Settlement Agreement Should Not Encourage Further Litigation: Delhi HC Raps Its Mediation Cell [Read Order]

The High Court of Delhi on Tuesday rapped it Mediation Cell for drawing up a settlement agreement that had resulted in further litigation.

“The attempt of the mediator should be to bind the parties by providing such default clauses as may discourage further litigation. A Settlement Agreement drawn up by the Mediation Cell of this Court should not be allowed to furnish a cause of action for further litigation, as has happened in the present case. To provide for continuation of the suit in the event of default, only allows an unscrupulous litigant to gain time under the garb of settlement and thereafter continue with the suit,” Justice Rajiv Sahai Endlaw observed.

“This is yet another instance where settlement agreements are found to have been drawn up by the Mediation Cell of this Court and which settlement agreements rather than serving the purpose of finishing the litigation once and for all, give rise to further litigation. A copy of this order be forwarded to the Mediation Cell of this Court for appropriate action,” the Judge further added.

The Court was hearing an execution petition for an order passed on 28 October, 2015, which had made reference to a settlement agreement entered into on 2 September, 2015, by the parties to a property dispute. The suit was withdrawn at the initial stage, and parties had entered into the agreement with the liberty to file fresh proceedings if any disputes arose from the agreement.

Further, the agreement was arrived at with the plaintiffs having agreed to withdraw the suit for declaration/cancellation of sale deed, on the condition that the defendant paid a total sum of Rs. 2, 25, 00,000.

The Court, however, noted that the plaintiffs did not seek a decree when the court passed an order dated October 28, 2015. Moreover, the suit was withdrawn even before the defendant had paid the aforesaid amount.

Justice Endlaw then observed that “a better settlement” in the circumstances would have been to provide for a decree for recovery of money in terms of Settlement Agreement to be passed, so that in the event of default it could be executed.

“To take care of the delay in payment, a provision for payment of interest and/or of the defendant being not entitled to deal with the property till such payment or to occupy the property (which was under construction) till the payment is made, could have been made. The mediators of the Mediation Cell of this Court, while mediating and drawing up of the Settlement Agreement, ought to take care of the implementation of the settlement arrived at,” the Court further observed.

It also rejected the suggestion of the plaintiff to treat the order dated 28 October, 2015 as a decree. “I am unable to agree. Without the counsel for the plaintiff/decree holder having taken care on 28th October, 2015 to have the suit decreed, the counsel for the plaintiff in the face of the order as it stands cannot possibly urge that a decree was passed,” it observed. The Court thereafter directed the plaintiff to have the order dated 28 October, 2015 corrected.

Read the Order here.