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CHAPTER -III
HISTORICAL BACKGROUND OF ALTERNATIVE DISPUTE

RESOLUTION SYSTEM AND ITS ORIGIN
I. INTRODUCTION:
The historical development of any system
envisages its growth, existence and slow development since the aeon of
evolution. The history exposes the existence of the things, human races and
other animate and inanimate in the past. The history may sets forth past
experience to the successors. In the same way, the legal research may
trace out and expose historical background of legal system, development
and expansion of law including working methodology and legal
administrative set up of country at particular point of time. The roots of
present day human institutions lie deeply buried in the past. The same is
true of country's law, legal system and its institutions established and
changed from time to time according to the suitability of Sovereign and its
Subjects^
The legal system of any country at given point of
time is not the creation of one man or of one day. It represents the
cumulative fruits of endeavour, experience, thoughtful planning and patient
about large number of people through generations. In this backdrop, it is
necessary to acquire background knowledge and the course of its grov^rth
including development with variations from time to time in order to
comprehend, understand and appreciate the present legal system
adequately. One has to penetrate deep into the past and take cognizance of
the factors, stresses, and strains to explain 'why it is so', that have moulded
and shaped the legal development. To understand 'how it is so' one must
appreciate the problems and pitfalls, which the administrators had to face in
the past and the manner in which they sought to deal with them. India has a
1 See, M.P.Jain, Outlines of Indian Leqal HistqorilQQJ), p-1.
62
Historical background of Alternative Dispute Resolution System and its Origin
known history for its adjudicatory system over 5000 years in one or other
form. There were the Hindus and the IVIuslims periods before British regime.
But the process for development of legal institutions in India started
especially with the establishment of British regime during 1600^. The history
of the Alternative Dispute Resolution System [ADR] may not be traceable in
direct forms adopted since the evolution of legal system.
The method of dispute resolution through law
Courts established under the Sovereign authority of State or the King is late
development. The kings were not law makers but law enforcers. There was
no established judicial authority at rudimentary stage. The Shastras laid
down the duties of the king in minute detail. The detailed rules were laid
down by these Shastras for the guidance of the king in the performance of
his duties. Because the administration of justice was his another important
function as such the King was also known as the fountain of justice and the
Court of ultimate resort^. Besides Kings Court, Dharmashastras exposes
the system of dispute resolution between members of a particular clan or
occupation or between members of a particular locality. First is Kulas, which
refers the assembly of the members of a clan. It was composed of relations
by blood or marriage. Second, refers to Srenis, which were composed of the
guilds or members of a particular occupation or of the same trade, business
or calling. Third was Pugas consisting of fellow townsmen, the
neighborhood or assemblies of fellow villagers. It was a local Court. The
Pugas and Srenis were the people's Courts and both these Courts worked
without any basis of class or caste. All the three Courts were of original
jurisdiction. The decisions of these Courts could be rectified in appeals to
higher Courts. The appeals ultimately rest in the king's Court. The Kings
Court enjoyed discretion to hear and decide any case. It is pertinent to
mention that there was no separation between judiciary and executive at
higher level'*. The people in the course of social interaction and business life
2 Ibid.
^ See, Dr. P.N.Sen, The General Principles of Hindu Jurisprudence, Reprint
[1984], p-17.
* Ibid
63
had been deciding their disputes with the help of senior man in the tribe or
community. The dispute may be between blood relations, neight>orhood or
traders, all the disputes were settled through compromise, negotiation,
mediation and conciliation by those senior members of the community who
have had earned credible reputation amongst the people in the community.
The conciliatory approach is not new. It has traditional roots in several parts
of the world. The informal dispute resolution through compromise or
negotiation in the world societies is dating back to ^2^ century especially in
China, England and America^. The negotiation and conciliation did not only
settled the dispute between conflicting parties but that also served the
healthy purpose of community maintaining peace and harmony among
them. The ADR System in legal world is running with the ages but without
proper recourse and recognition. The Indian legal system for dispute
resolution also recognizes ADR system outside the legal world. These
disputes were always decided by the intervention of seniors and elders and
with aid of learned men. The Naya Panchayats were prevalent at the grass
root level before the advent of British Justice System in order to decide the
disputes without legal formalities and outside the Judicial Courts^. The
decision of the 'Ranch' and 'Panchayat' in conventional forms means the
'Arbitrator' and 'Arbitration'. The Arbitrator and Arbitration simply means that
in the event of any problem, the decision of five persons on any issue was
accepted as a guideline to make permanent settlement of controversy^.
But as the society progressed and made
advancement, these old methods of the dispute resolution were put to
disuse owing to creation of modern judicial system. These traditional
methods of dispute resolution by the Family Heads, Tribal Chiefs,
Panchayats or the Kings would have been proved to be efficacious,
workable and more successful in the present era of litigation producing
plethora of cases in different sphere of life. The dispute resolution by
5 See, P.C.Rao & William Sheffield, Alternative Dispute Resolution: What it is and
How it Worl<s, Reprint, 2002, 79.
6 Ibid, at pp, 79-80.
7 See, Devendra Nath Mishra, Arbitration as a Mode of Alternative Dispute
Resolution (ADR) - Its Necessity and Implications, A.I.R. 2001, Journal, p-250.
64
mutual settlement is an essential element of social peace and harmony from

prehistoric time. This was the main reason that the task of dispute resolution
fallen upon the shoulders of the powerful Tribal Chiefs or the Kings or on the
wise ones like the village tribunals of panchayats or the quazis. It is with the
evolution of modem States and sophisticated legal systems, the Courts run
on very formal lines and presided over by trained judges who are
exclusively entmsted with the responsibility of dispute resolution and the
traditional methods fell into disuse and declined"^.
The traditional form of ADR System as Panchayats is
as old as civilization. It is prevalent in the society due to interaction between
the communities in the field of commerce, trade and business. The system
may not be in vogue in specific form and name but compromise and
conciliation was ultimate object of this theory. The ADR System is an
attempt to devise machinery for dispute resolution through compromise
settlement providing an alternative to the conventional methods^. The ADR
approach in various forms is a tactical balancing of practicality and equity
rather than of legal considerations. The labour policy for the first five year
plan laid down that 'the State has to step in with an offer of conciliation
where the parties fail to reach an agreement and the dispute continues'^".
Before the enactment of Arbitration law, the bench Courts constituted for
justice delivery system used to be of laymen. The criminal trials with the
assistance of jurors and assessors was also conceived on the basis of
laymen with the assumption that a laymen can be depended upon for a
objective assessment of facts. Sometimes their views would be better as
the commonsense approach would help in reaching the truth nearer than
one with too many technicalities. But later on as the activities and
commerce increased number of disputes started arising of greater
8 Supra Note 6. [Foreword by Mr. Justice A.M. Ahmedi].

9 See, Avtar Singh, Law of Arbitration and Conciliation, (2002), p-327
^° See, V.P.Gupta, Law and Practice of Industrial Disputes witti Central, Punjab
andHaryana Rules, (1984), p-19-20.
65
complexities and old methodology applied in dispute resolution were put to

disuse^\
The Researcher of the present study profoundly feels
to trace out and expatiate on the history of ADR System in the form of
Arbitration, Conciliation, Negotiation and Mediation including practical
difficulties in procedural laws framed for justice delivery system. The
attempt has also been made to expose various reasons for change in the
existing system and growth of new and alternative techniques.
II. HISTORY OF ARBITRATION RULES :
[i] Alternative Dispute Resolution during ancient
India
The Panch and Panchayat system is as old as
Indian history. The word Panch and Panchayat envisages a proceeding
before five persons, who act, as the sole and final judge of the matter
referred to them by the parties for decision. The members of Panchayats
varied from one to eleven and even more. The decision of Panch is known
as the decision by Panchayat and that has always been accepted as
binding force. The Panchayat system is still in vogue and running with the
history and ages^^. The history reveals that the Head of family, the Chief of
Community or selected inhabitants of a town or villages were acting as
decision makers. There were different degrees of Panchayats engaged in
dispensation of justice. These Panchayats are the bases for creation and
establishment of arbitration system. The Arbitrators were famous in the
name of Puga, Sreni and Kula. These Panchayats had not been working as
jury or the tribunal but merely a system of arbitration, subordinate to
regularly constituted Tribunals or Courts^^. Mr Justice Martin, CJ of Bombay
High Court, about the functioning of these institutions has observed that
"Arbitration is indeed a striking feature of ordinary Indian life and I would go
" See, K.A.Krlshnaswamy, Change of Approach of Court towards Arbitration

Awards Under the changed Modern Times, A.I.R. 1997 Journal, p-196.
^^ See, S.D.Singh, The Law of Arbitration, (1988 ), p-3.
^^ See, Justice Mahavir Singh, Nathuni Lai's Law of Arbitration in India, (1983),
p-1.
66
further and say that it prevails in all ranks of life to a much greater extent
than is the case of England. To refer matter to a 'panch' Is one of the natural
ways of deciding many a disputes in India. It may be that in some cases the
panch resembles a judicial Court because the 'panch' may intervene on the
complaint of one party and not necessarily on the agreement of both, i.e. in
caste matters but there are many cases where the decision is given by
agreement between the parties. The decision of Kula or Kinsmen is subject
to revision by Sreni, which again could be revised by Puga. From the
decisions of the Puga, appeal was maintainable to Pradvivaca and finally to
the Sovereign Prince"^'*.
[ii] Alternative Dispute Resolution during Medieval
India:
Islam came to India in the form of a political
conquest but it did not lead to intellectual, moral and religious subversion of
the Indian people. The old Indian traditions and faiths were deeply
entrenched in the Indian soil and they were firm and strong enough to resist
successfully the new influences. The rulers like Shershah Suri and Akbar
were wise enough and they made some tangible efforts to bring about some
appreciable changes in the administrative set-up of the Kingdom under their
control. But the Muslim rulers either from avarice or indolence did not
concern themselves with the change or improvements in civil laws, which
they found prevailing in the land in their subjugation. Their governments
were mostly tax taking and not a law making. It has been observed that
notwithstanding the mighty political revolution brought about by
Mohammedan in India, the Hindu idea of law and rules, which regulated
their domestic life, remained unruffled and unmodified. There was no
change in the prevailing Panchayat system and the system remained almost
as it was in existence^^.
14 See.Per Martin, C.J. in Chanbasappa Vs Beslingayaa, A.I.R 1927 Bom [HC], p-

565
^5 Supra Note 13, p-2.
67
[iii] British India:

[a] Pre-Leglslation [1857] Period -
The British Administrators have had recognized
the utility of the decision by a person chosen by the parties to a dispute
themselves in early stages of their regimes in India. But the provisions
relating to arbitration of disputes were not made applicable to immovable
property till 1813^^. The ancient Panchayat system underwent considerable
change with the advent of the Britisher's. They appreciated the value of
domestic tribunals and encouraged it. They brought about salutary changes
by degrees under two heads. First, the Bengal Regulations of 1772 in
Bengal Presidency provided that "In all cases of disputed accounts, it shall
be recommended to the parties to submit the decision of their cause to
arbitration, the award of which shall become the decree of the Court". These
provisions remain in force till 1780"^''. Second, Sir Elijah Impey's Regulation
of 1781 was issued, which contained a provision that "the judge do
recommend and so far as he can, without compulsion, prevail upon the
parties to submit to the arbitration of one person to be mutually agreed upon
by the parties"^®. The Regulation of 1781 further provided that" no award of
any Arbitrator or Arbitrators can be set aside, except upon full proof, made
by oath of two credible witnesses that the Arbitrators have been guilty of
gross corruption or partiality in the cause in which they had made their
awards"^^.
There is distinct and important departure at this
level. According to original Hindu idea the Panchayat was the Tribunal at
the base level against the decision of which appeals were provided. For the
first time the Regulation of 1781 imported the idea that Panchayat was the
Tribunal of party's own choice and, therefore, its decision was the last word
16 Supra Note 12, p-4.

17 See, The Bengal Regulations of 1772.
68
in the cause. No appeal could be made except for the reason with credible
evidence of misconduct, partiality and corruption of arbitrators^".
The next Regulation relating to the
administration of justice was passed during the year 1787. The Regulation
of 1787 empowered the Court to refer suits to arbitration with the consent of
parties. But the Regulation contained deficiency, as it made no provisions
as to what was to happen if there was difference of the opinion among the
arbitrators. The Regulation also lacks sufficient provisions to regulate the
arbitration proceedings^^ The Regulation of 1793 provided that 'the Court
was authorized to promote the references of dispute to arbitration'. It was
confined to deal with the cases and suits pertaining to disputed accounts,
partnership, debts, doubtful or contested bargain, the non-performance of
contract and where the value of suit did not exceed Rs. 200. The Regulation
XVI of 1793 was brought on statute book to promote references of certain
disputes for arbitration. It further laid down procedure for conducting the
proceedings^. The Regulation XVI of 1793 was extended to Benaras by
Regulation XV of 1795. The Regulation XXI of 1803 extended its operation
to the territories ceded by the Nawab Wazir. But the disputes pertaining to
immovable property could not be referred to arbitration under these
Regulations. During the year 1803, for the first time, the Regulation
provided for extension of the ambit of the Regulation XVI of 1793 and made
it applicable to suits with respect to rights over the lands. But the Regulation
contained restriction upon the advocates to appear or act as arbitrator for
the parites. The Regulation XXVII of 1814 removed the restriction imposed
upon Vakils - Advocates to act as Arbitrators. The Regulation VII of 1822
authorized Revenue Officers to refer rent cases and revenue disputes to
arbitrators for adjudication. The Bengal Regulation IX of 1883 empowered
Settlement Officers to refer disputes to arbitrators and exercise control over
them. In Madras Presidency, the Regulation VII of 1816 empowered the
District Munsifs to convene District Panchayats for the administration of civil

^^ See, The Bengal Regulations of 1787.
^^ See, The Bengal Regulations of 1793.
69
suits for real and personal property. This regulation was repealed by Act VII
of 1870 2^
The Regulation VII of 1827 provided for
arbitration in the Presidency of Bombay. It was enacted to facilitate
amicable adjustment of present or future dispute of civil nature. The
Regulation provided that the disputes could be referred to arbitration by an
agreement between the parties and made in writing. The Regulation further
provided that the name of the Arbitrator and time limit for making award had
to be prescribed as and when the dispute is referred for adjudication. These
provisions were not directory but mandatory. The omission to fix time frame
for making the award was fatal as such it was a mistake incurable and could
not be set right by proof of agreement of the parties before the Arbitrators^'*.
(b) Post legislation period :
The Legislative Council for India was established
in 1834 by Charter Act of 1833 and that led to passing of Act 9 of 1840. The
Act of 1833 was designed to amend the laws relating to arbitration and
Arbitrators, damages, and interested witnesses. It was decided to extend
certain provision of Charter Act of 1833 to certain areas. The Statutes 3 and
4 were made applicable to the territories of the East India Company and
applied to Calcutta, Madras and Bombay. Thereafter, the Act VIM of 1859
was placed on the Statute book. The Statue regulated procedure of Civil
Courts and Sections 312 to 327 regulated the procedure with respect to law
arbitration. The Section 312 of the Statute permitted references to
arbitration in pending suits. The Section 313 to 325 of the Statute of 1859
regulated the procedure with respect to the arbitration proceedings. The
Section 326 and Section 327 of the Act provided for Arbitration without the
intervention of the Court. This Act was repealed by Act X of 1877. But
repealing Act did not effect any change in the law relating to arbitration^^.
The Code of Civil Procedure was again revised in the year 1882 (Act XIV of
1882) and provisions relating to arbitration were borrowed from enactment
23 Supra Note 20, p-2-3.

24 Ibid.
25 Supra Note 16, p- 5.
70
of 1859. These provisions were re-enacted in Sections 506 to 526 in this

Act. The provisions relating to arbitration provided that the existing or
present disputes could be referred for arbitration. There was neither
provisions nor could be referred future disputes for arbitration. But the
Bombay High Court through its judgement and decision in a case, while the
Civil Procedure Code of 1882 was in force, has held that 'the future dispute
could be made the subject matter of arbitration provided the arbitrator was
named in the agreement^®.
[c] The origin of Indian Arbitration Act, 1899:
During the year 1899 Indian Arbitration Act, 1899
was passed. This Act was based on the English Arbitration Act of 1889. It
has been noticed that many sections were taken verbatim from that Act.
Before the passing of the Arbitration Act, 1899 an agreement or contract to
refer matter to arbitration was governed by the Civil Procedure Code, Indian
Contract Act and Specific Relief Act. There was no provosions in the Indian
Contract Act and the Specific Relief Act to make any contract to refer
present or future disputes to arbitration. No contract could be specially
enforced to this effect. But the party, who refuses to perform a contract if
made, is debarred from brining a suit on the same subject matter. The
Arbitration Act was complete in itself and was not affected by rules as to
appeals as laid down in the Code of Civil Procedure with reference to
proceeding taken under the Second Schedule of the Code^^. The Arbitration
Act, 1899 made provisions for reference of present and future disputes by
agreement to arbitration with or without the intervention of the Court
irrespective of the fact whether the Arbitrator was named in it or not. The
Act extended to the whole of India, and came into force on the 1^* day of
July, 1899. But the application of this Act was confined to the Presidency
towns of Calcutta, Bombay and Madras. The provision was made to
empower the local Government to apply it to any other town by notification
^^ See, Fazal Bhai Vs The Bombay and Persia Steam Navigation, 20 Bom, p- 282
^^ See, N.D.Basu, Law of Arbitration and Conciliation, (2003), p-50.
71
and it was later on done and extended accordingly to the areas beyond
Presidencies^^.
III. THE ORIGIN OF ARBITRATION ACT, 1940 :
The Civil Procedure Code revised by the Special
Justice Committee, 1925 [Presided over by Sir Earl Richards] transferred all
the provisions relating to arbitration to the end of the Code in the form of
Second Schedule. The President of the Committee had observed that 'We
are of opinion that the best course could undoubtedly be to eliminate from
the Code all the clauses as to arbitration and place them in a new and
comprehensive Arbitration Act. There are perhaps difficulties as to this at
present. We have determined, therefore, to leave the arbitration clauses as
much as they are in the present Code. We have placed them in a schedule
in the hope that at no distant date, they may be transferred into a
comprehensive Arbitration Act'^^.
The Honb'le Mr Justice Rankin who presided
over the Civil Justice Committee had also said that 'this hope has not been
fulfilled and it is certainly a pity. But it is an important to observe that what is
required is not so much that the whole of the law, on the subject, should be
put into one Act, as that the law should be made more workable'^". On the
other hand the Judges were not satisfied with the law of arbitration. They
deplored the unsatisfactory state of condition of law of Arbitration. The
Bombay High Court in a case of Dinkar Rai Laxmi Prasad V Yeshwanth Rai
Hari Prasad^^ has observed that
"this case is one more illustration of the state of doubt and
uncertainty in which the law of arbitration undoubtedly lies.
The framers of the Code in dealing with section 89 observed
that the provision of the Code of 1882 relating to arbitration
had been transferred with certain modification to separate
schedule in the hope that at no distant date they may be

^ Ibid.
30 Id.
^' A.I.R 1930 Bom [HC] p- 98, at 105.
72
transferred into a comprehensive Arbitration Act.

Unfortunately that hope has not been realized. I think it is
high time that those responsible for legislation in this country
should seriously consider the advisability of taking early
steps to revise the law of arbitration^^.
In this background, the Arbitration Act, 1899 was

repealed and the Arbitration Act, 1940 was enacted with a view to remove the
deficiencies lies in the repealing Act of 1899. The Section 89 and 104(1)
clause (a) to (f) and the second schedule of the Code of Civil Procedure was
also repealed and deleted from the statute book^^. The Act of 1899 was
largely based on the English Arbitration Act, 1889. The Act applied only to
those cases where if the subject matter submitted to arbitration was the
subject matter of a suit. But the scope of this Act was also confined to
arbitration by agreement and without the intervention of a Court. The Code of
Civil Procedure enacted in 1908 originally left the arbitration provisions much
as they were in the earlier Codes except that it placed the said provisions in
the Second Schedule with the hope that they would be transferred later into a
comprehensive Arbitration Act. The Second Schedule dealt with arbitration of
those suits and cases, which were outside the operation and scope of the
Arbitration Act, 1899. It related for the most part to arbitration in suits,
through arbitration but without intervention of Courts. It also contained an
alternative method whereby the parties to a dispute or any of them could file
their arbitral agreement before a Court, which after a certain procedure
referred the matter to an arbitrator^'*. There are also various reasons and
technicalities existing in the Code of Civil Procedure, 1908 causing delay in
dispensation of justice delivery system enumerated below.
^^ See, Dinkar Rai Laxmi Prasad V Yeshwanth Rai Hari Prasad, A.I.R 1930 Bom
[HC]p-98, alios.
33 Supra Note 30.
^ Supra Note 8, p-34.
73
IV. PROCEDURAL TECHNICALITIES IN CIVIL PRICEDURE

CODE.
[a] Procedure for Institution of Suit::
The law and process in civil cases is always set
in motion by an action initiated by the aggrieved party by presentation of suit
in the Court. The S.26. of CPC provides that every suit shall be instituted by
the presentation of a plaint or in such other manner as may be prescribed. In
every plaint, facts shall be proved by an affidavit. The facts of the case and
other relevant information is explained in support of plaint, which is further
supported by an affidavit or in such other manner as may be prescribed by
rules made by the High Court^^.
[b] Presentation of Suit by Agent or Pleader :
The advocate is considered to be a legal
luminary and an officer of the Court. He is an authorized person to present
the case of the petitioner/plaintiff. The advocate of plaintiff who is authorized
by the party presents the case of his party before the Presiding Officer of
the Courts^^. The Court has every discretion to dismiss the plaint or petition
if not presented by advocate or recognized agent^^.
[c] Summons to the defendants :
The second stage comes to issue the process of
calling the defendants/ respondents for their appearance before the Judicial
Officer in order to explain his position and answer the claim set by the
plaintiff/ petitioner in the plaint. The defendant's appearance before the
Court is procured through issuance of the summons within the period of
thirty days. It will be worth to mention that prior to 1-7-2002 there was no
minimum or maximum time limit for issuance of the summons to
defendants, which has been prescribed by the [Amendment] Act 46 of 1999.
It provides 30 days time from the institution of suit within which the
^^ See, The Code of Civil Procedure, 1908 as amended by [Amendment] Act 46 of

1999 & 22 of 2002, S.26.
^^ Ibid, Order III, Rule 1
^^ See, H.P Horticultural P.M. and P Corporation Ltd. Vs United India Insurance
Co. Ltd, A.I.R. 2000 HP [HC], p-11.
74
summons should be sent to defendants'^. Order V of CPC also provides

that when a suit has been duly instituted, a summons may be issued to the
defendant to appear and answer the claim and to file the Written statement
of his defence, if any, within thirty days from the date of service of summon
on that defendant'^.
[d] Examination of parties by the Court :
At the first hearing after the institution of the suit,
the Court under Order X makes the examination of parties. The Court shall
ascertain from each party or his pleader whether they admits or denies such
allegations of fact as are made in the plaint or written statements of the
opposite party, and as are not expressly or by the necessary implication
admitted or denied by the party against whom the allegations are made.
The Court shall, thereafter, record such admission and denials".'*"
[e] Submission of Written Statements :
The defendant either admits or denies the
allegations of the plaintiff. The defendant on having denied shall present a
written statements of his defence with in the period of thirty days from the
date of service of summons served upon him'*\ But the proviso appended
to Order VIII Rule 1 of the CPC has been incorporated in favour of the
defendant, which provides that if the defendant fails to file the written
statements within the period of thirty days or any other period specified by
the Court, he may file after thirty days but shall not be filed later than ninety
days from the date of service of summons. Meaning thereby he could file
the written statement within the period of ninety days from the date of
service of summons^^.
[f] Settlement of Issues and Determination of Suit :

On perusal of the case and averments made by
both the parties, the Presiding Officer on giving preliminary hearing to the
^ Supra Note 36. S.27.

^Nb/d, Order V, Rule 1.
^° Id, Order X, Rule 1.
^Wd, Order VI11, Rule 1.
^^ Id, Order VIII, Rule 1, Proviso.
75
written versions and reply thereof settle the issues for determination of suit,
which are based on a material proposition of the fact or law affirmed by the
one party and denied by the other party'*^. The Presiding Officer under
Order XIV, Rule 1, Sub-Rule 5 of the CPC, ascertain upon what material
propositions of fact or law the parties are at variance and thereupon shall
proceed to frame and record the issues on which the right decision of the
case would appear to be depending on"*"*.
[g] Summoning and attendance of Witnesses :
After the parties have been examined and cross
examined by the Court, then comes the stage for examination and
recording of statements of their witnesses. Each party produces their
evidences in order to authenticate and corroborate their statements of
allegations either deposed or submitted in the written forms. Each party
under Order XVI submits the long list of their witnesses. The Court, for this
purpose appoints a day, but it should not be beyond the period fifteen days
after the date on which the issues are settled, for submission of list of
witnesses whom the parties propose to call either to give evidence or to
produce documents. The Court issues the process of summons to all the
witnesses to appear in the Court for recording of their statements'*^.
[h] Grants of adjournments :

The Court under Order XVII of CPC is
empowered at any stage of the suit to grant time to the parties or to any of
them to adjourn the hearing of the suit if the parties show sufficient cause or
reason. The reasons shall be recorded in writing to this effect. But the
proviso appended to Order XVII, Rule 1, Sub-Rule (1) restrict the number of
adjournment, which requires that no adjournment shall be granted more
than three times to a party during hearing of the suit'*^. This is a remarkable
achievement in the history of amendment to the CPC, which has come in to
force w.e.f. 1^' July,2002, but the results are yet to come rather may show a
^^ Id. Order XIV, Rule 1, Sub-Rule (1).

^ Id. Order XIV, Rule 1, Sub-Rule (5).
'^/d, Order XVI, Rule 1.
^^id, Order XVII, Rule 1,
76
dismal picture under the guise of 'circumstances beyond the control of

party'.
[i] Delay in Judgement and Decree :
On completion of the examination in-chief and
cross- examination etc. and after the case has been heard, judgement and
decree shall follow*^. The CPC under Order XX prescribes the procedure
for Judgement and Decree. The Order XX, Rule 1 requires that the Court,
after the case has been heard, shall pronounce judgement in an open
Court, either at once, or as soon thereafter as may be practicable. In case
the judgement is to be pronounced on some future day, the Court shall fix a
day for that purpose, of which due notice shall be given to the parties or
their pleaders. The Proviso appended to Order XX Rule 1, Sub-Rule (1)
requires that where the judgement is not pronounced at once, every
endeavor shall be made by the Court to pronounce the judgement within
thirty days from the date on which the hearing of the case was concluded.
Where it is not practicable on the ground of the exceptional and
extraordinary circumstances, the Court shall fix a future day for the
pronouncement of the judgement, and such day shall not be beyond the
period of sixty days from the date on which the hearing of the case was
concluded'*^.
If the Presiding Officer of the Court remains
without transfer, it normally takes three to five years of time, which is
reasonable for judiciary but unreasonable from litigants point of view. The
real game of litigation starts from this point when the decree has been
passed in favour of one and against other party. In this way, instead of
solution, the drift goes on widening between the parties infinitely'*^.
[j] Innumerable Appeals and delay:
The looser against whom the decree has been
passed by the Court possesses a right to appeal under Section 96 of the
'•''Id, S.33.
^^ Id. Order XX, Rule 1.
49
See, I.P.Massey, Administrative Law, (1995), p-207.
77
Code from original decree to the liigher Court autliorized to hear such
appeals from the lower Court or Court of original jurisdiction as the case
may be^°. The CPC under Order XLI also prescribes form of a
memorandum and other documents to be presented before the Appellate
Court duly signed by the appellant or his pleader. In this way in most of the
cases appeal goes to the level of Supreme Court. The litigants are never
oblivious of their rights and frequently exercising these options under Article
136 of the Constitution. The Constitution grants discretion under Article 136
to the Supreme Court to entertain the appeal from any Court or Tribunal^\
Keeping in view the entire process and other
procedural technicalities up to appellate level the dispensation of justice
have become so lengthy that the original litigant gets nothing worth of the
cost during his life time. The residuary appellate jurisdiction of Supreme
Court under Article 136 of the Constitution are also being frequently invoked
in criminal cases ^^. It has also been observed that where the party after
filling appeal under Article 136 intends to withdraw the case, the Supreme
Court has refused to allow withdrawal on the ground of inadequate and
invalid reasons^^.
[k] Revision and review of Judgements :
The resort to indiscriminate use of revisional
jurisdiction of the High Court under section 115 CPC not only adds to the
arrears in the High Court but also affect the working of subordinate Courts
adversely. The High Court under Section 115 of CPC may call on different
grounds for the record of any case, which has been decided by any Court
subordinate to it and in which no appeal lies under the section. Long
arguments and prolix judgements even in exercise of revisional jurisdiction
contribute lot to the accumulation of arrears in the various High Courts in
the country^.
^ Supra Note, 48, S. 96.

^^ See, The Constitution of India, Article 136.
^^ See, V.N. Shukia, The Constitution of India, (1994), pp-441-442.
" See, State ofA.P. Vs. P.Anjaneyulu, (1984) 2 SCC, p-445 : 1984 SCO (Cri.), p-
269
^ Supra Note, 50, Section 115, Revision,
78
[I] Delay in Execution of Decree:

Now, it is the turn of implementation of
judgement and execution of decree. The decisions of the Courts are not
implemented gracefully. The problem for implementation of the judgement
does not relate to the civil disputes of private nature only but also causes
great concern in cases of service matters and between the different
governments and statutory bodies. Ultimately, the life of the original plaintiff
comes to an end before the decision of the Court is implemented finally as
such there is again separate process prescribed under the CPC for the
execution of the different types of decrees. The decree holder, stating
number and title of the suit, name of the parties, date of institution of suit
and decree passed and other allied facts pertaining to the appeals etc. shall
have to apply to the Court, which have passed the decree or to the officer
appointed in this behalf for its execution^^. The entire process of execution
is followed by attachment, custody, arrest and detention etc., which is fatal
for speedy settlement rather in most cases original complainants does not
survive and execution is faced by the grandsons.
[m] Prohibitory and Permanent Injunctions :

The injunctions, may it be temporary or
permanent, is also responsible for the inordinate delay in disposing of the
main suits. The litigants without resorting to nearest or possible attempt or
remedy always rush to the Courts to obtain preventive relief by way of
prohibitory injunctions against the other party^^. The preventive relief is of
two types, which is ordered in the shape of temporary or perpetual
injunctions. The temporary injunction is granted at any stage of a suit for a
specified time or until the further order of the Court^^. The perpetual
injunction is granted by the decree made at the hearing of the parties and
^^//j/d, Order XXI, Rule 10.

^® See The Specific Relief Act, 1963, S.36.
57
Ibid, S.37(1).
79
upon the merits of the suit whereby the defendant is completely refrained
from assertion of his right in perpetuity^®.
These injunctions are regulated by the CPC.
The Order XXXIX, Rule 1 of CPC provides that the temporary injunction is
granted where in any suit it is proved by an affidavit; or otherwise that any
property in dispute is in danger of being wrongfully wasted, damaged or
alienated by any party to the suit or wrongfully sold in execution of a decree.
The Order XXXIX, Rule 1(b) depicts that the injunction can be obtained if
the defendant threatens or intends to remove or dispose of his property with
a view to defrauding his creditors. In case the defendant threatens to
dispossess the plaintiff or othenwise cause injury to the plaintiff in relation to
any property in dispute in the suit, the Court may order and grant an
injunction against the defendant restraining him from proceeding ahead^^.
V. THE ARBITRATION ACT, 1940- NEED AND IMPORTANCE:

The Arbitration law is one of such methods
whereby matters othen/vise would go to the Court or which have already
gone to the Court would be got processed by ADR System. Keeping in view
the intransigence and other technicalities in the procedure under the CPC
and deficiencies in old arbitration laws enacted during British regimes, the
Arbitration Act, 1940 was enacted in order to provide an additional forum for
speedy justice with specific objects and reasons given below.
[a] Statement of Objects and Reasons :
1. "The law of arbitration in British India is at
present substantially contained in two enactments, the Indian Arbitration
Act, 1899 and the Second Schedule to the Code of Civil Procedure, 1908.
The operation of the 1899 Act is limited to the Presidency towns and to such
other areas as it may be extended by the appropriate Provincial
Government. Its scope is confined to "arbitration by agreement without the
intervention of a Court". The Second Schedule to the Code of Civil
^^ Id, S.37 (2).

^^ Supra Note 55, Order XXXIX,
80
Procedure deals with arbitration outside the operation and scope of the
1899 Act. It relates for the most part to arbitration in suits, though arbitration
without intervention of a Court. This schedule also contains an alternative
method whereby the parties to a dispute or any of them may file their
arbitration agreement before a Court, which after a certain procedure, refers
the matter to an Arbitrator.
2. The question of amending and consolidating this
law is not new. The Civil Justice Committee in 1925 recommended several
changes in the arbitration law. The Act of 1899 was based largely on the
then English law, to which several substantial amendments have been
effected by an amending Act of Parliament in 1934. In 1938 the Central
Government placed an officer on special duty to examine the question and
the present bill is the outcome of this examination. The existing law, the
amended English law, and the recommendations of the Civil Justice
Committee, have been scrutinized together and the present Bill, which
seeks to consolidate and standardize the law relating to arbitration
throughout British India, in its detailed extract from the sources referred to
those principles of law which, it is considered, are most suitable to British
India" ^°.
[b] Pitfall In the Arbitration Act,1940 :
The scheme of Arbitration Act, 1940 had been
providing a domestic forum for speedy and substantial justice without
following the legal technicalities by a person in whom the parties have full
faith and confidence. This Act with the passage of time was found to have
involved many pitfalls and procrastination. The delays, which were found to
have occurred before regular Courts, also found to have got reflected in the
arbitration proceedings under the Act of 1940. The global interaction in the
commercial business world had become valuable and growing at faster
speed. It became necessary to find out an easy mechanism by which legal
problem arisen out of domestic and international transaction / contracts
would serve in a better manner. The problems were being faced by the
60 See, The Gazette of India, Part-V, Published on 22"'' July,1939, p-142.

judiciary apart from numbers suggestions from every corner to replace the
Arbitration Act of 1940 and ultimately resulted in the promulgation of the
Arbitration and Conciliation Ordinance, 1996^\
VI. THE ARBITRATION AND CONCILIATION ACT, 1996 -
SOURCE AND ORIGIN :
The Arbitration law has been transplanted from
the English to the Indian Soil. The Indian Arbitration Act of 1889 was based
on the English Arbitration Act o^ 1889 and the \nd\an ArbWraWon Act of 1940
was based on the English Act of 1934. But the operation of Arbitration laws
in British India and during later legislation period, little attention has been
paid to it as the arbitration laws grown and flourished gradually at slow pace
in Hindu or Muslim India^^. The English arbitration law are statutes,
international conventions and the common law. The United Nations
Commission on International Trade Law [UINCITRAL] produced a Model
Law on International Commercial Arbitration in 1985. In 1989 the
Departmental Advisory Committee on Arbitration Law recommended that
instead of England, Wales and Northern Ireland adopting the UNCITRAL
Model Law, there should be enacted a new Act to embody both the existing
statutory law on arbitration and the relevant Common Law principles. The
Committee also recommended that the new Act should follow, as for as
possible, the structure and language of the UNCITRAL Model Law. After the
gap of seven years of this recommendation it could be implemented in the
Arbitration and Conciliation Act, 1996^^.
The Arbitration and Conciliation Act 1996

repealed almost all existing statutes governing the law of arbitration,
including Part I of the Arbitration Act, 1950, [ a consolidation of earlier
arbitration legislations], the Arbitration Act 1975 [an enabling legislation for
the United Kingdom's treaty obligations under the New York Convention,
61 See, N.P.Mohanty, New Arbitration Law and Alternative Dispute Resolution,

A.I.R.2004, Journal, p-24.
^^ See, M.A.Sujan, The Law Relating to Government Arbitration, {1985),pp-9-10 :
Also See, N.N.Sircar, Law of Arbitration in British India, [1942].
^^ See, Halsbury's Laws of England, Fourth Edition, REISSUE, Vol 2(3),
Arbitration, P-2.
82
1958], the Arbitration Act, 1979, which abolished the 'case stated' procedure
and replaced it with a limited right of appeal on points of law and the
Consumer Arbitration Agreements Act, 1988. It consolidates earlier
enactments, codified principles established by recent case law, introduce
changes designed to improve the fairness, speed and cost effectiveness of
arbitration and incorporates certain provisions of the UNCITRAL Model Law.
In consequence, any work on the English law of arbitration is dominated by
the provisions of the Arbitration and Conciliation Act, 1996, with which this
title is primarily concemed^. The Arbitration and Conciliation Act, 1996
under Part III consists of commendable features of Conciliation for dispute
resolution. Before the commencement of the Act of 1996, the provisions and
mechanism of conciliation for disputes resolution contained under Industrial
Dispute Act, 1947^^, Section 23 of Hindu Marriage Act, 1955 and Order 32
A, Rule 3 of Code of Civil Procedure, 1908. But under the Act of 1996
separate Chapter of Conciliation distinct from Arbitration has been
incorporated with a view to bolster up the Mechanism of ADR System in
India. The Conciliation has got statutory recognition and become an
effective instrument for dispute resolution.
VII. INTERNATIONAL CENTRE FOR ALTERNATIVE

DISPUTE RESOLUTION [ICADR] :
The Mechanism of ADR System in one or other
forms has become common, popular and effective instrument of dispute
resolution. The experts were of the opinion that the impact of ADR on
international commerce is continuously expanding, which require
establishment of ADR institutions. Consequent to the persisting demand
from every walk of life, the International Centre for Alternative Dispute
Resolution has been established, which situates at Bikaji Cama Place, New
Delhi. The ICADR is a unique centre in this country. It works for promoting
teaching and research in the field of ADR. The ICADR offers ADR services
to litigant parties not only within India territory but also at international level.
64 Ibid.
^^ See, Industrial Dispute Act, 1947, S. 12.
83
The centre intends to spread ADR concept effectively throughout the

country with the following main objectives:
i. To propagate, promote and popularize the

settlement of domestic and international disputes by different modes of
ADR.
ii. To provide administrative assistance and other
support facilitating services for holding conciliation, mediation, mini-trials
and arbitration proceedings.
iii. To promote reforms in the system of settlement
of disputes and its healthy development suitable to mitigate the social,
economic and other needs of the community for dispensation of justice.
iv. To make appointment of Conciliators, Mediators,
Arbitrators, etc., when the request is made by the parties.
V. To undertake teaching in ADR and related
matters and to award diplomas, certificates and other academic or
professional distinction.
vi. To develop infrastructure for education, research
and training in the field of ADR.
vii. To impart training in ADR and other related
matters and to arrange for fellowships, scholarships, stipends and prizes^^.
VIM. THE ALTERNATIVE DISPUTE RESOLUTION SYSTEM
IN FOREIGN COUNTRIES:
[a] The Alternative Dispute Resolution in America :
The development and use of ADR system as
substitute to legal fora is a recent proliferation. But its use in the form of
arbitration and other related techniques is not new in USA. In America the
origin of methodology pre-dates both the Declaration of Independence and
the Constitution. The Arbitral Tribunals were established during 1768 in New
York. Its expansions have been found in other cities primarily to settle
disputes in the clothing, printing and merchant seaman industries. During
66
Supra Note 34, p-80-81.
84
1854, for the first time, the U.S Supreme Court in a case has observed the
right of an arbitrator to issue binding judgements and held that
"Arbitrators are judges chosen by the parties to decide
the matter submitted to them, finally and without appeal.
As a mode of settling disputes, it should receive every
encouragement from the Court of equity"®''.
During 1920, New York passed the First State

law, which recognized 'voluntary agreements' to arbitrate upon the dispute
in the United States. Thereafter in 1923, leading businessmen created a
New Educational Organization for this purpose. During 1925, the Arbitration
Society of America has contributed significantly for the enactment of Federal
Arbitration Act. During 1926, the Arbitration Society merged with another
foundation and formed the American Arbitration Association [AAA], which is
working as largest private ADR service providers in the United States®^.
The U.S did not ratify the United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, 1958. During 1970, there was
broad-based movement for use of ADR system in dispute resolution. The
American Bar Association established a Special Committee on Minor
Disputes and gave official recognition for Alternative Dispute Resolution
movement. The community dispute resolution movement spawned from the
social activism helped a lot to propel the ADR system in U.S. The Civil
Rights Act, 1964 was also promulgated, which created the Community
Regulations Services [CRS] and that utilized mediation and negotiation to
assist in preventing violence and resolved even racial and ethnic disputes
outside the law Courts®^.
During, 1989 the United States District Court for
the District of Columbia introduced a voluntary mediation program, which
settled 50% disputes through ADR. In 1990, the U.S enacted the Civil
Justice Reform Act, which made obligatory on every Federal District Court
^^ See, Burchell Vs Marsh. 58 U.S. 344 (1854).

^^ Supra Note 66, p-^08.
69
/b/d, atp-109.
85
to implement a civil justice expense and delay reduction plan and make use
of mechanism of ADR system increasingly. In 1994, 'opt-out' program has
been introduced in the District Courts, whereby the Courts notify the litigants
that the arbitration and other ADR programs are available. It places all
eligible cases in the arbitration program^". The mechanism of ADR system
is v\/orking in all the States of America especially at California, Minnesota,
New Jersey, North Carolina, and Texas. The Texas ADR Act provides a
comprehensive framework for voluntary, non-binding ADR process. The
growth and development of ADR mechanisms has resulted from initiatives
at all level and from all branches of government, executive, legislature and
judiciary including many corner of the private sector, communicity
organization, corporation and the bar. The US has introduced numberous
judicial reforms with provisions of sufficient funds and increased use of ADR
to work at domestic and international level^^
[b] The Alternative Dispute Resolution in England :
The ADR system in the form of arbitration has
ancient roots in England. The system has been adopted and long practised
by the merchants and traders for dispute resolution in matters connected to
accounts and trading differences. The persons were specially selected for
this purpose. The arbitration initially applied for dispute resolution in the
cases of personal chattels or personal wrongs. But gradually its horizon
extended to the disputes relating to real estate and other matters also. The
practice was governed by the Common law till the passing of the Arbitration
Act, 1697''^. The Common law applicable to arbitration was not satisfactory
and the deficiency in the law necessitated amplification leading to
enactment of the Arbitration Act, 1697. The main object behind this
enactment was to render a submission to arbitration as binding upon the
parties and make award easily enforceable. The advantage of arbitration, as
a means for dispute resolution was recognized by providing for Statutory
Arbitration in the different Acts of Parliament. It was governed by the Special
^°/rf, at pp-110-111.
'^ See, http://www4. worldbank. org/legal/leglr/judicialreform.html.
12
Supra Note 62, p-7.
86
Act. There developed two classes of arbitration, parallel to each other viz. (i)
Statutory Arbitration and (ii) Common law Arbitration. The Statutory
Arbitration was concerned and applied to the subject matter under the
Special Act. Whereas the Common law arbitration applied to the subject
matter covered under general laws. During 1889, it was considered
advisable to codify the general law as it had been scattered in several
statutes and decided cases. In this backdrop the Arbitration Act of 1889 was
enacted in England. The Arbitration Act of 1889 repealed all the existing
statutes and re-enacted most of their provisions with some amendments. It
regulated all arbitration in England except arbitration arising out of oral
submission. In the case of statutory arbitration, the Act applied except to
where it found to be inconsistent with the provision of that statute^^.
The Arbitration Act, 1934 introduced some
important amendments to the law of arbitration. The amendment is based
on the recommendations made by the Committee during 1927 constituted
for the purpose. After the gap of 16 years with the changed business
scenario the arbitration rules again felt amplification to be modified
accordingly. The Arbitration Act of 1950 was enacted. This Act applied to all
arbitration commenced aiter that date, including cases where the arbitration
agreement was made earlier. The Arbitration Act, 1950 repealed all the
existing Acts and re-enactment was in a consolidated form^'*. There is
statutory arbitration in England. A statute may provide that disputes of a
particular class shall be determined by arbitration of a particular sort, either
in every case or upon certain steps being taken by the parties. The
Arbitration Act, 1950 applies to arbitration under other statutes, unless
excluded by the other statute concerned. It is now fashionable for public Act
to exclude the Arbitration Act when making provisions for statutory
arbitration. The Act applies, where not excluded, to statutory arbitration as if
the arbitration were pursuant to an arbitration agreement an^^.
^^ Ibid, at p-9.
''Id.
" See, Russell on The Law of Arbitration, (1982), p-10.
87
[c] Special Statutes of Arbitration in England:

In England there have been important and
Special Statutes making provisions for dispute resolution by an arbitration
mentioned below :
i. The Agricultural Holdings Act, 1948
provides for dispute resolution through arbitration to all those matters, which
may arise between landlords and tenants in agricultural holdings.
ii. The Building Societies Act, 1962
contains provisions respecting Arbitration under the Act. It provides that
whenever the rules of the society direct, the disputes shall be referred to
arbitration. It further provides that when the matters under dispute are
between the building society and the member or the members intense, such
matter must be referred to arbitration. In case the Arbitrator has not been
appointed, the appointment shall be done accordingly.
iii. The County Courts Act, 1959 empowers
the County Court Judges, with the consent of the parties, to refer any
proceedings to arbitration.
iv. The Friendly Societies Act, 1974 makes
provision for reference of dispute for arbitration. The Act envisages that
every dispute shall be decided in manner directed by the rules of the society
or branch and the decision so given shall be binding and conclusive on all
parties without appeal. The dispute should be; (i) between members or
persons claiming through a member or under the rules of a registered
society or branch and the society or branch, or an officer thereof, or (ii)
between any person aggrieved who has ceased to be a member of
registered society or branch, or any person claiming through such person
aggrieved, and the society or branch, or any officer thereof, or (iii) between
any registered branch of any society or branch, and the society or branch of
which it is a branch, or (iv) between an officer of any such registered branch
and the society or branch of which that registered branch is a branch, and
88
(v) between any two or more registered branches of any society or branch
or any officer thereof respectively''^.
V. Industrial and Provident Societies Act,
1965 contained a provisions analogous to the Friendly Societies Act
governing in particular disputes between societies and their members.
vi. The Housing Act, 1957 contained various
provisions for the payment of compensation for compulsory acquisition,
extinguishment of easements and demolition of obstructive building. But
now disputes of compensation are dealt with by the Land Tribunals under
the Land Compensation Act, 1961.
vii. The Public Health Act, 1936 provided for
arbitration of various types of disputes relating to public health etc.
viii. The Public Utilities Street Works Act
1950 also provided for the reference of several sorts of dispute to single
Arbitrator who is to be appointed in defaults of agreement, by the President
of the Institute of Civil Engineers.^^
ix. The Arbitration (International
Investment disputes) Act,1966 provided for the enforcement of

awards rendered pursuant to the convention on the settlement of investment
disputes between States and Nationals of other States. The Convention
provides machinery for conciliation and arbitration^®.
[d] Alternative Dispute Resolution in Hong Kong :
The Hong Kong had also emerged as one of the
major international dispute resolution centre in Pacific Asia. The legal
system in Hong Kong was based on English law and the Courts have had a
high reputation for their integrity, competence and speed. In 1985, Hong
Kong International Arbitration Centre was established to assist parties to
resolve their disputes not only by arbitration but also by other means of
^^/ib/cf, atp-17.
" / d , at PP--14-21.
^^/cf. at pp-20-21.
89
dispute resolution. The centre was established by the leading businessmen

and professionals. The Arbitration centre was non-profit making company
limited by guarantee and financed by the business community apart from
Hong Kong Government and worked independently. It operated under a
Council composed of business and professional people of different
nationalities with a wide diversity of skill and experience. The legislatures
enacted new legislation adopting the UNCITRAL Model Law for international
Arbitration to improve international understanding of Hong Kong Arbitration
law. This came into effect on 6*^ April, 1990. The centre always provided
free information services on dispute resolution apart from services and
panel of experienced international and local Arbitrators. The centre provided
arbitration to the disputes relating to Maritime arbitration, Construction
disputes, Securities Disputes and other related matters. But now the Hong
Kong ceases to be a British colony and have become a Special
Administrative region of China. The Hong Kong is enjoying a high degree of
autonomy. Perhaps, the old laws are in force as it might have ceases to
operate after change in the status^^.
[e] Alternative Dispute Resolution in New Zealand:

The ADR is also well established in New
Zealand. The Indigenous Arbitration Act has been applicable in disputes
resolution since 1890. The Arbitration in New Zealand system is based on
the Common Law and English Arbitration Act. The Arbitration Act, 1908,
The Arbitration Amendment Act, 1938, The Arbitration [International
Investment Dispute] Act, 1979, The Arbitration [Foreign Agreements and
Awards] Act, 1982 have been prevalent arbitration statutes for dispute
resolution at international and domestic level in New Zealand. In 1988, the
New Zealand Law Commission published its report and suggested reforms
in the Arbitration law. The Law Commission also reviewed the papers
comparative and recommended in 1991 for application of UNCITRAL Model
Law in Arbitration^".
^^ Supra Note 70, pp 191 - 199.

^° Ibid, at pp 200-209.
90
The Alternative Dispute Resolution System is

also prevalent in Australia and Sri Lanita through Arbitration law. They
have also followed UNCITRAL Model Law in dispute resolution at
international and domestic level. In Australia mediation is most preferred for
dispute resolution.
IX. ORIGIN AND HISTORY OF LOK ADALATS :
The Adalat system in India is prevalent since the
advent of Muslim rule. But these Civil and Criminal Adalats established for
dispensation of justice were not the same as is 'Lok Adalat' in the present
context. The system of Lok Adalat is preceded by the mutual settlement of
dispute through conciliation, negotiation and mediation. It is a new system
come into existence to grapple with the docket problem and provide cheap
and speedy justice to people. The system is visualized not as a substitute
for the present judicial system, but as supplementary to the existing one.
The Lok Adalat system is giving a practical
shape to the twin concept of Swaraj and Sarvodaya propounded by the
Father of the Nation. The concept of the Swaraj implies not merely liberation
from the foreign yoke but also emancipation from backwardness, poverty
and illiteracy. The concept of Sarvoday means well being of all obliteration
of the distinction between haves and have-nots°\ The Lok Adalats implies
dispute resolution by discussion, counselling, conciliation and persuasion
with the mutual and free consent of the parties. The system has been
formed on the basis of traditional panch and panchyat system providing
justice to common man at the door step. Mahatma Gandhi in his
autobiography about conciliatory role of law and lawyer has said
"I had learnt the practice of law. I had learnt to find out the
better side of human nature, and to enter men's hearts. I
realized that the true function of a lawyer was to unit party's
riven asunder. The lesson was so indelibly burnt into me that
the large part of my time during the twenty years of my
®^ See, Prof. Paras Diwan, Justice at the Door Step of People: The Lok Adalat
system, A.I.R. Journal, 1991, p-86.
91
practice as a lawyer was occupied in bringing about private

compronnises of hundreds of case. I lost nothing thereby -
not even money, certainly my soui"®^.
The ADR has been an integral part of our
historical past. Like 'Zero' the concept of Lok Adalat is an innovative Indian
contribution to the world jurispmdence. The institution of 'Lok Adalat', which
means 'People's Court' is prevalent in the forms 'Naya Panchayat' and it
has a long tradition and history of such methods being practised in the
society at grass roots level. The arbitral process of People's Court or
decision of Naya Panchayat is conceptualized and institutionalized in the
philosophy of Lok Adalat. The concept of Lok Adalat was pushed back into
oblivion in last few centuries before independence and particularly during
the British regime. But the concept has once again, been evolved and
rejuvenated, which is becoming popular and most familiar in nature amongst
litigants®^. This Lok Adalat System has close allegiance to the culture and
perception of justice in Indian ethos. The concept has gained historical
momentum being an efficient and important form of ADR suited to the Indian
environment, culture and societal interests. The Lok Adalats have worked
very well and producing satisfactory results in our country. The camps of
Lok Adalat were initially started in Gujarat during 1982 and now the system
has been extended throughout the country. The evolution of this movement
was a part of the strategy to relieve heavy burden on the Courts with
pending cases. The reasons to create such camps were only to settle the
pending cases by mutual settlement and to give relief to the litigants who
were standing in a queue to get justice. The First Lok Adalat in India has
been held on 4"^ March, 1982 at Junagarh in Gujarat - the land of Mahatma
Gandhi^.
The enactment of the Legal Services Authorities

Act, 1987 is also remarkable achievement in India. The Article 39-A of the
Constitution of India is the pre-cursor for creation of the Legal Services
^^ See, M.K.Gandhi, The Law and the Lawyer, Reprint, (2001), p-258.
®^ See, Prof. Anurag K.Aggarwal, Strengthening 'Lok Adalat' Movement in India,
A.I.R. Journal, 2006, P-35.
92
Authority Act, 1987. The Legal Services Authority Act, 1987 contains
various provisions of settlement of disputes through Lok Adalats. It casts
duty upon the Central, State, District and Taluk Legal Services Authorities to
organize Lok Adalats for dispute resolution^^.
The Parliament during 2002 further amended the
Legal Services Authority Act, 1987 whereby the provisions has been made
for the establishment of Permanent Lok Adalats in Indian territory on
uniform basis. These Lok Adalats can be approached by any party for
resolution of disputes involving 'public utility services' as defined in the
Legal Services Authority Act, 1987®®. The system of Lok Adalat is working
well in the country and various law Commission and High Court's Arrears
Committee has recommended to strengthen the system successfully
especially to settle the disputes relation to family and matrimonial matters
including those of MACT claims®^. The various provisions of Legal Services
Authority Act, 1987 has been discussed in the Chapter relates to the
Legislative Provisions.
X. CIVIL PROCEDURE CODE, SECTION 89
It is first time in the Indian history that there has
been statutory recognition to ADR in the Code of Civil Procedure. The
provisions of conciliation were also available in the Code of Civil Procedure,
1908. But Section 89 is a unique, which has been reinserted to the CPC^®
by the amendment Act, 46 of 1999. The section provides for settlement of
dispute outside the Court. The enactment of these provisions under Section
89 are based on the recommendations made by the Law Commission of
India and the Mallimath Committee®^. The Law Commission has
emphasized the desirability of the Courts being empowered to compel
parties to a private litigation to resort to arbitration, conciliation or
''' Ibid.
^^ See, The Legal Services Authorities Act, 1987, Ss. 19, 20, 21.
^^ Ibid. Ss. 22A, 22B, 22C.
^'^ See, The Law Commission of India, 12^" Report.
^^ The Section was repealed by Act 10 of 1940 and has been again inserted by Act
46 of 1999 and came into force w.e.f. 1^' July, 2002.
^^ See, The High Court Arrears Committee Report, 1989-90.
93
mediation^. The Section 89 requires for settlement of disputes outside the

Court where it appears to the Court that there exists an element of a
settlement to the proceedings before him provided the formula is
acceptable to the parties. The Court shall formulate the terms of settlement
and place it before the parties for their observations. After receiving the
observations from the concerned parties, the Court may reformulate the
terms of a possible settlement and refer the suit or proceedings for
arbitration, conciliation, and judicial settlement including through Lok Adalat
or mediation^\
Sum UP
However, the history reveals that there are
various provisions for Mechanism of Alternative Dispute Resolution System
in India under different enactments. These provisions were not given
statutory recognition, but had been working well since the advent of justice
delivery system in one or other form. It is available in various forms viz.
Ranch -Panchyat, Conciliation, Mediation and Arbitration. But during the
establishment of British regime and introduction of judicial system, we
became the oblivious of these techniques. Keeping in view the docket
problem in the Indian judiciary and delay in justice delivery system there is
persistent demand from every corner to rejuvenate the system once again.
The Government of India is making all possible efforts in this direction and
providing statutory recognition to various forums and techniques of ADR
System. The Supreme Court of India has also made lot of contributions
strengthening the Mechanism of Alternative Dispute Resolution System,
making it popular and effective amongst the general public and more use in
dispute resolution at every level.
^ See, The Law Commission of India, 129^^ Report [on Urban Litigation].
^^ See, Supra Note, 59, Section 89.
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CHAPTER -III

HISTORICAL BACKGROUND OF ALTERNATIVE DISPUTE

1 See, M.P.Jain, Outlines of Indian Leqal HistqorilQQJ), p-1.

mutual settlement is an essential element of social peace and harmony from

8 Supra Note 6. [Foreword by Mr. Justice A.M. Ahmedi].

complexities and old methodology applied in dispute resolution were put to

" See, K.A.Krlshnaswamy, Change of Approach of Court towards Arbitration

14 See.Per Martin, C.J. in Chanbasappa Vs Beslingayaa, A.I.R 1927 Bom [HC], p-

[iii] British India:

16 Supra Note 12, p-4.

20 Supra Note 15, p-3.

23 Supra Note 20, p-2-3.

of 1859. These provisions were re-enacted in Sections 506 to 526 in this

28 Supra Note 23, p-4.

transferred into a comprehensive Arbitration Act.

In this background, the Arbitration Act, 1899 was

IV. PROCEDURAL TECHNICALITIES IN CIVIL PRICEDURE

^^ See, The Code of Civil Procedure, 1908 as amended by [Amendment] Act 46 of

summons should be sent to defendants'^. Order V of CPC also provides

[f] Settlement of Issues and Determination of Suit :

^ Supra Note 36. S.27.

[h] Grants of adjournments :

^^ Id. Order XIV, Rule 1, Sub-Rule (1).

dismal picture under the guise of 'circumstances beyond the control of

^ Supra Note, 48, S. 96.

[I] Delay in Execution of Decree:

[m] Prohibitory and Permanent Injunctions :

^^//j/d, Order XXI, Rule 10.

V. THE ARBITRATION ACT, 1940- NEED AND IMPORTANCE:

^^ Id, S.37 (2).

60 See, The Gazette of India, Part-V, Published on 22"'' July,1939, p-142.

The Arbitration and Conciliation Act 1996

61 See, N.P.Mohanty, New Arbitration Law and Alternative Dispute Resolution,

VII. INTERNATIONAL CENTRE FOR ALTERNATIVE

The centre intends to spread ADR concept effectively throughout the

i. To propagate, promote and popularize the

During 1920, New York passed the First State

^^ See, Burchell Vs Marsh. 58 U.S. 344 (1854).

[c] Special Statutes of Arbitration in England:

Investment disputes) Act,1966 provided for the enforcement of

dispute resolution. The centre was established by the leading businessmen

[e] Alternative Dispute Resolution in New Zealand:

^^ Supra Note 70, pp 191 - 199.

The Alternative Dispute Resolution System is

practice as a lawyer was occupied in bringing about private

The enactment of the Legal Services Authorities

mediation^. The Section 89 requires for settlement of disputes outside the

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