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

Meridian Textiles Pvt Ltd and Kaveri Dyes Ltd attempted conciliation over a supply dispute, which failed. Meridian then began arbitration. In the arbitration, Meridian's counsel wants to produce a letter from Kaveri's managing director, written during the conciliation, suggesting a 20% price reduction as a possible settlement. Under Section 81 of the Arbitration and Conciliation Act, 1996, what is the position?

Meridian cannot rely on the letter. Section 81(a) prohibits parties from introducing, in arbitral or judicial proceedings, the other party's views or suggestions on a possible settlement made during conciliation. The tribunal's freedom from the Evidence Act does not remove this statutory bar.

  1. AMeridian may produce it, because the arbitral tribunal is not bound by the Indian Evidence Act, 1872
  2. BMeridian may produce it, because the arbitration relates to the same dispute
  3. CMeridian may not rely on it, because views or suggestions of the other party on a possible settlement cannot be introduced as evidence in arbitral proceedingsCorrect
  4. DMeridian may produce it only if the conciliator consents

Explanation

Section 81(a) bars parties from relying on views expressed or suggestions made by the other party about a possible settlement, in arbitral or judicial proceedings. Section 19(1) frees the tribunal from the Evidence Act but does not override this specific bar. The restriction applies whether or not the proceedings relate to the same dispute.

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