ALTERNATIVE DISPUTE RESOLUTION UNDER SECTION 89 CPC

RESEARCH REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE

COURSE ALTERNATIVE DISPUTE RESOLUTION FOR THE DEGREE B.B.A
LL.B (Hons.) DURING THE ACADEMIC YEAR 2019-20.

SUBMITTED TO:- SUBMITTED BY:-

MR. HRISHIKESH MANU NIHARIKA BHATI
(ASSISTANT PROFESSOR OF LAW) ROLL NO. - 1839
6th SEMESTER

CHANAKYA NATIONAL LAW UNIVERSITY

NYAYANAGAR, MITHAPUR, PATNA
800001
FEBRUARY, 2020

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 DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the BB.A.LL.B. Project Report entitled “Alternative
Disute Resolution under Section 89 CPC” submitted at Chanakya National Law University,
Patna is an authentic record of my work carried out under the supervision of Asst. Prof. Mr.
Hrishikesh Manu. I have not submitted this work elsewhere for any other degree or diploma. I
am fully responsible for the contents of my Project Report.

(Signature of the Candidate)

Niharika Bhati
Chanakya National Law University, Patna

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 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide Mr.
Hrishikesh Manu. for his exemplary guidance, monitoring and constant encouragement
throughout the course of this thesis. The blessing, help and guidance given by him time to time
shall carry me a long way in the journey of life on which I am about to embark.
I am obliged to staff members of Chanakya National Law University, for the valuable
information provided by them in their respective fields. I am grateful for their cooperation
during the period of my assignment.
Lastly, I thank almighty, my parents, brother, sisters and friends for their constant
encouragement without which this assignment would not be possible.

Thank you!

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 RESEARCH METHODOLOGY

Method of Research:
For the purpose of research, the researcher has used the Doctrinal Method of Research. The
Research is entirely a Library-based Research, where the researcher has made use of books, law
journals, magazines, law reports, legislations, internet websites, etc., for the purpose of research.

Aims and Objectives:

By doing this project the researcher aims to understand and analyze the mechanism of alternate
dispute resolution embodied in Sec. 89 of Civil Procedure Code.

Sources of Data:

Primary-
 Code of Civil Procedure, 1908

 The Arbitration and Conciliation Act, 1996

 Case Laws

Secondary-
 Books

 Journals

 Articles

Method of Writing:
The method of writing followed in the course of this research paper is primarily analytical.

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 TABLE OF CONTENTS
DECLARATION BY THE CANDIDATE

2
ACKNOWLEDGEMENT

3
RESEARCH METHODOLOGY

4
1. Section 89 CPC – Introduction

6
1.1 Malimath Committee Report and the 129th Law Commission Report:- 6
2. ADR Mechanisms under Sec 89

8
2.1 Arbitration 8
2.2 Mediation 8
2.3 Conciliation 9
3. Procedure under Sec 89

10
3.1 Its Mandatory Nature:- 10
3.2 Consent of the Parties:- 10
3.3 The Role of Referral Judges:- 11
4. Anomalies under Sec 89

12
4.1. Mixing of Definitions:- 12
4.2. Inconsistency with Arbitration and Conciliation Act:- 13
5. Drafting Errors In Section 89- Afcons Infrastructure Case

15
5.1 Facts of the Case:- 15
5.2 Issues Discussed:- 15

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6. Conclusion

18
6. Bibliography

19

1. SECTION 89 CPC – INTRODUCTION

The proliferation and pendency of litigation in Civil Courts for a variety of reasons has made it
impracticable to dispose of cases within a reasonable time. The overburdened judicial system is
not in a position to cope up with the heavy demands on it mostly for reasons beyond its control.
Speedy justice has become a casualty, though the disposal rate per-Judge is quite high in our
country.1 The need to put in place Alternative Dispute Resolution (ADR) mechanisms has been
immensely felt so that the courts can offload some cases from their dockets.

The ADR systems have been very successful in some countries, especially USA wherein the
bulk of litigation is settled through one of the ADR processes before the case goes for trial. The
Constitution of Bangladesh enjoins that the State shall secure that the operation of the legal
system promotes justice and shall, in particular, provide free legal aid, by suitable legislation or
schemes, to ensure that opportunities for securing justice are not denied to any citizen by reason
of economic or other disabilities.2
Thus, easy access to justice to all sections of people and provision of legal aid for the poor and
needy and dispensation of justice by an independent Judiciary within a reasonable time are the

1
27th Report of Law Commission of India, pg. 1-3
2
Justice Doabia, MLJ‘s Code of Civil Procedure, 13th edn Vol. 1,Delhi: Wadhwa Nagpur, 2008. 468.
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cherished goals of our Constitutional Republic and for that matter, of any progressive
democracy.3

1.1 Malimath Committee Report and the 129th Law Commission Report:-

The enormous arrears of cases, multiple appeals/revisions, procedural shackles and the
adversarial system, all result in creating a judicial lag of sorts and an effective remedy against the
same is settlement through alternate forums. The same was brought to light in the Malimath
Committee and the 129th Law Commission report.4

Malimath committee called for a “legal sanction to a machinery for resolution of disputes and
resort thereto is compulsory” which the sole objective of reducing he large influx of commercial
litigation in courts of civil nature, number of appeals to higher courts lessened and the efficiency
of courts revitalized by such implementation.5 It recommended to make it mandatory for courts
to refer disputes, after their issues having been framed by courts, for resolution through alternate
means rather than litigation/trials.

The Law Commission in its 129th Report advocated the need for amicable settlement of disputes
between parties. The Law Commission recommended the establishment of Conciliation Courts
all over the country to with the authority to initiate conciliation proceedings in all cases at all
levels. The aims of both these committees were to further the cause of justice and ensure
efficient working of the judicial system.  The Commission called for a replication of the
Himachal Pradesh High Court’s Conciliatory practices before, during and post trial for litigants
which majorly covered issues related to partition, inheritance, wills etc.6

Resultantly Section 89 CPC as it stands today was introduced into the statute book by the Code
of Civil Procedure (Amendment) Act, 1999 with effect from 01.07.2002. With the introduction
of this provision, a mandatory duty has been cast on the civil courts to make an endeavour for
settlement of disputes by relegating the parties to an ADR process. 7 It has now become
imperative that resort should be had to ADR mechanisms with a view to bring an end to
litigation between the parties at an early date.8

3
Sangram Singh v. Election Tribunal AIR 1955 SC 425
4
Gupta, VInay. Mulla: The Code of Civil Procedure. 14th ed. New Delhi: LexisNexis, 2005. 420.
5
Malimath Committee Report, Chapter IX, pg 168, 170 , 171
6
129th Report of Law Commission of India.
7
Law Commission of India, 238th Report, Amendment of Section 89 of the Code of Civil Procedure, 1908
8
Salem Advocate Bar Association v. Union of India, AIR 2003 SC 189.
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 2. ADR MECHANISMS UNDER SEC 89

Section 89 states, Where it appears to the court that there exist elements of a settlement which
may be acceptable to the parties, the court shall formulate the terms of settlement and give them
to the parties for their observations and after receiving the observation of the parties, the court
may reformulate the terms of a possible settlement and refer the same for

(a) arbitration;

(b) conciliation

(c) judicial settlement including settlement through Lok Adalat; or

(d) mediation.

2.1 Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes
outside the courts. At its core, arbitration is the private, judicial determination of a dispute, by an
independent third party. An arbitration hearing may involve the use of an individual arbitrator or
a tribunal. A tribunal may consist of any number of arbitrators though some legal systems insist

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on an odd number for obvious reasons of wishing to avoid a tie. 9 One and three are the most
common numbers of arbitrators. The disputing parties hand over their power to decide the
dispute to the arbitrator(s). Arbitration is an alternative to court action (litigation), and generally,
just as final and binding (unlike mediation, negotiation and conciliation which are non-binding).
Arbitration is today most commonly used for the resolution of commercial disputes, particularly
in the context of international commercial transactions and sometimes used to enforce credit
obligations. It is also used in some countries to resolve other types of disputes, such as labour
disputes, consumer disputes or family disputes, and for the resolution of certain disputes between
states and between investors and states.10

2.2 Mediation is a dynamic, structured, interactive process where a neutral third party assists
disputing parties in resolving conflict through the use of specialized communication and
negotiation techniques. The term "mediation" broadly refers to any instance in which a third
party helps others reach agreement. More specifically, mediation has a structure, timetable and
dynamics that "ordinary" negotiation lacks. The process is private and confidential, possibly
enforced by law. Participation is typically voluntary. The mediator acts as a neutral third party
and facilitates rather than directs the process. Mediation is becoming a more peaceful and
internationally accepted solution in order to end conflict. Mediation can be used to resolve
disputes of any magnitude. Mediators use various techniques to open, or improve, dialogue and
empathy between disputants, aiming to help the parties reach an agreement. Much depends on
the mediator's skill and training.11 As the practice gained popularity, training programs,
certifications and licensing followed, producing trained, professional mediators committed to the
discipline.

2.3 Conciliation is an alternative out-of-court dispute resolution instrument. Like mediation,

conciliation is a voluntary, flexible, confidential, and interest based process. The parties seek to
reach an amicable dispute settlement with the assistance of the conciliator, who acts as a neutral
third party. The main difference between conciliation and mediation proceedings is that, at some
point during the conciliation, the conciliator will be asked by the parties to provide them with a
non-binding settlement proposal. A mediator, by contrast, will in most cases and as a matter of
principle, refrain from making such a proposal.12

2.4 In a Judicial Settlement the concerned Judge tries to settle the dispute between the parties
amicably. If at the instance of judiciary any amicable settlement is resorted to and arrived at in
the given case then such settlement will be deemed as Judicial Settlement. Section 89 states that
when there is a Judicial Settlement the provisions of the Legal Services Authorities Act, 1987
will apply. There are no written guidelines prescribed in India as to judicial settlement. But in

9
https://www.wipo.int/amc/en/arbitration/what-is-arb.html.
10
https://www.lexology.com/library/detail.aspx?g=72bcbbe3-c139-46f2-b9ce-086394161f41.
11
https://adr.findlaw.com/mediation/what-is-mediation-.html
12
Supra Note 4.
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America, ethics requiring judicial settlement has been enumerated which are also followed in
India.13

3. PROCEDURE UNDER SEC 89

Section 89 CPC makes it obligatory for the courts to explore the possibility of resolution of the
dispute by making reference to one of the several ADR mechanisms provided therein. However
the pre condition for referring the matter is satisfaction of the court that there exist elements of
settlement. The court has to form an opinion that a case is one that is capable of being referred to
and settled through any of the ADR processes. Simultaneously Order X Rule 1A CPC mandates
that the court to direct the parties to the suit to opt either mode of the settlement outside the court
as specified in sub-section (1) of section 89 CPC and on the option of the parties, the court has to
fix the date of appearance before such forum or authority as may be opted by the parties

3.1 Its Mandatory Nature:-

The provisions14 when harmoniously construed indicate that the need of the having a hearing
after completion of pleadings, to consider recourse to ADR process under section 89 CPC is
mandatory. But actual reference to an ADR process in all cases is not mandatory. Where the case
is unsuited15 for reference to any of the ADR process, the court will have to briefly record the
reasons for not resorting to any of the settlement procedures prescribed under section 89 CPC. In
other cases reference to ADR is mandatory. The court need not elaborate the terms of the
13
Supra Note 2.
14
S. 89(1) and Order X Rules 1A, 1B and 1C, Code of Civil Procedure, 1908.
15
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.
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proposed settlement nor is there any requirement to give detailed reasons for arriving at the
conclusion regarding the existence of elements of settlement and the court may describe very
briefly the nature of the dispute and the existence of the elements of settlement in three or four
lines. However, a duty is cast upon the court to consider whether it is possible to refer the parties
for a settlement.16

3.2 Consent of the Parties:-

The language of the Section clearly states that there are 4 alternate resolution forums, including
arbitration and all the 4 forums are treated identically and as such there is no distinction
mentioned in the Section. During the course of legal proceedings after recording the admissions
and denials, the court has to direct the parties to suit to opt either mode of the settlement outside
the court as specified in sub-section (1) of section 89 CPC by mutual consent and on the option
of the parties, the court has to fix the date of appearance before such forum or authority as may
be opted by the parties.17 If the parties are not able to opt for a particular mode of ADR provided
in section 89 CPC then the court has to refer the matter itself to a suitable ADR mechanism in
terms of section 89 CPC except for arbitration and conciliation which require express consent of
the parties.18 Arbitration or conciliation can only be on account of the consent of parties to a
dispute and it is not within the powers of the court to refer disputes for arbitration in absence of
consent of parties.19 Moreover, notwithstanding the fact that a government is one of the parties to
arbitration agreement, a court functions in accordance with the jurisdiction conferred in on
them.20 However, in rest of the mechanisms, consent of the parties is not needed. Even without
their consent the court can refer the matter for ADR.

3.3 The Role of Referral Judges:-

The reference to ADR mechanisms is mandatory in cases which are found to possess elements of
settlement. The responsibility of deciding whether a case possesses elements of settlement has
been put on the shoulders of the trial judge who is also referred to as the referral judge since it
his on his orders that a case is referred to any one of the ADR mechanisms enunciated in section
89 CPC.21 Since, except Arbitration, all the other methods are non-adjudicatory, thus after
arriving at a settlement, the settlement has to be submitted before the referral judge who then will
give his final seal of approval and pass the final binding decree.22 Thus mere settlement does not
bind the parties itself. In Arbitration however the role of referral judge comes to an end the

16
Basheer v. Kerala State Housing Board, AIR 2005 Kerala 64.
17
Order X Rule 1A of the Code of Civil Procedure, 1908.
18
Sangram Singh v. Election Tribunal AIR 1955 SC 425
19
BOC India Ltd v. Instant Sales Pvt Ltd, AIR 2007 Cal 275 at 276
20
K Venkulu v. State of AP, AIR 2004 AP 85 at pp. 86-87
21
S.B. Sinha, “ADR: Mechanism and Effective Implementation”, available at:
http://bombayhighcourt.nic.in/mediation/index_articles.html.
22
Salem Advocate Bar Association v. Union of India, AIR 2003 SC 189.
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moment he has referred the case to arbitration. Award passes by the Arbitral Tribunal does not
require any final seal of approval and is binding in itself. 23

4. ANOMALIES UNDER SEC 89

Even after more than a decade of its implementation, the provision provided for ADR under
Section 89 suffers from many anomalies. The constitutional validity of this section was upheld
but the frequency with which ADR is utilized for resolution of disputes remains minute, which
arises due to lack of knowledge about the same or on account of the reluctance of the parties.
The drafting of the Section 89 was said to be done in a haphazard manner and the interpretation
of the Section was observed to be, “A trial judge’s nightmare.”24

The apex court held that it puts the cart before the horse and lays down an impractical, if not
impossible, procedure in sub-section (1), and it has mixed up the definitions in sub-section (2). 25
The Court refers to these anomalies in the Salem Bar Association cases I26 and II27, whereupon
despite these anomalies, the validity of S. 89 was upheld. Then in the case of Afcons
Infrastructure v. Cherian Varkey Construction,28 these anomalies were removed.

23
Ibid.
24
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.
25
Ibid.
26
(2003) 1 SCC 49
27
AIR 2005 SC 3353.
28
Supra Note 24.
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4.1. Mixing of Definitions:-

The first inconsistency is the mixing up of the definitions of `mediation' and `judicial settlement'
under Section 89(2) (c) and Section 89(2) (d) of the Code. It makes no sense to call a
compromise effected by a court, as mediation, as is done in Section 89 (2) (d). Nor does it make
any sense to describe a reference made by a court to a suitable institution or person for arriving
at a settlement as judicial settlement, as is done in Section 89 (2) (c). A agreement/ negotiated
settlement by court being termed as  Mediation is a misnomer and reference to another forum to
arrive at a compromise should not be termed as a “judicial settlement”.

Judicial Settlement is a term which is very much in vogue in USA. It is referred as a settlement
of civil case with the help of a judge who is not assigned to adjudge upon the dispute and try to
bring both the parties at an amicable settlement. Mediation, is also a well known term and it
refers to a method of non-binding dispute resolution method with the aid and assistance of a
neutral third party who try to bring the parties to arrive at a negotiated settlement.

The court held that mix-up of definitions of the terms judicial settlement and mediation in
Section 89 is apparently due to a clerical or typographical error in drafting, resulting in the two
words being interchanged in clauses (c) and (d) of Section 89(2). If the word mediation in
clause (d) and the words judicial settlement in clause (c) are interchanged, we find that the said
clauses make perfect sense.29 The court observed these as a draftsmen’s error and the changes
with regard to the same shall be kept in place till the legislature corrects the mistakes, so that
Section 89 is not rendered meaningless and infructuous.30

4.2. Inconsistency with Arbitration and Conciliation Act:-

The second inconsistency is that Section 89(1) imports the final stage of conciliation referred to
in section 73(1) of the 1996 Act into the pre-ADR reference stage under section 89 of the Code.
If sub-section (1) of Section 89 is to be literally followed, every Trial Judge before framing
issues, is required to ascertain whether there exists any elements of settlement which may be
acceptable to the parties, formulate the terms of settlement, give them to parties for observations
and then reformulate the terms of a possible settlement before referring it to arbitration,
conciliation, judicial settlement, Lok Adalat or mediation. There is nothing that is left to be
done by the alternative dispute resolution forum. If all these have to be done by the trial court
before referring the parties to alternative dispute resolution processes, the court itself may as
well proceed to record the settlement as nothing more is required to be done.

Section 73 of 1996 Act shows that formulation and reformulation of terms of settlement is a
process carried out at the final stage of a conciliation process, when the settlement is being

29
Supra Note 14.
30
Sukhdev Singh Gambhir v. Amrit Pal Singh : 2003 (105) DLT 184.
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arrived at. What is required to be done at the final stage of conciliation by a conciliator is
borrowed lock, stock and barrel into section 89 and the court is wrongly required to formulate
the terms of settlement and reformulate them at a stage prior to reference to an ADR process.
Thus, the terms of settlement drawn up by the court will be totally useless in any subsequent
ADR process. Why then the courts should be burdened with the onerous and virtually
impossible, but redundant, task of formulating terms of settlement at pre-reference stage?

Since it has been held by the apex court that when a statute has words which, if interpreted
literally, could give rise to anomalies them the judge may instead of adopting the textual
construction, add omit or substitute certain words in the statute to redress the situation and get rid
of the anomalies.31 The Apex Court relying on these cases, therefore held that, diluted this
anomaly equating terms of settlement to a summary of disputes meaning thereby that the court is
only required to formulate a `summary of disputes' and not `terms of settlement'. 32 The 238th
Law Commission Report also advocated for the same changes as were specified in Afcons case
and called for restructuring of the Section on the contours set out by the Supreme Court with
certain reservations.33

The anomalies of S.89 have been addressed by the judiciary in various case laws, but the section
still remains unchanged by the legislature. It is a viable section which has the potential to reduce
the burden of the Indian judiciary and accomplish what every justice system aims for, fair and
speedy justice for all, since justice delayed is justice denied.

31
Tirath Singh vs Bachittar Singh And Others, 1955 AIR 830, Shamarao V. Parulekar vs The District Magistrate,
Thana, 1952 AIR 324.
32
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.
33
238th Report of Law Commission of India.
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 5. DRAFTING ERRORS IN SECTION 89- AFCONS INFRASTRUCTURE CASE

5.1 Facts of the Case:-

The Cochin Port Trust (2nd Respondent) entrusted the work of construction of certain bridges
and roads to the Afcons Infrastructure and Ors. (Appellants) under an agreement dated
20.04.2001. The Afcons Infrastructure and Ors. Sub-contracted a part of the said work to Cherian
Varkay Construction (1st Respondent) under an agreement dated 1.8.2001. Cherian Varkay
Construction filed a suit against the Afcons Infrastructure and Ors. for recovery of Rs.210,70,881
which includes the amount due to the appellants from the employer with interest at 18% per
annum. In the same suit an order of attachment was made on 15.09.2004 in regard to the sum of
Rs. 2.25 crores. Thereafter, In March 2005, Cherian Varkay Construction filed an application
under section 89 of CPC before the trial court praying that the court may formulate the terms of
settlement and refer the matter to arbitration. Afcons Infrastructure and Ors. filed a counter dated
24.10.2005 to the application submitting that they were not agreeable for referring the matter to
arbitration or any of the other ADR processes under section 89 of the Code. In the meanwhile,
the High Court of Kerala by order dated 8.9.2005, allowed the appeal filed by the appellants
against the order of attachment and raised the attachment granted by the trial court subject to
certain conditions. While doing so, the High Court also directed the trial court to consider and
dispose of the application filed by the first respondent under section 89 of the Code. The trial
court after hearing the parties allowed the said application under section 89 of the code.

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Then ,the Appellants filed the review petition against the order of the trial court. The High Court
by the impugned order dated 11.10.2006 dismissed the revision petition holding that the apparent
tenor of section 89 of the Code permitted the court, in appropriate cases, to refer even unwilling
parties to arbitration. This order was challenged in the Supreme Court as an Appeal.34

5.2 Issues Discussed:-

1. Section 89 enacted with a lofty objective has revealed manifest drafting errors which in
turn gave rise to complexities in understanding its true scope and purpose. Despite a
number of loopholes, the validity of section 89 was upheld in the case of Salem Bar
Association v. Union of India (I), wherein the court had applied purposive construction to
uphold its validity. However in Afcons case, it was stated that if section 89 was implemented
in literal sense, it will lead to be a “Trial Judges Nightmare”. According to Justice R. V.
Raveendran “It puts the cart before the horse and lays down an impractical, if not
impossible, procedure in sub-section (1).” 35
2. The first shortcoming pointed out is that there has been error in drafting the meaning of
“Mediation” and “Judicial Settlement” under section 89(2). Clause (c) states that for
“judicial settlement”, the court shall refer the same to a suitable institution or person who
shall be deemed to be a Lok Adalat and clause (d) states that for “mediation”, the court shall
effects a compromise between the parties by following such procedure as may be prescribed.
The Supreme Court pointed out that in order to give proper meaning to section 89, the said
two words should be interchanged.
3. The second shortcoming is that section 89 (1) requires the court to formulate the terms of
settlement and refer the same to the parties for their observation and once the parties
approve it the terms shall be reformulated and refer to appropriate forum. However if the
court does these things there will be nothing left for the conciliator or mediator to do as this
is the task of the conciliator or mediator at the final stage. Also if the dispute is referred to
Arbitration it will be of no use as the arbitrator does not adjudicate upon the terms of
settlement. This will in no way reduce the burden of the court and the pendency will
continue. Thus formulation and reformulation of terms of settlement by the court is wholly
out of place in the pre- reference stage of ADR process. 36
4. Thirdly, section 89 states that “where it appears to the court that there exist elements of a
settlement” and uses the words “shall” and “may”. This implies that the court needs to
determine in each case whether it is suitable for ADR or not and refer only those suits which
it thinks are capable of being resolved by ADR. However in Order X Rule 1A the term
“shall” makes it mandatory for court to refer the suit for ADR. However this ambiguity was
cleared in Afcons’ case where the court held that on harmonious construction of both the
provisions it is clear that it is mandatory to consider a case for ADR whether or not it is
actually referred to.

34
2010 (7) SCC 616
35
Afcons Infrastructure Ltd. v Cherian Varkey Construction Co. (P) Ltd.,2010 7 SC 616.
36
R.V. Raveendran, “Section 89 CPC: Need for an Urgent Relook” 4 SCC Journal 23 (2007).
Page 16
 5. Another anomaly is with regard to Court fees. The amendment act of 1999 also brought
about an amendment in section 16 of the court fees Act, 1870, 37 which states that where a
suit is referred by court to any other mode of settlement under section 89 of CPC, the person
shall receive back the full amount of the fees that he had paid for plaint. However no remedy
has been suggested in case in the person returns back to the court on failure to resolve the
dispute through ADR process.
6. In Afcons Infrastructure case court has also formulated a list of matters which may or may
not be suitable for reference to ADR. Cases like representative suits under order I rule 8,
election petitions, suits for grant of probate or letters of administration, cases involving
serious allegations of fraud, forgery, coercion etc, suits for declaration of title against
government, claims against minors etc are classified as unsuitable for reference to ADR. On
the other hand cases relating to trade, commerce and contract, cases involving strained
relationships, tort claims or consumer dispute are held to be suitable for ADR. 38

37
Refund of fee: Where the court refers the parties to the suit to any one of the mode of settlement of dispute
referred to in Section 89 of the Code of Civil Procedure, 1908 the plaintiff shall be entitled to a certificate from the
court authorizing him to receive back from the Collector, the full amount of the fee paid in respect of such plaint.
38
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., JT 2010 (7) SC 616.

Page 17
 6. CONCLUSION

Section 89 CPC embodies the legislative mandate to courts for exploring the possibility of a
resolution of a dispute de hors the litigative process in matters pending for judicial determination
and if found appropriate, refer the dispute to any of the ADR processes provided therein namely
arbitration, conciliation, mediation, lok adalats and judicial settlement.

The initiatives taken by the Supreme Court in Salem Advocate Bar Association v. Union of
India,39 gave the initial momentum to use of ADR in courts pursuant to section 89 CPC.
Thereafter in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., 40 which
can be described as a comprehensive practical guide for effective use of section 89 CPC, the
Supreme Court has given detailed practical guidelines so that section 89 CPC can be utilized so
as to achieve the best results. In Afcons Infrastructure Ltd. the Supreme Court has pointed out
serious errors in section 89 CPC which have also been acknowledged by the Law Commission of
India thereby underlining the need of an amendment of section 89 CPC, in its 238 th Report. The
Supreme Court has also directed interchange of clauses (c) and (d) of section 89 (2) CPC by
interpretative process to correct the draftsman's error so that section 89 CPC is not rendered
meaningless and infructuous.

However despite these flagrant errors Section 89 CPC has given a massive boost to the ADR
revolution in India and has helped in developing a settlement culture which is the most important
aspect to be taken care of as has been highlighted by of the Chief Justice of India. 41 The concept
of employing ADR has undergone a sea change with the insertion of section 89 CPC 42 and it has
39
AIR 2003 SC 189
40
2010 (7) SC 616
41
Justice S.H. Kapadia, Chief Justice of India. See “Let litigation make way for settlement culture: Kapadia”, The
Hindu, New Delhi, July 11 2010.
42
S.B. Sinha, “ADR: Mechanism and Effective Implementation”, available at: http://bombay
highcourt.nic.in/mediation/index_articles.htm (last visited on 11.04.2012).
Page 18
resulted in a paradigm shift. The journey so far has been good however there is still scope for
improvement and definitely a need for progress.

6. BIBLIOGRAPHY

Legislations
1. Code of Civil Procedure, 1908
2. Arbitration and Conciliation Act,1996
3. Court fees Act, 1870

Books
1. Gupta, VInay. Mulla: The Code of Civil Procedure. 14th ed. New Delhi: LexisNexis, 2005.
2. Sudipto Sarkar & V.R. Manohar (Eds.), Sarkar’s Code of Civil Procedure (Wadhwa and
Company, Nagpur, 11th Edn., 2006

Journals
1. R.V. Raveendran,“Section 89 CPC: Need for an Urgent Relook” 4 SCC Journal 23 (2007)

Reports
1. 27th Report of Law Commission of India
2. Law Commission of India, 129th Report, Urban Litigation : Mediation as Alternative to
Litigation (1988).The Malimath Committee submitted its report in August, 1990.
3. Law Commission of India, 238th Report, Amendment of Section 89 of the Code of Civil
Procedure, 1908

Websites

1. A.M. Khanwilkar, “Need to Revitalise ADR Mechanism”, available at:

http://bombayhighcourt.nic.in/mediation/Mediation_Concept_and_Articles/need to revitalis.pdf
2. Guidelines for referral judges at http://www.delhimediationcentre.gov.in/
3. S.B. Sinha, “ADR: Mechanism and Effective Implementation”, available at:
http://bombayhighcourt.nic.in/mediation/index_articles.htm

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4. Justice R.C. Lahoti, Keynote address at the Valedictory Session of two days Conference on
“ADR, Conciliation, Mediation and Case Management” organised by the Law Commission of
India, available at: http://lawcommissionofindia.nic.in/adr_conf/Justice_Lahoti_Address
5. Elizabeth Plapinger & Donna Stienstra, ADR and Settlement in the Federal District Courts: A
Sourcebook for Judges and Lawyers, available at: http://www.fjc.gov
6. https://www.wipo.int/amc/en/arbitration/what-is-arb.html.
7. https://adr.findlaw.com/mediation/what-is-mediation-.html.

Databases Referred
1. Manupatra
2. SCC Online
3. indiankanoon

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