Conciliation under Arbitration and Conciliation Act, 1996

The author in this article discusses the concept of Conciliation under Arbitration and Conciliation act and also discusses the formation of Lok Adalats and other Additional Dispute Resolution (ADR) committees are fruitful as the speedy dissolution of cases will lead to a strong judiciary and judicial system.

The Arbitration and Conciliation Act, 1996 (the Act), is instituted on the UNCITRAL model statute on international business-related arbitration and conciliation. The act ushered a new statute of an era of personal arbitration and conciliation. It was also the first time when comprehensive legislation on the theme of conciliation started in India. The act does not define conciliation, but in simple words, conciliation is confidential, chosen, and personal dispute tenacity procedure in which a non-aligned and unbiased person aids the parties in dispute to reach a negotiated decision.[1] This tactic offers the disputing parties an opportunity to reconnoiter the options provided by the unbiased third party to exhaustively determine if reimbursement is possible. The Act is a significant and appreciable statute of the Indian legal system. This is due to the reason that because of rampant judicial pressure, judges cannot hear and decide all the cases, so this statute provides a meaningful aid to all those victims whose cases are generally civil. The formation of Lok Adalats and other Additional Dispute Resolution (ADR) committees are fruitful as the speedy dissolution of cases will lead to a strong judiciary and judicial system.

Principles of Conciliation

The process mentioned in Part III of the Actshows the following broad standards:

Non-adversary nature of conciliation proceedings – There is no claimant and petitioner in the conciliation proceedings. Part III of the Act lays down the rules and procedure for the conciliation proceedings. The following is a summary of the conciliation proceedings as laid down in Part III of the Act:

  1. The conciliation proceedings commence when the party initiating the proceedings sends a written invitation to conciliate to the other party, and the other party accepts it in writing. (Section 62 of the Act)
  2. The parties appoint the conciliator(s) with mutual agreement. (Section 64 of the Act)There shall be once conciliator unless the parties agree for two or three. (Section 63 of the Act)
  3. Each party submits its written statement to the conciliator(s).(Section 65 of the Act)
  4. To facilitate the conduct of conciliation proceedings, the parties, or the conciliator with the consent of the parties arranges for administrative assistance. (Section 68 of the Act)
  5. The parties meet the conciliator together or separately. (Section 69 of the Act)
  6. The conciliator formulates terms for a settlement with the mutual consent of both the parties. (Section 73 of the Act)
  7. The proceedings terminate once the parties sign or submit a written declaration to the conciliator. (Section 76 of the Act)
  8. Upon termination, the conciliator fixes the cost of the conciliation and gives written notice to the parties. (Section 78 of the Act)
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Voluntary nature of proceedings – Any party can begin and end the proceedings. Under section 62 of the Act, “(1) the party initiating conciliation shall send to the other party a written invitation to conciliate under this Part, briefly identifying the subject of the dispute, (2) Conciliation proceedings shall commence when the other party accepts in writing the invitation to conciliate, and (3) If the other party rejects the invitation, there will be no conciliation proceedings.”Section 76 of the Act states the termination of conciliation proceedings which start only after consulting with the parties. According to these sections, any party can send an invitation for the conciliation and the conciliation will begin only if the other party agrees, and the termination is also at the free will of the parties, proving the power of autonomy that the parties hold.

A flexible procedure-The conciliator has the discretion to espouse any procedural statute to ensure the speedy and inexpensive conduct of proceedings. Section 67(2) and (3) of the Act ensure that the conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to the usages of the trade concerned and that he/she conducts the conciliation proceedings in such a manner as he/she considers appropriate, taking into account the need for a speedy settlement of the dispute.

Decisions are recommendatory – The settlement of disputes is by mutual agreement and not by imposed decisions. Section 73(1) of the Act, states, “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 observation of the parties, the conciliator may reformulate the terms of a settlement in the light of such observations”. This section proves that the final decision arrived at byfollowing the parties’ suggestions and observations and not unilaterally decided by the conciliator and imposed upon the parties.

The Role of Conciliator                                                            

Section 80 of the Arbitration and Conciliation Act, 1966, states, Unless otherwise agreed by the parties, (a) the conciliator shall not act as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject of the conciliation proceedings; (b) the conciliator shall not be presented by the parties as a witness in any arbitral or judicial proceedings”.According to this section of the Act, the conciliator cannot maintain any kind of professional communication with the parties during an arbitral or judicial proceeding of the dispute, and the conciliator cannot be produced as a witness in the court for the same.“The conciliator does not plump for the parties in dispute, rather supports them in creating options to seek a remedy that is well-matched and attuned for both the parties. This fulfils the main theme of section 67 of the Act, which describes the main function of a conciliator to assist the parties to reach a fitting decision. The conciliator must act independently, should be impartial while proceedings, must abide by principles of objectivity, fairness, and justice. Section 67(4) of the Act enables the conciliator to make proposals for settlement of the dispute at any stage of the conciliation proceedings”.[2]

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Conciliation under the Civil Procedure Code, 1908 (CPC)

“The amendment of CPC in the year 1999 authorized the courts to refer pending cases to arbitration, conciliation, or mediation to accelerate early and amicable resolution of disputes. Beforethe amendment, the act did not contain any provision for referring to arbitration or conciliation to by the courts, in the absence of the agreement between the parties to that effect. However,following the insertion of section 89 in the CPC, a court can refer the case to arbitration, conciliation,or mediation. Section 89 of CPC empowers the court to formulate the terms of the settlement and give them to the parties. Section 76 of the Act allows the parties to end the conciliation proceedings even if the dispute is not resolved”.

Pros of Conciliation

  • It is more elastic, inexpensive, and informal.
  • Parties are unswervingly engaged in negotiating a settlement.
  • Conciliation enriches the likelihood of the parties continuing their good-humoured business relationship during and after the proceedings. The object is that the parties are in a conciliatory mode, away from the hostile environment of a court or an arbitral tribunal.[3]
  • It offers matters to a conclusion much sooner than court proceedings.
  • The conciliation procedure is carried out confidentially and without prejudice.
  • Conciliation is useful when the parties wantinput and direction from a third party, as against the more passive steering approach offered by mediation.

Cons of Conciliation

  • The core downfall of conciliation is that it relies on the parties accepting the authority of the conciliator and wanting to carry out a resolution.
  • If either of the parties involved does not enter the procedure with the right attitude, then it may prove to be a waste of time and money.

Conciliation versus Litigation

Since many years, litigation was the only way left for parties to settle their disputes. But both time and money are very precious to humans and litigation requires both. Many of the cases do not even come to judicial glam light. As speedy trials are not possible for every case,the system decided to adopt a new system of dispute resolution, i.e. ADR committee. Conciliation is an alternative to litigation. It is cheap compared to litigation. If the parties are not satisfied with the decision of a conciliator then they can move to courts, but in litigation, there is no other place to go if you are not satisfied with the decision of the Apex Court. Conciliation is not compulsory and binding, but it saves money and time of a person in other aspects.

  • Haresh Dayaram Thakur v. State of Maharashtra & Ors.[4]

The court held that a conciliator is a person who aids the parties to settle disputes amicably. For this purpose, conciliator has the power to decide the procedure tofollow in the conciliation proceedings.

  • Mysore Cements Ltd. v. Svedala Barmac Ltd.[5]
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The court held that section 73 of the Act speaks of the settlement agreement. If the conciliator proposes a settlement and the parties agree to it, then the conciliator draws a settlement agreement and the parties sign it. Once signed, the settlement becomes binding on the parties.


The procedure of conciliation as an alternative dispute resolution system has gained popularity in the past few years by many people appreciating it as an easy system to get justice, and to save time and money. For the conciliator to exercise his duties properly, the parties should come face to face and try to settle the dispute. The conciliation process is good but, there are many lacunae which this excellent system faces. People with valuable resources and knowledge know about the process of conciliation, but the helpless section of society still goes for litigation. Many advocates do not want the cases to go for ADR. Seeing the brighter side, the formation of ADR wings enables everyone to access it so that the pending cases of the Indian judiciary can see the sun of justice.

Also read Mediation & Negotiation in Resolving Personal Disputes


  1. Ramendra Pratap Singh, Conciliation in India,
  2. http://JUDIS.NIC.IN

[1] Ramendra Pratap Singh, Conciliation in India,

[2] Ramendra Pratap Singh, Conciliation in India,

[3] Ramendra Pratap Singh, Conciliation in India,

[4] (2000) 3 SCR 1140

[5] (2003) 2 SCC 1028