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CASE NO.:

Appeal (civil) 3247 of 2000

PETITIONER:

HARESH DAYARAM THAKUR

RESPONDENT:

STATE OF MAHARASHTRA AND ORS.

DATE OF JUDGMENT: 05/05/2000

BENCH:

D.P. MOHAPATRA & R..P SETHI

JUDGMENT:

JUDGMENT

2000 (3) SCR 1140

The Judgment of the Court was delivered by

D.P. MOHAPATRA, J. Leave granted.

Appellant Haresh Dayaram Thakur and respondent No. 3 Pitambar Dayaram

Thakur are brothers. Raj Kumari Pitambar Thakur Respondent No. 4 is wife of

respondent no. 3. The dispute raised in the case centres round the flat

bearing No. 16/199 at Ramakrishna Nagar, Khar, (W), Mumbai, belonging to

the Maharashtra Housing and Area Development Authority, Mumbai (for short

'MHADA'). The MHADA had granted lease of the said flat to one N.H.

Krishanan, who transferred his right, title and interest thereunder to one

Manmeet Singh Chadha under an agreement of transfer dated 7th April, 1986.

By the agreement for transfer dated 21.11.1989 the right, title and

interest of the flat was purchased by the appellant for a consideration of

Rs. 3,45,000. The appellant also became a member of the society of flat

owners of the building called Melody Cooperative Housing Society of which

the flat in question is a part. The appellant had applied to MHADA for

regularisation of allotment of the flat in his name. In December 1992 on a

routine inspection of the premises the Estate Manager of MHADA reported

that the property was in occupation of the appellant and his family members

including respondent No. 3, though it stood in the name of N.H. Krishnan,

and therefore, they were unauthorised occupants of the flat. On receipt of

the report a proceeding was initiated under section 66(1) of the

Maharashtra Housing and Development Act, 1966 (for short 'the Act'). In

pursuance of the order dated 23.4.1997 MHADA evicted all the unauthorised

occupants from the flat and sealed the same. In the said order leave was

given to the present appellant to establish his claim in respect of the

property in light of the deed of transfer dated 21.11.1989 and other

documents executed by the allottee in his favour. Subsequently, after

examining the relevant documents MHADA regularised the allotment of the

flat in favour of the appellant by an order under the Act.

On 19.9.1998 respondent no. 3 filed Writ Petition No. 5072/98 before the

Bombay High Court challenging the order of eviction passed by MHADA under

section 66(1) of the Act against him. It was the case of the respondent no.

3(writ petitioner) that he had also contributed a sum of Rs. 1,25,000 for

the purpose of purchase of the flat alongwith his brother, the appellant

herein, though the documents stood in the name of the latter. A Division

Bench of the High Court disposed of the Writ Petition by the order dated

7.10.1998 directing, inter alia that the competent authority of MHADA would

re-examine the claims of the respondent No. 3 as well as the appellant

herein and pass a speaking order in accordance with the law. In compliance

with the directions of the High Court the competent authority of MHADA

passed the order dated 18.12.1998 rejecting the claim of respondent no. 3

and confirming the allotment/regularisation of the flat in the name of the

appel-lant.

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The respondent Nos. 3 & 4 challenged the order dated 18.12.1998 of MHADA by

filing a writ petition under Articles 226 and 227 of the Constitution, Writ

Petition No. 510/99, asserting their title to the property. They prayed for

a writ of certiorari or any other appropriate writ, direction or order

under Article 226 of the Constitution of India quashing the order of the

Appellate Authority dated 23.4.1997 and the eviction order dated

18.12.1998; for a writ of Mandamus or any appropriate writ, direction or

order directing MHADA and its Estate Manager and the respondent no. 7 in

the writ petition (appellant herein) to restore to them possession of the

flat No. 16/199 at Ramakrishna Nagar, Khar (W), Mumbai and for issue of a

writ of mandamus to MHADA to regularise allotment of the said flat in

favour of the writ petitioners and for an interim direction restoring

possession of the flat to them after obtaining possession thereof from

respondent No. 7 (ap-pellant herein).In the said writ petition the High

Court by the order dated 6.3.1999 appointed a conciliator with regard to

the dispute between the parties. The relevant portion of the order reads

thus :

"By consent of the Petitioners and Respondent No. 7 hereto, Shri H. Suresh,

Retired Judge of the Bombay High Court, is appointed as Conciliator with

regard to dispute between the Petitioners and Re-spondent No. 7 relating to

Flat No. 16/199. Melody Co-operative Housing Society Ltd., Ramakrishna

Nagar, 9th Road, Khar, Mumbai - 400 052 including the issue of title,

regularisation/possession and compensation, if any.

The parties agree and undertake to this Court that the decision of the

Conciliator will be final and binding on both the parties.

Court Receiver, High Court, Bombay is hereby appointed as Receiver of

aforesaid Flat No. 16/199, with a further direction to take formal

possession of the said flat from Respondent No. 7, and appoint Respondent

No. 7 as his agent, on monthly royalty of Rs. 1,000 to be deposited with

the Conciliator, subject to the final award. The Receiver shall not insist

tor security and shall not display his board at the suit flat.

The learned Conciliator is requested to submit his report/award, and

preferably within six months."

In pursuance of the said order Justice H. Suresh (Retired) held meetings on

20.4.99, 5.7.99, 25.7.99, 8.8.99 and on 24.8.99 in presence of the counsel

for the parties. In the minutes of the Meeting held on 8.8.99 it was

recorded :

"After hearing both the parties, the Conciliator suggested that the matter

could be settled on the petitioner paying an amount as may be fixed by the

Conciliator, to the Respondent, the petitioner would be entitled to the

flat in question and would be put in possession. The parties agreed to the

above and requested the Conciliator to settle on these lines, and the

Conciliator to fix all the relevant terms, including the requirement the

petitioner foregoing his claim for the ancestral flat i.e. 18/224,

R.K.Nagar.

The Meeting is now adjourned to 24th Aug., 1999 at 4.30 p.m. when the

Advocates will make all the relevant submissions which will enable the

Conciliator to fix the amount and the other terms of settlement."

In the minutes of the last meeting held on 24.8.1999 the Conciliator

recorded that both the advocates have completed their submissions in

respect of the amount to be paid by the petitioner to the respondent to

enable the Conciliator to fix the amount as noted in the last meeting; that

both the advocates stated that there are no further submissions to be made.

In the concluding portion of the minutes of the said meeting it is recorded

"accord-ingly these proceedings come to an ending excepting the Conciliator

will make a report to the High Court incorporating the terms of

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settlement". The Conciliator in his report dated 31.8.1999 which was sent

to the High Court stated inter alia, that after taking into account all the

submissions made by both the parties and after considering all the relevant

documents and papers and pleading he (Conciliator) proposes to settle the

dispute in the manner set out in the report. The proposals in the

Conciliator's report included the stipulation i.e. (1) that on petitioner's

(respondents 3 & 4 herein) paying a sum of Rs. 4,00,000 to respondent no. 7

(appellant herein) he shall vacate the flat No. 16/199 and the petitioners

shall be put in possession thereof; (2) Petitioner No. 1 (Respondent 3

herein) shall forego and relinquish all his claims in respect of flat No.

18/224 Sunshine Co-operative Housing Society Ltd. 9th Road, Khar, Mumbai

400 052.; (3) that on the basis of the above settlement, the possession of

the said Flat No. 16/199 by the Petitioners be regularised in their favour

by the Maharashtra Housing and Area Develop-ment Authority (Respondent No.

2) and that in view of the settlement respondent No. 7 (appellant herein)

will have no claim whatsoever in respect of flat No. 16/199 and the writ

petitioners (Respondent 3 & 4 herein) will have no claim whatsoever in

respect of flat no. 18/224. The other stipulations of the settlement set

out in the report are not very material for the purpose of the present

case. It is relevant to state here that the so called 'proposal' by the

Conciliator was not signed by the parties, nor were its terms disclosed to

the parties by the Conciliator. As submitted by Sri Tulsi learned Sr.

counsel appearing for the appellant the report was sent by the Conciliator

in a sealed cover to the High Court directly.

The appellant filed an objection against the report of the Conciliator

setting out various grounds of challenge. A Division Bench of the High

Court summarily rejected the objections raised against the Conciliator's

report. Referring to the statement in the previous order dated 6.3.1999

that the parties agreed to undertake to the Court that the decision of the

Conciliator would be final and binding on both the parties the Division

Bench was of the opinion that when the Conciliator has been appointed for

taking a decision, with the consent of the parties no amount of objections

raised in the form of appli-cation can be entertained at all. (emphasis is

mine). Division Bench observed in the order "but in the present case, at

the time when conciliator was agreed to be appointed, clear cut

understanding was there between the parties to given to finality". The

conclusion arrived at by the Court as expressed in paragraph 4 of the order

reads :

"The net result of the matter is that the report filed by the conciliator

shall be treated as the Order in the Writ Petition and parties' rights will

be governed thereunder. Petition is disposed of accordingly. Civil

Application is disposed of."

The said order is under challenge in this appeal filed by the respondent

No. 7 of the writ petition.

The Arbitration and Conciliation Act, 1996, as the name itself suggests,

deals with two types of proceeding: arbitration proceedings and

conciliation proceedings. While provisions relating to arbitration

proceedings are con-tained in part-I in which are included Chapters 1 to X,

the conciliation proceedings are dealt with in part-Ill which includes

sections 61 to 81. On perusal of the provisions of the Act the position is

manifest that a clear distinction is maintained in the statute between

arbitration proceedings and conciliation proceedings.

Section 61 which deals with Application and Scope of the provisions, in

part-Ill provides, inter alia, that save 3s otherwise provided by any law

for the time being in force and unless the parties have otherwise agreed,

this Part shall apply to conciliation of disputes arising out of legal

relationship, whether contractual or not and to all proceedings relating

thereto.

In section 64 provision is made that the appointment of conciliators shall

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be by agreement of parties or if the parties agree they may request a

suitable institution or a person to appoint a conciliator on their behalf.

In section 65 it is provided, inte.r alia, that on being appointed the

conciliator shall request each party to submit to him a brief written

statement describing the general nature of the dispute and the points at

issue. Each party shall send a copy of such statement to the other party.

Section 67 which makes provision regarding role of conciliator pro-vides in

sub-section (1) that the conciliator shall assist the parties in an

independent and impartial manner in their attempt to reach an amicable

settlement of their dispute. In sub-section (2) thereof, it is provided

that the conciliator shall be guided by principles of objectivity, fairness

and justice, giving consideration to, among other things, the rights and

obligations of the parties, the usages of the trade concerned and the

circumstances surrounding the dispute including any previous business

practices between the parties. In sub-section (4) of section 67 it is laid

down that the conciliator may, at any stage of the conciliation

proceedings, make proposals for a settlement of the dispute. Such proposals

need not be in writing and need not be accompanied by a statement of the

reasons therefor. Section 69 contains the provision regarding communication

between conciliator and parties whether orally or in writing and about the

place of meetings etc. in section 70 provision is made regarding disclosure

of information. Therein it is provided, inter alia, that when the

conciliator receives factual information concerning the dispute from a

party, he shall disclose the substance of that information to the other

party in order that the other party may have the opportunity to present any

explanation which he considers appropriate. In the provision to the section

it is stated that when a party gives any information to the conciliator

subject to a specific condition that it he kept confidential, the

conciliator shall not disclose that information to the other party. Under

section 72 it is laid down that each party may, on his own initiative or at

the invitation of the conciliator, submit to the conciliator suggestions

tor the settlement of the dispute.

Section 73 in which provision is made regarding settlement agreement reads

as follows :

"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. Alter 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 respec-tively.

(4) The conciliator shall authenticate the settlement and furnish a copy

thereof to each of the parties."

Section 74 provides that 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.

Section 75 which incorporates in the statute the confidentiality clause

provides that notwithstanding anything contained in any other law for the

time being in force, the conciliator and the parties shall keep

confidential all matters relating to the conciliation proceedings.

Confidentiality shall extend also to the settlement agreement, except where

its disclosure is necessary for purposes of implementation and enforcement.

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Section 76 wherein provision is made regarding termination of conciliation

proceedings is extracted hereunder :

"76. Termination of conciliation proceedings - The conciliation proceedings

shall be terminated -

(a) by the signing of the settlement agreement by the parties on the date

of the agreement; or

(b) by a written declaration of the conciliator, after consultation with

the parties, to the effect that further efforts at conciliation are no

longer justified, on the date of the declaration; or

(c) by a written declaration of the parties addressed to the conciliator to

the effect that the conciliation proceedings are terminated, on the date of

the declaration; or

(d) by a written declaration of a party to the other party and the

conciliator, if appointed, to the effect that the conciliation proceedings

are terminated, on the date of the declaration.

Section 77 contains the provision that the parties shall not initiate,

during the conciliation proceedings, any arbitral or judicial proceedings

in respect of a dispute that is the subject-matter of the conciliation

proceedings except that a party may initiate.arbitral or judicial

proceedings where, in his opinion, such proceedings are necessary for

preserving his rights.

At this stage it will be convenient to refer to section 30, which is a

provision in Chapter VI dealing with making of arbitration award and

termination of proceedings. Section 30 reads as follows:

"30. Settlement: (1) It is not incompatible with an arbitration agree-ment

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."

From the statutory provisions noted above the position is manifest that a

coneiliator is a person who is to assist the parties to settle the dispute

between them amicably. For this purpose the conciliator is vested with wide

powers to decide the procedure to be followed by him untrammeled by the

procedural laws like the Code of Civil Procedure or the Indian Evidence

Act, 1872. When the parties are able to resolve the dispute between them by

mutual agreement and it appears to the conciliator that there exists an

element of settlement which may be acceptable to the parties he is to

proceed in accordance with the procedure laid down in section 73, formulate

the terms of a settlement and make it over to the parties for their

observations; and the ultimate step to be taken by a conciliator is to draw

up a settlement in the light of the observations made by the parties to the

terms formulated by him. The settlement takes shape only when the parties

draw up the settlement agreement or request the conciliator to prepare the

same and affix their signatures to it. Under sub-section (3) of section 73

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the settlement agreement signed by the parties is final and binding on the

parties and persons claiming under them. It follows therefore that a

successful conciliation proceeding comes to an end only when the settlement

agreement signed by the parties comes into existence. It is such an

agreement which has the status and effect of legal sanctity of an arbitral

award under section 74.

In the case in hand, as appears from the materials on record, no such

procedure as prescribed under part-Ill of the Act has been followed by the

conciliator. The conciliator appears to have held some meetings with the

parties in which there was discussion and thereafter drew up the so called

settlement agreement by himself in secrecy and sent the same to the court

in a sealed cover. Naturally the so called settlement agreement drawn up by

the conciliator does not bear the signatures of the parties. As the

impugned order shows the said settlement has been given a status higher

than an arbitral award in as much as the court has refused to even

entertain any objection against the said settlement agreement reiterating

the position that the settle-ment arrived at by the conciliator will be

binding on the parties. The conciliator who is a former judge of the High

Court and the learned Judge who passed the impugned order failed to take

note of the provisions of the Act and the clear distinction between an

arbitration proceeding and a con-ciliation proceeding. The learned judge in

passing the impugned order failed to notice the apparent illegalities

committed by the conciliator in drawing up the so called settlement

agreement, keeping it secret from the parties and sending it to the Court

without obtaining their signature on the same. The position is well settled

that if the statute prescribes a procedure for doing a thing, a thing has

to be done according to that procedure. Thus the order passed by the High

Court confirming the settlement agreement received from the conciliator is

wholly unsupportable.

Accordingly, the appeal is allowed. The order dated 6.10.1999 passed by the

High Court of Bombay in Civil Application No. 7117 of 1999 is set aside.

The settlement agreement dated 31.8.1999 filed by Justice H. Suresh before

the High Court is also set aside. The High Court is directed to dispose of

the Writ Petition afresh on merit in accordance with law. Parties to bear

their own costs.