Once Settlement Is Reported After Mediation, Court Must Pass Decree In Its Terms Under Rule 25 Civil Procedure Mediation Rules: Orissa High Court

The High Court clarified that failure to do so would undermine the statutory mandate of Section 89 of the Code of Civil Procedure, 1908 (CPC) and the Civil Procedure Mediation Rules, 2007.

The Court was hearing a petition under Article 227 of the Constitution challenging a trial court’s refusal to decree a suit in terms of a settlement reached between the parties through mediation.

A Bench comprising Justice Sashikanta Mishra, while deciding the matter, observed 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, subject of course to the situations envisaged under sub-Rule (3).”

Advocate K.M. Dhal appeared for the petitioners, while Advocate D.P. Mohanty represented the respondents.

Background

The matter arose out of a civil suit filed by the petitioners before the Additional Civil Judge seeking a declaration of an easementary right to use a particular passage and a permanent injunction restraining the defendants from obstructing its use or raising any construction over it.

During the pendency of the suit, both parties agreed to settle their dispute and jointly moved an application under Section 89 of the CPC to refer the matter to mediation. The trial court referred the matter to a mediator, and the parties amicably resolved their differences, agreeing that the land in question was government property and that neither side would claim ownership or obstruct each other’s use of it.

A report to this effect was submitted by the mediator before the trial court. Both parties requested that a decree be passed in accordance with the settlement. However, the trial court declined, observing that a declaratory decree could not be passed based on compromise alone and that evidence was necessary to substantiate such relief. The court suggested that the plaintiffs withdraw the suit under Order XXIII Rule 1 CPC if they wished to end the litigation.

Aggrieved, the plaintiffs approached the High Court.

Court’s Observation

The Orissa High Court examined the provisions of Section 89 CPC and Order X Rule 1-A, noting that the law mandates courts to consider settlement through alternative dispute resolution (ADR) mechanisms where possible.

The Bench relied on the Supreme Court’s judgment in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd. (2010), which held that civil courts should invariably refer cases suitable for ADR, including disputes between neighbours over easementary rights.

The Bench observed that since the trial court itself had referred the case to mediation, it was contradictory to later hold that no decree could be passed based on the settlement. Justice Mishra remarked that the trial court’s approach nullified the purpose of mediation envisaged under Section 89 CPC and violated Rule 25 of the Civil Procedure Mediation Rules, 2007.

Citing the said rule, the Bench reiterated that upon receiving a report of successful mediation, the trial court must fix a date to record the settlement and then pass a decree in accordance with it. The Court further noted that the mediator’s report conclusively demonstrated mutual resolution of the dispute and that the trial court’s insistence on further evidence was legally unsustainable.

Conclusion

Allowing the petition, the Orissa High Court set aside the trial court’s order and directed it to pass an appropriate decree in accordance with the settlement recorded by the mediator.

Cause Title: Charulata Beura & Another v. Ranjana Pradhan & Others

Appearances

Petitioners: K.M. Dhal, Advocate

Respondents: D.P. Mohanty, Advocate

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