
( Rajiv Sharma ),
Judge.
September 06, 2014,



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