Eco Green Buildtech hired Vikartan Infrastructure to build the Sikka Kamya Greens project in Greater Noida under a contract worth Rs 53.73 crore, due for completion by February 2019. It did not finish on time, and the two sides blamed each other for why. Vikartan said Eco Green had defaulted on payments and thrown up hindrances that made timely completion impossible; Eco Green said Vikartan had simply abandoned the work. A memorandum of understanding the parties signed to sort things out did not resolve matters, and in 2020 the dispute went to arbitration.
Midway through the arbitration, the tribunal tried its hand at conciliation between the parties, a common enough practice where an arbitral tribunal encourages settlement talks before pressing on with a full hearing on the merits. During those talks, a procedural order came to record that Eco Green was broadly satisfied with a Local Commissioner's report on the state of the construction, and that both sides were hopeful of reaching a settlement. The optimism did not last. Conciliation failed, and the tribunal went back to deciding the arbitration on its merits, delivering an award on 28 February 2023 and a further award on 27 March 2023.
The problem, as Eco Green argued when it challenged both awards under Section 34, was what the tribunal did next. Rather than starting the merits determination fresh, the tribunal relied on the earlier recorded satisfaction with the Local Commissioner's report, material that had surfaced only in the course of the failed conciliation, to decide disputed questions in the arbitration itself. Several damages findings in the awards traced back to that recorded conciliation-stage satisfaction, including a Rs 2.84 crore award for additional overheads that the Court later found had no independent evidentiary support beyond this.
Justice Avneesh Jhingan agreed that this crossed a line Indian arbitration law treats as fundamental rather than procedural. Conciliation and settlement discussions, whether run inside an arbitration or as a separate process, operate on an understood premise of confidentiality: what a party says or concedes while trying to settle cannot later be used against it if the settlement falls apart and the underlying dispute has to be decided on its merits after all. Without that assurance, parties would never speak freely in conciliation, because anything said in the spirit of compromise could resurface as an admission once the talks collapse, defeating the entire purpose of trying to settle in the first place.
The Court anchored this in Supreme Court authority on the confidentiality that must survive unsuccessful alternative dispute resolution, pointing to Moti Ram v. Ashok Kumar and Perry Kansagra v. Smriti Madan Kansagra as settled law on the point. A tribunal that folds conciliation-stage material into its merits reasoning after talks fail is not simply making a procedural misstep; it is undermining the confidentiality guarantee that makes conciliation a viable option for parties in the first place; allow it once, and no party in any future arbitration will risk engaging honestly in settlement talks again.
On that basis, the Court set aside both the February 2023 award and the March 2023 additional award in their entirety, not merely the specific damages heads that most directly traced back to the conciliation material. The enforcement petition Vikartan had filed to execute the awards was accordingly disposed of as infructuous, since there was no longer a valid award left to enforce.
For tribunals and counsel running arbitrations that include a conciliation attempt along the way, the ruling is a clear warning to maintain a hard wall between the two processes. Whatever a party says, concedes or signals in a settlement discussion, however encouraging it looks for a quick resolution, cannot quietly carry over into the tribunal's merits reasoning if that settlement falls through. Parties who find themselves on the wrong end of an award that leans on their own conciliation-stage statements now have a clear, Supreme Court-anchored basis to challenge it under Section 34, as Eco Green did here, with a full award set aside as the result rather than a partial correction.