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

Sharma Textiles Pvt Ltd emails Gupta Dyes Ltd a written invitation to conciliate a payment dispute, briefly identifying the subject of the dispute. Gupta Dyes does not reply. Sharma Textiles wants to proceed on the footing that the invitation is rejected. Under Part III of the Arbitration and Conciliation Act, 1996, what is the correct position?

Sharma Textiles may treat Gupta Dyes' silence as rejection once thirty days, or the period specified in the invitation, pass without a reply. It must inform the other party in writing of that election. Conciliation begins only on written acceptance, never by silence.

  1. AConciliation proceedings commence automatically after 30 days of silence
  2. BSharma Textiles may treat the silence as rejection if no reply comes within thirty days (or the period specified in the invitation), and must inform Gupta Dyes in writingCorrect
  3. CSilence is treated as acceptance, so conciliation commences immediately
  4. DSharma Textiles must wait 90 days before it can treat the invitation as rejected

Explanation

Conciliation commences only when the other party accepts the invitation in writing. If no reply is received within thirty days or the period stated in the invitation, the initiating party may elect to treat this as rejection and must inform the other party in writing. Silence is never acceptance, so the option on automatic commencement is wrong.

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