INDIA Law and Practice Contributed by: Anuradha Mukherjee, Omar Ahmad, Vikram Shah and Soumya Dasgupta, Cyril Amarchand Mangaldas
anticipation that the parties may renege on the set- tlement, the parties can seek for the settlement agree- ment to be made into a decree of the court (“consent decree”) of which execution can then be sought, in order to ensure enforcement of the settlement. There- after, if the settlement agreement is not adhered to, the party seeking to have the consent decree acted upon can file an application for execution of the con- sent decree in addition to applying for the initiation of contempt proceedings. Settlement in Case of Alternative Dispute Resolution If the parties to an arbitration settle the dispute, an arbitrator may pass an award based on the settle- ment terms and such settlement can be enforced in the same manner as an arbitral award before Indian courts. In the case of a settlement pursuant to conciliation, the settlement agreement has to be arrived at in the manner and form stipulated, and duly authenticated by the conciliator. Thereafter, such a settlement agree- ment would be final and binding on the parties, and it shall have the same status and effect as an arbitral award. If parties have privately entered into an out-of-court settlement for the settlement of disputes that have not been the subject matter of a formal arbitration, con- ciliation or mediation, such a settlement agreement cannot be enforced as an arbitral award. Section 27 of the Mediation Act, 2023 states that a mediated settlement agreement resulting from a mediation signed by the parties and authenticated by the mediator shall be enforced in accordance with the provisions of the CPC in the same manner as if it were a judgment or decree made by a court. 8.4 Setting Aside Settlement Agreements While a consent decree in a suit arising out of a set- tlement agreement operates as an estoppel by judg- ment, it can be set aside if the settlement agreement was obtained by fraud, misrepresentation or mistake. Furthermore, for a challenge to a consent decree on the ground that the decree was not lawful (ie, it was
void or voidable), a party has to approach the same court, and a separate suit to challenge the consent decree will not be maintainable. A settlement agreement that has become an arbitral award by virtue of Section 30 or 74 of the Arbitration Act can be set aside in terms of Section 34 of the Arbitration Act. Section 28 of the Mediation Act sets out that a medi- ated settlement agreement can be challenged only on the grounds mentioned therein, which are: • fraud; • corruption; • impersonation; or • where the mediation was conducted regarding dis- putes or matters that are not fit for mediation under Section 6 of the Mediation Act. 9. Damages and Judgment 9.1 Awards Available to the Successful Litigant Parties to a suit can be awarded a decree granting them contractual, equitable or statutory relief, or any other suitable relief under the inherent powers of the court. Specific performance of a contract may also be granted if such a relief has been requested in the suit. Specific performance of a contract can also be grant- ed by an arbitral award, and costs and damages can be awarded if requested. Arbitration proceedings are terminated by the making of a final award by the arbitrator. An interim award can also be made at any time during the arbitral proceed- ings. 9.2 Rules Regarding Damages The awarding of damages is covered by Sections 73 and 74 of the ICA. Section 73 requires a party in breach of the contract to reasonably compensate the counterparty by way of damages. However, damages can only be awarded if loss has occurred, as would naturally and consequently arise
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