Study with the several resources on Docsity
Earn points by helping other students or get them with a premium plan
Prepare for your exams
Study with the several resources on Docsity
Earn points to download
Earn points by helping other students or get them with a premium plan
he use of methods such as mediation or arbitration to resolve a dispute without resort to litigation
Typology: Study Guides, Projects, Research
1 / 60
This page cannot be seen from the preview
Don't miss anything!
“ Discourage litigation. Persuade your neighbours to
compromise wherever you can. Point out to them how the
nominal winner is often a looser – in fee, expenses and waste
of time .”-A braham Lincoln
I. Introduction It is impossible to eliminate contradictions, conflicts and disputes in any society, and the human society develops in contradictions. It is these contradictions and conflicts which tell us the importance of peace. Peace is, therefore, a sine qua non for development and one of the most important facts which help maintain peace in any society is people‟s faith in the justice delivery system. Trust of the people in the system that they will get justice, if and when required, keeps the system peaceful, smooth and comfortable. There are many stake-holders of justice delivery system. The most important is the consumer of justice who is a litigant. The seekers of justice come to the courts with pain and anguish in their hearts because they have faced legal problems and suffered physically and psychologically. They have a trust in the courts and believe that they would get justice from the courts, so they do not take the law into their own hands.
The truth is that an effective judicial system requires not only that just results be reached but they be reached swiftly. However, the reality is that it takes a very long time to get justice through the established court system. In spite of the continuous efforts, sometimes the litigation continues for the life time of the litigant and sometimes it carries on even to the next generation. In this state of uncertainty and unending long process, the disputant or litigant may exhaust his resources besides physical and mental sufferings. Thus, there is a chain reaction of litigation process and, at times, civil cases may even give rise to criminal cases.
In our country the justice delivery system through courts has given rise to certain grave problems like inordinate delays, huge pendency of cases and expensive litigation. Thus, it has become very difficult for the poor and marginalized people to have access to justice. In these circumstances, it becomes significantly necessary for
all the stake-holders of the judicial system to find out some mechanism where such grey areas can be effectively and adequately taken care of. Alternative Dispute Resolution (ADR) contains the effective mechanism to provide speedy and cost effective justice, it also has the potential to trim the huge arrears of cases to size. Parliament brought about a legislation and introduced section 89 and Rules 1-A, 1-B and 1-C to Order X in the Code of Civil Procedure, 1908, so as to make effective use of ADR process.
II. 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.
III. 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 „Nyaya- Panchayat‟ 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 20 th^ 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.
Page
As regards the Industrial Disputes Act, the Supreme Court observed, “the policy of law emerging from Industrial Disputes Act, 1947 and its sister enactments is to provide an Alternative Dispute Resolution mechanisms to the workmen, a mechanism which is speedy, inexpensive, informal and unencumbered by the plethora of procedural laws and appeals upon appeals and revisions applicable to civil court^1.
S. 9 of the Family Courts Act, 1984 mandates the family court to assist and persuade the parties at the first instance, to arrive at a settlement.
S. 107(2) of the Code of Civil Procedure provides that subject to such conditions and limitations as may be prescribed, “………. The appellate court shall have the same powers and shall perform as nearly as may be the same duties as are conferred and imposed by this Code on courts of original jurisdiction in respect of suits instituted therein.” Thus, it is inferred that the provisions regarding Alternative Disputes Resolutions are applicable to appellate courts also.
Order 23, Rule 3, Code of Civil Procedure mandates the courts to record a full adjustment or compromise and pass a decree in terms of such compromise or adjustment. But the compromise decree has to be recorded as a whole so as to gather the intention of the parties^2.
The court must apply its judicial mind while examining the terms of settlement. The compromise shall not be recorded in a casual manner. The court is under the responsibility to satisfy itself about the lawfulness and genuineness of the compromise^3.
Government of India and State Governments are the largest litigants in India. The government or statutory authorities are defendants in a large number of suits pending in various courts in the country. Section 80, CPC and some other statutes require service of notice as a condition precedent for filing of a suit or other proceedings against the government or authority. It is observed that in a large number of cases where government is a defendant either the required notice is not replied or in
(^1) Rajasthan State Road Transport Corporation v. Krishna Kant, AIR 1995 SC 1715 2 Manjulata Sharma v. Vinay Kumar Dubey, AIR 2004 All 92 (94) DB 3 Banwarilal v. Chano Devi, AIR 1993 SC 1139
Page
a few cases where a reply is sent, it is generally vague and evasive. Thus, the object of S. 80, CPC and similar provisions get defeated. It not only gives rise to avoidable litigation but also results in heavy expenses and costs to the government exchequer.
The object of notice under section 80, CPC is to give the government sufficient warning of the case which is going to be filed against it and an opportunity to it to settle the claim without litigation.^4 It gives the government an opportunity to consider its legal position and accordingly settle the claim out of court.^5 The notice under section 80, CPC intends to alert the state to negotiate a just settlement or at least have the courtesy to tell the potential outsiders why the claim is being resisted.^6 The underlying object of section 80, CPC and other similar provisions is to curtail litigation and area of dispute.
The Supreme Court of India in Geeta Iron and Brass Works Ltd. case has emphasised that governments must be made accountable by Parliamentary social audit for wasteful litigation expenditure inflicted on the community through its inaction.
The Apex Court has directed that all governments, central or state or other concerned authorities to nominate within a period of three month, an officer who shall be made to ensure that replies to notice under section 80, CPC or similar provisions are sent within the stipulated period and the replies shall be sent after due application of mind. This direction of Supreme Court shall put the government authorities in a conciliation mode and promote early settlement of disputes.^7
Section 89 has been inserted in the Code of Civil Procedure by the CPC (Amendment) Act, 1999. It became effective from 01.07.2002. Section 89 CPC reads as follows:-
“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
4 Ghanshyam Das v. Domination of India; AIR 1984 SC 1004 5 Raghunath Das v. Union of India; AIR 1969 SC 674 6 State of Punjab v. Geeta Iron and Brass Works Ltd.; AIR 1978 SC 1608 7 Salem Advocate Bar Association, Tamil Nadu v. Union of India; AIR 2005 SC 3353
Page
deemed to be a Lok Adalat and all the provisions of the Legal Services Authorities 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 “judicial settlement”, the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.^8
Order 10 Rule 1-A:
“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:
“ 1-B. Appearance before the conciliatory forum or authority.- Where a suit is referred under Rule 1-A, the parties shall appear before such forum or authority for conciliation of the suit.”
Order 10 Rule 1-C:
“1-C. Appearance before the court consequent to the failure of efforts of conciliation .- Where a suit is referred under Rule 1-A 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.”
Section 89, CPC confers the jurisdiction on the court to refer a dispute to an ADR process whereas Rules 1-A to 1-C of Order X lays down the manner in which the jurisdiction is to be exercised by the Court. The scheme is that the court explains
(^8) Afcons Infrastructure and others v. Cherian Verkay Construction Company Pvt. Ltd. and others, (2010) 8 SCC 24
the choices available regarding ADR process to the parties, permit them to opt for a process by consensus, and if there is no consensus, proceeds to choose the process.
V. Cases “Unsuitable” & “Suitable” for ADR Processes In Afcon‟s case (supra), Supreme Court of India has observed that the following categories of cases, having regard to their nature, are normally considered to be not suitable or suitable for ADR Processes :-
Cases “unsuitable” for ADR Processes (Excluded category of cases)
VI. Cases “suitable” for ADR Processes Except the excluded category of cases (as mentioned above), all other suits and cases of civil matters in particular, the following cases are normally considered to be suitable for A.D.R. processes:
(i) All cases relating to trade, commerce and contracts (including all money cases) 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;
In family disputes or matrimonial matters, the ideal stage for mediation will be immediately after service of notice on respondent and before the respondent files objections/written statement because in such cases the relationship becomes hostile on account of various allegations in the petition and the hostility will be further aggravated by the counter allegations made in the objections/written statement.
VIII. Consent of Parties for referring the matter to ADR Processes The consent of all the parties to the suit is necessary for referring the case for arbitration under section 89, CPC. The court exercising power under section 89, CPC cannot refer a suit to arbitration unless all the parties to the suit agree to such reference.
The Supreme Court has observed that where there is no pre-existing arbitration agreement, the parties to the suit can agree for arbitration by means of a joint application or joint affidavit before the court or by record of the agreement by the court in the order sheet signed by the parties^9.
Similarly, the consent of all the parties to the suit is necessary for referring the case for conciliation under section 89, CPC (if the parties are not agreeable for arbitration).
If the parties are not agreeable for either arbitration or conciliation, the court has to consider which of the three other ADR Processes (Lok Adalat, Mediation and Judicial Settlement) is suitable for reference. In Afcon‟s case (supra) the Supreme Court has observed that three ADR Processes – Lok Adalat, Mediation and Judicial Settlement do not require the consent of parties for reference but the court has to use its discretion in choosing the ADR Process judiciously, keeping in view the nature of disputes, interests of parties and expedition in dispute resolution. However absence of consent for reference does not affect the voluntary nature of the mechanism of mediation as the parties still retain the freedom to agree or not to agree for the mediation settlement.
(^9) Ibid.
IX. General Guidelines In Afcon’s case (supra), Supreme Court has given general guidelines regarding the following issues relating to settlement by ADR methods :-
(A) Procedure to be adopted by a court under Sec. 89, CPC: (1) When the pleadings are complete and before framing the issues, the court shall fix a date for preliminary hearing and appearance of parties, to know about facts of the case and nature of the dispute between the parties. (2) The court should first consider whether the case falls within the excluded category of cases which are unsuitable for ADR processes. If the court finds that the case falls under any excluded category, it should record a brief order mentioning the nature of the case and why it is not fit for reference to ADR Processes. In such cases, the court will proceed with framing of issues and trial. (3) In other cases (which can be referred to ADR Process) the court will explain the choice of five ADR Mechanisms to the parties to enable them to exercise their option. (4) The court should first ascertain whether the parties are willing for arbitration. The court should inform the parties that:- (a) Arbitration is an adjudicatory process by a chosen forum and reference to arbitration will permanently take the suit outside the ambit of the court. (b) The cost of arbitration will have to be borne by the parties. It is significant to note that matter should be referred to the arbitration only if both the parties agree for arbitration. (5) If the parties do not agree for arbitration, the court should ascertain whether the parties are agreeable for reference to conciliation. If the parties agree, the court can refer the matter to conciliation in accordance with S. 64 of the Arbitration and Conciliation Act, 1996. (6) The matters referred to arbitration or conciliation will be governed by the provisions of the Arbitration and Conciliation Act.
(C) Keeping track of the matter: (1) In order to avoid delay of trial as also to prevent any misuse of the provisions for reference to ADR, the courts should keep track of the matter. If the court refers the matter to ADR processes, other than arbitration, it should keep track of the matter by fixing the date of hearing for ADR report. The date for a week or so may be fixed. Normally, the period allotted for the ADR Processes should not exceed two months, but the same may be extended in exceptional cases depending upon the availability of the alternative forum and the nature of the case etc. (2) Normally the court should not send the original record of the case when referring the matter to an ADR forum (for this purpose, when pleadings are filed, the court may insist upon filing of an extra copy). (3) Regarding the time limit for completion of mediation, rule 19 of the Uttar Pradesh Civil Procedure Mediation Rules, 2009 provides as under:- “on the expiry of 60 days from the date fixed for the first appearance of the parties before the mediator, the mediation shall stand terminated, unless the court, which referred the matter, either suo moto or upon request by the mediator or any of the parties, and upon hearing all the parties, is of the view that extension of time is necessary or may be useful, but such extension, shall not be beyond a further period of 30 days. X. Appropriate ADR Process, How to select? Sec. 89, CPC refers to five types of ADR Mechanisms:-
(1) Arbitration (2) Conciliation (3) Mediation (4) Judicial Settlement, and (5) Lok Adalat
Arbitration:
Arbitration is an adjudicatory process and remaining four ADR processes are negotiable in nature (non-adjudicatory processes). Arbitration is governed by the provisions of the Arbitration and Conciliation Act. For a reference to arbitration under sec. 89, CPC, there must be the consent of all the parties to the suit. The parties to the suit can agree for arbitration by means of a joint memo, joint application or joint affidavits before court or the court may record such agreement in the order sheet signed by the parties. On a reference to the arbitration the case will go outside the stream of the court permanently and will not come back to the court.
Parties to the suit may agree for one arbitrator or each side may select its arbitrator and then two arbitrators select the third one. The award of the arbitrators is binding on the parties and is enforceable as a decree of the court in view of section 36 of the Arbitration and Conciliation Act, 1996. If any settlement is arrived at in the arbitration proceedings then the award passed on the basis of such settlement will have the same status and effect as any other arbitral award as per section 30 of the Arbitration and Conciliation Act.
Conciliation:
For a reference to conciliation also the consent of the parties to the dispute is a must. If both the parties do not agree for conciliation, there can be no conciliation. As a consequence the court cannot refer the parties to the conciliation u/s. 89, CPC in the absence of consent by all the parties. When a matter is referred to conciliation, it does not go outside the stream of the court and if the conciliation fails, the matter is returned to court for hearing of the case. The ADR Process of Conciliation is also governed by the Arbitration and Conciliation Act.
If a matter is settled through conciliation, then according to S. 74 of the Arbitration and Conciliation Act, such settlement will have the same status and effect as an arbitral award. Thus, such settlement is enforceable as a decree of the court as per section 36 of the Arbitration and Conciliation Act.
liberty to withdraw from the mediation proceedings, at any stage and without assigning any reason, before its termination.
Parties have direct and active participation in the process of mediation for resolution of their dispute. They play the key role and are actively encouraged to explain the background of the dispute, identify issues and underlying interests, provide options for agreement and make a final decision regarding the settlement. Thus the mediation is a party centered negotiation process.
The mediation process is itself an structured and formalised process which has clearly identifiable stages with, of course the degree of flexibility. The mediation process is informal in nature which signifies that this mechanism of dispute resolution is not governed by the rules of evidence and procedure. But at the same time it is not a casual process either, because as mentioned above, it has identifiable stages.
Mediation is broadly focused on the point of facts, law and underlying causes of the dispute which includes underlying interests of the parties. Such interests of parties may be personal, commercial or social and may be related to family or community.
In the process of meditation the mediator assists the parties to bring about a resolution to their dispute. He does not adjudicate a dispute by imposing a decision upon the parties rather he works together with parties to facilitate the dispute resolution. The job of mediator is of a facilitator because he manages the interaction between the parties, encourages and promotes communication between them and manages interruption and outbursts by them so as to facilitate and motivate them to arrive at a settlement which is acceptable to the parties.
Mediation is a negotiatory and voluntary process where a neutral third party assists the parties in bringing about an amicable settlement of their dispute. Parties are the focal point of the mediation process, their active and direct participation is encouraged in resolution of their dispute. The goal of mediation is to find a solution which is acceptable to all the parties and which adequately and legitimately satisfies the needs, desires and interests of the parties. The mediator remaining impartial,
works together with the parties to facilitate the dispute resolution and for this purpose, the mediator uses specialized communication skills and negotiation techniques.
Mediation is a private process which is confidential in nature. The settlement reached out in a case referred for mediation, is required to be reduced in writing and after getting it signed by the parties, it is filed in the court for appropriate order. In case the mediation fails, the report of the mediator does not mention the reason for the failure but it would only say “not settled”.
Keeping in view the scope and significance of mediation and recognizing the immense possibility of the mediation process in the dispute resolution, Hon‟ble Allahabad High Court took initiative to inaugurate on October 06, 2006, the Allahabad High Court Mediation & Conciliation Centre (AHCMCC). This centre became functional on October 16, 2006. As a significant step towards mediation movement at District Level, as many as 11 Mediation Centers in the largest Districts of Uttar Pradesh became operational on February 01, 2009 and now Mediation Centers have been established and made functional in all the Sessions Divisions across the State.
Judicial Settlement:
The process of judicial settlement is much in vogue in the U.S. It refers to a settlement of a civil case with the help of a judge who is not assigned the adjudication of such a case.
In Afcon‟s case (supra), the Supreme Court in order to correct the draftsman‟s error, has held that the definitions of “judicial settlement” and “mediation” in clauses (c) & (d) of Section 89(2), CPC shall have to be interchanged as follows :-
(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 Authorities 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.
