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CS Professional · Arbitration, Mediation and Conciliation · Introduction to Conciliation and its Importance for MSMEs

In a conciliation between Patel Engineering and Surya Components, the conciliator directs each party to deposit Rs 25,000 as advance for costs. Patel pays; Surya does not pay within thirty days. Which course is open to the conciliator under the Act?

The conciliator may either suspend the proceedings or make a written declaration of termination to the parties. Under section 79(3), when both parties have not paid the required deposits in full within thirty days, termination takes effect on the date of that declaration.

  1. ASuspend the proceedings or make a written declaration of termination, effective on the date of that declarationCorrect
  2. BOnly suspend the proceedings, as termination requires consent of both parties
  3. CRefer the deposit default to the court for an order of termination
  4. DContinue and recover Surya's share from Patel's deposit

Explanation

Section 79(3) provides that if required deposits are not paid in full by both parties within thirty days, the conciliator may suspend the proceedings or declare termination in writing to the parties, effective on the date of that declaration. Termination does not need consent or court order.

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