When power is applied to the circuit, SCR1 is off, so there is no bias-current path to ground; thus, LM317 acts as a current regulator. The LM317 is connected to the battery through steering diode D1. limiting resistor R1, and bias resistor R2.

Click on Picture for Full Size

The steering diode prevents the battery from discharging through the LED and the SCR when power is removed from the circuit. As the battery charges, the voltage across trip-point potentiometer R5 rises, and at some point, turns on the SCR. Then, current from the regulator can flow to ground, so the regulator now functions in the voltage mode.

When the SCR turns on, it also provides LED1 with a path to ground through R3. So, when LED1 is on,
the circuit is in the voltage-regulating mode; when LED1 is off, the circuit is in the current-regulating mode.