Sections 72 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.
Section 72 lets each party suggest a settlement. Section 73 sets out how the conciliator formulates terms and how a signed settlement agreement is made, authenticated and bound. Section 74 gives that agreement the same status and effect as an arbitral award on agreed terms under section 30. This follows the India Code consolidated text consulted.
Each party may submit suggestions for settlement (section 72). Where elements of a settlement appear, the conciliator formulates terms and submits them to the parties for observations (section 73(1)). If the parties agree, they may draw up and sign a written settlement agreement (section 73(2)); on signing, it is final and binding on the parties and persons claiming under them (section 73(3)), and the conciliator authenticates it and furnishes a copy to each party (section 73(4)). It has the same status and effect as an arbitral award on agreed terms under section 30 (section 74).
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. The Mediation Act has its own provisions on a mediated settlement agreement; see our article on section 19 of the Mediation Act, 2023.
Where these sections fit
Sections 72 to 74 are the outcome stage of Part III. The earlier sections cover the start (62), the conciliator (63 to 68) and the conduct of the process (69 to 71); see our article on sections 69 to 71. Sections 76 and 77 say how the proceedings end and what may be started elsewhere. If you want a settlement drafted so that its terms are clear and complete, our conciliation services team can help.
Section 72: suggestions by parties
Each party may, on his own initiative or at the invitation of the conciliator, submit to the conciliator suggestions for the settlement of the dispute.
Two routes are open: the party acts on its own initiative, or the conciliator invites suggestions. The section says nothing on form, so the text consulted does not require the suggestions to be in writing.
Section 73: the settlement agreement
Sub-section (1): terms formulated by the conciliator
When it appears to the conciliator that there exist elements of a settlement which may be acceptable to the parties, he shall formulate the terms of a possible settlement and submit them to the parties for their observations. After receiving the observations of the parties, the conciliator may reformulate the terms in the light of such observations.
The trigger is the conciliator's view that "elements of a settlement" exist that "may be acceptable". The conciliator shall then formulate and submit terms; the step of reformulating is a "may".
Sub-section (2): signing
If the parties reach agreement on a settlement of the dispute, they may draw up and sign a written settlement agreement. If requested by the parties, the conciliator may draw up, or assist the parties in drawing up, the settlement agreement.
Sub-section (3): final and binding
When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively.
Sub-section (4): authentication and copies
The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.
| Sub-section | Step | Who | Mood of the verb |
|---|---|---|---|
| 73(1) | Formulate terms and submit for observations | Conciliator | "shall" |
| 73(1) | Reformulate in light of observations | Conciliator | "may" |
| 73(2) | Draw up and sign a written agreement | Parties | "may" |
| 73(2) | Draw up or assist in drawing up | Conciliator, if requested | "may" |
| 73(3) | Final and binding on signing | The agreement | "shall be" |
| 73(4) | Authenticate and furnish copies | Conciliator | "shall" |
The text consulted does not say what "authenticate" involves or in what form. It gives no prescribed format for a settlement agreement, and none is described here.
Section 74: status and effect
The settlement agreement shall have 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.
To read section 74 you need section 30. Section 30(2) deals with settlement during arbitral proceedings, where the tribunal records the settlement in the form of an arbitral award on agreed terms; section 30(3) says that award shall be made in accordance with section 31 and shall state that it is an arbitral award; and section 30(4) says it shall have the same status and effect as any other arbitral award on the substance of the dispute. See our articles on section 30 and section 31.
Put side by side:
| Question | Section 30(4) | Section 74 |
|---|---|---|
| What is it? | An arbitral award on agreed terms | A conciliation settlement agreement |
| Status given | Same status and effect as any other arbitral award on the substance of the dispute | Same status and effect as if it is an arbitral award on agreed terms under section 30 |
| Made by | The arbitral tribunal | The parties, authenticated by the conciliator |
Section 74 does not mention section 36 or any enforcement step. Section 36 sets the enforcement route for an arbitral award; see our article on section 36. How the status given by section 74 works out in a given case is a question the text consulted does not answer, and we do not answer it here.
Related provisions to keep in view
- Section 75 keeps confidential all matters relating to the conciliation, and extends confidentiality to the settlement agreement "except where its disclosure is necessary for purposes of implementation and enforcement". See our article on section 75.
- Section 76(a) says the conciliation proceedings terminate by the signing of the settlement agreement, on the date of the agreement.
- Section 78(3) says costs are borne equally unless the settlement agreement provides for a different apportionment.
An illustration
Fernandes Agro Pvt Ltd and Shah Cold Storage disagree over rent for stored produce. Each sends the conciliator suggestions (section 72). The conciliator sees elements of a settlement and sends both a draft of possible terms; after their comments she reformulates them (section 73(1)). Both sign a written settlement agreement, at their request drafted with her help (section 73(2)). On signing it is final and binding on them and on persons claiming under them (section 73(3)). She authenticates it and gives each a copy (section 73(4)). Under section 74 it has the status and effect of an award on agreed terms under section 30. Names and facts are invented.
Need help settling a dispute in conciliation?
A signed settlement is binding, so the terms need to be complete: amounts, dates, release, apportionment of costs and what happens on default. Our conciliation services team can help you draft the agreement and check it against the sections above before you sign.
Key takeaways
- Each party may submit settlement suggestions (section 72).
- The conciliator shall formulate terms when elements of a settlement appear, and may reformulate them after the parties' observations (section 73(1)).
- A signed written settlement agreement is final and binding on the parties and persons claiming under them (section 73(3)).
- The conciliator authenticates the agreement and gives each party a copy (section 73(4)).
- The agreement has the same status and effect as an arbitral award on agreed terms under section 30 (section 74).
- The Mediation Act, 2023 provides for replacement of sections 61 to 81; commencement by notification, date not in the sources consulted.
Read next
- Section 30: settlement and arbitral award on agreed terms
- Sections 76 and 77: termination of conciliation and resort to arbitral or judicial proceedings
- Sections 78 and 79: costs and deposits in conciliation
- Section 36: enforcement of the arbitral award and stay
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.