NCLAT Delhi clarifies tribunal settlement powers and waives cost penalty

The National Company Law Appellate Tribunal in New Delhi held that a tribunal bench inviting litigating parties to explore a settlement does not constitute a formal referral to mediation. Addressing the procedural challenge, the appellate authority also set aside the ₹25,000 costs that had been levied against the appellant.

This clarification prevents procedural steps aimed at amicable dispute resolution from being misconstrued as formal statutory mediation mandates. It provides judicial flexibility for tribunals to encourage out-of-court settlements without subjecting litigants to unintended procedural complications or cost liabilities.

Parties engaged in corporate disputes should remain open to informal settlement inquiries initiated by tribunal benches. Legal counsel must track these procedural distinctions to accurately manage cost risks and compliance requirements during appellate proceedings.