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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10786 OF 2017 (Arising out of S.L.P. (C) No. 9888 of 2015)

GOVIND PRASAD SHARMA & ORS.                  …APPELLANTS

VERSUS

DOON VALLEY OFFICERS COOPERATIVE  HOUSING SOCIETY LTD      …RESPONDENT

J U D G M E N T

R.F. Nariman, J.    

1) Leave granted.

2) The  appellants  are  before  us,  against  a  judgment  dated

12.12.2014, passed by the High Court of Uttarakhand at Nainital,

in which a demarcation report made by a government agency, in

the course of  conciliation proceedings between the parties,  was

sought  to  be  relied  upon.   The  Special  Judge  at  Dehradun,

specifically referring to Sections 75 and 81 of the Arbitration and

Conciliation  Act,  1996,  dismissed  the  Revision  Petition  on

11.12.2012 that was filed against an order dated 06.12.2010, by

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which an application by the plaintiff for taking the said report as

evidence was dismissed.  Interfering with the said orders in a Writ

Petition filed, the impugned order has allowed the said report to be

admitted into evidence.

3) Mr. V. Hansaria, learned Senior Counsel appearing on behalf

of the appellants, has argued that Section 75 is in very wide terms

and  that  parties  are  to  keep  confidential  all  matters  relating  to

conciliation proceedings.  He also referred to Section 81 of the Act,

and stated that parties cannot rely upon or introduce as evidence

in  arbitral  or  judicial  proceedings,  proposals  made  by  the

conciliator  under  sub-clause  (c)  from  which  the  said  report

emanated.

4) Mr. Hrishikesh Baruah, learned counsel appearing on behalf of

the  respondent,  has  argued  that  quite  clearly  none  of  the

sub-clauses in Section 81 would apply.  In any case, according to

him, the various sub-clauses in Section 81 only reflect the extent of

confidentiality that arises out of the earlier sections contained in

Part III dealing with Conciliation, and that, therefore, the moment

the case does not fit into any of the four pigeon holes of Section

81, the report can certainly be admitted into evidence and relied

upon.  He also cited a Canadian Supreme Court judgment, which

we will deal with, in support of this proposition.

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5) Sections  75  and  81  of  the  Arbitration  and  Conciliation  Act,

1996 read thus:

“75.  Confidentiality.—  Notwithstanding  anything contained in any other law for the time being in force, the conciliator  and  the  parties  shall  keep  confidential  all matters  relating  to  the  conciliation  proceedings. Confidentiality  shall  extend  also  to  the  settlement agreement, except where its disclosure is necessary for purposes of implementation and enforcement.

81. Admissibility of evidence in other proceedings.— The parties  shall  not  rely  on  or  introduce  as  evidence  in arbitral  or  judicial  proceedings,  whether  or  not  such proceedings relate to the dispute that is the subject of the conciliation proceedings,—

(a) views expressed or suggestions made by the other party in respect of a possible settlement of the dispute;

(b) admissions made by the other party in the course of the conciliation proceedings;

(c) proposals made by the conciliator;

(d)  the  fact  that  the  other  party  had  indicated  his willingness to accept a proposal for settlement made by the conciliator.”

On a reading of Section 75, it is clear that the object of the section

is sub-served by the expression “relating to” which is an expression

of  extremely  wide  import.   (See:  Renusagar  Power  Company

Limited v. General Electric Company, (1984) 4 SCC 679 at 704).

It is clear, therefore, that both the conciliator and the parties must

keep as confidential all matters relating to conciliation proceedings.

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6) The litmus test for determining whether the matter relates to

conciliation proceedings was laid down by an earlier judgment of

this Court.   In  Ruby General  Insurance Co. Ltd. vs.  Pearey Lal

Kumar and Another, [1952] S.C.R. 501, the question to be decided

was as to whether a dispute or difference arose out of a certain

insurance policy.  This Court laid down that the test for determining

whether  a  dispute  or  difference  arose  out  of  the  said  policy  is

whether recourse to the contract, by which the parties are bound,

is necessary for the purpose of determining the matter in dispute

between them.  If it is found that such recourse is necessary, then

the  matter  would  certainly  fall  within  the  policy.  Following  this

judgment, and applying it to the facts of this case, it is clear that

recourse  needs  to  be  had  to  conciliation  proceedings  as  the

genesis  of  this  demarcation  report  is  only  in  conciliation

proceedings and not otherwise.      

7) This being the case, it is of no matter that the present case

does not fall within the four pigeon holes contained in Section 81,

as  otherwise,  if  there  are  insidious  encroachments  on

confidentiality, a free and fair settlement may never be arrived at,

thus stultifying the object sought to be achieved by Part III of the

1996 Act.

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8) Mr. Baruah cited before us a judgment of the Supreme Court

of  Canada  in  Union  Carbide  Canada  Inc.  and  Dow  Chemical

Canada  Inc. vs.  Bombardier  Inc.,  Bombardier  Recreational

Products  Inc.  and  Allianz Global  Risks  US Insurance  Company

[2014]  1  SCR  800.   He  relied,  in  particular,  on  a  sentence

contained in para 36 of the said judgment which reads as under:-

“Moreover, a  litigant  cannot  object  to  evidence of  a fact  that  is  independent  of  and  separate  from  a settlement offer.”   

We agree  with  this  decision.   In  that  a  litigant  cannot  possibly

object to evidence of a fact that is independent of or separate from

a settlement offer.  In the facts of the present case, this case is

wholly distinguishable and would not apply for the simple reason

that the demarcation report has its genesis only in the conciliation

proceedings, as has been held by us above.

9) In this view of the matter, we allow the appeal and set aside

the  impugned  judgment  dated  12.12.2014.   However,  it  will  be

open for the respondent to adduce, by way of evidence, any report

that he may obtain from authorities for the purpose of demarcating

property, which  may then  be  introduced by way of  evidence  in

accordance with law.

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10) The appeal is disposed of accordingly.

                                                                …………………………J. (R.F. Nariman)

…………………………J. (Sanjay Kishan Kaul)

New Delhi; August 23, 2017