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Yours faithfully, Svedala Barmac Ltd.

Ian Rodger Marketing Director"

Shri K.K. Venugopal, the learned Senior Counsel for the appellant made elaborate submissions taking pains to explain the background facts, the nature, scope, object and purpose of conciliation, arbitration and adjudication by courts to contend that conciliation is a fundamentally different alternative dispute; in conciliation, however, apart from consensual selection of the forum, even the dispute is settled by agreement and not by adjudication. Under Section 74 read with Sections 30 and 36 of the Act, settlement agreements are enforceable as if they are arbitration awards : in a sense, a conciliation settlement is analogous to a compromise agreement or consent order which is enforced by using the machinery of the court; remedies in alternative dispute resolution modes such as arbitration must be more flexible than in traditional litigation. According to the learned Senior Counsel, in cases such as this, where the aggrieved party has given up its right to go to a binding forum such as arbitration or a civil suit in order to go in for conciliation proceedings at the request of the other party, the courts should be extremely reluctant not to enforce a conciliation settlement agreement at the behest of the other party. This is especially so where both the parties have shown by their subsequent conduct that they consider the conciliation settlement agreement to be binding and enforceable. It was submitted that to refuse to enforce the settlement agreement, would amount to rewarding bad faith in the conciliation process. He urged that in the present case, the conciliation settlement agreement dated December 18, 1997 entered into by the parties satisfied all of the requirements of Section 73 of Act. In particular the Conciliation Settlement was drafted by the conciliators and the parties during conciliation proceedings as provided in Section 73 (2) and bears the signature of the representatives of both parties at the end of the document as required by Section 73(3) of the Act. It has also been authenticated by the conciliators at the end of the document as required by Section 73(4) of the Act. Consequently, the Conciliation Settlement has become final and binding on the parties as set out in Section 73(3) of the 1996; Act. He also submitted that there is no overlap between the current proceedings for execution of the Conciliation Settlement and the arbitration proceedings separately being conducted pursuant to the arbitration clause; the two proceedings are distinct and independent and the Conciliation Settlement cannot be sent to the arbitral tribunal. He emphasized that heading of a document cannot determine its binding nature; in case or a contract, it is well-settled that it is really the intent of the parties that will govern whether it is to be construed as a binding agreement and not the heading of the document. Pursuing his submissions, he stated that various clauses of the Conciliation Settlement impose binding obligations on each of the parties and even the subsequent conduct of the parties also shows the binding character of the Conciliation Settlement. In the present case, the Letter of Comfort must be treated as integral part of the Conciliation Settlement and binding on the parties. He added that a reference in an agreement to another document such as Letter of Comfort can result in the Letter of Comfort being incorporated into the agreement as in this case, Settlement Agreement and Letter of Comfort are executed on the same day contemporaneously. In support of his submissions, he drew our attention to relevant clauses in the Memorandum of Conciliation and Letter of Comfort. He read the preamble of the Act which states that one of the objects of the UNCITRAL Conciliation Rules embodied in Part 111 of the Act is to make "a significant contribution to the establishment of a unified legal framework for the fair and efficient settlement of disputes arising in International commercial relations." He submitted that this Court should ensure that the intention of the Parliament reinforcing the System of Alternative Dispute Resolution in India is not frustrated by the hyper-technical approach taken by the respondent. This Court may see that Part III does not become redundant by accepting technical definition as to enforceability raised by the respondent.

Shri F.S. Nariman learned Senior Counsel on behalf of the respondent submitted that the impugned order is well-justified and the view taken by the High Court is a right view. He contended that the thrust of the submissions in short and substance amount to asking for the enforcement of the Letter of Comfort in execution proceedings which is not permissible unless there is a conciliation settlement in terms of and as required to in Section 73 of the Act; there is nothing to show that the Letter of Comfort is incorporated in he Settlement Agreements; there was no termination of conciliation proceedings under Section 76(a) by the signing of the Settlement Agreement by the parties on the date of Agreement. According to him, Letter of Comfort is only an interim arrangement and the dispute is pending before the Arbitrators. He submitted that where a statute prescribes a procedure for doing something, the same course must be followed and the procedure prescribed must be adhered to. Since the Letter of Comfort and the Memorandum of Conciliation do not meet the requirements of Section 73, they cannot be given status of Settlement Agreement under Section 74 to deem them as an arbitral award under Section 30 so as to enforce them in execution proceedings straigthaway, We have carefully considered the submissions made on behalf of either side.

From Clause (IX) of the Memorandum of Conciliation Proceedings, it is clear that the respondent has agreed to give a Letter of Comfort in favour of the appellant ensuring (subject to Mysore Cements Ltd., performing their obligations) that the modification work would be completed within the time mentioned therein. It is not stated in the said Memorandum that the Letter of Comfort shall be part and parcel of it; the said Clause only indicates that the respondent agreed to give a letter: there is nothing to show that the said letter gets incorporated in the Memorandum: under the Memorandum, quantum of compensation is not mentioned, so also it does not state what follows in case of default of completion of the modification work; the completion of modification of the work was subject to the appellant performing their obligations : there appears to be dispute in regard to satisfactory completion of the work and as to who committed breach of obligation. The Letter of Comfort starts with the sentence that in pursuance of the agreement in the Conciliation Proceedings to undertake the modification work, assurance was given that the modification work of Line II shall be completed by 30th April 1999, and on completion of the trial run, modification work on Line I shall thereafter also be commenced and which shall be completed by 31st August, 1998. Further assurance was given that in case the modification work was not completed within the time, compensation at the rate of Rs. 20 lacs for each line would be given. It is also made clear that in the event of any arbitration or court proceedings taking place between the parties and consequent to which the respondent is required to make any payment to the appellant, the amount of compensation, if any, already paid in terms of paras 1 and 2, shall be adjusted/deducted from the payment, if any, to be made by them consequent to the award of the arbitrators/courts. There is also nothing in the Letter of Comfort as to what happens in case of dispute as to the satisfaction of modification work or otherwise arose. This Letter of Comfort gives an assurance for payment of compensation but it is difficult to say that even in case of dispute as to the satisfactory completion of modification work, still the compensation amount has to be paid, that too in the absence of any adjudication by any authority in that regard. This Letter of Comfort in the beginning itself states that it is pursuant to the agreement in the conciliation proceedings and not that it shall form part of the Memorandum of Conciliation.

There is no difficulty in accepting the argument that a Conciliator is a person who is to assist the parties to settle the disputes between them amicably unlike an arbitrator who has an adjudicatory function. But that does not dispense with satisfying the requirements of Section 73 in bringing out a binding Settlement Agreement.

If the Settlement Agreement comes into existence under Section 73 satisfying the requirements stated therein, it gets the status and effect of an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under Section 30 of the Act. The submission that when there was substantial compliance with the requirements of Section 73, as in the present case, when the parties have arrived at a Settlement Agreement like the parties before any civil court filing a compromise petition, there should be no impediment to take up execution based on such a compromise or agreement, cannot be accepted. Even a compromise petition signed by both the parties and filed in the court per se cannot be enforced restoring to execution proceedings unless such a compromise petition is accepted by the court and the court puts seal of approval for drawing a decree on the basis of compromise petition. In the present case, looking to the Memorandum of Conciliation Proceedings and Letter of Comfort, it is true that parties have agreed to certain terms, but they cannot be straightaway enforced by taking up execution proceedings. As rightly held by the High court for the reasons stated in the impugned order on the basis of the Letter of Comfort execution proceedings could not be taken up under Section 36 of the Act. When the facts are disputed as to the satisfaction of the modification work and as to the breach of obligations even in relation to the modification work by either party, the High Court was right in passing the impugned order. It may be again stated here that at the end of Memorandum of Conciliation Proceedings, it is stated that the terms of Conciliation Settlement are agreed to and accepted by both the parties. Conciliators and both the parties also have signed the same but the procedure as indicated and various steps contemplated in Section 73 of the Act were not adhered to. This apart, as already stated above, in this Memorandum neither consequences for not completing the modification work are stated nor any amount of compensation is fixed. In this case virtually Letter of Comfort is sought to be enforced. This Letter of Comfort, in our view, could not be accorded the status of Settlement Agreement to bring it within the meaning of Section 74 of the Act to treat it as an arbitral award under Section 30 of the Act so as to enforce it under Section 36 of the Act. In the present case, the Conciliation proceedings were not terminated but they were only adjourned. Under Section 76 of the Act, the proceedings shall be terminated as per clauses (a) to (d) of the said Section. If there was Settlement Agreement under Section 73, Conciliation Proceedings would have been terminated under Section 76(a) of the Act. This is yet another pointer against the appellant's case. It is also not possible to agree with the submission that this Memorandum of Conciliation and the Letter of Comfort could be treated as interim award in the absence of any Settlement Agreement as already discussed above. It is not every agreement or arrangement between parties to the disputes, arrived at in whatever manner or form, during the pendency of conciliation proceedings that automatically acquires the status of a settlement agreement within the meaning of Section 73 of the Act so as to have the same status and effect as if it is an arbitral award, for being enforced as if it were a decree of the court. It is only that agreement which has been arrived at in conformity with the manner stipulated and form envisaged and got duly authenticated in accordance with Section 73 of the Act, alone can be assigned the status of a settlement agreement, within the meaning of and for effective purposes of the Act, and not otherwise. We find in spite of our careful scrutiny, serious deliberations and analysis of the materials on record, particularly the Memorandum of Conciliation Proceedings and the Letter of Comfort, that either taken individually or even together - they or any one of them cannot legitimately claim to be entitled to or assigned the status of a settlement agreement within the meaning of Section 73, for purposes of the Act. In our view, they fall short of the essential legal pre requisites to be satisfied for being assigned any such status, despite our endeavour to view them with a liberal approach in the background of the objects and purposes underlying conciliation, arbitration and alternative mode of settlement of disputes.