Is there a hadith stating that if a judge knows that the right belongs to one party over the other, is it permissible for him to propose a settlement?

The questioner : ...

The Shaykh : Yes, if there is a trial in the matter, then no. That is, if two men go to a judge and he knows that the right belongs to one of them over the other, it is not permissible for him to propose a settlement. Yes, but if he does not know, there is nothing wrong with proposing a settlement, unless he explicitly states, "I know that so-and-so is the one who has the right, but allow me to settle the matter between you," in which case there is nothing wrong.