When Is Without Prejudice Evidence Admissible in India

Vikrant D. Shetty

Aug 10

12 min read

Updated: Aug 26

When Is Without Prejudice Evidence Admissible in India

Correspondence marked without prejudice is not automatically inadmissible in Indian courts; Section 23 of the Indian Evidence Act, 1872, reproduced as Section 21 of the Bharatiya Sakshya Adhiniyam, 2023, excludes only admissions made during a genuine attempt to settle a dispute, and Indian courts recognise defined exceptions where that privilege never attaches or gives way. These exceptions include proving that a settlement was concluded, setting aside a settlement for fraud, and admitting communications that would otherwise cloak perjury or blackmail. This article sets out the statutory basis of the rule, the exceptions courts apply, and the more permissive position that governs arbitral tribunals.

The Statutory Basis: Section 23 of the Evidence Act and Section 21 of the BSA

What Does Section 23 of the Evidence Act Actually Say?

Section 23 of the Evidence Act, 1872 (Section 21 of the BSA, 2023, in materially identical language) provides that in civil cases no admission is relevant if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the court can infer that the parties agreed that evidence of it should not be given. The provision does not use the words "without prejudice" at all; the phrase is a drafting convention that courts treat as strong, but not conclusive, evidence of the parties' intent to negotiate on that basis. The Supreme Court explained the practical effect of the phrase in Superintendent (Tech. I), Central Excise v Pratap Rai [(1978) 3 SCC 113], observing that it signals that a matter has not been decided on its merits and that fresh proceedings according to law remain open.

The Explanation Clause: Advocates Can Still Be Compelled to Testify

Section 21 of the BSA carries an explanation stating that nothing in the section exempts an advocate from giving evidence of any matter he may be compelled to disclose under sub-sections (1) and (2) of Section 132 of the BSA (the corresponding provision under the old regime was Section 126 of the Evidence Act). It is a reminder that the without prejudice bar is a rule of evidence operating within the wider architecture of privilege in Indian law, not a freestanding immunity that trumps every other evidentiary rule.

When Does Without Prejudice Privilege Actually Attach?

Before asking which exceptions permit without prejudice material into evidence, a prior point deserves attention: in a large share of disputes, the privilege never attaches in the first place. Indian courts insist on a threshold inquiry: was the communication actually made as part of a genuine attempt to compromise a dispute?

Peacock Plywood and the "Body of Negotiation Correspondence" Test

In Peacock Plywood (P) Ltd. v Oriental Insurance Co. Ltd. [(2006) 12 SCC 673], the Supreme Court held that the use of the expression "without prejudice" in a communication is not, by itself, sufficient to attract the privilege; the words have to be construed in the context in which they were used. Drawing on Phipson on Evidence, the Court held that correspondence is protected only if it is written for the purpose of a genuine attempt to compromise a dispute, and that it need not carry the without prejudice heading at all if it is plainly part of a continuing body of negotiation correspondence between the parties.

The Recognised Exceptions: When the Bar Gives Way

Once it is established that the privilege did attach, Indian courts have accepted, largely through the reasoning of English authority that the Supreme Court and various High Courts have repeatedly cited with approval, that the exclusionary rule is not absolute. Robert Walker LJ's judgment in Unilever v Procter & Gamble remains the most systematic catalogue of these situations in the common law world, and its structure is a useful map of the Indian position as well, even where an Indian court has not yet had occasion to apply a particular limb.

Proving, or Disproving, a Concluded Settlement

Where the very question before the court is whether without prejudice communications resulted in a binding settlement, those communications are admissible. Their relevance in that scenario has nothing to do with the truth of any admission they contain; it lies in the fact that they constitute the offer and acceptance that replaced the original dispute with a new contract. This is the exception Indian courts confront most often in practice, typically when one side pleads a concluded compromise and the other denies that finality was ever reached, as in the Bombay High Court decisions discussed above.

Setting Aside a Settlement for Fraud, Misrepresentation or Undue Influence

Where a party seeks to have a concluded settlement set aside on grounds such as fraud, misrepresentation or undue influence, evidence of the underlying negotiations becomes admissible to establish that vitiating factor. The privilege cannot be used to insulate the very process by which consent to the settlement was procured from scrutiny.

Estoppel Arising From a Clear Representation

Even where no concluded settlement exists, a sufficiently clear statement made by one party during negotiations, on which the other party is intended to act and does act, can be admitted to found an estoppel. The rationale is that a party should not be permitted to make an unambiguous representation, induce reliance on it, and then use the privilege as a shield against the consequences of that reliance.

The "Unambiguous Impropriety" Exception

Perhaps the most misunderstood limb is the exception for communications that would otherwise cloak perjury, blackmail or other conduct amounting to what English courts have termed "unambiguous impropriety." This is precisely the exception the parties argued over in Unilever v Procter & Gamble itself: Unilever tried to found a statutory claim for groundless threats of patent infringement on statements made by Procter & Gamble's representatives at an expressly without prejudice meeting. Therefore, the conclusion would be that Without Prejudice communication cannot be used to enforce a positive statement made in such communication. However, if a party is asserting a claim of fact, the without prejudice communication can definitely be relied to show that such assertion is false.

Explaining Delay or Acquiescence

Without prejudice communications may be referred to, typically on an application to dismiss proceedings for want of prosecution or in resisting a delay-based defence, purely to explain why a claimant did not act sooner. The evidentiary use here is usually confined to the bare fact that correspondence passed between the parties and the dates on which it did, rather than to its substantive content, though courts have accepted that a fuller account is sometimes necessary to give a fair picture of the delay.

Construing the Terms of a Concluded Settlement

Where a settlement has been reached but its terms are ambiguous, evidence of the negotiations that led up to it can assist a court in construing what the parties actually agreed. This limb, developed by the UK Supreme Court in Oceanbulk Shipping and Trading SA v TMT Asia Ltd, is a natural extension of the "proving a settlement" exception: if without prejudice communications can be looked at to establish that a contract was formed, there is little logic in refusing to look at them to work out what that contract means.

Waiver by Consent of Both Parties

Because the privilege is joint, resting on an implied agreement between the parties rather than a unilateral entitlement, it can ordinarily be waived only with the consent of both sides to the correspondence. One party cannot unilaterally deploy its own without prejudice letters, or the other side's, for forensic advantage. Waiver can be express, through an agreed disclosure, or implied from conduct, such as where both sides independently rely on the same negotiations in subsequent proceedings.

The Costs Exception: A Doctrine Still Taking Shape in India

English practice recognises a further variant, the offer made "without prejudice save as to costs," under which a party may refer to a rejected settlement offer once liability has been determined, purely on the question of costs. This device, associated with Calderbank v Calderbank and Cutts v Head, rests on an express or implied agreement between the parties to vary the ordinary scope of the privilege for costs purposes alone. Indian civil procedure has not developed an identical convention; costs generally follow the event under Section 35 of the Code of Civil Procedure, 1908, and courts retain broad discretion regardless of settlement conduct. That said, the increasing emphasis on costs consequences under the Commercial Courts Act, 2015 regime suggests this is an area where Indian practice may move closer to the English position over time, and parties are free to contract for a similar arrangement expressly in their correspondence.

The table below summarises the exceptions discussed above.

Exception	What It Permits	Leading Authority
No genuine settlement attempt	Privilege never attaches; correspondence treated as ordinary evidence	Peacock Plywood v Oriental Insurance (2006) 12 SCC 673
Concluded settlement in dispute	Correspondence admissible to prove offer and acceptance	Oberoi Constructions v Worli Shivshahi (Bom HC, 2008)
Setting aside settlement	Negotiations admissible to prove fraud, misrepresentation or undue influence	Underwood v Cox, cited in Unilever v P&G
Estoppel	Clear representation relied upon by the other party is admissible	Hodgkinson & Corby v Wards Mobility, cited in Unilever v P&G
Unambiguous impropriety	Admissible where exclusion would cloak perjury, blackmail or abuse	Unilever plc v The Procter & Gamble Co. [2000] 1 WLR 2436
Explaining delay	Fact and dates of correspondence admissible to justify delay	Walker v Wilsher, cited in Unilever v P&G
Construing a settlement	Negotiations admissible to interpret ambiguous settlement terms	Oceanbulk Shipping v TMT Asia [2010] UKSC 44
Mutual waiver	Privilege lifted only by joint, express or implied consent of both parties	NTPC v Reshmi Constructions (2004) 2 SCC 663
Advocate compellability	Advocate may still be compelled to testify under Section 132, BSA	Explanation to Section 21, Bharatiya Sakshya Adhiniyam, 2023

Why Is the Bar Softer in Arbitration?

The picture changes materially once a dispute is referred to arbitration. Section 19(1) of the Arbitration and Conciliation Act, 1996 releases an arbitral tribunal from the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 altogether, and Section 19(4) instead vests the tribunal with the power to determine the admissibility, relevance, materiality and weight of any evidence as it sees fit. Because Section 21 of the BSA is, strictly speaking, a rule that binds courts and not arbitrators, the without prejudice bar operates in arbitration as a matter of party autonomy, implied contract and general fairness rather than as a mandatory statutory exclusion. An arbitral tribunal is not obliged to slam the door on settlement correspondence the moment it is offered; it can, in an appropriate case, receive it and decide how much weight it deserves, a flexibility a civil court simply does not have when Section 21 applies in its full force. In practice, most tribunals continue to treat settlement communications as off-limits by convention and because parties reasonably expect it, but the source of that protection in arbitration is discretion and practice rather than a rigid rule of law, which is precisely why parties who want certainty continue to head their settlement correspondence "without prejudice" even in arbitral proceedings.

Frequently Asked Questions

Can a "without prejudice" letter ever be used to prove a settlement was reached?

Yes. Once the question in dispute is whether the parties actually reached a binding settlement, the without prejudice correspondence itself becomes admissible, because its relevance lies in the fact that an offer and acceptance were exchanged, not in the truth of any admission it contains.

Does the without prejudice rule apply in arbitration the same way it applies in court?

Not quite. Section 19 of the Arbitration and Conciliation Act, 1996 frees an arbitral tribunal from the Evidence Act, so the exclusion is not a mandatory rule of law in arbitration the way it is in court. Tribunals generally continue to respect settlement privilege as a matter of practice and party expectation, but they have more discretion to admit and weigh such material than a court bound by Section 21 of the BSA does.

Can settlement correspondence be used to disprove a party who asserts a false fact and/or commits perjury ?

Yes, although the rule of barring admission of without prejudice communication is to allow parties to freely have settlement talks, there is a greater priority in barring a party from committing perjury. Courts recognise an exception where excluding the correspondence would cloak perjury, blackmail or "unambiguous impropriety," but this exception is applied sparingly. In Unilever v Procter & Gamble itself, the Court of Appeal declined to strip away privilege from statements made during a without prejudice meeting, including a reference to possible infringement proceedings, because the conduct fell well short of the clear abuse the exception demands.

Does marking a document 'without prejudice' automatically make it privileged?

No. Indian courts, following Peacock Plywood (P) Ltd. v Oriental Insurance Co. Ltd., look beyond the label to whether the communication was genuinely written as part of an attempt to compromise a dispute. A letter can carry the without prejudice heading and still fall outside the privilege, and correspondence without the heading can still be protected if it is plainly part of an ongoing negotiation.

Can without prejudice communications be used to explain why a claimant delayed filing a claim?

Yes, on a limited basis. Courts allow reference to the fact and dates of without prejudice correspondence to explain delay, typically when resisting an application to dismiss proceedings for want of prosecution. The evidentiary use is generally confined to the bare fact that correspondence passed and when, rather than its substantive content.

Who can waive the without prejudice privilege attached to settlement correspondence?

Because the privilege rests on an implied agreement between both parties, it is a joint privilege that ordinarily cannot be waived unilaterally. One party cannot deploy its own without prejudice letters, or the other side's, for forensic advantage without the other party's consent, whether that consent is express or implied from conduct such as both sides relying on the same negotiations.

Can an advocate be compelled to testify about a without prejudice negotiation?

The explanation to Section 21 of the Bharatiya Sakshya Adhiniyam, 2023 makes clear that the without prejudice bar does not exempt an advocate from giving evidence of matters they can otherwise be compelled to disclose under Section 132 of the BSA. The without prejudice rule is a rule of evidence operating within the wider law on privilege, not a standalone immunity that overrides it.

Does the without prejudice rule apply to communications used to interpret an ambiguous settlement?

Yes, in principle. Where a settlement has been reached but its terms are unclear, evidence of the negotiations that produced it can help a court construe what the parties actually agreed. This limb follows the same logic as the exception allowing without prejudice material to prove that a settlement was concluded in the first place.

Is there an Indian equivalent to the English 'without prejudice save as to costs' offer?

Not as a settled doctrine. Costs in Indian civil proceedings generally follow the event under Section 35 of the Code of Civil Procedure, 1908, and courts retain broad discretion regardless of settlement conduct. Parties who want a costs-only exception to apply can contract for one expressly in their correspondence, but Indian practice has not developed the automatic convention that English law has.

Can settlement negotiations be used as evidence to set aside a settlement obtained by fraud or undue influence?

Yes. Where a party seeks to have a concluded settlement set aside on grounds such as fraud, misrepresentation or undue influence, the underlying without prejudice negotiations become admissible to establish the vitiating factor. The privilege exists to protect genuine settlement talks; it cannot be used to shield the very process by which a party's consent to the settlement was procured from later scrutiny.

Can a party rely on a clear statement made during without prejudice talks to found an estoppel?

Yes, in certain circumstances. Even where no concluded settlement results, a sufficiently clear representation made by one party during negotiations, intended to be relied on and actually relied on by the other party, can be admitted to found an estoppel. The rationale is that a party should not be able to make an unambiguous representation, induce reliance on it, and then invoke the privilege to escape the consequences.

Does the without prejudice privilege protect oral settlement discussions or only written correspondence?

Section 23 of the Indian Evidence Act, 1872 (Section 21 of the Bharatiya Sakshya Adhiniyam, 2023) protects an admission made under circumstances from which the court can infer the parties agreed evidence of it should not be given, and this is not confined to written letters. An oral statement made in the course of a genuine settlement meeting can equally attract the privilege, provided the surrounding circumstances show it was made as part of a bona fide attempt to compromise the dispute.

If a letter mixes a settlement offer with an admission of an independent fact, is the whole letter protected?

Not necessarily. Courts examine the substance of what is being protected rather than treating an entire document as privileged merely because it also contains settlement language. A statement of an independent fact unconnected to the compromise being negotiated can, depending on the circumstances, be treated separately from the concession or offer made for settlement purposes, so parties should not assume that appending a without prejudice heading insulates every sentence in the correspondence.

Can a party who did not participate in the settlement negotiations rely on without prejudice correspondence between two other parties?

The without prejudice privilege is generally held jointly by the parties to the negotiation, not by third parties, so a stranger to the correspondence typically cannot compel its production and equally cannot invoke it defensively unless the correspondence's content otherwise becomes relevant to a dispute involving that third party, such as where a co-defendant's liability turns on whether a settlement was concluded between the other parties. Multi-party litigation involving one settling and one non-settling defendant is where this question arises most often in practice.