Conciliation Settlement and Arbitral Award Compared

Section 74 of the Arbitration and Conciliation Act, 1996 provided that a settlement agreement reached in conciliation shall have the same status and effect as if it is an arbitral award on agreed terms under Section 30. The two instruments were therefore equally enforceable, both being executed under Section 36 as decrees. They remain different in origin: an award on the merits is a determination by a tribunal, while a settlement binds because the parties signed it. That difference decides how each is attacked, what it must contain, and what happens if the requirements are not met.

The routes by which a settlement or an award becomes executable, and the difference that survives

1. Three Instruments, One Enforcement Route

An award on the merits. Made under Section 31 after the tribunal has heard the parties, stating reasons, final and binding under Section 35 and enforced under Section 36.
An award on agreed terms. Made under Section 30 where the parties settle during the arbitration. It states that it is an arbitral award and has the same status and effect as any other award, but by Section 31(3)(b) it need not state reasons.
A conciliation settlement agreement. Made under Section 73 outside any arbitration, and given by Section 74 the status and effect of an award on agreed terms, so that it too was enforced under Section 36.

The chain is deliberate. Section 74 does not say that a conciliation settlement is an award; it says that it has the same status and effect as an award on agreed terms under Section 30, and Section 30(4) in turn gives such an award the same status and effect as any other award on the substance of the dispute. The enforcement machinery of Section 36 then applies to all three.

2. The Comparison

Basis	Arbitral award on the merits	Conciliation settlement agreement
How it comes about	The tribunal hears the parties and decides	The parties agree, often on terms the conciliator formulated under Section 67(4)
Source of its binding force	The determination of the tribunal, under the authority of the arbitration agreement	The consent of the parties, expressed by signature
Reasons	Required by Section 31(3)	Not required; the agreement records terms, not findings
Formal requirements	In writing, signed by the members, stating the date and the place, with a signed copy delivered under Section 31(5)	Drawn up and signed by the parties, and authenticated by the conciliator, Section 73(2) and (4)
Status	Final and binding under Section 35	The status and effect of an award on agreed terms, Section 74
Enforcement	Section 36, as a decree	Section 36, as a decree
Challenge	Setting aside under Section 34 on the stated grounds	Only by attacking consent, for fraud, coercion or incapacity; there is no application to set aside
If a requirement is missing	The award may be set aside, but it exists as an award	The document is not a settlement agreement at all and carries no statutory status

3. The Requirements Are Strictly Construed

📖 Haresh Dayaram Thakur v. State of Maharashtra, (2000) 6 SCC 179

Held: A settlement agreement acquires the status and effect of an arbitral award only when the requirements of Section 73 are satisfied: the parties must reach agreement, the agreement must be drawn up and signed by them, and the conciliator must authenticate it and furnish a copy to each party. A document prepared by the conciliator recording his own view of what the settlement should be, which the parties have not signed, is not a settlement agreement and cannot be enforced as an award.

📖 Mysore Cements Ltd. v. Svedala Barmac Ltd., (2003) 10 SCC 375

Held: For a document to carry the status given by Section 74 the statutory requirements must be strictly complied with. Correspondence or minutes recording that the parties were close to agreement, or a draft not signed and authenticated as the section requires, does not qualify and cannot be enforced as an award on agreed terms.

Significance: Read with Haresh Dayaram Thakur, the two decisions establish that the formalities of Section 73 are conditions of the statutory status, not mere directions.

⚠ Why the difference in challenge matters

An award on the merits may be set aside under Section 34 for want of jurisdiction, breach of natural justice, excess of scope, non-arbitrability, conflict with public policy, or patent illegality in a domestic reference. None of these fits a settlement, because the parties themselves decided the outcome. A settlement is attacked by attacking consent, which means proving fraud, coercion, misrepresentation or incapacity in the ordinary way. The practical consequence is that a properly executed settlement is far harder to dislodge than an award.

4. The Position after 2023

Section 61 of the Mediation Act, 2023 with its Sixth Schedule substituted Sections 61 to 81 of the 1996 Act, so a settlement reached in what would formerly have been a conciliation is now a mediated settlement agreement under Section 19 of the Mediation Act and is enforced under Section 27 of that Act in the same manner as a judgment or decree. Two changes follow. The route to enforcement no longer passes through Section 36 of the arbitration statute. And a direct challenge now exists: Section 28 of the Mediation Act permits a settlement to be challenged on the ground of fraud, corruption, impersonation, or that the mediation was conducted in a dispute not fit for mediation, within ninety days. The new Section 62 saves conciliation proceedings already initiated, which continue under the old provisions.

Section 30 of the arbitration statute is unaffected. Where parties settle during an arbitration, the tribunal continues to record the settlement as an award on agreed terms, which remains the most convenient instrument of all: it is an award for every purpose, it needs no reasons, and it is enforced under Section 36 without any separate proceeding.

5. Related Topics and Provisions

Topic or provision	Connection
Conciliation under Part III: Sections 61 to 81	Sections 73 and 74 in their context
Making of the Arbitral Award: Sections 28 to 33	Section 30, and the form and contents of an award
Arbitration and Conciliation Compared	The processes that produce the two instruments
Sections 31, 34, 35 and 36, A&C Act, 1996	Form, challenge, finality and enforcement
Sections 19, 27 and 28, Mediation Act, 2023	The present route for a settlement and its challenge