Conciliation Under the Arbitration and Conciliation Act, 1996: Sections 61 to 81 (Part III)

Conciliation explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Part III of the Act, headed "Conciliation", is a self-contained procedure in twenty-one sections: one party invites the other, a conciliator helps them look for a settlement, and a signed settlement agreement has the status of an arbitral award on agreed terms. This overview takes the sections in order, as per the India Code consolidated text consulted, and links the section-wise article for each group; later amendments should be checked. If you are weighing conciliation against arbitration or a suit, our legal dispute resolution team can set out the options.

Conciliation starts with a written invitation and commences only when the other party accepts in writing (section 62). The conciliator assists the parties in an independent and impartial manner and may propose terms (section 67). When the parties sign the settlement agreement it is final and binding (section 73(3)) and has the same status and effect as an arbitral award on agreed terms under section 30 (section 74). Everything relating to the proceedings is confidential (section 75), and what is said there cannot be used as evidence later (section 81).

The Mediation Act, 2023 and Part III

The India Code text consulted prints these sections. The Mediation Act, 2023 provides for sections 61 to 81 of this Act to be replaced by two sections. Its commencement is by notification, and the date is not in the sources consulted, so check whether that change is in force before relying on Part III. Our article on sections 58 to 61 of the Mediation Act, 2023 explains the amendments.

What follows describes Part III as the text consulted prints it.

The stages at a glance

Sections 61 and 62: scope and commencement

Part III applies to conciliation of disputes arising out of a legal relationship, whether contractual or not, and to all proceedings relating to it, save as otherwise provided by any law in force and unless the parties have otherwise agreed (section 61(1)). It does not apply where a law in force bars certain disputes from conciliation (section 61(2)).

The party initiating conciliation sends a written invitation briefly identifying the subject of the dispute. Proceedings commence when the other party accepts in writing; if the invitation is rejected there are no conciliation proceedings. If no reply comes within thirty days from the date the invitation is sent, or within the period stated in the invitation, the initiating party may elect to treat this as a rejection and shall inform the other party in writing (section 62). See sections 61 and 62.

Sections 63 and 64: number and appointment of conciliators

There is one conciliator unless the parties agree on two or three, and where there is more than one they ought, as a general rule, to act jointly (section 63). With a sole conciliator the parties may agree on the name; with two, each party may appoint one; with three, each may appoint one and the parties may agree on the third, who acts as presiding conciliator (section 64(1)). The parties may also ask a suitable institution or person to recommend names or to make the appointment directly (section 64(2)). See sections 63 and 64.

Sections 65 and 66: statements

On appointment the conciliator may ask each party for a brief written statement describing the general nature of the dispute and the points at issue, with a copy to the other party, and later for a further written statement of position, facts and grounds with documents and other evidence (section 65). The conciliator is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872 (section 66). See sections 65 and 66.

Sections 67 to 72: how the conciliator works

The conciliator assists the parties in an independent and impartial manner, is guided by principles of objectivity, fairness and justice, may conduct the proceedings in the manner considered appropriate, and may at any stage make proposals for settlement, which need not be in writing or reasoned (section 67). The parties, or the conciliator with their consent, may arrange administrative assistance (section 68). See sections 67 and 68.

The conciliator may meet or communicate with the parties together or separately (section 69). Factual information received from one party is disclosed in substance to the other, except information given subject to a specific condition that it be kept confidential (section 70). The parties shall co-operate in good faith (section 71), and each may submit suggestions for settlement (section 72). See sections 69 to 71.

Sections 73 and 74: the settlement agreement

When it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, the conciliator formulates the terms of a possible settlement, submits them for observations and may reformulate them (section 73(1)). If the parties reach agreement they may draw up and sign a written settlement agreement, with the conciliator's help if requested (section 73(2)). Once signed it is final and binding on the parties and persons claiming under them (section 73(3)); the conciliator authenticates it and furnishes a copy to each party (section 73(4)).

Section 74 gives the settlement agreement the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30. See sections 72 to 74.

Sections 75, 80 and 81: confidentiality and later proceedings

The conciliator and the parties shall keep confidential all matters relating to the conciliation proceedings, and confidentiality extends to the settlement agreement except where disclosure is necessary for implementation and enforcement (section 75). Unless otherwise agreed, the conciliator shall not act as arbitrator, representative or counsel in any arbitral or judicial proceeding in respect of the same dispute, and shall not be presented as a witness (section 80).

Section 81 bars the parties from relying on or introducing as evidence, in arbitral or judicial proceedings:

• views expressed or suggestions made by the other party in respect of a possible settlement;
• admissions made by the other party in the course of the conciliation proceedings;
• proposals made by the conciliator;
• the fact that the other party had indicated willingness to accept a proposal for settlement made by the conciliator.

Sections 75 and 81 are named in Explanation 1 to sections 34(2)(b), 48(2) and 57(1): an award whose making was in violation of either is in conflict with the public policy of India. See section 75 and sections 80 and 81.

Sections 76 to 79: termination, costs and deposits

Conciliation proceedings are terminated by the signing of the settlement agreement; by a written declaration of the conciliator, after consulting the parties, that further efforts are no longer justified; by a written declaration of the parties to the conciliator; or by a written declaration of one party to the other and the conciliator (section 76). During the proceedings the parties shall not initiate arbitral or judicial proceedings on the same dispute, except where a party considers them necessary for preserving its rights (section 77). See sections 76 and 77.

On termination the conciliator fixes the costs and gives written notice; they are borne equally unless the settlement agreement provides for a different apportionment (section 78). The conciliator may direct equal deposits as an advance; if they are not paid in full by both parties within thirty days, the conciliator may suspend the proceedings or declare them terminated (section 79). See sections 78 and 79.

One printing point: clause (c) of section 78(2) ends with a full stop before clause (d).

An example

Betwa Polymers sends Tungabhadra Foods a written invitation to conciliate a dispute over rejected consignments and hears nothing. After thirty days from the date it sent the invitation, section 62(4) lets Betwa elect to treat the silence as a rejection, and it must then inform Tungabhadra in writing. Had Tungabhadra accepted in writing, the proceedings would have commenced on that acceptance.

Need help choosing a route?

Conciliation, mediation, arbitration and a suit each carry different time and cost consequences. Our legal dispute resolution service reviews the contract and the dispute, checks which statute currently governs the route you prefer, and drafts the invitation or notice.

Key takeaways

• Conciliation commences on written acceptance of a written invitation (section 62).
• One conciliator is the default (section 63).
• A signed settlement agreement is final and binding and has the status of an arbitral award on agreed terms (sections 73 and 74).
• Confidentiality and the bar on later use of evidence are in sections 75 and 81.
• Check whether the Mediation Act, 2023 change to sections 61 to 81 is in force before relying on Part III.

Read next

• The Mediation Act, 2023 for commercial and trade disputes
• Section 18(1) and (2) of the MSMED Act, 2006: reference to the Facilitation Council and conciliation
• Arbitration vs litigation vs mediation
• Introduction to the Arbitration and Conciliation Act, 1996

Disclaimer: Based on the India Code consolidated text of the Arbitration and Conciliation Act, 1996, whose footnotes show amendments up to Act 3 of 2021 and a latest date of 12 October 2023, as consulted on 2 October 2026. Rules, regulations and notifications under the Act, later amendments and the commencement of the Mediation Act, 2023 should be checked. This article is general information, not legal advice; check the official text before acting.