CRITICAL STUDY ON JUDICIAL CONTRAVENTION IN ADR LAW IN INDIA

“I realized that the true function of a lawyer was to unite parties given as under. The lesson was
so indelibly burnt unto me that the large part of my time, during the twenty years of my practice
as a lawyer, was occupied in bringing about private compromises of hundreds of cases.”

- Mahatma Gandhi

INTRODUCTION-

It is well known fact that the evolution of arbitration law in India has a quite long-running
history that could be traced through various sources time and again. It is said that modern
arbitration was first introduced at the time when Britishers were ruling in India in 1772 through
the Bengal Regulations as well as through daily life examples. But due to some fallouts of the
past, a need for a proper legislation was witnessed in our country and so eventually Arbitration
and Conciliation Act, 1996 came into being. Filliping through the objectives that is being
articulated by the legislators through this act, it can be better summarized that in the initial stage
of a dispute, with regard to the appointment of an arbitrator, requires intervention of the court.
Additionally, during the proceedings, the court’s intervention is required to assist the
proceedings. Hence, the court can provide assistance by providing interim protection or
otherwise that is necessary at point of time. And lastly, when the arbitral award is declared,
judicial intervention is required if the aggrieved party wants to challenge it and the other one
wants enforcement of it. It is a fact that ADR mechanism provides for outside court settlement
that limits the judicial intervention and hence this will be postulated below.

LEGISLATIVE INTENT-

As said previously, one of the intrinsic objectives behind the enactment of Arbitration and
Conciliation Act, 1996 was reducing the scope of judicial intervention. The Indian Legislature in
conformity with Article 5 of the UNCITRAL Model Law on International Commercial
Arbitration 1985 enacted Section 51 of the Act which eliminates the scope of judicial
intervention and enumerates that no judicial authority shall intervene except where so provided
by the Act.

1
Section 5, Arbitration and Conciliation Act, 1996. 
In plethora of judgments, the Indian Judiciary has reaffirmed this settled principle of Law and
stated that the Act under Section 5 intents to reduce judicial intervention. Furthermore, Section
34 of the Act2 also restricts the scope of judicial intervention by Courts and provides an inclusive
list of circumstances in which an Arbitral Award can be set aside by the Court.

JUDICIARY IN ADR-

Lok Adalat (People’s Court), where justice is dispensed summarily without too much emphasis
on legal technicalities with methods like negotiation, mediation and conciliation are being
increasingly used to resolve disputes instead of going for litigation3.

Undoubtedly, the concept and philosophy of the Lok Adalat (more popularly known as the
Peoples’ Court) is an innovative Indian contribution to the world jurisprudence. LokAdalat has
symbolized a human sensitive forum to provide amicable, speedy, cheap justice by adopting
informal procedure and avoiding technicalities4.

While the Lok Adalats are a concept that has flourished in both rural and urban settings alike,
when it comes to the other mechanisms of ADR the only field where the Courts in India have
recognized the same is in the field of arbitration. It is in this perspective that one should view the
scope and limit of corrections by the Court of an award made by the arbitrator5.

The power to decide the jurisdiction of the arbitrator to decide a particular issue or not is
therefore ultimately vested with the Law Courts as per cases like Union of India v. G.S. Alwal &
Co.6 and State of Orissa and another v. Damodar Das7.

Consequent to it, by way of the Supreme Court’s decision in SBP & Co v. Patel Engineering
Limited8, the power of the Chief Justice in appointing an arbitrator was held to be a judicial
2
Section 34, Arbitration and Conciliation Act, 1996 
3
Agarwal, Anurag K. "Role of Alternative Dispute Resolution Methods in Development of Society: Lok Adalat’ in
India." (2005).
4
Chowbe, Vijay Kumar Shrikrushna and Dhanokar, Priya, Lok Adalat – A Strategic Forum for Speedy and
Equitable Justice (February 21, 2011).
Available at SSRN: https://ssrn.com/abstract=1766237
5
Food Corporation of India v. Jogindarlal Mohindarpal,1989(2) SCC 347.
6
1996(3) SCC 568.
7
1996(2) SCC 216.
8
[2005] 8 SCC 618.
power and not administrative. This allowed the Indian Courts had to look into the validity of the
arbitration agreement and the dispute itself before proceeding to appoint arbitrators.

Further, The Bombay High Court recently held in Mulheim Pipe coatings v. Welspun Fintrade 9
that an arbitration agreement would survive even if the agreement (containing the arbitration
clause) was suspended by a subsequent agreement. However, this position has been slightly
modified by the Supreme Court’s where it was held that an arbitration clause in an agreement
cannot survive if the agreement containing arbitration clause has been superseded. The Supreme
Court in Enercon v. Enercon Gm BH10, while determining whether an arbitration clause is
unworkable or incapable of being performed, held that the court ought to adopt the attitude of a
reasonable business person, having business common sense as well as being equipped with the
knowledge that may be peculiar to the business venture.

JUDICIAL INTERVENTION IN ARBITRATION LAW-

Generally, the judiciary intervenes in three ways-

1. Before proceedings- Section 5 of Act 1996

The extent of judicial intervention statutorily permitted is laid under Section 5 of the
Arbitration and Conciliation Act, 199611. Interestingly this section is analogous to Article
5 of UNCITRAL Model Law. It is also inspired by the English Arbitration Act 1996 as
well. However, a significant amount of unnecessary judicial intervention is practiced in
reality while applying the Arbitration Law.
A certain extent of judicial intervention is allowed in order to kick start the arbitral
process only. Judiciary just plays an administrative role and not a judicial one. The Act
provides exceptions to the non-obstante clause by including words like “except where so
provided in this part”. The SC explained the same in Secur Industries Ltd v. Godrej and
Boyce Mfg. Co. Ltd12.

9
[2014] (2) ABR 196.
10
[2014] 5 SCC 1.
11
Section 5: Extent of Judicial Intervention: Notwithstanding anything contained in any other law for the time being
in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
12
Secur Industries Ltd., v. Godrej and Boyce Mfg. Co. Ltd, AIR 2004 SC 1766.
 The SC in Surya Dev Rai v. Ram Chander Rai 13 observed that “If it intervenes in
pending proceedings there is bound to be a delay in termination of proceedings. If it does
not intervene, the error of the moment may earn immunity from correction. Thus, the
power is there but the exercise is discretionary which will be governed solely by the
dictates of judicial conscience enriched by the judicial experience and practical wisdom
of the Judge”.

2. During proceedings- Section 9 of Act 1996

There are various sections involved where the judiciary steps in during proceedings as
well. Section 9 of the Act lays down interim measures that can be granted by the Court.
Section 17 of the Act on the other hand empowers arbitral tribunals to make orders as
per the section. Section 9 confers the same powers to judicial authorities and courts.
However, the purpose of both sections is absolutely different.

3. After proceedings- with regard to arbitral proceedings.

One of the most significant provisions of the Act is Section 34. This Section lays down
the permissible grounds upon which an arbitral award can challenge. The Court doesn’t
entertain appeal over arbitral awards. This section is also a testament to the limited scope
of judicial intervention that is statutorily allowed14. 

Sections 34 encompass 4 important sub-sections that lay down the permissible grounds
for setting aside an arbitral award. Presently, the pendency of a petition under this
section renders an arbitral award unenforceable. The SC in National Aluminum Co. Ltd.
v. Pressteel & Fabrications15, criticized the present situation and has suggested certain
amendments that should be overlooked.

CONCLUSION-

13
Surya Dev Rai v. Ram Chander Rai, AIR 2003 SC 3044.
14
P.R. Shah, Shres and Stock Broker (P) Ltd., v. B.H.H. Securities (P) Ltd, AIR 2012 SC 1866.
15
National Aluminum Co. Ltd. v. Pressteel & Fabrications, (2004) 1 SCC 540.
Through the examples given above, it can be concluded that it is not hard to see that the
implementation of Alternative Dispute Resolution mechanisms is a necessity during these trying
times of Covid-19, that gives us the possibility that ADR is the future of the coming generations
and so it cannot be ruled out currently. Since it is the need of the hour, the purpose of the same is
multi-fold. Firstly, to reduce the burden of the Courts, keeping in mind certain points that is- to
provide less expensive mode of resolution, convenient and speedy process of obtaining justice.
As seen above, the end goal of justice and equality is upheld with the Courts in India intervening,
when a gross miscarriage of justice is in the making.

Plag Report Pending.

Dear Author,

We require some changes in your blog. Please find below the comments of reviewer stating the
reason for the same:

1. The article was short and organized. However, It would be better if you give specific
suggestions or your own advice on implementation of Alternative Dispute Resolution
mechanism.
2. No summary
3. The research need to be more informative and brief.

Furthermore, you’ll get the confirmation of the publication only after the Plagiarism Test, else
till now the content is good.

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UPES ADR Association Blog