Whether parties can unilaterally withdraw from agreement entered before mediator?

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT: MR. JUSTICE A.MUHAMED MUSTAQUE
15TH DAY OF FEBRUARY 2017
OP(C).No. 3131 of 2016 (O)

MOHANAN P.K.,
Vs
SUDAKSHINA RAMAKRISHNAN,

In this original petition, a serious question arises as to the procedure to be followed by the courts in regard to the settlement arrived at between the parties in a court-annexed mediation.

2. In a suit for recovery of possession, the parties were referred to mediation. The parties have settled their dispute as seen from Ext.R3(c). The settlement reads as follows: {Vernaculars omitted}

3. Thereafter, it appears that the court below awaited the report of the surveyor to pass a decree in terms of the compromise. As the plaintiffs were not satisfied with the report of the surveyor, they filed I.A.No.559/2015 to revoke the mediation settlement and to permit him to proceed with the case. Aggrieved by the course of procedure adopted by the court below, the defendants approached this court in O.P.No.900 of 2015. This court by judgment in O.P.No.900 of 2015 directed the court below to refer the parties once again to mediation. Ext.P1 is the judgment in O.P.No.900 of 2015 dated 26.6.2015. The directions issued therein are as follows:

“In the result, this Original Petition (Civil) is allowed and
the court below is directed to refer the matter once again for
mediation. In the mediation, the parties can come to terms
with regard to the appointment of another Surveyor in the
place of the earlier Surveyor and once again measurement
can be carried out afresh.”

4. The parties were again referred to mediation and they have arrived at the following settlement:

“1. Both parties hereby mutually agreed to get the property
measured by the Taluk Surveyor, Ernakulam. The said
surveyor shall measure the property after giving notice
to all the concerned parties to the suit and also to the
neighbouring parties on all the four boundaries. The
expenses shall be borne by the plaintiffs. The
measurement shall be conducted in accordance with
the mediation agreement dated 13-12-2013 as early as
possible within three months. The surveyor shall
measure the property.
2. In view of the aforesaid agreement entered into
between the parties, the parties pray that the suit(s)
petition(s), appeal(s) be decreed/dismissed/disposed of
in terms of the aforesaid agreement.
3. In view of the aforesaid agreement, the plaintiff(s)/
Appellant(s) pray(s) for refund of the full Institution Fee.
4. Parties will appear on ….. before the Hon’ble Court for
passing Orders/Decree in terms of the above said
agreement.”

5. After arriving at the above settlement, the plaintiffs filed I.A.No.911 of 2016 to appoint an Advocate Commissioner for measurement. This was dismissed by the court below holding that the mediation agreement as above does not contemplate the appointment of an Advocate Commissioner. However, the court below referred the parties to mediation to enable them to measure the properties with the assistance of a Taluk Surveyor as agreed to in the mediation agreement earlier. Again the matter was referred back to the court stating that the matter was not settled in mediation. Then, again the plaintiff filed an application for appointment of an Advocate Commissioner with the help of a Taluk Surveyor after ignoring the mediation agreement. This has been dismissed by Ext.P6 order, stating that, unless and until the mediation agreement is not wiped off by the court, the petitioners cannot maintain such an application.

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6. The question that looms large in this case is, what is the effect of an agreement entered into between the parties in a mediation? Is that to be considered only as a piece of agreement between the parties for prosecuting the original suit or has it become final as to the dispute referred to the mediation.

7. The “court-annexed mediation” has become part of the administration of justice by an amendment to the Civil Procedure Code with effect from 1.7.2002. The power is conferred upon the court in terms of Section 89 to refer the dispute for settlement on any of the prescribed modes therein. In exercise of the power conferred under Section 122 of CPC, the High Court of Kerala framed Civil Procedure (Alternative Disputes Resolution) Rules, 2008. Part II of the above Rules refers to Mediation Rules. The parties may agree to the procedure to be followed by the mediator in the conduct of mediation proceedings (See Rule 13). Therefore, it is open for the parties to have the assistance of others to enable them to arrive at a settlement. The parties themselves could obtain such assistance. If not possible, through the court. This is for enabling the parties to arrive at a settlement. In a matter like this, it is open for the parties to approach the Taluk Surveyor or such other private surveyors to measure the properties and place it before the mediator before arriving at a settlement. If parties are unable to settle in spite of such assistance obtained, the mediator can very well report before the court that the matter is not settled. The entire procedure and steps taken therein will be protected in terms of Rule 20. Neither the mediator nor the parties shall disclose the information so collected through the procedure adopted by them. Rule 20 stipulates that Mediator, as well as parties, shall maintain confidentiality in respect of the events that transpired during the mediation. The mediator appointed will have to report to the court as to whether the matter is settled or not settled. In case, the mediation has not taken place; he will have to report, ‘not mediated’. He has no duty other than the above. The mediator cannot forward any agreement to the court to the effect as to what course of procedure to be followed by the court for passing a decree.

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8. However, when the parties settled the disputes by signing an agreement, detailing the procedures to be followed to work out such settlement, certainly, that agreement is having all the characteristics of compromise in terms of Order XXIII Rule 3 CPC. Once a compromise is arrived at between the parties, it is a settlement of dispute referred to in the mediation pending before the court. When the parties to the dispute sign the compromise, this settlement comes to the public domain. Confidentiality of the mediation covers the matters only upto the stage of reaching at a settlement or till the termination of the mediation. The parties when put their signature by accepting the terms and conditions in writing, the agreement is having all the characteristics of the compromise as referred to under Order XXIII Rule 3 CPC and no party can withdraw from it unilaterally. The moment it reaches the court, the court will have to act upon the compromise and to pass a decree in terms of the compromise.

No doubt, the court concerned will have to be satisfied with the legality of the compromise as well as jurisdiction to pass a decree based on such compromise. Once a settlement has been arrived at between the parties in relation to the matter in the suit, that concludes as far as the court concerned in relation to the dispute resolved in the settlement. It is to be noted that the court recording the compromise is entering into a satisfaction in terms or Order XXIII Rule 3 CPC and the court is not merely acting upon agreement. If one party wants to withdraw from the agreement, the court has every power to decide whether the agreement was effected lawfully or not. If it is proved to the satisfaction of the court that the dispute has been settled wholly or in part by a compromise, the court shall pass a decree in accordance with the agreement. The proviso to Order XXIII Rule 3 has a significant guidance in this regard. Therefore, if in the case of denial of an agreement or in the case of unilateral withdrawal, the court will have to enter a satisfaction whether there was a compromise of the subject matter of the suit or not. In fact, in the case of denial or withdrawal of the agreement, the court is bound to frame a question in this regard and decide the matter as contemplated under Order XXIII Rule 3 CPC.

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9. There cannot be any settlement between the parties as to the manner in which the suit has to be conducted or concluded. For that, the court is only bound by the Civil Procedure Code and other relevant statutory provisions. That means when a settlement is arrived at, and the court is satisfied that a decree can be passed, the court is bound to pass a decree.

10. In this case, it appears that based on the settlement, petitioners want to proceed further by invoking the original jurisdiction of the court to ensure that compromise is worked out. The various petitions filed by the petitioners would clearly indicate that the petitioners want to execute the settlement through the original jurisdiction of the court. If such procedure is allowed, that will amount to obliterating the original jurisdiction of the court with that of an executing court. Certainly, such procedure is disastrous to the mediation process as well as to the adjudicatory process of the court concerned.

11. In fact, it appears that the learned officer now presiding the court had realised that the procedure earlier adopted by him and his predecessor in office was wrong. That is the reason why the learned Sub Judge observed that “unless and until the mediation agreement is wiped off by the court, the petitioners cannot maintain a petition to depute an Advocate Commissioner to measure the plaint schedule property”. The learned Sub Judge is right in finding so. In such circumstances, the only course open for the court below is to consider the nature of settlement to find whether a decree can be passed or not based on such settlement. Therefore, there is no scope for interfering with the order of the court below. The court below, after adverting to the nature of the settlement, is directed to pass appropriate orders in this matter without any delay.

The original petition is disposed of as above.

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