Final draft adr sumit

COURT ANNEXED ADR IN INDIA
Session 2015-2020
SUBJECT – ALTERNATIVE DISPUTE RESOLUTION
SUBMITTED BY :- SUBMITTED TO :-
Sumit Kumar Hrishikesh Manu
ROLL. No. 1442 Assistant Professor of Law
B.B.A. LLB. (Hons.)
CHANAKYA NATIONAL LAW UNIVERSITY
MITHAPUR, PATNA

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DECLARATION BY THE CANDIDATE
I hereby declare that the work reported in the B.A. LL. B (Hons.) Project Report entitled
“COURT ANNEXED ADR IN INDIA” submitted at CHANAKYA NATIONAL LAW
UNIVERSITY; PATNA is an authentic record of my work carried out under the supervision
of Mr. HRISHIKESH MANU. I have not submittted this work elsewhere for any other
degree or diploma. I am fully responsible for the contents of my Project Report.
(Signature of the Candidate)
SUMIT KUMAR
CHANAKYA NATIONAL LAW UNIVERSITY, PATNA
Date:

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ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my teacher Mr. HRISHIKESH
MANU as well as my institution CHANAKYA NATIONAL LAW UNIVERSITY which
gave me the golden opportunity to do this wonderful project on the topic “COURT
ANNEXED ADR IN INDIA ”, which also helped me in doing a lot of Research and I came
to know about so many new things I am really thankful to them.
Secondly, I would also like to thank my parents and friends who helped me a lot in finalizing
this project within the limited time frame.
I would also like to extend my gratitude to my college librarian and all those unseen hands
that helped me out at every stage of my project.
Thank you,
SUMIT KUMAR
Roll no. – 1442 , Semester -6th

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CONTENTS
DECLARATION BY THE CANDIDATE.................................................................................................2
ACKNOWLEDGEMENT................................................................................................................... 3
AIMS AND OBJECTIVES.................................................................................................................. 5
RESEARCH QUESTIONS.................................................................................................................. 5
HYPOTHESIS.................................................................................................................................5
RESEARCH METHODOLOGY...........................................................................................................5
SOURCES OF DATA COLLECTION....................................................................................................5
LIMITATION OF THE STUDY ...........................................................................................................6
SCOPE OF THE STUDY.................................................................................................................... 6
1. INTRODUCTION ........................................................................................................................ 7
1.1. ADR as dispute solving mechanism...................................................................................... 7
1.2. Constitutional Provisions ....................................................................................................8
1.3. Historical Background.........................................................................................................8
2.LEGAL PROVISIONS FOR COURT ANNEXED ADR IN INDIA.............................................................. 9
3. KINDS OF ADR IN INDIA........................................................................................................... 12
3.1.Arbitration:....................................................................................................................... 12
3.2.Conciliation:...................................................................................................................... 12
3.3.Mediation:........................................................................................................................ 13
3.4.Judicial Settlement............................................................................................................ 13
3.5. Lok Adalat:....................................................................................................................... 13
4. SECTION 89 OF CPC AND ADR.................................................................................................. 14
4.1. Whether the settlement in an ADR processis bindingin itself? ........................................... 14
4.2.Procedure to be adopted by a court under Section 89 of the Code:...................................... 15
4.3.The Courtshouldalsobearin mindthe followingconsequentialaspects,while givingeffectto
Section 89 of the Code:........................................................................................................... 16
5. ANAMOLIES OF SECTION 89 OF CPC......................................................................................... 18
6.CONCLUSION AND SUGGESTIONS............................................................................................. 21
Legislative Measures............................................................................................................... 21
Administrative AndAllied Measures......................................................................................... 22
BIBLIOGRAPHY........................................................................................................................ 23

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AIMS AND OBJECTIVES
The researcher has following aims and objectives -
1. To understand the concept of ADR.
2. To understand advantages and disadvantages of ADR.
3. To understand the concept of court annexed ADR in India.
RESEARCH QUESTIONS
The researcher has following research question-
1. What is the concept of ADR?
2. What are the advantages and disadvantages of court annexed ADR in India?
HYPOTHESIS
The researcher has made following hypothesis:
1. The annexation of the concept of ADR by the courts has played a significant role in
the Indian judiciary.
RESEARCH METHODOLOGY
The researcher has used doctrinal method of research for accomplishment of this project
work. He has has used library and internet for the completion of this project.
SOURCES OF DATA COLLECTION
The researcher has used secondary sources for accomplishing of this project work.
SECONDARY SOURCE:
Books
Journals

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Websites
Newspapers
LIMITATION OF THE STUDY
Researcher has used secondary sources of data collection. But there is paucity of time and
money .So, the period of research will be restricted to 1 month and will be restricted to
CNLU campus.
SCOPE OF THE STUDY
This project work will be very helpful for the academic purpose of the researcher and also for
the future accomplishment of the researcher.

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1. INTRODUCTION
Dispute resolution is an indispensable process for making social life peaceful. Dispute
resolution process tries to resolve and check conflicts, which enables persons and group to
maintain co-operation. It can thus be alleged that it is the sin qua none of social life and
security of the social order, without which it may be difficult for the individuals to carry on
the life together.1
Alternative Dispute Resolution (ADR) is a term used to describe several different modes of
resolving legal disputes. It is experienced by the business world as well as common men that
it is impracticable for many individuals to file law suits and get timely justice. The Courts are
backlogged with dockets resulting in delay of year or more for the parties to have their cases
heard and decided. To solve this problem of delayed justice ADR Mechanism has been
developed in response thereof. 2
1.1. ADR as dispute solving mechanism
Arbitration may be defined as the process by which a dispute or difference between two or
more parties as to their mutual legal rights and liabilities is referred to and determined
judicially and with binding effect by the application of law by one or more persons (the
arbitral tribunal) instead of by a court of law3. Arbitration is only an alternative to litigation
and it does not replace the judicial machinery in all aspects, rather it co-exists with it.
The object of arbitration is to provide fair and impartial resolution of disputes without
causing unnecessary delay or expense and at the same time, it allows freedom to the parties to
agree upon the manner in which their disputes should be resolved, subject only to safeguards
imposed in public interest. Today, arbitration is a very popular mode of alternate dispute
resolution in the commercial world and one can find an arbitration clause incorporated in the
majority of business contract .Parties are entitled to choose the form of arbitration, which
they deem appropriate in the facts and circumstances of their dispute. This necessarily
involves the consideration & evaluation of the various features of both forms of arbitration
and this can be a daunting task, as both forms have their own merits and demerits.
1 Park and Burger, Introduction to the Science of Sociology p. 735.
2 Hindu Marriage Act 1955, Industrial Dispute Act, 1947, The Code of Civil Procedure, The Family Court Act,
1984.
3 Halsbury’s Laws of England (Butterworths, 4th edition, 1991) para 601,33.

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1.2. Constitutional Provisions
Article 39-A of the Constitution of India provides that the State shall secure that the operation
of the legal system promotes justice, on the basis of equal opportunity and shall in particular,
provide free legal aid, by suitable legislations or schemes or in any other way, to ensure that
opportunities for securing justice are not denied to any citizen by reason of economic or other
disabilities. Article 14 also makes it obligatory for the State to ensure equality before law and
a legal system which promotes justice on the basis of equal opportunity to all. Thus, access to
justice, provision of legal aid for poor and needy and dissemination of equal and speedy
justice are the cherished goals of our Constitutional Republic. 4
1.3. Historical Background
The history of ADR can be traced to our historical path. The concept of Lok Adalats
(People‟s Court) is an innovative contribution of India to the World Jurisprudence. India has
a long tradition and history of ADR process like Mediation and Lok Adalat being practiced in
the society at the grass root level, these are called Panchayats. The ancient concept of
settlement of dispute through Arbitration, Conciliation, Mediation or Negotiation known as
the verdict or decision of „NyayaPanchayat‟ is conceptualized and institutionalized in the
philosophy of Lok Adalat. Concept of mediation has been practiced with great frequency in
the last quarter of the 20th Century. After the emergence of 21st Century this practice has
been developed with more frequency in the Western countries. Its roots can be traced in
USA, notably at the Pound Conference in 1976. It was followed by two legislations – The
Civil Justice Reforms Act, 1990 and The Administrative Dispute Resolution Act, 1996. There
are many Statutes in America which make the mediation mandatory for dispute resolution.
The State Bar Associations have set up mediation centers and the American Bar Association
has its intensive section for dispute resolution. Other countries like United Kingdom has also
introduced mediation system as an alternate for dispute resolution mechanism. In United
Kingdom, besides, Civil Procedures Reforms of 1999, Lord Chancellor‟s Department
announced in 2001 that all government disputes should be resolved through settlement
procedures. Likewise, ADR mechanism was encouraged and implemented in Australia, South
Africa and Sri Lanka.
4 D.P. Mittal,Taxmann’s Law of Arbitration,ADR & Contract (Taxmann Allied Services (P) Ltd., Delhi,2nd Edn.).

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2.LEGAL PROVISIONS FOR COURT ANNEXED ADR IN INDIA
In India, the Parliament has amended the Civil Procedure Code by inserting Section 89 as
well as Order 10 Rule 1-A to 1-C. Section 89 of the Civil Procedure Code provides for the
settlement of disputes outside the Court. It is based on the recommendations made by the
Law Commission of India and Malimath Committee. It was suggested by the Law
Commission of India that the Court may require attendance of any party to the suit or
proceedings to appear in person with a view to arriving at an amicable settlement of dispute
between the parties and make an attempts to settle the dispute between the parties amicably.
Malimath Committee recommended to make it obligatory for the Court to refer the dispute,
after issues are framed, for settlement either by way of Arbitration, Conciliation, Mediation,
Judicial Settlement through Lok Adalat. It is only when the parties fail to get their disputes
settled through any of the alternate disputes resolution method that the suit could proceed
further. In view of the above, new Section 89 has been inserted in the Code in order to
provide for alternative dispute resolution.5
At the time of framing of CPC, section 89 was their providing for settlement of disputes by
way of arbitration. The supporting procedural provisions were laid down in second schedule
of CPC. Later on a comprehensive legislation dealing with domestic arbitration was passed
i.e. - The Arbitration Act 1940. In pursuant to the same section 89 and second schedule of
CPC were deleted. Further in order to give effect to the recommendations given by various
law commission reports and Justice Malimath Committee report, again Section 89 is
incorporated in CPC in its modified form by way of CPC Amendment Act, 1999.
A simple reading of the section suggests that the Court is not bound to decide each case itself,
but can refer the dispute to Arbitration, Conciliation, Mediation, Lok Adalats or Judicial
settlement mechanism, the failure of which would revert the case back to the Court for
normal adjudication proceedings. This could reduce the burden of the Court. But there have
been several doubts, even cases challenging the validity and the completeness of S.89, saying
that it does not provide much operational value in real time.
Sec. 89. Settlement of disputes outside the court. - (1) 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 –
5 Alexander Bevan, Alternative DisputeResolution (Sweet and Maxwell,London, 1992).

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a) arbitration;
b) conciliation;
c) judicial settlement including settlement through Lok Adalat; or
d) mediation.
(2) where a dispute has been referred –
a) for arbitration or conciliation, the provisions of the Arbitration and
Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings
forarbitration or conciliation were referred for settlement under the
provisions of that Act;
b) 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 (39 of 1987) and all other provisions
of that Act shall apply in respect of the dispute so referred to the Lok
Adalat;
c) 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 (39 of 1987) shall apply as if the dispute were referred to a Lok
Adalat under the provisions of that Act;
d) for mediation, the Court shall effect a compromise between the parties and
shall follow such procedure as may be prescribed."
On perusal of the aforesaid provisions of Section 89, it transpires that it refers to five types of
ADR procedures, made up of one adjudicatory process i.e. arbitration and four negotiatory
i.e. non adjudicatory processes such as Conciliation, Mediation, Judicial Settlement and Lok
Adalat. The object behind Section 89 is laudable and sound. Resort to ADR process is
necessary to give speedy and effective - 60 - relief to the litigants and to reduce the pendency
in and burden upon the Courts. 6
Of course, Section 89 has to be read with Rule 1-A of Order 10, which runs as follows:7 -
6 Anirudh Wadhwa and Anirudh Krishnan (Eds.),R.S. Bachawat’s Law of Arbitration and Conciliation (Lexis
Nexis Butterworths Wadhwa,Nagpur, 5th Edn., 2010).
7 Avtar Singh Law of Arbitration and Conciliation (Eastern Book Company, Lucknow, 7th Edn, 2005).

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Order 10 Rule 1-A. 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.
Order 10 Rule 1-B. 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.
Order 10 Rule 1-C. 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. On joint reading of Section 89 read with
Rule 1-A of Order 10 of Civil Procedure Code, it transpires that the Court to direct the parties
to the dispute.

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3. KINDS OF ADR IN INDIA
On joint reading of Section 89 read with Rule 1-A of Order 10 of Civil Procedure Code, it
transpires that the Court to direct the parties to - 61 - opt for any of the five modes of the
Alternative Dispute Resolution and on their option refer the matter. Thus, the five different
methods of ADR can be summarized as follows8: -
1. Arbitration
2. Conciliation
3. Mediation
4. Judicial Settlement &
5. Lok Adalat
3.1.Arbitration: Arbitration, a form of alternative dispute resolution (ADR), is a technique
for the resolution of disputes outside the courts, where the parties to a dispute refer it to one
or more persons – arbitrators, by whose decision they agree to be bound. It is a resolution
technique in which a third party reviews the evidence in the case and imposes a decision that
is legally binding for both sides and enforceable. There are limited rights of review and
appeal of Arbitration awards. Arbitration is not the same as judicial proceedings and
Mediation. Arbitration can be either voluntary or mandatory. Of course, mandatory
Arbitration can only come from s statute or from a contract that is voluntarily entered into,
where the parties agree to hold all existing or future disputes to arbitration, without
necessarily knowing, specifically, what disputes will ever occur. 9
3.2.Conciliation: Conciliation is an alternative dispute resolution process whereby the parties
to a dispute use a conciliator, who meets with the parties separately in order to resolve their
differences. They do this by lowering tensions, improving communications, interpreting
issues, providing technical assistance, exploring potential solutions and bring about a
negotiated settlement. It differs from Arbitration in that. Conciliation is a voluntary
proceeding, where the parties involved are free to agree and attempt to resolve their dispute
by conciliation. The process is flexible, allowing parties to define the time, structure and
content of the conciliation proceedings. These proceedings are rarely public. They are
8 Id.
9 Bryan A. Garner (Ed.), Black’s LawDictionary (WestPublishingCompany,St. Paul,Minnesota,8th Edn., 2004).

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interest-based, as the conciliator will when proposing a settlement, not only take into account
the parties' legal positions, but also their; commercial, financial and /or personal interests.10
3.3.Mediation: Now, worldwide mediation settlement is a voluntary and informal process of
resolution of disputes. It is a simple, voluntary, party centered and structured negotiation
process, where a neutral third party assists the parties in amicably resolving their disputes by
using specified communication and negotiation techniques. Mediation is a process where it is
controlled by the parties themselves. The mediator only acts as a facilitator in helping the
parties to reach a negotiated settlement of their dispute. The mediator makes no decisions and
does not impose his view of what a fair settlement should be.11
3.4.Judicial Settlement: Section 89 of the Civil Procedure Code also refers to the Judicial
Settlement as one of the mode of alternative dispute resolution. Of course, there are no
specified rules framed so far for such settlement. However, the term Judicial Settlement is
defined in Section 89 of the Code. Of course, it has been provided therein that when there is a
Judicial Settlement the provisions of the Legal Services Authorities Act, 1987 will apply. It
means that in a Judicial Settlement the concerned Judge tries to settle the dispute between the
parties amicably. If at the instance of judiciary any amicable settlement is resorted to and
arrived at in the given case then such settlement will be deemed to be decree within the
meaning of the Legal Services Authorities Act, 1987. Section 21 of the Legal Services
Authorities Act, 1987 provides that every award of the Lok Adalat shall be deemed to be a
decree of the Civil Court.
3.5. Lok Adalat: The concept that is gaining popularity is that of Lok Adalats or people’s
courts as established by the government to settle disputes through conciliation and
compromise. It is a judicial institution and a dispute settlement agency developed by the
people themselves for social justice based on settlement or compromise reached through
systematic negotiations. The first Lok Adalats was held in Una aim the Junagadh district of
Gujarat State as far back as 1982. Lok Adalats accept even cases pending in the regular
courts within their jurisdiction. Section 89 of the Civil Procedure Code also provides as to
referring the pending Civil disputes to the Lok Adalat. When the matter is referred to the Lok
Adalat then the provisions of the Legal Services Authorities Act, 1987 will apply.
10 See http://www.dispute-resolution-hamburg.com/conciliation/what-is-conciliation(accessed on 24-03-18)
11 An Article“Disputes among Business Partners should beMediated or Arbitrated, Not Litigated” by William
Sheffield, Judge, Supreme Court of California (Ret.) published in book “Alternative Dispute Resolution – What it
is and how it works” Edited by P. C. Rao and WilliamSheffield,page No.291

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4. SECTION 89 OF CPC AND ADR
4.1. Whether the settlement in an ADR process is binding in itself?
When the court refers the matter to arbitration under Section 89 of the Act the case goes out
of the stream of the court and becomes an independent proceeding before the arbitral tribunal.
Arbitration being an adjudicatory process, it always ends in a decision. There is also no
question of failure of ADR process or the matter being returned to the court with a failure
report. The award of the arbitrators is binding on the parties and is executable/enforceable as
if a decree of a court, having regard to Section 36 of the AC Act. If any settlement is reached
in the arbitration proceedings, then the award passed by the Arbitral Tribunal on such
settlement, will also be binding and executable/enforceable as if a decree of a court, under
Section 30 of the AC Act.12
The other four ADR processes are non-adjudicatory and the case does not go out of the
stream of the court when a reference is made to such a non- adjudicatory ADR forum. The
court retains its control and jurisdiction over the case, even when the matter is before the
ADR forum. When a matter is settled through conciliation, the Settlement Agreement is
enforceable as if it is a decree of the court having regard to Section 74 read with
Section 30 of the AC Act. 13
Similarly, when a settlement takes place before the Lok Adalat, the Lok Adalat award is also
deemed to be a decree of the civil court and executable as such under Section 21 of the Legal
Services Authorities Act, 1987. Though the settlement agreement in a conciliation or a
settlement award of a Lok Adalat may not require the seal of approval of the court for its
enforcement when they are made in a direct reference by parties without the intervention of
court, the position will be different if they are made on a reference by a court in a pending
suit/proceedings. 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 for recording it and disposal in
its terms. Where the reference is to a neutral third party ('mediation') on a court reference,
though it will be deemed to be reference to Lok Adalat, as court retains its control and
12 DavitSt. John Sutton, Judith Gill,Mathew Gearing (Eds.) Russel on Arbitration (Sweet and Maxwell,London,
23rd Edn., 2007).
13 Id.

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jurisdiction over the matter, the mediation settlement will have to be placed before the court
for recording the settlement and disposal. 14
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 Fora 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 Section21 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.
4.2.Procedure to be adopted by a court under Section 89 of the Code:
a) When the pleadings are complete, before framing issues, the court shall fix a preliminary
hearing for appearance of parties. The court should acquaint itself with the facts of the case
and the nature of the dispute between the parties.
b) The court should first consider whether the case falls under any of the category of the
cases which are required to be tried by courts and not fit to be referred to any ADR processes.
If it finds the case falls under any excluded category, it should record a brief order referring
to the nature of the case and why it is not fit for reference to ADR processes. It will then
proceed with the framing of issues and trial.
c) In other cases (that is, in cases which can be referred to ADR processes) the court should
explain the choice of five ADR processes to the parties to enable them to exercise their
option.
d) The court should first ascertain whether the parties are willing for arbitration. The court
should inform the parties that arbitration is an adjudicatory process by a chosen private forum
and reference to arbitration will permanently take the suit outside the ambit of the court. The
parties should also be informed that the cost of arbitration will have to be borne by them.
14 H.E. Chodosh,N.J. Bhatt, F.Kassam,Mediation in India:A Toolkit(U.S. Educational Foundation in India,
FulbrightHouse, New Delhi,Feb. 2004).

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Only if both parties agree for arbitration, and also agree upon the arbitrator, the matter should
be referred to arbitration.15
e) If the parties are not agreeable for arbitration, the court should ascertain whether the parties
are agreeable for reference to conciliation which will be governed by the provisions of the
AC Act. If all the parties agree for reference to conciliation and agree upon the conciliator/s,
the court can refer the matter to conciliation in accordance with Section 64 of the AC Act.
f) If parties are not agreeable for arbitration and conciliation, which is likely to happen in
most of the cases for want of consensus, the court should, keeping in view the
preferences/options of parties, refer the matter to any one of the other three other ADR
processes: (a) Lok Adalat; (b) mediation by a neutral third party facilitator or mediator; and
(c) a judicial settlement, where a Judge assists the parties to arrive at a settlement.
(g) If the case is simple which may be completed in a single sitting, or cases relating to a
matter where the legal principles are clearly settled and there is no personal animosity
between the parties (as in the case of motor accident claims), the court may refer the matter to
Lok Adalat. In case where the questions are complicated or cases which may require several
rounds of negotiations, the court may refer the matter to mediation. Where the facility of
mediation is not available or where the parties opt for the guidance of a Judge to arrive at a
settlement, the court may refer the matter to another Judge for attempting settlement.
(h) If the reference to the ADR process fails, on receipt of the Report of the ADR Forum, the
court shall proceed with hearing of the suit. If there is a settlement, the court shall examine
the settlement and make a decree in terms of it, keeping the principles of Order 23 Rule 3 of
the Code in mind.
4.3.The Court should also bear in mind the following consequential aspects, while giving
effect to Section 89 of the Code:
(i) If the reference is to arbitration or conciliation, the court has to record that the reference is
by mutual consent. Nothing further need be stated in the order sheet.
(ii) If the reference is to any other ADR process, the court should briefly record that having
regard to the nature of dispute, the case deserves to be referred to Lok Adalat, or mediation or
15 Id.

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judicial settlement, as the case may be. There is no need for an elaborate order for making the
reference.
(iii) The requirement in Section 89(1) that the court should formulate or reformulate the terms
of settlement would only mean that court has to briefly refer to the nature of dispute and
decide upon the appropriate ADR process.
(iv) If the Judge in charge of the case assists the parties and if settlement negotiations fail, he
should not deal with the adjudication of the matter, to avoid apprehensions of bias and
prejudice. It is therefore advisable to refer cases proposed for Judicial Settlement to another
Judge.
(v) If the court refers the matter to an ADR process (other than Arbitration), it should keep
track of the matter by fixing a hearing date for the ADR Report. The period allotted for the
ADR process can normally vary from a week to two months (which may be extended in
exceptional cases, depending upon the availability of the alternative forum, the nature of case
etc.). Under no circumstances the court should allow the ADR process to become a tool in the
hands of an unscrupulous litigant intent upon dragging on the proceedings.
(vi) Normally the court should not send the original record of the case when referring the
matter for an ADR forum. It should make available only copies of relevant papers to the
ADR forum. (For this purpose, when pleadings are filed the court may insist upon filing of an
extra copy). However if the case is referred to a Court annexed Mediation Centre which is
under the exclusive control and supervision of a Judicial Officer, the original file may be
made available wherever necessary.16
16 H.K. Saharay,Law of Arbitration and Conciliation (Eastern LawHouse, Calcutta,2001).

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5. ANOMALIES OF SECTION 89 OF CPC
In the latest case on the applicability of S.89 and Court annexed ADR, decided in 2010,
Afcons Infrastructure v. Cherian Varkey Construction17, the Court says that if this section
is literally read and implemented, then it would be “put[ting] the cart before the horse”, with
an “impractical” procedure in sub-section (1) and mixed up definitions in sub-section (2). The
Court refers to the anomalies addressed in the Salem Bar Association cases I18 and II19,
whereupon the validity of S. 89 was upheld and the Court held that it could be implemented
by “ironing out the creases” and by applying purposive interpretation, respectively. The
anomalies addressed were:
1. The definitions of ‘mediation’ and ‘judicial settlement’ under S. 89(2)(c) and (d) have
been mixed up, with mediation being effected by court-resolved compromise and the
latter as reference made by the court to a suitable institution for settlement.
It makes no sense to call a compromise effected by a court, as "mediation", as is done in
clause (d). Nor does it make any sense to describe a reference made by a court to a suitable
institution or person for arriving at a settlement as "judicial settlement", as is done in clause
(c). "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 well-known 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. It is also synonym of the term `conciliation'.20 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. The mix-up of definitions of the
terms "judicial settlement" and "mediation" in Section 89 is apparently due to a clerical or
typographical error in drafting, resulting in the two words being interchanged in clauses (c)
and (d) of Section 89(2). 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.
17Afcons InfrastructureLtd. v. Cherian Varkey Construction Co. (P) Ltd., Civil Appeal No.6000 Of 2010
18Salem Advocate Bar Association v.Union of India,2003 (1) SCC 49
19Salem Advocate Bar Association v.Union of India,2005 (6) SCC 344
20 Black's LawDictionary,7th Edition, Pages 1377 and 996.

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2. In sub-section (1), the final stage of conciliation, as stated in S. 73(1) of the
Arbitration and Conciliation Act, is brought into the pre-ADR stage under S.89. If the
Court is directed to list out the terms of settlement and refer the parties to anyone of
the ADR mechanisms, then what will be the work of the ADR forum? S. 89(1)
requires the formulation the terms of settlement and reformulatation of the terms after
the parties send their observations, regarding those terms, all at the pre-ADR stage. It
is not possible for the courts to perform all these actions at the preliminary hearing
stage only to decide whether the case should be referred to ADR, and if so, then
which ADR mechanism. If the trial court is to “ascertain whether there exists any
elements of settlement”, then why will it again refer it to ADR rather than solving the
dispute itself?
Moreover, if the dispute is referred to Arbitration, then all the terms listed out by the Court
will be useless, as the Arbitrator will hear the dispute and not to the already enlisted terms,
and his award will be based on his own adjudication over the matter. In case of reference to
LokAdalat, Conciliation, Mediation, the drawing up of terms is the work of the LokAdalat,
Conciliator or the Mediator as the case may be. Then, if at all useless, what end will be
achieved by the court formulating the terms of settlement that too at a pre-ADR stage?
These Anomalies were addressed in Salem Bar II by equating the phrase “terms of
settlement” in S. 89(1) to “a summary of disputes”. Therefore the courts would only be
required to summarize the disputes which have arisen.
The Afcons case has reference to the Tirath Singh case21 and Shamrao v Thane District
Magistrate case22, where the Court states that if a statute has words which, if interpreted
literally would give rise to anomalies, then, the judge may, instead of adopting the textual
construction, add, omit, or substitute certain words in the statute to redress the situation and
get rid of the anomalies.
Afcons suggest that S.89 has to be read along with Rule 1A of Order 10 to give it an
appropriate structure. The parties, thus have an option to opt for any of the 5 dispute
resolution mechanisms and refer the matter to their choice of ADR process. Rule 1A does not
require the Court to formulate terms of settlement or reformulate the terms after receiving the
observations of either party. Therefore, if Rule 1A of Order 10 is read along with S. 89, it
21Tirath Singh v. Bachittar Singh,AIR 1955 SC 830,as read in Afcons Case
22ShamraoV.Parulekar v.DistrictMagistrate,Thana,Bombay,[AIR 1952 SC 324,read in Afcons Case

20 | P a g e
would be practically feasible, since the court would be enabled to inform the parties of the 5
ADR mechanisms and then refer them to opt the process of their choice. The court would
have to refer to S.89 before the framing of the issues, right after the pleadings of both the
parties have been heard.
For proper interpretation of S. 89, CPC, the court is required to remove itself from a plain and
literal construction and make two clear changes.
1. The court is not mandatorily required to formulate the “terms of settlement” before
referring the dispute to an ADR process, but can briefly describe the dispute and refer it to the
same.
2. The clauses (c) and (d) of S. 89(2), with the terms ‘mediation’ and ‘judicial settlement’
will have to be interchanged, otherwise the sub-section makes no sense.
Since the opening words of the section are "where it appears to the court that there exist
elements of a settlement", this section need not be invoked if the Court forms an opinion that
the case is not suited for an ADR process.
The anomalies of S.89 have been addressed by the judiciary in various case laws, but the
section still remains unchanged by the legislature. It is a viable section which has the
potential to reduce the burden of the Indian judiciary and accomplish what every justice
system aims for, fair and speedy justice for all, since justice delayed is justice denied.
This section addresses the need of the hour that is the requirement to reduce the load of our
adversarial judicial system. ADR processes can be finally made an active part of the Justice
system through this section. But this section needs to be properly formed through a thorough
responsible debate by the law academicians and judicial authorities. This section needs to be
looked into again by the parliament to iron out the creases and make it an effective solution to
provide speedy, satisfactory justice, at an affordable cost.23
23 Arunvir Vashista,“Emerging Trends in ADR as Dispute ResolvingTechniques”, XLIX ICA Arbitration Quarterly
31 (January – March 2011).

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6.CONCLUSION AND SUGGESTIONS
Because justice is not executed speedily men persuade themselves that there is no such thing
as justice. Sharing the same sentiments, Chief Hustice Bhagwati said in his speech on Law
Day, “I am pained to observe that the judicial system in the country is on the verge of
collapse. These are strong words I am using but it is with considerable anguish that I say so.
Our judicial system is creeking under the weight of errors.” Arrears cause delay and delay
means negating the accessibility of justice in true terms to the common man. Countless
rounds to the Courts and the lawyers’ chambers can turn any person insane. Even then
loitering and wasting time in the corridors of Courts has become a way of life for a majority
of Indians who day by day are becoming litigous. Some of the main reasons for delay in the
disposal of cases are abnormal increase in the number of cases going to Courts and Tribunals,
mainly due to faulty legislation enacted hurriedly, arbitrary administrative orders, increased
consciousness of one’s rights and gambler’s instinct in a litigant due to multiplicity of appeals
and revisions provided in law.” The disputants want a decision, and that too as quickly as
possible. As the problem of overburdened Courts has been faced all over the world, new
solutions were searched. Various Tribunals were the answer to the search. In India, we have a
number of Tribunals. However, the fact of the matter is that even after the formation of so
many Tribunals, the administration of justice has not become speedy. Thus, it can be safely
said that the solution lies somewhere else. All over the globe the recent trend is to shift from
litigation towards Alternative Dispute Resolution. It is a very practical suggestion, which if
implemented, can reduce the workload of Civil Courts by half. Thus, it becomes the bounden
duty of the Bar to take this onerous task of implementing ADR on itself so as to get matters
settled without going into the labyrinth of judicial procedures and technicalities. The Bar
should be supported by the Bench in this herculean task so that no one is denied justice
because of delay.
Suggestions-
Legislative Measures
1. In the interregnum there is an urgent need to afford statutory recognition to mediation,
which has already developed as the frontrunner in the ADR revolution and therefore
legislation of a Mediation Act on the lines of Part III of the Arbitration and
Conciliation Act, 1996, is the need of the hour.

22 | P a g e
2. Arbitration Division at High Courts should be statutorily created for exclusively
dealing with arbitration matters which should also monitor special courts for
arbitration matters at the district court level.
3. An Arbitral Council of India should be created as a statutory body for regulating
domestic arbitration.
4. A Code of Conduct / Code of Ethics for arbitrators should be introduced via
appropriate legislation/ delegated legislation/ amendment so as to maintain the
impartiality, independence, purity and quality of arbitration.
5. Online Dispute Resolution (ODR) which is the future of ADR in this age of internet,
e- commerce and e courts should be afforded legislative recognition.
Administrative And Allied Measures
1. ADR should be largely institutionalized in Delhi so as to bring in more consistency
and efficacy. Institutional arbitration should be promoted and should gradually
replace most ad hoc arbitrations. However the government, judiciary and private
players need to work collaboratively to develop such institutionalized ADR
framework.
2. Courts should provide comprehensive multi door alternatives to disputants under a
single roof ranging from litigation to arbitration to mediation and other ADR
mechanisms and develop court annexed ADR centres.
3. In the interregnum there is an urgent need to immediately classify and designate the
existing mediation centres as Mediation and Conciliation Centres expressly offering
conciliation also as a state sponsored ADR mechanism.
4. The Mediation and Conciliation Centres should diversify and expand their role so as
to provide dispute resolution services at the pre litigation stage also and primarily pre
litigation conciliation.

23 | P a g e
BIBLIOGRAPHY
PRIMARY SOURCE-
 Arbitration and Conciliation Act, 1996.
 Legal Services Authority Act,1987.
 Code of Civil Procedure,1908.
SECONDARY SOURCES-
Books-
 “Alternative dispute resolution,” Ed. P.C. Rao and William Sheffield, 1st ed. 1997,
Universal Law Publishing Co. Pvt. Ltd., Delhi.
 S.R. Myneni, “Arbitration, Conciliation and Alternative Dispute Resolution Systems,”
1st ed. 2004, Asia Law House, Hyderabad.
 Alexander Bevan, Alternative Dispute Resolution (Sweet and Maxwell, London,
1992).
 Anirudh Wadhwa and Anirudh Krishnan (Eds.), R.S. Bachawat’s Law of Arbitration
and Conciliation (Lexis Nexis Butterworths Wadhwa, Nagpur, 5th Edn., 2010).
 Ashwanie Kumar Bansal, Arbitration and ADR (Universal Law Publishing Company
Pvt. Ltd., Delhi, 2005).
 Avtar Singh Law of Arbitration and Conciliation (Eastern Book Company, Lucknow,
7th Edn, 2005).
Websites-
 http://www.icadr.org/news-speechcjhc.html
 http://pib.nic.in/feature/feyr2002/fjan2002/f140120021.html
 http://www1.worldbank.org/publicsector/legal/adr.htm
 http://www1.worldbank.org/publicsector/legal/ADR%20Workshop.pdf
 http://lawcommissionofindia.nic.in/alt_dis.pdf

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