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Settlement agreements must discourage litigation: Endlaw J. pulls up Delhi HC Mediation Cell

Settlement agreements must discourage litigation: Endlaw J. pulls up Delhi HC Mediation Cell

Aditya AK

Earlier this week, the Delhi High Court pulled up its own Mediation Cell for drawing up a settlement agreement that resulted in further litigation.

Justice Rajiv Sahai Endlaw was hearing a case in which a settlement had been arrived at between two parties to a property dispute.

The parties had entered into a settlement agreement before the Delhi High Court Mediation and Conciliation Centre on September 2, 2015. The suit was withdrawn at the initial stage, and the settlement agreement provided that either party had the liberty to file fresh proceedings if any disputes arose from the agreement.

The plaintiff had agreed to withdraw the suit for cancellation of a sale deed, provided the defendant paid a total sum of Rs. 2,25,00,000. Justice Endlaw pointed out that the plaintiffs did not seek a decree when the court passed an order dated October 28, 2015. Moreover, the suit was withdrawn even before the defendant paid the aforesaid amount.

The Court also noted that it would have been better if the settlement had provided for a decree for recovery of money on default of the payment. Further, Justice Endlaw criticised the Mediation Cell for having made such an agreement.

“The mediators of the Mediation Cell of this Court, while mediating and drawing up of the Settlement Agreement, ought to take care of the implementation of the settlement arrived at. The attempt of the mediator should be to bind the parties by providing such default clauses as may discourage further litigation.

A Settlement Agreement drawn up by the Mediation Cell of this Court should not be allowed to furnish a cause of action for further litigation, as has happened in the present case. To provide for continuation of the suit in the event of default, only allows an unscrupulous litigant to gain time under the garb of settlement and thereafter continue with the suit.”

He also hinted that this is not the first time he has seen this happen.

“This is yet another instance where settlement agreements are found to have been drawn up by the Mediation Cell of this Court and which settlement agreements rather than serving the purpose of finishing the litigation once and for all, give rise to further litigation.”

He then directed that a copy of this order be sent to the Mediation Cell for “appropriate action”.

Appearing for the plaintiff, Senior Advocate Raman Kapur asked for a passover and urged that the order dated October 28, 2015 be treated as a decree. Justice Endlaw failed to agree.

“I am unable to agree. Without the counsel for the plaintiff/decree holder having taken care on 28th October, 2015 to have the suit decreed, the counsel for the plaintiff in the face of the order as it stands cannot possibly urge that a decree was passed.”

Read the order: