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CS Professional · Arbitration, Mediation and Conciliation · Conciliation Proceedings and International Perspective of Conciliation

Conciliation between Vihaan Constructions and Jain Steels ended on 5 June when both parties signed a settlement agreement. The conciliator had received deposits of Rs 1,20,000 in total (Rs 60,000 from each party). Reasonable costs under Section 78(2) come to Rs 90,000, and the agreement is silent on apportionment. Which statement is correct?

Costs of Rs 90,000 are shared equally at Rs 45,000 each, since the settlement agreement is silent. The conciliator must account for the deposits and return the unexpended Rs 30,000, Rs 15,000 to each party, under Sections 78 and 79(4) after termination.

  1. ACosts are borne equally, Rs 45,000 each, and the conciliator returns the unexpended Rs 30,000 balance, Rs 15,000 to each party, after rendering an accountingCorrect
  2. BCosts are borne by Vihaan, as the initiating party, and Jain Steels receives its full deposit back
  3. CCosts are fixed before the proceedings terminate, so no balance is returned
  4. DCosts are borne equally, but the unexpended balance is kept by the conciliator as additional fee

Explanation

Proceedings terminated on 5 June under Section 76(a). The conciliator then fixes costs (Section 78(1)). With no agreed apportionment they are borne equally: 90,000/2 = 45,000 each. Unspent deposit is 1,20,000 - 90,000 = 30,000, returned after accounting under Section 79(4), i.e. 15,000 each (check: 60,000 - 45,000).

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