During a pending suit, the court suggests mediation to the parties, who consent. The court refers the dispute to mediation, in which a settlement is reached. Under the Mediation Act, 2023:

Where a court refers a dispute to mediation (court-referred mediation, a recognised mode under the Mediation Act, 2023), the resulting settlement agreement signed by the parties and the mediator is binding and ENFORCEABLE in the same manner as a judgment or decree, once the court disposes the matter in terms thereof. Meanwhile, the mediation dialogue is confidential and admissions made during it are not admissible in the suit. The mediator cannot, without consent, act as an arbitrator or judge in the same dispute. The Act thus gives court-referred meditation real finality.