October 3, 2022

Section 89: Provision for settlement outside the court

ABSTRACT: Section 89 prescribe the provisions for dispute settlement outside the court. The present paper exhaustively analyses section 89 and tries to include every aspect of section 89 in a chronological way. Both landmarks cases on section 89 and law commissions reports have bee

INTRODUCTION

Indian judicial system is overburdened with a large number of cases. Common people choose to settle their disputes from the court only when they have no option except to go to court. Prisons are overcrowded; innocent people spend their almost whole life waiting for the light of justice.

Indian Constitution directed the state under Article 39A to secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and to provide free legal aid by suitable legislation or schemes, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.

In Khatri Vs. State of Bihar[1], the court held that the accused is entitled to free legal services not only at the stage of trial but also when first produced before the Magistrate and also when remanded.

Therefore, the Indian state also made efforts to implement the system of free legal aid and to provide alternative methods for dispute resolution outside the court, so that court can offload some cases from their dockets.

ADR IN INDIA

In the 20th century, the ADR systems saw a huge success in some countries, especially USA wherein the bulk of litigation is settled through one of the ADR processes before the case goes for trial.

In India, some ADR processes have been introduced since long. The first statute on Arbitration was enacted in 1899, which was replaced by Arbitration Act, 1940, which further replaced by Arbitration and Conciliation Act, 1996.

In some States, resolution of court litigation through Lok Adalats became quite popular during 1970s and ’80s. With the advent of Legal Services Authorities Act 1987, Lok Adalats and Legal Aid Schemes have received statutory recognition and become an integral and important part of the justice delivery system.

In 1988, Law commission of India in its 129th report advocated the need for amicable settlement of disputes between the parties.

Malimath Committee also recommended making it obligatory for the court to refer the dispute, after issues are framed, for settlement either by way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat.

To implement the 129th report and suggestions of malimath committee, government introduced section 89 to civil procedure code, 1908, in the code of civil procedure (Amendments) act, 1999.

PROVISIONS OF SECTION 89

In 1999, the Code of civil procedure (amendment) act, 1999 inserted section 89 and Rules 1A, 1B, 1C, to Rule 1 of Order X, to prescribe the provisions for dispute settlement outside the court.

Section 89 confers the power on the court to refer the dispute to an ADR method if s/he think there are chances for settlement and Rules 1A, 1B, 1C of Order X lays down the procedure in which this power of referring the disputes, is to be exercised by the court.

Section 89 provides that;

  • Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for: — 
  • arbitration;
  • conciliation;
  • judicial settlement including settlement through Lok Adalat: or
  • mediation.
  • Were a dispute has been referred— 
  • for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;
  • to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;
  • for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;
  • for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

Thus, this section gives power to the court to refer the disputes to any ADR methods, if it appears to the court that there exists an element of settlement that may be acceptable to the parties. In this case, the court shall formulate the terms of settlement to the parties for their observation. And after receiving the observation of the parties the court may reformulate the terms of settlement and refer it to an ADR method.

When the court shall refer the dispute to an ADR method, the proceeding of that ADR method will be governed by their respective rules or statutes.

  • for arbitration or conciliation proceedings the Arbitration & Conciliation Act, 1996 will apply;
  • for Lok Adalat or judicial settlement the Legal Services Authority Act, 1987 will apply and
  • for mediation the Mediation Rules, 2009 will apply.

As this, section 89 introduced five ADR methods-

  • Arbitration,
  • Conciliation,
  • Judicial settlement,
  • Settlement through Lok Adalat, and
  • Mediation.

As stated above, this section will be exercised as according to Rules 1A, 1B, and 1C of Order X, which are as follows; –

1A. Direction of the court to opt for any one mode of alternative dispute resolution. —After recording the admissions and denials, the court shall direct the parties to the suit to opt either mode of the settlement outside the court as specified in sub-section (1) of section 89. On the option of the parties, the court shall fix the date of appearance before such forum or authority as may be opted by the parties.

1B. Appearance before the conciliatory forum or authority. —Where a suit is referred under rule 1A, the parties shall appear before such forum or authority for conciliation of the suit.

1C. Appearance before the court consequent to the failure of efforts of conciliation. —Where a suit is referred under rule 1A, and the presiding officer of conciliation forum or authority is satisfied that it would not be proper in the interest of justice to proceed with the matter further, then, it shall refer the matter again to the court and direct the parties to appear before the court on the date fixed by it.

THE ISSUE OF DRAFTING ERRORS AND CHALLENGES TO SECTION 89

Section 89 suffer from many drafting errors. Salem Advocate’s bar Association v. Union of India (2005) 6 SCC 344 and Afscon Infrastructure limited v. Cherian Varkey Construction Co. (P) Ltd. (2010 8 SCC 24) are two landmark cases on Section 89, where this section challenged and Supreme court corrected down the drafting errors of section 89. 

SALEM ADVOCATES’ BAR ASSOCIATION CASE

In 2002, a writ Petition was filed by the Salem Advocate Bar Association seeking to challenge amendments made to the Code of Civil Procedure by the Amendment Act 1999 and Amendment Act 22 of 2002. It was contended that there may be some practical difficulties in implementing the section 89, therefore, clarifications are necessary.

However, Supreme court by rejecting the challenges, observed as follows;

  • Keeping in mind the laws delays and the limited number of Judges which are available, it has now become imperative that resort should be had to Alternative Dispute Resolution Mechanism with a view to bring to an end litigation between the parties at an early date.
  • If the parties agree to arbitration, then the provisions of the Arbitration and Conciliation Act, 1996 will apply and that case will go outside the stream of the court but resorting to conciliation or judicial settlement or mediation with a view to settle the dispute would not ipso facto take the case outside the judicial system. All that this means is that effort has to be made to bring about an amicable settlement between the parties but if conciliation or mediation or judicial settlement is not possible, despite efforts being made, the case will ultimately go to trial.

In this case, the court suggested constituting a committee to ensure that the amendments made become effective and result in quicker dispensation of justice. the court further said that the Committee might consider devising a model case management formula as well as rules and regulations which should be followed while taking recourse to the ADR referred to in Section 89. The Model Rules, with or without modification, which are formulated may be adopted by the High Court concerned for giving effect to Section 89(2)(d). Because Part X of the CPC (Sections 121 to 131) contains provisions in respect of the power of high court to make Rules.

For this purpose, a Committee headed by a retired judge of supreme Court and Chairman, Law Commission of India (Justice M. Jagannadha Rao) was constituted. Report No. 2 of this committee, dealt with the amendments in section 89.

In 2005, supreme court in “salem advocate’s bar association case (II) considered the report of committee and said that;

  • Some doubt as to a possible conflict has been expressed in view of use of the word ‘may’ in Section 89 when it stipulates that ‘the Court may reformulate the terms of a possible settlement and refer the same for’ and use of the word ‘shall’ in Order X, Rule 1A when it states that ‘the Court shall direct the parties to the suit to opt either mode of settlements outside the Court as specified in sub-section (1) of Section 89’.

Section 89 uses both the word ‘shall’ and ‘may’ whereas Order X, Rule 1A uses the word ‘shall’ but on harmonious reading of these provisions it becomes clear that the use of the word ‘may’ in Section 89 only governs the aspect of reformulation of the terms of a possible settlement and its reference to one of ADR methods. There is no conflict. It is evident that what is referred to one of the ADR modes is the dispute which is summarized in the terms of settlement formulated or reformulated in terms of Section 89.

  • Section 89 (2) provides that where a dispute has been referred for Arbitration or Conciliation, the provisions of the Arbitration and Conciliation Act, 1996 shall apply as if the proceedings for Arbitration or Conciliation were referred for settlement under the provisions of 1996 Act. Section 8 of the 1996 Act deals with the power to refer parties to Arbitration where there is arbitration agreement.

If reference is made to Arbitration or conciliation under Section 89 of the Code, 1996 Act would apply only from the stage after reference and not before the stage of reference when options under Section 89 are given by the Court and chosen by the parties. Thus, there is no impediment in the ADR rules being framed in relation to Civil Court as contemplated in Section 89 upto the stage of reference to ADR.

On the same analogy, The Legal Services Authority Act, 1987 or the Rules framed thereunder by the State Governments cannot act as impediment in the High Court making rules under Part X of the Code covering the manner in which option to Lok Adalat can be made being one of the modes provided in Section.

  • A doubt has been expressed in relation to clause (d) of Section 89 (2), whether the terms of compromise are to be finalized by or before the mediator or by or before the court. It is evident that all the four alternatives, are meant to be the action of persons or institutions outside the Court and not before the Court.

Order X, Rule 1C speaks of the ‘Conciliation forum’ referring back the dispute to the Court.

Clause (d) of Section 89(2) only means that when mediation succeeds and parties agree to the terms of settlement, the mediator will report to the court and the court, after giving notice and hearing the parties, ‘effect’ the compromise and pass a decree in accordance with the terms of settlement accepted by the parties.

  • A doubt was expressed about the applicability of ADR rules for dispute arising under the Family Courts Act since that Act also contemplates rules to be made. It is, however, to be borne in mind that the Family Courts Act applies the Code for all proceedings before it. In this view, ADR rules made under the Code can be applied to supplement the rules made under the Family Courts Act and provide for ADR insofar as conciliation/mediation is concerned.
  • When the parties come to a settlement, the Court has to first record the settlement and pass a decree in terms thereof and if necessary proceed to execute it in accordance with law. It cannot be accepted that such a procedure would be unnecessary.

If the settlement is not filed in the Court for the purpose of passing of a decree, there will be no public record of the settlement. It is, however, a different matter if the parties do not want the court to record a settlement and pass a decree and feel that the settlement can be implemented even without decree. In such eventuality, nothing prevents them in informing the Court that the suit may be dismissed as a dispute has been settled between the parties outside the Court.

In its report, the committee also suggested that after compulsory reference of disputes to the ADR methods, the expenses of these settlements should be borne by the government because if the parties feel that they have to incur extra expenditure for resorting to such ADR modes, it is likely to act as a deterrent for adopting these methods. Supreme Court also agreed and applauded this suggestion.

The committee also drafted Civil Procedure-Alternative Dispute Resolution and Mediation Rules for the reference of high courts.

AFSCON INFRASTRUCTURE CASE

In Afscon Case, the question of procedure to be followed by a court in implementing section 89 and Order 10 Rule 1A and the question of whether the said section empowers the court to refer the parties to a suit to arbitration without the consent of both parties, arisen for consideration before the court.

In salem bar association case, the supreme court interpreted section 89 and its rules by purposive construction in an attempt to make it workable. But, in afscon case, supreme court observed the section in following words;

“If section 89 is to be read and required to be implemented in its literal sense, it will be a Trial Judge’s nightmare. It puts the cart before the horse the horse and lays down an impractical, if not impossible, procedure in sub-section (1). It has mixed up the definitions in sub-section (2).”

Supreme court found many drafting errors in section 89 which were hurdles in successful implementation of section 89. We can sum up the observations of supreme court in following paras-

  • The first anomaly is the mixing up of the definitions of `mediation’ and `judicial settlement’ under clauses (c) [judicial settlement] and (d) [Mediation] of sub-section (2) of section 89 of the Code.

“Judicial settlement” is a term in vogue in USA referring to a settlement of a civil case with the help of a judge who is not assigned to adjudicate upon the dispute.

“Mediation” is also a term and it refers to a method of non-binding dispute resolution with the assistance of a neutral third party who tries to help the disputing parties to arrive at a negotiated settlement.

When words are universally understood in a particular sense, and assigned a particular meaning in common parlance, the definitions of those words in section 89 with interchanged meanings has led to confusion, complications and difficulties in implementation.

If the word “mediation” in clause (d) and the words “judicial settlement” in clause (c) are interchanged, we find that the said clauses make perfect sense.

  • The second anomaly is that sub-section (1) of section 89 imports the final stage of conciliation referred to in section 73(1) i.e. settlement agreement, of the Arbitration and Conciliation Act into the pre-ADR reference stage under section 89 of the Code.

If sub-section (1) of Section 89 is to be literally followed, every Trial Judge before framing issues, is required to ascertain whether there exist any elements of settlement which may be acceptable to the parties, formulate the terms of settlement, give them to parties for observations and then reformulate the terms of a possible settlement before referring it to arbitration, conciliation, judicial settlement, Lok Adalat or mediation.

There is nothing that is left to be done by the alternative dispute resolution forum. If all these have to be done by the trial court before referring the parties to alternative dispute resolution processes, the court itself may as well proceed to record the settlement as nothing more is required to be done, as a Judge cannot do these unless he acts as a conciliator or mediator and holds detailed discussions and negotiations running into hours.

  • Applying the same analogy, If the reference is to be made to arbitration, the terms of settlement formulated by the court will be of no use, as what is referred to arbitration is the dispute and not the terms of settlement; and the Arbitrator will adjudicate upon the dispute and give his decision by way of award.

Thus, the terms of settlement drawn up by the court will be totally useless in any subsequent ADR process. Why then the courts should be burdened with the onerous and virtually impossible, but redundant, task of formulating terms of settlement at pre-reference stage?

However, in salem advocate’s bar association case (II) supreme court diluted this anomaly by equating “terms of settlement” to a “summary of disputes” meaning thereby that the court is only required to formulate a `summary of disputes’ and not `terms of settlement.’

After observing the above, Honorable supreme court then tried to interpret section 89 in following ways-

  • Section 89 has to be read with Rule 1-A of Order 10 which requires the court to direct the parties to opt for any of the five modes of alternative dispute resolution processes and on their option refer the matter. The said rule does not require the court to either formulate the terms of settlement or make available such terms of settlement to the parties to reformulate the terms of possible settlement after receiving the observations of the parties.

Therefore, the only practical way of reading Section 89 and Order 10, Rule 1-A is that after the pleadings are complete and after seeking admission/denials wherever required, and before framing issues, the court will have recourse to section 89 of the Code. Such recourse requires the court to consider and record the nature of the dispute, inform the parties about the five options available and take note of their preferences and then refer them to one of the alternative dispute resolution processes.

  • Proper interpretation of section 89 of the Code requires two changes from a plain and literal reading of the section.

Firstly, it is not necessary for the court, before referring the parties to an ADR process to formulate or re-formulate the terms of a possible settlement. It is sufficient if the court merely describes the nature of dispute (in a sentence or two) and makes the reference.

Secondly, the definitions of `judicial settlement’ and `mediation‘ in clauses (c) and (d) of section 89(2) shall have to be interchanged to correct the draftsman’s error. Clauses (c) and (d) of section 89(2) of the Code will read as under when the two terms are interchanged:

(c) for “mediation“, the court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

(d) for “judicial settlement“, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.

The above changes made by interpretative process shall remain in force till the legislature corrects the mistakes so that section 89 is not rendered meaningless and infructuous.

After considering the question of procedure to be followed in the implementation of section 89, the supreme court considered the question of Mandatory reference to ADR.

While discussing the question, the court said that “Section 89 starts with the words “where it appears to the court that there exist elements of a settlement”. This clearly shows that cases that are not suited for ADR process should not be referred under section 89 of the Code. having a hearing after completion of pleadings, to consider recourse to ADR process under section 89 of the Code, is mandatory. But actual reference to an ADR process in all cases is not mandatory. Where the case falls under an excluded category there need not be reference to ADR process. In all other case references to ADR process is a must.”

Supreme court categorized the cases which are capable for the reference to ADR methods and which cannot be referred to ADR methods.

According to the Hon. Apex Court, the following categories of cases are normally considered to be not suitable for ADR process having regard to their nature:

  • Representative suits under Order 1 Rule 8 CPC which involve public interest or interest of numerous persons who are not parties before the court. (In fact, even a compromise in such a suit is a difficult process requiring notice to the persons interested in the suit, before its acceptance).
  • Disputes relating to election to public offices (as contrasted from disputes between two groups trying to get control over the management of societies, clubs, association etc.).
  • Cases involving grant of authority by the court after enquiry, as for example, suits for grant of probate or letters of administration.
  • Cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion etc.
  • Cases requiring protection of courts, as for example, claims against minors, deities and mentally challenged and suits for declaration of title against government.
  • Cases involving prosecution for criminal offences.

All other suits and cases of civil nature in particular the following categories of cases (whether pending in civil courts or other special Tribunals/Forums) are normally suitable for ADR processes:

  • All cases relating to trade, commerce and contracts, including disputes arising out of contracts (including all money claims);       
  • disputes relating to specific performance;
  • disputes between suppliers and customers;
  • disputes between bankers and customers;
  • disputes between developers/builders and customers;
  • disputes between landlords and tenants/licensor and licensees;
  • disputes between insurer and insured;
  • All cases arising from strained or soured relationships, including disputes relating to matrimonial causes, maintenance, custody of children;
  • disputes relating to partition/division among family members/coparceners        /co-owners; and
  • disputes relating to partnership among partners.
  • All cases where there is a need for continuation of the pre-existing relationship in spite of the disputes, including;
  • disputes between neighbours (relating to easementary rights, encroachments, nuisance etc.);
  • disputes between employers and employees;
  • disputes among members of societies/associations/Apartment owners Associations;
  • All cases relating to tortious liability including; claims for compensation in motor accidents/other accidents; and
  • All consumer disputes including disputes where trader/supplier/manufacturer/service provider is keen to maintain his business/professional reputation and credibility or `product popularity.

The court clarified that above categorization of cases is illustrative which can be subjected to just exceptions or additions by the court/Tribunal exercising its jurisdiction/discretion in referring a dispute/case to an ADR process.

Next, the court considered which of the ADR processes require mutual consent of the parties and which of them do not require the consent of parties, court explained it one by one as follows;

1.      ARBITRATION

A court has no power, authority or jurisdiction to refer unwilling parties to arbitration if there is no arbitration agreement. This Court has consistently held that though section 89 of the Code mandates reference to ADR processes, reference to arbitration under section 89 of the Code could only be with the consent of both sides and not otherwise. But, if parties agree to go for arbitration, they have to be file an agreement and Such agreement can be by means of a joint memo or joint application or a joint affidavit before the court, or by record of the agreement by the court in the ordersheet signed by the parties. Once there is such an agreement in writing signed by parties, the matter can be referred to arbitration under section 89 of the Code; and on such reference, the provisions of AC Act will apply to the arbitration, and as noticed in Salem Bar-I, the case will go outside the stream of the court permanently and will not come back to the court.

2.      CONCILIATION

There can be a valid reference to conciliation only if both parties to the dispute agree to have negotiations with the help of a third party or third parties either by an agreement or by the process of invitation and acceptance provided in section 62 of AC Act followed by appointment of conciliator/s as provided in section 64 of AC Act. If both parties do not agree for conciliation, there can be no `conciliation’.

when a matter is referred to conciliation, the matter does not go out of the stream of court process permanently. If there is no settlement, the matter is returned to the court for framing issues and proceeding with the trial.

OTHER THREE ADR PROCESS

If the parties are not agreeable for either arbitration or conciliation, both of which require consent of all parties, the court has to consider which of the other three ADR processes (Lok Adalat, Mediation and Judicial Settlement) which do not require the consent of parties for reference, is suitable and appropriate and refer the parties to such ADR process.

MEDIATIONIf mediation process is not available (for want of a mediation centre or qualified mediators), necessarily the court will have to choose between reference to Lok Adalat or judicial settlement.

If the suit is complicated or lengthy, mediation will be the recognized choice.

LOK ADALAT- If the suit is not complicated and the disputes are easily sortable or could be settled by applying clear cut legal principles, Lok Adalat will be the preferred choice.

JUDICIAL SETTLEMENTIf the court feels that a suggestion or guidance by a Judge would be appropriate, it can refer it to another Judge for dispute resolution.

The court has used its discretion in choosing the ADR process judiciously, keeping in view the nature of disputes, interests of parties and expedition in dispute resolution.

STATUS OF ADR’s SETTLEMENT

As held in Afscon case,

  • When the matter is settled through Arbitration (where there is no pre-existing arbitration clause), the award shall have the same status as if it is a decree of the court (vide section 36 of Arbitration act).

 If any settlement is reached in the arbitration proceedings, then the award passed by the arbitrator on the basis of such agreed terms will have the same status and effect as any other arbitral award, vide section 30 of the AC Act.

  • When the matter is settled through Conciliation, the settlement agreement shall have the same status and effect as if it is arbitral award (vide section 74 of the Arbitration and conciliation act) and therefore it is enforceable as a decree of the court by virtue of section 30 of the AC Act.
  • When a settlement takes place before the Lok Adalat, the award of the Lok Adalat is deemed to be a decree of a civil court under section 21 of the Legal Services Authorities Act, 1987.

As the court continues to retain control and jurisdiction over the cases which it refers to conciliations or Lok Adalats, the settlement agreement in conciliation or the Lok Adalat award will have to be placed before the court recording it and disposal in its terms.

  • Where the reference is to a neutral third party (`mediation’ as defined above) on a court reference, the mediation settlement will have to be placed before the court for recording the settlement and disposal.
  • Where the matter is referred to another Judge and settlement is arrived at before him, such settlement agreement will also have to be placed before the court which referred the matter and that court will make a decree in terms of it.

Whenever such settlements reached before non-adjudicatory ADR methods are placed before the court, the court should apply the principles of Order 23 Rule 3 of the Code and make a decree/order in terms of the settlement, in regard to the subject matter of the suit/proceeding.

In regard to matters/disputes which are not the subject matter of the suit/proceedings, the court will have to direct that the settlement shall be governed by Section 74 of AC Act (in respect of conciliation settlements) or Section 21 of the Legal Services Authorities Act, 1987 (in respect of settlements by a Lok Adalat or a Mediator). Only then such settlements will be effective.

By concluding the judgement of afscon case, court laid down a procedure which can be adopted by a court under section 89. This procedure may be summarised as;

  • know the dispute;
  • exclude `unfit’ cases;
  • ascertain consent for arbitration or conciliation;
  • if there is no consent, select Lok Adalat for simple cases and mediation for all other cases,
  • reserving reference to a Judge assisted settlement only in exceptional or special cases.
  • Conclusion

238TH REPORT FOR THE AMENDMENTS IN SECTION 89

After the supreme court judgement in Afscon case (2010), next year (2011) law commission of India in its 238th report proposed amendments to section 89 CPC as well as Order X Rules 1-A to 1-C. Further, the amendment of section 16 of Court Fee Act has also been suggested.

While discussing the need of amendments to section 89, law commission largely took the reference from Afscon case.

Besides proposing the amendments to section 89 and its rules, the law commission also highlighted the issue of “court fee refund”. Which was not discussed in Afson case.

CPC Amendment Act, which introduced section 89, also inserted section 16 to the Court-fees Act, 1870.

Section 16 provides that;

“Where the section refers the parties to the suit to any one of the mode of settlement of dispute referred to in section 89 of the Code of Civil Procedure, 1908, the plaintiff shall be entitled to a certificate from the court authorizing him to receive back from the collector, the full amount of the fee paid in respect of such plaint.”

This section gives rise to conflict with section 21 of the Legal Services Authorities Act, 1987. The LSA Act provides that the court-fees paid in a case placed before the Lok Adalat shall be refunded in the manner provided under the Court-fees Act, 1870 only if a compromise or settlement has been arrived at between the parties.

However, Section 16 of the Court-fees Act, as the language stands, goes further and says that the court-fee is refundable merely on a reference by court to any ADR process.

This would mean that virtually the court-fee paid in most of the suits will have to be refunded. What will happen if the reference to conciliation, mediation or Lok Adalat does not end in a settlement and the parties come back to the court for adjudication? If the court-fees paid had already been refunded to the plaintiff when the reference was made, adjudication of the suit becomes free, there being no provision for collecting fresh court-fees.

Therefore, the law commission proposed following substitution to section 16 of the Court-fees Act, 1870:

“Where the court refers the parties to the suit or other proceeding to any one of the modes of settlement of dispute referred to in section 89 of the Code of Civil Procedure and as a result thereof a compromise or settlement has been arrived at between the parties, the court-fees paid in such a case shall be refunded.”

CONCLUSION

Alternative Dispute Resolution (ADR) is the need of the hour. Court become handicapped due to backlog of cases and in this situation, this is ADRs method which can help them to dispose of the cases. Arbitration became an established and reputed field of law where new lawyers want to make their career and also companies prefer to go for arbitration rather than to present before the court at every hearing.

Mediation and conciliation also becoming a science and attracting lawyers. For family matters and contract matter, mediation becomes a successful tool to solve the matters.

Lok adalats have arisen as a true companion of the courts to dispose of the cases. In temporary lok adalat, which is organized by legal service authorities, a number of cases come to their end.

However, there is still need to popularize these ADR methods to common people of India because a number of people still don’t know about the mediation option. LSAs are campaigning to create awareness and we should perform our role.

 


[1] (1981) 2 SCC 493

Reference

2. Salem Advocate’s bar Association v. Union of India (2005) 6 SCC 344

3. Afscon Infrastructure limited v. Cherian Varkey Construction Co. (P) Ltd. (2010 8 SCC 24)

4. 238th report of law commission of India

This article is written by Arshi hayat Gnagohi. She is a lawyer, blogger at ababeelfolks and writes on laws, culture, books, cinema, food and literature.