Settlement agreement
Section 73 of the Arbitration and Conciliation Act, 1996 deals with settlement agreement. 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. The Act came into force on 22 Aug 1996.
(1) 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 of a possible settlement in the light of such observations.
(2) 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.
(3) When the parties sign the settlement agreement, it shall be final and binding on the parties and persons claiming under them respectively.
(4) The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each of the parties.
Section 73, The Arbitration and Conciliation Act, 1996 (Act 26 of 1996).
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Afcons Infra. Ltd. vs Cherian Varkey Constn Co. P. LTD
Court's Decision & Legal Precedent
A civil court cannot refer a suit to arbitration under Section 89 of the Code of Civil Procedure unless all parties to the suit agree to such reference. Even though Section 89 mandates courts to refer pending suits to alternative dispute resolution processes, reference to arbitration specifically requires mutual consent of all parties, as arbitration is governed by the Arbitration and Conciliation Act, 1996 which contemplates the existence of an arbitration agreement. While non-adjudicatory ADR processes (Lok Adalat, mediation, judicial settlement) can be imposed by court discretion after identifying suitable cases, adjudicatory arbitration process cannot be imposed without party consent. The proper procedure requires courts to invoke Section 89 suo moto after completion of pleadings and before framing issues, consider whether the case falls under excluded categories, and only for suitable cases, explain the five ADR options to parties and ascertain their preferences, with arbitration and conciliation requiring mutual consent.
On this section: Describes formulation and reformulation of settlement terms at final stage of conciliation process; Court erroneously applied this at pre-reference stage under Section 89
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United India Insurance Co. LTD vs Ajay Sinha
Court's Decision & Legal Precedent
When a dispute before the Permanent Lok Adalat involves the determination of whether a non-compoundable criminal offence has been committed, the Permanent Lok Adalat lacks jurisdiction to entertain such dispute, notwithstanding that the pecuniary value of the claim falls within its jurisdictional limit of Rs. 10 lakhs. The phrase 'relating to an offence' in the first proviso to Section 22-C(1) of the Legal Services Authorities Act, 1987 must be interpreted broadly to exclude cases where the resolution of the civil dispute depends on determining whether a non-compoundable offence has occurred.
On this section: Permits conciliator to formulate terms of possible settlement and reformulate terms after receiving observations
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 73
What have the courts held on Section 73 of the Arbitration and Conciliation Act?
Afcons Infra. Ltd. vs Cherian Varkey Constn Co. P. LTD (26 Jul 2010) is the leading judgment on this section among those set out below: Describes formulation and reformulation of settlement terms at final stage of conciliation process; Court erroneously applied this at pre-reference stage under Section 89. Another 1 judgment on this section is set out below, all of them from the Supreme Court. They run from 2008 to 2010.
How do I find court cases under Section 73 of the Arbitration and Conciliation Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Arbitration Act 73, section 73 Arbitration Act, section 73 of the Arbitration and Conciliation Act. People searching for it also type arbitration act s 73. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Afcons Infra. Ltd. vs Cherian Varkey Constn Co. P. LTD (26 Jul 2010).
When did Section 73 of the Arbitration and Conciliation Act come into force?
Section 73 of the Arbitration and Conciliation Act, cited as Arbitration Act 73, came into force on 22 Aug 1996, having been enacted on 16 Aug 1996. It is in force as at the date shown on this page.
Other sections of this Act
- 8. Power to refer parties to arbitration where there is an arbitration agreement1029 words
- 11. Appointment of arbitrators1027 words
- 34. Application for setting aside arbitral awards861 words
- 2. Definitions732 words
- 29A. Time limit for arbitral award635 words
- 57. Conditions for enforcement of foreign awards519 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.