M/S DELTA PROTECH PVT LTD v. M/S MACWEL INTERIOR SOLUTIONS PVT. LTD

1. This is a contempt petition filed by the petitioner against the respondent on account of the alleged wilful disobedience of the order dated 26.05.2014. The order dated 26.05.2014 reads as under: “ The disputes have been settled between the parties in mediation. The settlement agreement dated 23.05.2014 duly signed by the parties, their counsel and the learned mediator is on record. The terms of the settlement appear to be fair, just and reasonable. Accordingly, this petition is disposed of in terms of the said settlement agreement which shall bind the parties.” 2014:DHC:7183

2. It has been contended by the learned counsel for the petitioner since the respondent has breached the terms and conditions of the settlement agreement arrived at before the Delhi High Court Mediation and Conciliation Centre which has been approved by the learned Judge of this court, therefore, it tantamounts to wilful disobedience of the orders of the court and hence the present contempt petition.

3. I have seen the Mediation Conciliation Rules (‘the said Rules’ for short).

4. The Rule 24 of the Rules lays down that where an agreement is reached between the parties in regard to all the issues or proceeding or some of the issues, the same shall be reduced into writing and signed by the parties or their constituted attorney. If any counsel has represented the parties, the conciliator/mediator may obtain his signature also on the settlement agreement. Further, the agreement of the parties so signed shall be submitted to the mediator/conciliator along with a covering letter to the Court.

5. Rule 25 of the Rules lays down that the court after receipt of the settlement, shall fix up a date for hearing within seven days but not beyond a period of 14 days and after hearing the learned counsel for the parties or the parties, it shall pass a decree in accordance with the terms thereof.

4. A combined reading of the aforesaid two rules would show that the settlement agreement arrived at between the parties does not tantamount to passing of a decree. The settlement agreement has to be recorded by the court so as to record its satisfaction that it has been voluntarily arrived at between the parties and thereafter it shall pass a decree. The necessity of passing a decree in terms of the settlement agreement is occasioned on account of the fact that the decree can be got enforced only through sanction of law while as an agreement of settlement was arrived between the mediator/conciliator will have no binding effect.

5. In the instant case, the settlement agreement between the parties shows that the respondent had agreed to pay a sum of Rs.26 lakhs to the present petitioner towards the full and final settlement in a staggered manner laid down in the agreement itself towards the full and final settlement of the entire claim failing which the petitioner shall be entitled to recover the original amount of Rs.35 lakhs.

6. It is the case of the petitioner that the respondent has defaulted in abiding by the aforesaid terms of settlement and consequently it tantamount to contempt of court.

7. I do not agree with the contention of the learned counsel for the petitioner that the breach of terms of agreement of settlement tantamount to contempt. This is on account of the fact that the court has not passed any formal order accepting the terms of settlement between the parties as envisaged under Rule 25 of the Rules. Although the order shows that it has considered the terms and conditions of the settlement agreement as reasonable, just and fair, but has fallen short of passing any decree in terms of Rule 25 of the Rules. In the absence of the same, the breach of the terms of settlement cannot be treated to be resulting in wilful disobedience of the order or breach of an undertaking or of a decree, which may warrant initiation of contempt action.

8. For the reasons mentioned above, the present petition which is totally misconceived is dismissed. The contempt notice is discharged. V.K. SHALI, J. DECEMBER 16, 2014 dm