top of page
Haresh Dayaram Thakur v. State of Maharashtra & Ors.

Author: Vaishnavi Sethuraman, SASTRA Deemed University


Introduction

The judgment in Haresh Dayaram Thakur v. State of Maharashtra is one of the earliest decisions where the Supreme Court of India gave a detailed interpretation of conciliation under the Arbitration and Conciliation Act, 1996. The dispute that reached the Court may have appeared at first glance to be a simple quarrel between two brothers over the ownership of a Mumbai flat. Yet, in deciding this quarrel, the Court addressed foundational questions about the limits of a conciliator’s powers, the voluntary nature of conciliation and the conditions under which a settlement can attain legal finality.

The decision is significant because it prevented courts from blurring the lines between arbitration and conciliation. At a time when India was still acclimatising to ADR processes, the Court laid down a clear rule: conciliation derives its binding force not from a judge’s order or a conciliator’s recommendation but only from the parties’ signed consent. In doing so, the Court protected the legitimacy of conciliation as a process that depends on trust, transparency and autonomy of the parties.


Facts of the Case

The appellant, Haresh Dayaram Thakur, had purchased Flat No. 16/199 at Ramakrishna Nagar, Khar (West), Mumbai, from Manmeet Singh Chadha in 1989 for ₹3,45,000. The flat originally belonged to MHADA and was allotted to N.H. Krishnan, who transferred his rights to Chadha before the appellant’s purchase. Upon acquiring the flat, Haresh also became a member of the Melody Cooperative Housing Society.

In 1992, MHADA officials discovered that both Haresh and his brother, Pitambar, with their families, were living in the flat even though records still showed Krishnan as the allottee. MHADA treated them as unauthorised occupants and ordered eviction under Section 66(1) of the Maharashtra Housing and Area Development Act, 1966. The flat was sealed, though Haresh was given liberty to prove his claim. After examining documents, MHADA regularised the allotment in his favour.

Pitambar then approached the Bombay High Court, alleging that he had contributed ₹1,25,000 towards the purchase and was entitled to a share. The High Court directed MHADA to reconsider, but the authority reaffirmed Haresh’s title. A second writ petition followed in 1999, where the High Court appointed Justice H. Suresh (Retd.) as conciliator. Importantly, the court order recorded that the decision of the conciliator would be final and binding. The Court Receiver was also directed to take possession and appoint Haresh as agent on payment of royalty until the conciliator’s report was finalised.

The conciliator held several meetings and suggested that Pitambar should get possession of the flat on payment of ₹4,00,000 to Haresh. He also proposed that Pitambar forgo his claim to another family property. These proposals, however, were never signed by the parties. Instead, Justice Suresh forwarded them directly to the High Court in a sealed cover. When Haresh objected, the High Court dismissed his challenge, reasoning that the parties had earlier consented to treat the conciliator’s decision as binding. The report was treated as the order of the Court. Haresh appealed to the Supreme Court.


Legal Issues

The dispute raised two crucial questions. First, whether the conciliator’s report could be enforced as binding in the absence of a settlement signed by both parties under Section 73 of the Arbitration and Conciliation Act, 1996. Second, whether a conciliator, even if appointed by court with the parties’ consent, could impose a settlement instead of merely facilitating one.

These questions went to the heart of conciliation. The entire process is meant to be non-coercive, with parties voluntarily arriving at a settlement. If conciliators were permitted to impose terms or courts could treat their reports as binding irrespective of statutory requirements, the distinction between arbitration and conciliation would collapse.


Court’s Decision

The Supreme Court allowed the appeal, set aside the High Court’s order, and declared the conciliator’s report unenforceable. It emphasised that conciliation cannot result in a binding settlement unless both parties sign an agreement, as required by Section 73. Since no such agreement existed in this case, the High Court’s approach was wholly unsustainable. The Court directed the High Court to hear the writ petition afresh on its merits.


Legal Reasoning

Justice Mohapatra carefully distinguished arbitration from conciliation. Arbitration, he explained, is adjudicatory in nature, producing an award that binds parties much like a judgment. Conciliation, by contrast, is voluntary and facilitative. The conciliator assists the parties to reach an amicable resolution but cannot dictate outcomes.

The Court analysed Part III of the 1996 Act. Section 67 lays down the conciliator’s role: to assist the parties impartially, guided by fairness and justice. Section 73 prescribes that when it appears possible to reach settlement, the conciliator should draft terms and submit them for the parties’ observations. Only when parties sign the settlement agreement does it become final and binding. Section 74 then equates such a signed settlement to an arbitral award.

Against this statutory background, the Court found the conciliator’s conduct irregular. He held private deliberations, drafted proposals without full disclosure and sent them in a sealed cover to the High Court without securing the parties’ signatures. This short-circuited the process laid down in the Act. The Court also faulted the High Court for ignoring these statutory requirements. Consent given earlier to accept the conciliator’s decision could not override the clear mandate of Section 73.

The Court reiterated the principle that if a statute prescribes a method for doing something, it must be done in that manner and no other. Since the Act required a signed settlement, the absence of such signatures rendered the conciliator’s report legally ineffective.


Impact of the Case

The decision significantly impacted ADR in India by reaffirming that conciliation is a voluntary, consensual process; courts and conciliators cannot impose binding settlements. It clarified that while courts may appoint conciliators, they cannot confer adjudicatory powers, thus preventing misuse of conciliation as disguised arbitration. Socially and politically, the case reinforced fairness in family disputes and aligned India’s law with UNCITRAL Model Law principles, promoting conciliation as a credible, voluntary mechanism.


Personal Analysis

The Supreme Court’s reasoning is persuasive and principled. Conciliation without voluntariness is a contradiction in terms. 

The judgment’s strengths lie in its statutory fidelity and its insistence on procedural propriety. It avoided the temptation to validate a seemingly “practical” settlement at the cost of statutory safeguards. This built long-term trust in ADR by assuring parties that conciliation would never be transformed into arbitration without their consent.

Yet, some gaps remain. The Court did not suggest remedies for situations where conciliators exceed their mandate. Nor did it explore whether parties can validly contract out of Section 73 by pre-consenting to be bound by a conciliator’s report. While the Court rightly disallowed such circumvention here, a fuller discussion would have given clearer guidance. Similarly, a comparison with foreign jurisdictions could have contextualised India’s approach within global ADR practices.

Still, the outcome was correct. An alternative, upholding the High Court’s order, would have undermined conciliation by turning it into compulsory adjudication in disguise. That would discourage parties from using ADR for fear of losing control. The Supreme Court prevented this risk and ensured that conciliation in India remained true to its consensual spirit.


Conclusion

The case of Haresh Dayaram Thakur v. State of Maharashtra may have originated in a family property dispute, but it became a milestone in the evolution of Indian ADR jurisprudence. By striking down the High Court’s treatment of a conciliator’s report as binding, the Supreme Court reaffirmed that conciliation is distinct from arbitration and that its authority derives only from mutual consent and statutory compliance.

The judgment continues to guide courts, practitioners, and disputants by reminding them that ADR must be practiced with transparency and voluntariness. It preserved not only the rights of the parties involved but also the credibility of conciliation as a tool for peaceful resolution of disputes in India’s legal landscape.


References 



Related Posts

RECENT POSTS

THEMATIC LINKS

bottom of page