This article has been written by Yashika Kapoor, a student of pursuing Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from LawSikho.
The pendency of cases in India is in lakhs. The root cause behind such growing pendency of cases is the rise in the number of fresh suits filed every year which has surpassed the number of disposed of suits. Subsequently, this has led to an increase in the backlog of cases. The combined efforts of the Government of India and the Indian Judiciary has somehow resulted In bringing in a reduction in the number of pending cases. The proactive approach adopted by the Government included initiatives such as the establishment of specialized courts, speeding up the process, an increase in the number of judges, etc. However, among all the measures being taken, the amendment of Section 89 of the Code of Civil procedure 1908 was the most significant.
Section 89 of the Code of Civil Procedure mandated the courts to resolve the disputes of civil litigation through the mechanism of Alternative Dispute Resolution. Arbitration, Mediation, Conciliation, or LokAdalat are the modes of Alternative Dispute Resolution provided in the Code of Civil Procedure. It is pertinent to mention that the mechanisms of Alternative Dispute Resolution are extra-judicial in nature and are applicable to various matters of civil, commercial, partnership, intellectual property, personal injury, family, insurance, industrial, and product liability including other commercial disputes. Thus, to overcome the complexities of the modern legal system, the civil litigants resorted to adopting the less challenging technique, namely, Alternative Dispute Resolution.
Relevance of Section 89 of the Code of Civil Procedure
The Malimath committee along with the 29th report of the Law Commission proposed the idea of Conciliation as a technique of ADR. The primary intention behind such a proposal was to make the public aware of the options available to them for resolving their disputes by utilizing the modes of Alternate Dispute Resolution. Accordingly, it led to the enactment of Section 89 of the Code of Civil Procedure. Section 89 of the Code of Civil Procedure was enacted through the Code of Civil Procedure (Amendment) Act 1999 and became effective from 01-07-2002. Thus, with the motive of bringing a significant reduction in the number of pending cases and its early disposition, Section 89 of the Code of Civil Procedure was amended. It provides the machinery and procedure for settling the disputes of Civil Litigation through different mechanisms of ADR. Section 89 of the Code of Civil Procedure states that:
- Settlement of disputes outside the Court:
- 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 the 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-
- judicial settlement including settlement through Lok Adalat; or
2. Where a dispute has been referred-
- for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 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 (39 of 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 LokAdalat 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;
- for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.
Rules for the purposes of Section 89 and Order X Rules 1A, 1B and 1C.
These provisions read as under:
- 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 Courts 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.
- 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.
- 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.
Why must the Parties OPT for ADR in Civil Cases?
The key reason behind the amendment of Section 89 of the Code of Civil Procedure was to provide an amicable, congenial, peaceful, and mutual settlement between the disputing parties without the intervention of the court. In comparison to different countries across the world, over 90 per cent of their disputes are settled without the intervention of the court. Subsequently, in an event of failure to reach a settlement, the disputing parties appear before the court. In the case of civil matters, the conflicting parties possess the option of choosing negotiation to resolve their dispute. The parties opting for negotiation can settle their conflicts themselves without the intervention of the court. However, in the case when the disputants approach the court to settle their disputes, they are mandated under Section 89 of the Code of Civil Procedure to refer to the mechanisms of ADR. Section 89 of the Code of Civil Procedure provides an alternative method to the official judicial procedures in resolution of the disputes. Following are some of the reasons justifying the fact that the civil litigants must try the mechanisms of Alternative Disputes Resolution:
- One of the significant reasons for choosing the modes of ADR as provided under Section 89, is that it leads to reduce the workload of the courts. Thus, by choosing Arbitration, Mediation or Conciliation, the parties contribute to bringing a reduction in the number of cases.
- It is beneficial for the conflicting parties to resolve their disputes through ADR mechanism as it promotes realistic, mutually agreeable solutions to complex civil disputes.
- In comparison to the civil litigation, the costs involved in the mechanisms of ADR is less. Thus, it is considered to be cost-effective.
- The proceedings of civil litigation conducted through the formal procedure in courts possess a level of rigidity. On the other hand, the modes of Alternative Dispute Resolution like Mediation and Conciliation are quite flexible in nature.
- The adoption of the varied techniques of ADR, mandated under Section 89 provides an amicable, congenial, peaceful, and mutual settlement between the conflicting parties.
- The conflicting parties in civil litigation resolve their disputes in an efficient, simple, expeditious, and inexpensive manner by using the modes of ADR provided under Section 89 of the Code Of Civil Procedure.
- As the mechanisms of ADR involve minimal formalities and technicalities, the decisions are resolved at a faster pace.
- Unlike the proceedings of a civil court, the trial conducted through the mechanisms of ADR does not take place in an open civil court in front of various spectators. Thus, the level of confidentiality is maintained.
- When compared to litigation, ADR is considered to be cost-effective.
- Some people usually possess a fear of court and hesitate in expressing their issues freely. Thus, ADR proves to be quite advantageous in such a case.
- The conflicting parties can easily have access to justice without the use of formal procedures of litigation.
- Delay, which is considered to be one of the major hindrances in seeking justice through civil litigation present in our legal system, is said to have been overcome by ADR.
Arbitration is referred to as a mechanism of ADR wherein the disputing parties submit their dispute to the arbitrators. The arbitrator is an independent and impartial third party. The decision by the arbitrator is referred to as an arbitral award. The decision taken by the arbitrator is final and binding upon the disputing parties. In case if a matter is submitted to Arbitration by the court under section 89 of the Code of Civil procedure, then, the Arbitration and Conciliation Act, 1966 will be applicable from the stage after reference. However, when the dispute is referred under section 89, the consent of the parties is crucial. As soon as the case is referred to arbitration, it permanently moves out of the domain of court. Thus, the arbitration award is then treated as a decree.
Following mentioned are some of the types of Arbitration:
1) Ad Hoc Arbitration
2) Institutional Arbitration
3) Statutory Arbitration
4) Flip-Flop Arbitration
5) Domestic Arbitration
6) Fast-Track Arbitration
7) Contractual Arbitration
Conciliation is referred to as a process whereby a neutral third party namely a conciliator assists the conflicting parties in resolving their disputes. The Conciliator expresses his opinion about the merits of a dispute. His motive is to make the parties reach a mutual understanding and settlement. Conciliation is governed by the Arbitration and Conciliation Act, 1966. This mechanism of ADR is less formal in nature. The decision given by the conciliator is non-binding. Thus, Section 89 of Code of Civil Procedure, 1908, provides for Conciliation, Arbitration, Mediation, or LokAdalat as alternative dispute resolution mechanisms in cases when it appears to the court that the dispute can be resolved without its intervention.
Mediation is defined as a process of resolving conflicts with the assistance of a neutral third party called a mediator. The goal of the mediator is to make the disputing parties reach a negotiated resolution. The mediator resolves the disputes amicably. He advises the conflicting parties with his proposed solutions. A mediator aims to make the parties reach a common agreement. However, this mechanism is entirely controlled by the parties. The mediator takes into account the problems/ issues of both parties and advises accordingly. Mediation results in immediate control of the parties on both the on-going conflict and its resolution. Moreover, it is mandated by law and encouraged by the courts. Thus, the decision of the mediator is non-binding as his role is only limited to express his views and not impose or direct on the parties. The procedure of the mediation is as follows:
1) Opening statement
2) Joint session
3) Separate session
Lok Adalat is commonly known as the People’s Court. The Lok Adalat is presided over by chairman who can be retired judicial officers and two members which can be from the legal fraternity, social activists. The Court may submit the case to LokAdalat under section (1) of the Legal Services Authority Act, 1987. The National Legal Services Authority (NALSA) and other legal institutions have contributed the most in expanding the functioning of Lok Adalat. Thus, LokAdalat takes into account those cases which are:
1) Pending before any other court, or
2) Cases which have never been brought forth in any court.
The decision awarded by the LokAdalatis final and binding on the parties. It is non- appealable in any court of law. This mechanism is beneficial for the civil litigants as no court fee is charged. The procedure followed is quite simplified. The conflicting parties can utilize the benefit of directly interacting with the judicial officers. This is, however, not possible In the case of civil courts. In Afcons Infrastructure Ltd. vs. Cherian Varkey Construction Co. (P) LTD, the Hon’ble Supreme Court has laid down detailed guidelines regarding the referral of the civil dispute to each ADR mechanisms i.e. the kinds of civil disputes which can be referred under Section 89 of the Code of Civil Procedure. It was held by the court, the consent of both parties is necessary if the dispute is referred to arbitration or conciliation. However, if the dispute is referred to as mediation or LokAdalat, then the consent of the parties is not mandatory.
Thus, it is concluded that the key objective of Section on 89 of the Code of Civil Procedure is to expedite the process of adjudication in the court of law by utilizing the modes of alternate dispute resolution. Gradually, the mechanisms of Alternative Dispute Resolution are becoming the most preferred modes for resolving disputes globally. There are some drawbacks observed in the application of Section on 89 of Code of Civil Procedure. Firstly, the litigants are oblivious of the different mechanisms of ADR available with them. Secondly, section 89 has not been implemented in letter and spirit by the stakeholders. Lastly, neither advocates nor judges have properly explained ADR referral to the litigants.
Even though many shortcomings approached and questioned the validity of Section 89 of the Code of Civil Procedure, still, Section 89 was upheld in the case of Salem Bar Association v. Union of India, wherein the court had applied the rule of purposive construction to uphold its validity. Thus, it is concluded that the Salem Advocate Bar Association Vs Union of India and Afcons Infrastructure Limited Vs. Cherian Varkey Construction Co., Private Limited are the important case laws wherein the Supreme Court of India has provided all the guidelines related to modes of ADR.
http://www.legalserviceindia.com/legal/article-385-section-89-of-Code of Civil Procedure -a-critical-analysis.html
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