After Referring Case to Mediation, Referring Court Cannot Reject Settlement or Withhold Decree Based on Mediation Report: Orissa High Court
Sanchayita Lahkar
The High Court of Orissa, Single Bench of Justice Sashikanta Mishra held that after referring a dispute to mediation, the referring Court cannot refuse to accept the mediation report nor abdicate its duty to pass a decree based on the compromise reached therein. In a dispute concerning the right of passage over government land, the Court set aside the trial court’s order that declined to decree the suit despite accepting the mediator’s report. It directed the lower court to pass a decree in terms of the settlement, affirming that once mediation succeeds, the court must record and give effect to the agreement between the parties.
The case arose from a civil dispute between adjoining landowners over the right of passage through a piece of government land. The plaintiffs filed a civil suit before the Additional Civil Judge (Senior Division), Cuttack, seeking a declaration that they had the right to use the scheduled property as a passage and for a perpetual injunction restraining the defendants from raising construction or obstructing its use. They also sought a mandatory injunction for removal of any obstruction and other consequential reliefs.
During the pendency of the suit, the parties jointly moved an application under Section 89 of the Code of Civil Procedure (CPC), 1908, requesting that the dispute be referred to mediation. The trial court accepted the request and referred the matter to a mediator, who conducted discussions with both sides. On 12 February 2024, the parties reached an amicable settlement acknowledging that the disputed land was government property and that neither party had any right, title, or interest over it. They agreed not to raise any claim or construct permanent structures on it and further agreed to allow mutual use of the passage without obstruction. The mediator recorded the settlement and submitted a report to the trial court.
Following the report, both sides prayed for a decree in accordance with the mediated settlement. The trial court accepted the mediator’s report but declined to pass a decree, holding that a declaratory decree could not be granted solely on the basis of compromise or understanding between the parties without evidence. It suggested that the plaintiffs could withdraw the suit under Order XXIII Rule 1 CPC if they no longer wished to pursue it.
The petitioners challenged this order before the High Court under Article 227 of the Constitution of India, relying on Section 89 CPC and Rule 25 of the Civil Procedure Mediation Rules, 2007, contending that the trial court failed to act in accordance with the mandatory procedure governing mediated settlements.
The judgment noted, “Clause (d) of sub-Section (2) makes it clear that the Court has the power to effect a compromise between the parties in cases where the dispute has been referred to mediation.” The Court referred to Order X Rule 1-A of CPC, which mandates courts to direct parties to explore settlement through ADR processes.
The Court relied on the Supreme Court’s ruling in Afcons Infrastructure Limited v. Cherian Varkey Construction Company (P) Limited (2010) 8 SCC 24, which clarified the categories of cases suitable for mediation. Justice Mishra observed, “The Civil Court should invariably refer cases to ADR process. Only in certain recognised excluded categories of cases, it may choose not to refer to an ADR process.” He stated that easementary disputes between neighbors were specifically recognized by the Supreme Court as suitable for ADR, including mediation.
The judgment recorded, “The disputes between the neighbours relating to the easementary rights are clearly mentioned as being suitable for mediation. The plaintiffs and the defendants are adjoining land owners, each claiming right of passage over the scheduled land, which admittedly belongs to the Government.” Justice Mishra further noted that since both sides had agreed not to raise ownership claims, the settlement was valid and enforceable.
Referring to Rule 25 of the Civil Procedure Mediation Rules, 2007, the Court quoted, “Within seven days of the receipt of any settlement, the Court shall issue notice to the parties fixing a day for recording the settlement… and the Court shall then pass a decree in accordance with the settlement so recorded, if the settlement disposes of all the issues in the suit.” Justice Mishra remarked that this procedural mandate left “no other option available for the Court than to pass a decree in accordance with the settlement.”
The High Court observed that the trial court, despite accepting the mediation report, erred in directing the plaintiffs to lead evidence, thereby nullifying the mediation process envisaged under Section 89 CPC and Order X Rule 1-A. The judgment stated, “Firstly, the entire exercise undertaken in terms of Section 89 read with Order 10 Rule 1-A of CPC stood nullified and secondly, the mandate of Rule 25 of Civil Procedure Mediation Rules was not complied with.”
The High Court held that alternative dispute resolution is a statutory imperative and that “once the dispute has been settled and a report submitted before the Court, there is no other option available for the Court than to pass a decree in accordance with the settlement.”
Justice Mishra concluded, “For the foregoing reasons therefore, the CMP is allowed. The impugned order is set aside. The Court below is directed to pass appropriate decree for disposal of the suit in terms of the compromise between the parties as per the report submitted by the mediator.”
Advocates Representing the Parties
For the Petitioners: Mr. K.M. Dhal, Advocate
For the Respondents: Mr. D.P. Mohanty, Advocate
Case Title: Charulata Beura & Another v. Ranjana Pradhan & Others
Case Number: C.M.P. No. 1133 of 2024
Bench: Justice Sashikanta Mishra
