Thursday, 31 March 2016

Supreme court judgment on settlement of dispute through mediation

The proceedings in these petitions as indeed the
proceedings in the Bombay High Court (out of which the
present petitions have arisen) indicate a clear need for
encouraging an amicable settlement process, preferably
through mediation, in which the services of a mediator wellversed
in the art, science and technique of mediation may be
taken advantage of. The alternative, of course, is protracted
litigation which may not be the best alternative for the
contesting parties or for a society that requires expeditious
justice delivery.

 In his Foreword written on 12th April, 2011 to the first
edition of “Mediation Practice & Law – The path to successful
dispute resolution” written by Mr. Sriram Panchu, Senior
Advocate and Mediator, Mr. Fali S. Nariman, a Senior
Advocate of this Court and a respected jurist, writes:
“[T]he same subject matter of disputation between two
parties can be dealt with in two different ways, not
necessarily exclusive: first, by attempting to resolve a
dispute in such a way that the parties involved win as
much as possible and lose as little as possible through
the intervention of a third party steeped in the
techniques of mediation; and second, (failing this) the
dispute would be left to be resolved by each party
presenting its case before a disinterested third party
with an expectation of a binding decision on the merits
of the case: a win-all lose-all, final determination”.
The second alternative may not be the best alternative, as
already mentioned by us.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
PETITIONS FOR SPECIAL LEAVE TO APPEAL (C) NOS.1878-1879 OF 2009
Suresh Narayan Kadam & Ors. .…Petitioners
versus
Central Bank of India & Ors. …Respondents
Dated;February 5, 2016

1. The proceedings in these petitions as indeed the
proceedings in the Bombay High Court (out of which the
present petitions have arisen) indicate a clear need for
encouraging an amicable settlement process, preferably
through mediation, in which the services of a mediator wellversed
in the art, science and technique of mediation may be
taken advantage of. The alternative, of course, is protracted
litigation which may not be the best alternative for the
contesting parties or for a society that requires expeditious
justice delivery.

2. In his Foreword written on 12th April, 2011 to the first
edition of “Mediation Practice & Law – The path to successful
dispute resolution” written by Mr. Sriram Panchu, Senior
Advocate and Mediator, Mr. Fali S. Nariman, a Senior
Advocate of this Court and a respected jurist, writes:
“[T]he same subject matter of disputation between two
parties can be dealt with in two different ways, not
necessarily exclusive: first, by attempting to resolve a
dispute in such a way that the parties involved win as
much as possible and lose as little as possible through
the intervention of a third party steeped in the
techniques of mediation; and second, (failing this) the
dispute would be left to be resolved by each party
presenting its case before a disinterested third party
with an expectation of a binding decision on the merits
of the case: a win-all lose-all, final determination”.
The second alternative may not be the best alternative, as
already mentioned by us.
3. The decision rendered by the High Court which is under
challenge before us states that efforts were made to have the
disputes between the contesting parties settled but it is clear
that no institutional mechanism was invited to assist in the
settlement process. The proceedings before us also indicate
that several efforts were made to encourage the contesting
parties to arrive at a settlement, and at one point of time the
parties did reach an interim arrangement but that could not

fructify into a final settlement only because of the absence of
an intervention through an institutional mechanism.
Appreciating this, this Court has consistently encouraged the
settlement of disputes through an institutionalized alternative
dispute resolution mechanism and there are at least three
significant decisions rendered by this Court on the subject.
They are: (i) Salem Advocate Bar Assn. (II) v. Union of
India1
(ii) Afcons Infrastructure Ltd. v. Cherian Varkey
Construction Co. (P) Ltd.2
(iii) K. Srinivas Rao v. D.A.
Deepa.
3

4. That apart this Court has, on several occasions, referred
disputes for amicable settlement through the Mediation Centre
functioning in the Supreme Court premises itself and
Mediation Centres across the country in a large variety of
disputes including (primarily) matrimonial disputes. In spite
of the encouragement given by this Court, for one reason or
another, institutionalized mediation has yet to be recognized
as an acceptable method of dispute resolution provoking Mr.
Fali S. Nariman to comment in the same Foreword in the
context of the Afcon’s decision that “Mediation must stand on
its own; its success judged on its own record, un-assisted by
1
(2005) 6 SCC 344
2
(2010) 8 SCC 24
3
(2013) 5 SCC 226

Judges.”
5. With this prologue, it is necessary to state the facts of
the dispute before us. The Maharashtra Housing and Area
Development Authority (MHADA) had constructed some
buildings for the lower and middle income groups in a complex
known as Samata Nagar, Kandivli, Mumbai. Each building
had twenty flats. The Central Bank of India (for short ‘the
Bank’) took possession of the land and ten such buildings on
16th August, 1982 with the intention of housing the families of
a total of 200 employees. Pursuant thereto, the Bank issued
Circulars on 15th September, 1982 and 25th May, 1983 relating
to the policy of allotment of the flats to its Class III and Class
IV employees.
6. The Circular dated 15th September, 1982 provided that
the flats would be allotted to employees under the jurisdiction
of the Central Office, Bombay Main Office and the Bombay
Metropolitan Regional Office. It also provided that the
allotment would be as per the absolute discretion of the
management and that the facility of allotment was not given as
a condition of service nor did any right vest in any staff
member.

7. The Circular dated 25th May, 1983 made some minor
modifications in the eligibility for allotment but the sum and
substance, as far as the present proceedings are concerned,
remained more or less the same.
8. Based on the above broad principles, the allotment of
flats was made to its employees by the Bank. We are told that
presently, about 50 families are living in these flats, the rest
being vacant.
9. As earlier agreed upon by MHADA and the Bank, on 29th
July, 1994 MHADA leased out the land underneath the
buildings to the Bank for a period of 90 years. Some of the
salient conditions mentioned in the Lease Deed read as
follows:-
“(h) Not to assign, sublet, underlet or otherwise transfer
in any other manner whatsoever including parting with
the possession of the whole or any part of the said land
or its interest thereunder or benefit of this lease to any
person or persons or change the user of the said land or
any part thereof without the previous written
permission of the Authority.
(i) To use the said land and the tenements in the said
buildings constructed thereon for the purpose of
residence of its employees as service quarter only and
for no other purpose.
(l) Not to make any excavation upon any part of the said
land without the previous consent of the Authority in
writing first obtained, except for the purpose of
repairing renovation or rebuilding the existing structure
standing on the said land or utilization of permissible

F.S.I. if any as per Development control
rules/regulations on the plot leased to the lessee which
is a part of a layout of village Poisar at Borivali
Bombay."
10. Apparently with a view to redevelop the plot by
demolishing the buildings purchased by the Bank, it appears
that the Bank stopped allotting the flats from sometime in
1997 onwards and on or about 15th June, 2007 it floated a
proposal for redevelopment of the plot by demolishing the
buildings. The proposal for redevelopment necessitated the
eviction of the employees from the flats occupied by them.
Therefore, sometime in July 2007 eviction notices were issued
to the employees-allottees under the provisions of the Public
Premises (Eviction of Unauthorised Occupants) Act, 1971 (for
short “the Act”).
11. Some of the employees contested the proceedings and
eventually an order was passed by the Estate Officer
appointed under the Act in 2008 rejecting all their
submissions and they were directed to vacate the public
premises within 15 days of the date of publication of the order
failing which they were liable to be evicted, if need be, by the
use of such force as may be necessary. The employees were
also ordered to pay damages with effect from 15th June, 2007

till the date of handing over of peaceful possession of the
public premises to the Bank failing which the amount would
be recovered as arrears of land revenue.
12. Feeling aggrieved, the employees preferred appeals
under Section 9 of the Act which came to be dismissed by the
City Civil Court in Bombay in June 2008. The Appellate
Authority dismissed all the appeals with costs but stayed the
order of eviction for a period of seven days to enable the
employees to approach the Bombay High Court.
13. The employees then approached the High Court by
filing Writ Petition Nos.4417 of 2008 and 5589 of 2008 which
were heard by a learned Single Judge and dismissed by a
judgment and order dated 19th December, 2008 (impugned
before us).
14. The employees made the following four submissions
before the High Court:
(i) MHADA had leased the land to the Bank for
building residential quarters for Class IV employees;
(ii) the premises were part of the conditions of
services of the Class IV employees which could not
be taken away by issuing a quit notice;
(iii) The purpose for which the Bank required

vacant buildings was for demolishing them in order
to build new buildings for housing their managerial
staff; and
(iv) The notice for eviction did not spell out the
reasons for evicting the petitioners.
15. Each of these contentions was rejected by the High
Court but before us, learned counsel for the petitioners
effectively pressed only the 1st and 3rd contentions, being
interlinked.
16. At this stage, we must point out that the High Court
has observed that several adjournments were granted to the
parties to negotiate a settlement. However, the parties failed
to arrive at any settlement and it is for this reason that the
High Court was compelled to deliver judgment. Before this
Court also several efforts were made to arrive at some kind of
an amicable settlement including providing alternative
accommodation to the employees or making monthly payment
to them in lieu of the allotted premises. However, for one
reason or another despite best efforts made by learned counsel
for the parties, no settlement could be arrived at.
17. At one stage, the following interim arrangement was
broadly accepted by both the sides as noted in the order dated

29th November, 2010 but even that interim arrangement did
not fructify into a settlement between the parties and it is for
this reason that we too have been compelled to decide on the
correctness or otherwise of the judgment and order passed by
the High Court.
“(i) 49 employees (sub staff) are occupying units
spread over several buildings. Though most of the units
are vacant, as some of the units are occupied, the Bank
is not in a position to demolish the buildings and take
up development work which it proposes. In the
circumstances, out of the 49 employees, those who are
allottees of quarters, will be shifted by the Bank to one
or two buildings so that the Bank will be able to
demolish the other buildings and take up the
development.
(ii) It is made clear that if any family members of
deceased allottees (who have been given compassionate
appointment) are continuing in such units, they will not
be entitled to alternative accommodation. Such
occupants will have to vacate.
(iii) The Bank will, in the meanwhile, continue its
efforts to identify alternative premises for those who are
being shifted to the two buildings.”
18. There is no doubt that none of the employees have
any right to retain the allotted premises, more particularly
since the allotment was not a part of their condition of service.
This is quite clear from the Circulars dated 15th September,
1982 and 25th May, 1983. That apart, no right based
submission was made before us. That being the position, it is

really difficult to appreciate the basis on which the employees
are claiming an entitlement to continue in the allotted
premises.
19. It was submitted before us that the land was leased
out by the MHADA to the Bank for the purposes of housing
middle income group employees or lower income group
employees. As a result of the redevelopment plan, the Bank
was intending to demolish the buildings and to construct
luxury apartments for their managerial level officers, contrary
to the lease agreement with MHADA. Assuming this to be so,
if there is a violation of the provisions of the lease deed
between the MHADA and the Bank, it is really for them to
settle their differences, if any. The employees do not come into
the picture at all.
20. The various clauses in the lease agreement that have
been referred to do not in any manner involve the employees
and for them to raise an issue about any alleged violation of
the provisions of the lease deed is totally inconsequential.
This is not a public interest litigation where the rule relating to
standing can be relaxed. We are therefore not inclined to
accept this submission of the employees that since the
MHADA had leased out the land to the Bank for housing

middle income group or lower income group employees, the
Bank is disentitled from demolishing the buildings and
constructing luxury apartments for their managerial level
officers.
21. The second argument advanced by the employees is
really a different facet of the first argument and since we do
not find any basis at all for the grievance of the employees
against either the MHADA or against the Bank, we reject this
submission as well.
22. Under these circumstances, we find no merit in these
petitions and therefore decline to grant special leave to appeal
and dismiss these petitions but with no order as to costs.
23. Since the employees have been residing in the flats
for a considerable period of time, we grant them time to vacate
the premises allotted to them on or before 31st March, 2016.
We expect the employees to peacefully vacate the allotted
premises and if there is some difficulty in this regard, the
Bank is at liberty to approach the High Court for the
implementation of its order of eviction.
24. We may also note that the Bank has demanded
damages from the employees both who are still working with
the Bank and those who have retired. In our opinion, since

the employees were pursuing their remedies before the High
Court as well as before this Court, we do not think it
appropriate to direct them to pay any damages to the Bank for
the use and occupation of the premises allotted nor do we
think it appropriate to permit the Bank to recover the damages
awarded against the employees.
 ..……………………..J
 (Madan B. Lokur)

 ………………………J
New Delhi; (R.K. Agrawal)
February 5, 2016

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