Important Topics

1. Afcon Infrastructure case (Important)

2. Difference Between ADR, Mediation and Negotiation or Judicial Process, Mediation
and Negotiation, or Arbitration and Conciliation
3. Communication: Verbal and Non- Verbal
4. Negotiation, Negotiation strategies -
5. Mediator skills/role and Mediation stages -
6. Dayawati v. Yogesh Kumar Gosain case –

PART A - Introduction to ADR: Differences between Litigation,

Arbitration, Conciliation, Mediation and Negotiation

I.Afcon Infrastructure Ltd. v. Cherian Varkey Construction Co. P. Ltd. (2010)

Facts: In this case, the Cherian Varkey Construction Co. P. Ltd, (first respondent) filed an
application under S. 89 Code of Civil Procedure (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. (Appellants) filed a counter application stating that they do not want
the matter to be referred to arbitration or any of the other ADR processes under S. 89 of the
Code.

Issue:
(i) What is the procedure to be followed by a court in implementing S. 89 and Order 10 Rule
1A of CPC, 1908?
(ii) Whether consent of all the parties to the suit is necessary for reference to arbitration under
S. 89 of the Code?

Observation and Decision:

• The court found that the Trial Court did not adopt proper procedure while enforcing S.
89 of the Code. failure to invoke S. 89 suo moto after completion of pleadings and
considering it only after an application under S. 89 was filed, is erroneous.
• A civil court exercising power under S. 89 CPC cannot refer a suit to arbitration unless
all the parties to the suit agree for such reference.
• In this case, the appeal was allowed and the order of the trial court referring the matter
to arbitration and the order of the High Court affirming the said reference are set aside.
The Trial court was ordered to consider and decide upon a non - adjudicatory ADR
process.
• The Court referred to S. 89 CPC, which talks about settlement of Disputes outside the
Court and states that -
o Where it appears to the Court that there exist elements of 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
 observations of the parties, the Court may reformulate the terms of a possible
settlement and refer the same for -
§ Arbitration
§ Conciliation
§ Judicial settlement including settlement through Lok Adalat, or
§ Mediation
o Where a dispute has been referred -
a. For arbitration or conciliation - the provisions of the
Arbitration and Conciliation Act, 1996 shall apply as if the
proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act;
b. To Lok Adalat - the court shall refer the same to the Lok
Adalat - in accordance with the provisions of S. 20(1) of Legal
Services Authority Act, and all other provisions of that Act shall
apply in respect of the dispute so referred to the Lok Adalat.
c. For judicial settlement - the court shall refer the same to
a suitable institution or person and such institution or person
shall be deemed to be a Lok Adalat and all the provisions of the
Legal Services Authority Act, 1987 - shall apply as if the dispute
were referred to a Lok Adalat under the provisions of that Act;
d. For mediation - the court shall effect a compromise
between the parties and shall follow such procedure as may be
prescribed.
• The court also referred to Order 10 Rule 1A - which provides for direction of the court
to opt for any mode of alternative dispute resolution.
• Whether reference to ADR Process is mandatory?
o S. 89 starts with the words “where it appears…” - which means that suits which
are not suited for the ADR process should not be referred under S. 89 CPC. the
court has to form an opinion that a case is one that is capable of being referred
to and settled through the ADR process. Where the case is not suited 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. Therefore, having a hearing after completion of pleadings, to
consider recourse to ADR process under S. 89 CPC, is mandatory.

• The Supreme Court also proceeded to enumerate the case suitable for ADR processes.
Such cases are classified under the following -
o All cases relating to trade, commerce, and contracts.
o All cases arising from strained relationships, such as matrimonial cases.
o All cases relating to tortious liability, including accidental claims.
o All consumer disputes.
 o All cases where there is a need for continuation of the pre-existing relationship,
such as disputes between neighbours and members of societies.
• That the stage at which the court should explore whether the matter should be referred
to ADR processes, is after pleadings are complete, and before framing the issues, when
the matter is taken up for preliminary hearing for examination of parties under Order
10 of the Code. However, if for any reason, the court had missed the opportunity to
consider and refer the matter to ADR processes under Section 89 before framing issues,
nothing prevents the court from resorting to Section 89 even after framing the issues.
But once evidence is commenced, the court will be recollecting to refer the matter to
the ADR processes lest it becomes a tool for protracting the trial.
• The court laid down the procedure to be adopted by a court under section 89 of the code
as under:
o Meetings are complete – before framing the issues – the court shall fix a
preliminary hearing for the appearance of parties. The court should acquaint
itself with the facts of the case and the nature of dispute between the parties.
o The court should first consider whether the case falls under any of the categories
of the cases which are required to be tried by courts and not fit to be referred to
any idea processes. If it finds a case falls under the excluded category, it should
record a brief order referring to the Nature of the case and why it is not fit for
reference to ADR processes. It will then proceed with framing of issues and
trial.
o In other cases the court should explain the choice of five ADR processes to the
parties to enable them to exercise their option
o The court should first ascertain whether the parties are willing for arbitration.
The court should inform the parties that arbitration is an adjudicatory process
by a chosen private forum and reference to arbitration will permanently take the
suit outside the ambit of the court. The parties should also be informed that the
cost of arbitration will have to be borne by them. Only if both the parties agree
for arbitration, and also agree upon the arbitrator, the matter should be referred
to arbitration.
o If the parties do not agree for arbitration, the court should ascertain whether the
parties are agreeable for reference to conciliation which will be governed by the
provision of the Arbitration and Conciliation Act (AC Act). If all the parties
agree for reference to conciliation and agree upon the conciliator(s), the court
can refer the matter to conciliation in accordance with s. 64 of AC Act.
o If parties are not agreeable for arbitration and conciliation, the court should,
keeping in view the preferences/options of the parties, refer the matter to any of
the other three ADR processes: (i) Lok Adalat; (ii) mediation by a neutral third
party facilitator or mediator; and (iii) a judicial settlement, where a judge assists
the parties to arrive at a settlement.
o If The court referred the matter to the ADR process, it should keep track of the
matter by fixing a hearing date for the ADR report.
ADVANTAGES OF ADR
1. It can be used at any time, even when a case is pending before a court of law.
However, recourse to ADR as soon as the dispute arises may confer maximum
advantages on the parties.
2. It can provide a better solution to dispute more expeditiously and at less cost than
litigation.
3. ADR programmes are flexible and not afflicted with rigours of rules of procedure.
4. ADR can be used with or without an advocate.
5. ADR proceedings help in the reduction of the work – load of the courts and thereby
help them to focus attention on the case, which ought to be decided by Courts.

II. DIFFERENCES
i. Arbitration and conciliation
ii. Judicial process, arbitration and Mediation
iii. Mediation, Conciliation and Lok Adalat
iv. Mediation and Negotiation

i. Arbitration and Conciliation

Arbitration Conciliation

The arbitration proceedings are quasi – Conciliation proceedings are non – judicial in
judicial in nature. nature.

In arbitration proceedings, the matter is In case of conciliation, parties arrive at a

adjudicated in an arbitral tribunal. settlement with the assistance of conciliator

It requires a prior agreement. Conciliation may be initiated without such prior

agreement.

In arbitration proceedings, all In conciliation proceedings, the factual

information must be given by a party information given by the party to conciliator may
which will be subject to scrutiny by the be subjected to confidentiality.
other party.

An award is made and signed by the A settlement agreement may be made by the
arbitrator but it does not require parties themselves or with the assistance of
authentication. conciliator. The conciliator shall authenticate the
settlement agreement.
 There cannot be unilateral termination A party can unilaterally bring the conciliation
of arbitration proceedings. proceeding to an end.

ii. Judicial process, arbitration and Mediation

Judicial Process Arbitration Mediation

This is an adjudicatory This is a quasi – judicial This is a negotiation process and

process where a third adjudicatory process where not an adjudicatory process. The
party (judge/other the arbitrator(s) appointed by mediator facilitates the process.
authority) decides the the Court or by the parties Parties participate directly in the
outcome. decide the dispute between resolution of their dispute and
the parties. decide the terms of settlement.

Procedure and decision Procedure and decision are Procedure and settlement are not
are governed, restricted governed, restricted and controlled, governed or restricted
and controlled by the controlled by the provisions by statutory provisions; thereby
provisions of the of the AC Act, 1996. allowing freedom and flexibility.
relevant statutes.

The decision is binding The award in an arbitration is A binding settlement is reached

on the parties. binding on the parties. only if parties arrive at a mutually
acceptable agreement.

Adversarial in nature, as Adversarial in nature – as Collaborative in nature – as focus

focus is on past event focus is on determination of is on the present and the future and
and determination of rights and liabilities of resolution of disputes is by mutual
rights and liabilities of parties. agreement of parties irrespective
parties. of rights and liabilities.

Personal appearance or Personal appearance or Personal appearance and active

active participation of active participation of parties participation of the parties are
parties is not always is not always required. required.
required.
 A formal proceedings A formal proceeding held in A non – judicial and informal
held in public and private following strict proceedings held in private with
follows strict procedural procedural stages. flexible procedural stages.
stages.

Decision is appealable. Award is subject to challenge Decree/order in terms of the

on specific ground. settlement is final and is not
appealable.

No opportunity for No opportunity for parties to Optimal opportunity for parties to

parties to communicate communicate directly with communicate directly with each
directly with each each other. other in the presence of mediator.
other.

Involves payment of Does not involve payment of In case of settlement, in a court

court fees. court fees. annexed mediation – the court fee
already paid is refundable as per
the Rules.

iii. Mediation, Conciliation and Lok Adalat

Mediation Conciliation Lok Adalat

Mediation is a non – Conciliation is a non – Lok Adalat is non – adjudicatory if it

adjudicatory process. adjudicatory process. is established under S. 19 of the
Legal Services Authorities Act,
1987. It is conciliatory and
adjudicatory if it is established under
S. 22B of the Legal Services
Authorities Act, 1987.

Voluntary process Voluntary process Voluntary process

Mediator is a neutral third Conciliator is a neutral Presiding officer is a neutral third

party. third party. party.

Service of lawyer is Service of lawyer is Service of lawyer is available.

available. available.
Mediation is a party Conciliation is a party In Lok Adalat, scope of negotiation
centred negotiation. centred negotiation. is limited.

The function of mediator The function of the The function of the Presiding officer
is mainly facilitative. conciliator is more is persuasive.
active than the
facilitative function of
the mediator.

The consent of parties is The consent of parties is The consent of the parties is not
not mandatory for mandatory for referring mandatory for referring a case to Lok
referring a case of a case to conciliation. Adalat.
mediation.

The referral court applies In conciliation, the The award of Lok Adalat is deemed
the principles of Order agreement is to be a decree of the Civil Court and
XXIII Rule 3, CPC for enforceable as it is a is executable as per S. 21 of Legal
passing decree/order in decree of the Court as Services Authority Act, 1987.
terms of the agreement. per S. 74 of AC Act,
1996.

Not appealable. Decree/order is not Award is not appealable.

appealable.

The focus of mediation is The focus in conciliation The focus in Lok Adalat is on the
on the present and the is on the present and the past and present.
future. future.

Mediation is a structured Conciliation also is a The process of Lok Adalat involves

process having different structured process only discussion and persuasion.
stages. having different stages.

In mediation, parties are In conciliation, parties Parties are not actively and directly
actively and directly are actively and directly involved so much.
involved. involved.

Confidentiality is the Confidentiality is the Confidentiality is not observed in

essence of mediation. essence of conciliation. Lok Adalat.

iv. Mediation and Negotiation

 Mediation Negotiation

Parties agree to work together, but under the Parties agree to work with one another in
guidance of a trained mediator. order to get a resolution. This means
relying on the other individual to want to
achieve a result.

It is more flexible and allows parties to either The disputing parties are required to meet
meet directly in the same room with a mediator with one another since there isn’t anyone
or to meet separately and have the mediator else involved.
shuttle back and forth.

A mediator does not have decision making Parties are able to bind themselves in an
power and does not hand down a ruling like an agreement.
arbitrator or a judge might.

The Mediator’s role is not to persuade one side Both parties are likely to use persuasion to
or another. force the other side to agree with them and
sign a document.

B. Communication - Verbal and Non - verbal

III. What is communication?

It is the process whereby we create and exchange messages.
Seven components of communication - Source, message, receiver, encoding, channel,
decoding and context. (need to elaborate of these)

Principles of Communication
a. Communication is constant - if not verbally, then non - verbally. You are always
communicating.
b. Communication is irreversible - your word or deed can leave an indelible imprint on
the minds and hearts of others. Be conscious of your choices as you create messages to others.
c. Communication is creative - this refers to creativity expressed in daily communication,
in the unique and special ways you communicate.
The communication process has two forms - verbal and non - verbal. Both forms usually
operate together in the majority of messages you send and receive.

Verbal Communication - the term ‘verbal’ means connected with words and use of words.
Human beings are the only species gifted with the use of words that make language. Verbal
communication occurs when a person puts across a message by speaking or writing. The
message can be sent to an individual, a team or a group.
Types of verbal communication -
• Face to face
• Speaking on telephone
• Using intercom
• Video conferencing
• Conference calling
• Formal and informal letters
• Business and personal emails
• Online chat
• Reports
• Resumes

Advantages of verbal communication

a. It provides immediate feedback to the participants in the communication event.
b. Verbal communication is time saving.
c. It builds a healthy climate in the organisation. It brings superior and subordinates
closer.
d. It provides the speaker an opportunity to correct himself and make himself clear by
changing his voice, tone, pitch, etc.

Limitations of Verbal communication

a. It may not always be a time - saving method.
b. Verbal messages cannot always be retained in the listener’s memory.
c. Verbal messages do not have a legal validity.
d. If the speaker has not carefully organised his thoughts then verbal messages may lead
to misunderstanding.
e. It becomes difficult to fix responsibility for anything going wrong or for any mistakes
in verbal communication.

(IMPORTANT)
Non - verbal Communication (Body Language)- observing yourself and others is non -
verbal communication - the way we express ourselves, not by what we say, but what we
do. It refers to the communication and interpretation of information by any means other than
language. Non - verbal communication includes communication through visual movements
such as facial expressions, eye movements, gestures, body orientation, vocal/paralinguistics.
Understanding that you, and everyone around you, are constantly, sending off non - verbal cues
is important because it means that you have a constant source of information available about
yourself and others.

Body Language (Kinesics) - It is the study of human body movements. Our body says a lot
about us in many ways as we communicate. A glance, stare, smile etc. Convey meaning is
without words and through the body parts. The nodding of our head, blinking of our eyes, How
we feel – this is known as body language. It is the best non-verbal communication. Somebody
actions and their common interpretation are the following:

Action Interpretation

Maintaining eye contact Keenness to talk; confidence

Shifting eye contact Loss of interest’ dishonesty

Looking down Shyness; nervousness

Closing the eyes Lack of interest

Raising the eyebrows Surprise

Tight Lips Anger or low spirit

Foot tapping Impatience

Leaning back Relaxed

Paralanguage/Paralinguistic communication - the term ‘para’ means ‘like’. Paralanguage

means ‘like language’. It Is non-verbal because it is related to the way words are spoken.
Paralanguage means how people say something such as volume, pitch system, etc. Das, please
with that which directly companies are spoken communication such as accent, pronunciation,
pace, pitch, volume and tone. We cannot speak without engaging in paralanguage.

Advantages of Paralanguage -
1. Paralanguage is closely related to Oral communication. No communication is complete
without it.
2. It is a dependable indicator of the speaker's place in an organisation.
3. On the basis of paralanguage, or a way of speaking – we can find his educational
background.
4. Paralanguage also tells about a speaker’s Regional or national background.

Characteristics of Non - Verbal communication -

a. Non - verbal communication always exists in context. Each non - verbal cue is like a
single word expressing different meanings.
b. Non - verbal behaviour communicates something to someone.
c. Non - verbal behaviour - whether it involves the hands, eyes, or the tone of voice,
usually occur in packages or clusters.
d. Like verbal communication, non verbal communication is also governed.

Advantages of non - verbal communication

a. Non-verbal communication is reliable. Facial expression, emotions and body language
etc. can never lie.
b. It is very efficient in nature. It is able to communicate quickly and easily.
c. Managers can always make an impression on others with the help of non-verbal
communication.
d. Attitudes can be understood by a person who understands non-verbal signs.
e. Non - verbal behaviour can repeat what is said verbally.
f. Non verbal Messages may also still substitute for verbal ones.

Disadvantages of non - verbal communication

a. It lacks secrecy.
b. It lacks written proof.
c. It is very difficult to study non - verbal communication.
d. Non - verbal communication is useful only for short messages.
e. This communication may be misunderstood by the receiver.

IV. NEGOTIATION

Definition - Negotiation is the process we use to satisfy our needs when someone else controls
what we want. Negotiation between companies, groups or individuals normally occurs because
one has something the other wants and is willing to bargain to get it. Most of us were constantly
involved in negotiations in one way or another.

Development of Conflict - Conflict always arises out of four stage process:

a. Frustration - Failure to achieve a target or goal can cause the start of the conflict cycle.
Once the conflict cycle has begun the parties to conflict attempt – to understand the nature of
the problem, and what they themselves want as resolution. It is the moment of self or
behavioural analysis.
b. Behaviour – parties to the conflict attempt to implement their resolution by behaving in
the pattern that they have selected is most likely to achieve the desired result.
c. Outcome - If the outcome results in one party feeling dissatisfied, the seeds will be soon
for further conflict. Whatever the result, the outcome will be part of the battening and
conditioning that set the possible patterns of behaviour in future conflict.
How we respond to conflicts/handling conflict
It is only at the conceptualisations stage of concept development that the most effective
solutions can be found. Once the pattern of the developing conflict has been established, help
or self help can be administered.
a. Competing – it is handling conflict head-on. It is standing firm and rejecting the views
and beliefs of the other party standing between the warring factions and demanding that the
war cease.
b. Collaborating – it is less than the art of total compromise. To collaborate, take the
ideas that come from both parties to the conflict and try to find a way of developing them all,
without attracting from the overall goal.
c. Compromising - It is the art of win-win negotiation. Both parties to the conflict should
feel that they have one but neither should feel any sense of loss.
d. Avoiding – it means deciding not to get involved in the conflict and asking that it be
shelved elsewhere.
e. Accommodation – is the art of accepting the situation and agreeing to back down in
conflict.

Essentials of Negotiation
1. It is a communication process.
2. It resolves conflicts.
3. It is a voluntary exercise.
4. It is a non - binding process.
5. Parties retain control over outcomes and procedure.
6. There is a possibility of achieving wide ranging solutions, and of maximum joint gains.

Phases of Negotiation - there are seven phases of negotiation which are to be followed as
listed below -
1. Planning an fact - finding phase
2. Opening phase
3. Discussion phase
4. Proposal phase
5. Bargaining phase
6. Closing phase
7. Follow - up phase

NEGOTIATION TECHNIQUES/STRATEGIES (important)

Negotiation is the use of knowledge, time and power to influence the behaviour of other
people so that you can achieve your goals.
1. Salami - This is a technique used to achieve an objective little bit at a time rather than
in one giant step. It has been explained in this way: "when you want to get hold of a
Salaami which your opponents are strenuously defending, you must not grab at it. You
must start by carving yourself a very thin slice. The owner of the Salami will hardly
notice it, or at least you will not mind very much. The next day you will carve another
 slice, then still another. And so, little by little, the salami will pass into your
possession”.
Steps to be taken - First step is to listen actively; second - win yourself a hearing; and
third - working to a joint solution.

2. Standard Practice - It is a strategy used to convince others to do or not to do something

because of so-called “standard practises”. It often works very well because it infers it is the
best way to do whatever needs to be done, and is probably a safe approach. Standard contracts
are an example of the strategy. The party suggesting a standard contract assumes no one would
want to change it, Because it reflects what others routinely agree to under the circumstances.
Often the other party will accept this fact of life, however, those who wish to test it can have
good results.

3. Deadlines - Time is critical to people and organisations. Consequently deadlines can

be an effective negotiation strategy. The more we learn about the other party's deadlines the
better we can plan our strategies. When others attempt to force us to their deadlines, we should
not hesitate to test them. Before entering a negotiation, ask yourself these questions:
a. What are the actual deadlines and time constraints am I under? Are these self-imposed
or controlled by someone else?
b. Are these deadlines realistic? Can I change them?
c. What deadlines might be controlling the other side? Can I use these to my advantage?

4. Feinting - It gives the impression that one thing is desired when the primary objective
is really something else. Example: an employee may negotiate with the boss for a promotion
in the real objective is a good increase in salary. If the promotion is forthcoming so is the race.
If the promotion is not possible, a nice raise may be the consolation prize. If there is little
opposition it is probably safe to proceed. If there is an adverse reaction, another approach can
be explored.

5. Apparent Withdrawal - It may include some deception as well as deferring and

feinting. It attempts to make the other negotiator believe you have withdrawn from
consideration of an issue when you really have not. Its purpose may be to ultimately get the
concession or change in position.

6. Good Guy/Bad Guy - This is an internationally used strategy. One member of a

negotiating team takes a hardline approach while another member is friendly and easy to deal
with. When the bad guys steps out for a few minutes, the good guy offers a deal that under the
circumstances may seem too good to refuse. There are many versions of “bad guys”. They may
be lawyers, spouses, personal representatives, accountants, tax experts, sales manager or
economists. One danger in using this strategy is that it will be recognised for what it is.
Following are the ways in which you can act if you feel that it is being used on you – Walk out,
use your own bad guy, tell them to drop the act and get down to business.
7. Limited Authority - It is an attempt to force acceptance of a position by claiming
anything else would require higher approval. Individuals who claim to have limited authority
are difficult to negotiate with, because the reason they used to not meet your demands is due
to someone else, or some policy or practice over which they have no control. A salesperson
who cannot give more than a 5% cash discount; influence the delivery date; or accept a trade
will not make concessions in those areas. Some negotiators will concede under these
circumstances, while others will insist their offer be taken wherever necessary for approval or
rejection. There is some risk this will terminate the negotiation, but it does give the other party
a chance to gracefully re-evaluate their position.

Seven elements of negotiation

1. Alternatives - These are the walkaway alternatives that each party has if agreement is
not reached. These are things that one party or another can do by self help, without
requiring the agreement of the other. In general, neither party should agree to something
that is words for the party then it's “BATNA” - Best Possible Alternative.
2. Interests - The word we use for what it is that somebody wants. Underlying the position
of the party are their needs, their desires, their hopes and their fears. Other things being
equal, an agreement is better to the extent that it meets the interest of the parties.
3. Options - To identify the full range of possibilities on which the parties might
conceivably reach agreement. We refer to options "on the table” Or which might be put
on the table. Generally speaking, an agreement is better if it is best of many options.
4. Legitimacy - Other things being equal, an agreement is better to the extent that each
party considers it to be fair as measured by some external benchmark; some criterion
or Principle beyond just simple will of either party. Such external standards of fairness
include international law, precedent, practice or some principles such as reciprocity and
most favoured nation treatment.
5. Relationship - A negotiation has produced a better outcome to the extent that the
parties have improved their ability to work together rather than damage it. Most
important negotiations or with people or institutions with whom we have negotiated
before and will be negotiating again.
6. Communication - Other things being equal, an outcome will be better if it is reached
efficiently without waste of time or effort. Efficient negotiation requires effective two
way communication.
7. Commitments - Commitments or oral or written statements about what a party will or
won't do. They may be made during the course of a negotiation or maybe embodied in
an agreement reached at the end of the negotiation. In general, an agreement will be
better to the extent that the promises made have been well planned and well crafted so
that they will be practical, durable, easily understood by those who are to carry them
out, And verifiable if that is important.

Qualities of Negotiator - negotiation is often considered as an art requiring specific skills and
competencies that can only be practiced by talented as gifted people. Thus, the essential skill
which the negotiator must have are as listed below -
1. Judgement and general intelligence
 2. Ability to persuade others
3. Ability to win confidence and respect of opponent
4. General problem solving and analytical skills
5. Self control, especially of emotions and their visibility
6. Insight into others’ feelings
7. Previous negotiating experience
8. Personal sense of security
9. Open - mindedness
10. Competitiveness
11. Debating ability
12. Status or rank in organisation
13. Trusting temperament

V. MEDIATION

What is mediation?
It is a negotiation process in which a neutral third party assists the disputing parties in resolving
their disputes. Mediator uses special negotiation and communication techniques to help the
parties to come to a settlement. The parties can appoint a mediator within mutual consent or
the court, in a pending litigation, can appoint a mediator.The mediator does not decide what is
fair or right, does not apportion blame, nor renders any opinion on the merits or chances of
success of the case is litigated. Rather the mediator acts as a catalyst to bring that to disputing
parties together by defining issues and limiting obstacles to communication and settlement.

Evolution in India - The concept of mediation goes back deep in our ancient times and deep
rooted in the culture of our country. Earlier, disputes used to be resolved in a panchayat at the
community level. With increase in population and liberalisation, globalisation and tremendous
economic growth there is an increase in litigation too. With this increase in litigation, there are
long delays in the resolution of disputes in the courts of law. Hence, the judicial system turned
to alternative forms of dispute resolution.
• The Legal Services Authority Act, 1987 gave statutory recognition to the system of Lok
Adalats.
• To handle the matters of compensation, house tax, big companies, the Arbitration and
Conciliation Act, 1996 replaced the Arbitration ACt, 1940.
• Amendment of S. 89 of CPC by the Code of Civil Procedure (Amendment) ACt, 1999,
with effect from 2002 by recommendation of the Law Commission of India and the
Malimath Committee.
o It became obligatory for the court - After framing the issue is to refer the dispute
for settlement either by way of arbitration, conciliation, mediation or judicial
settlement. It is only when the parties fail to get the dispute settled through any
of the alternative dispute resolution methods that a suit could proceed further.
Risks of Mediation
1. It can be used to find out confidential information from the other side – in joint sessions.
Therefore the need for confidentiality is stressed.
2. When there is a severe imbalance in negotiating strength between the parties that may
be reflected in the agreement.
3. An unethical mediator could abuse the position of trust and collude with one party to
deprive the other. However, in the case of medication, a party can withdraw from it at
any time without adverse consequences.

Difference between Mediation and Lok Adalat

Mediation Lok Adalat

Mediation takes place in a private conference Usually takes place in court premises where
room. Only parties, their advocates or other numerous cases referred to Lok Adalat are
persons helping them or accompanying them listed before different conciliators.
or involved in the mediation process are
present.

Structured process featuring introductory Customary for the conciliators to talk with
comments by the mediator, detailed exchange parties, with their advocates present. The
of info in a joint session exchange of information is limited.

A series of separate and private meetings with Discussion with conciliators is also limited
parties and an agreement stage. here. Even if conciliators speak privately
with part, it is generally only once, due to
time constraints.

The mediator controls the process by The conciliator determines how the process
following the stages of the mediation process will be handled, which party speaks and
and deciding the order or presentation, the when.
length of presentation, settling the agenda,
etc.

In mediation, parties or afforded reasonable
time to negotiate the agreement. It may take
place over a course of time to accommodate
the parties and the complexities of a dispute.
There are usually strict time constraints. The
agreement has to be reached in a fixed
amount of time as the tenure of the
conciliator is only for the given day. There is
no continuity and follow-up by the
conciliators.

In mediation, the parties control the outcome Here, the parties may usually agree to
and work together in arriving at a settlement disagree with a settlement proposed by
with the assistance of the mediator. conciliators.
 A dispute is referred to mediation by court Reference is made mostly by the consent of
order, by consent of the parties, or pursuant the parties or their advocates. Parties may opt
to a contract clause, etc. to appear or not to appear.

Party pays for mediation or the court pays for Parties do not pay for Lok Adalat expenses.
mediation, if the programme provides funds.

Mediation is a private process. Without
consent of parties, neither the parties nor the
mediator can disclose the statements made
during mediation, or documents prepared for
mediation, such as mediation work.
The process is generally not private. It takes
place openly and in the presence of others
who have assembled for their respective
cases.

The factual and legal analysis is detailed and Due to time constraints, there is rarely an
in depth. extensive discussion.

All types of disputes, including commercial, Mainly motor accident claims and insurance
contract disputes, personal injury claims, real claims are tackled.
estate, etc Can be negotiated and resolved.

Neutral Persons work in partnership with the
parties to assist them in finding a solution that
means with their needs, interest, priorities,
etc.
The Conciliator attempts to persuade the
parties to settle their case. There is no
attempt to work together with the parties
solution that meet with the parties' individual
needs.

Parties play an active role in presenting
factual background, discussing positions,
developing offers and counter offers, making
decisions, etc.
Parties play no active role in presenting
information, identifying interests, making
offers of settlement, responding to offers of
settlement and shaping the terms of
settlement.

Advocates play an active role. Advocates play a part in advising their

clients to settle if they consider it advisable
to settle.

Parties are not bound by traditional legal Here the case is to reduce monetary
remedies. Highly creative, innovative and damages. Imaginative solutions, involving
non-traditional solutions are possible. non - monetary or non - traditional remedies
are not usually considered.

Stages of Mediation
1. Introduction - A mediator introduces himself and the parties and explains the process
of mediation. The mediator must dispel all doubts in the mind of any of the party that a
 lawyer or a relation cannot participate in the mediation. The stages of mediation are -
introduction, joint session, and separate session. These have been explained further:
a. Establish Neutrality - can be done by using appropriate words, body language, and
making appropriate eye contact that show equal treatment to the parties. A mediator should
greet both the parties together, and avoid calling a party by the first name because the opposite
party may misconstrue it. A mediator should use neutral terms, and also show neutrality with
regard to the date, venue and timing of mediation.
b. Describe the role of mediator - a mediator must tell the parties that his role is simply
to assist them to come to a settlement which may be acceptable to all of them. His role is only
facilitative and not to decide the dispute between the parties.
c. Address confidentiality - a mediator must explain to the parties/participants that the
mediation proceedings are confidential so that they may feel more comfortable in giving their
options towards resolution of dispute.
d. Establish a conducive environment and control over the process - a mediator should
be calm and relaxed during the mediation. He should be in complete control of the proceedings
and should diplomatically handle any interruption without giving an indication to any party
that he/she is not being given adequate attention.
e. Generate a momentum towards an agreement - develop a positive frame of mind in
the parties by expressing hope that if we work on the dispute, we may be able to come to a
settlement which we would normally come to through hard work.
f. Ground Rules: to respect each other during the proceedings. One party shall not
interrupt the other in the proceedings.
g. Determine whether the Mediation Process has been Understood: Enquire from the
parties if they have any question or any doubt about the mediation process.
2. Joint Session
. Here a mediator gathers information about the factual background of the parties, their
claims, defence, arguments, and positions, and their interests. This session has to be done coolly
and the mediator needs to remain neutral throughout.
a. Primary role of a mediator is to be an active listener, manage outbursts and interruptions
with acknowledgement, not jump to conclusions or rush to find a solution, be mindful of his
body language, etc.
3. Separate Session
. The mediator should not talk negatively about any party and not side with any one. A
mediator explains confidentiality to the extent requested and gathers information by asking
more questions. Parties are encouraged to invent settlement options in separate sessions. Here
the mediator is supposed to get strong on facts, and softer on parties.

Types of bargaining used in Mediation

1. Rights based bargaining - the parties’ primary focus is on right and wrong. It is blame
oriented analysis.
2. Positional bargaining - it is also a customary and traditional form of bargaining, in
which the parties focus on their legal positions and offer to settle. It is often combined
with rights based bargaining.
 3. Distributive bargaining - it focuses on the allocation of fixed or limited resources
between parties. It is referred to as “dividing the pie”, “zero sum” bargaining too,
because for each amount of resources received by one party, the other party loses the
same amount.
4. Integrative bargaining - a mediator expands the resources that are subject of
negotiations by introducing the possibility of traditional additional resources that are
outside the framework of initial negotiations.
5. Interest - based Bargaining - the focus shifts from law to the facts and underlying
interest of the parties to develop terms of settlement that produce mutual gains.

Communication techniques used in Mediation

1. Restatement - to ensure that the mediator has accurately heard their statement.
2. Reflection - it involves a mediator repeating a party’s statement about thoughts, feeling
and emotions.
3. Summarising - to briefly, clearly and accurately re-state the essence of statements by a
party or advocate.
4. Neutral re-framing - restatement by a mediator, in neutral words, of a comment or
position expressed by a party or his or her advocate.
5. Re - directing - to shift the focus of a party from one subject to another.
6. Setting an agenda - to establish the order in which issues, positions, claims, defences,
or proposed settlement terms will be addressed.
7. Deferring - to postpone a response to a question or statement by a party.
8. Acknowledgement - to reflect back a person’s statement or position, in a manner that
recognises the perspective of the party who expressed the statement or position.
9. Empathy without reinforcement - it is a mediator’s responsibility to express
understanding and empathy, without expressing agreement or disagreement with a
party.
10. Use of apology - this also plays an important role in resolution of a dispute between
two warring parties.

Qualities of a Good Mediator

1. Trust - If the parties do not respect the mediator, the chances of success are small.
Mediation often involves private discussions between a party and the mediator. If the
party does not trust a mediator to keep confidence disclosed at such a session, there will
exist little chance of success.
2. Patience - Parties frequently come to mediation with set positions that take a long time
to modify. A mediator must have patience to work with the parties to bring them to a
point where agreement is possible.
3. Knowledge - The chances of success are greater if the mediator has some knowledge
and expertise in the area of dispute.
4. Intelligence - A mediator must be resourceful and attentive to understand not only the
nature of the dispute, but also the motivation of the parties. Through an understanding
of what is important to each of the parties, the mediator can bring them into agreement
 much more quickly. The requirements of this not only inability to understand the
subject matter, but an ability to understand people and their motivation as well.
5. Impartiality - A mediator must be impartial. This characteristic is related to trust. Some
mediators will express their opinions about the position of a party, or will use their
powers of persuasion in order to bring the parties to agreement. In such cases, the party
must be satisfied that the mediator is neutral.
6. Good Communication Skills - An arbitrator needs only to listen to the evidence and
render a decision based upon knowledge of the law and good judgement. Although
these talents are extremely valuable ones, an arbitrator need not have the ability to
communicate with the parties. However a mediator needs good judgement and good
communication skills; it is the mediator's job to evaluate and understand the motivation
of the parties, foresee potential solutions and then bring the parties to agreement.

Benefit of Mediation
1. It is fast – as the amount of time necessary for the parties and the mediator to prepare
for the mediation is significantly less then needed for trial or arbitration, a mediation
can occur relatively early in the dispute.
2. It is flexible – there exists no set formula for mediation. Different mediators employ
different styles. Procedures can be modified to meet the needs of a particular case.
Mediation can occur late in the process – even during trial – or before any formal legal
proceedings begin.The mediation process can be limited to certain issues, or expanded
as a mediator or the parties begin to recognise during the course of the mediation
problems that they had not anticipated.
3. It is cost efficient – because mediation requires less preparation, is less formal than
trial or arbitration, and can occur at an early stage of the dispute, it is always less
expensive than other forms of dispute resolution.
4. Bring parties together – parties can save and sometimes rebuild their relationship like
in a family dispute or commercial dispute.
5. It is convenient – the parties can control the time, location, and duration of the
proceedings to a significant extent.
6. It is creative – Resolutions that are not possible through arbitration or judicial
determination may be achieved. Mediator makes the parties recognise solutions that
would not be apparent, – and not available – during the traditional dispute resolution
process.
7. It is confidential – what is said during a mediation can be kept confidential. Parties
wishing to avoid the glare of publicity can use mediation to keep their disputes low-key
and private.
8. Control – the parties control the outcome of mediation and either party has the
advantage of terminating the mediation, if it is felt that it is not in the interest of the said
party.
9. Direct communication – there is party to party direct communication in a mediation.
At least the parties have the feeling of being heard by the mediators of the parties or
either of them is being represented by an advocate.
BATNA AND WATNA

In assessing the value of a settlement offer, it is important to compare the pending offer to any
alternatives to settlement that may exist. These are the methods used for comparison by
negotiators - BATNA - Best alternative to negotiated agreement; WATNA - Worst
alternative to negotiated or agreement.

Batna - Using this point of reference, the negotiator will determine whether the settlement
offer is close to, equals, or exceeds the best outcome at trial, after adjusting for the litigation
expenses of trial, the risk of losing, and the delay in resolving a dispute.

Watna - This point of reference is valuable to a negotiator in determining whether a settlement

offer exceeds a party's worst possible outcome at trial.

Using the BATNA and the WATNA will help a negotiator determine whether a settlement
offer falls within the range of projected trial outcomes by establishing the high and low
alternatives to settlement. Mediators can use the BATNA and WATNA as per the reality testing
process to assist the parties and their advocates in evaluating the strength of a pending
settlement offer in relation to the possible outcomes at trial. The purpose of using BATNA and
WATNA by mediators is to employ this type of analysis for the purpose of overcoming
negotiation impasses.

By adopting these two techniques, a mediator can assist parties in making a balanced and
systematic evaluation of their alternatives to settlement. This will bring clarity establishing
alternatives and enabling the party to develop a concrete measuring stick by which they can
evaluate settlement offers.

CASE LAW: Dayawati v. Yogesh Kumar Gosain (2017)

Facts: in 2014, the appellant supplied certain fire fighting goods and equipment to Yogesh (the
respondent), who issued two cheques of Rs. 11 lakhs and 16 lakhs each, in favour of appellant.
Subsequently, the appellant presented the cheques to respondent’s bank but both the cheques
were dishonoured on the ground of ‘insufficiency of funds’. The appellant made repeated
requests for payment but the respondent failed to respond. Thus, the appellant filed two
complaints under S. 138 NI Act. Since the parties expressed their intention to settle the matter,
the court referred cases for mediation to Delhi High Court mediation and conciliation Centre.
After participating in the mediation process, the parties concluded a settlement agreement on
14.05.2015 whereby the respondent agreed to pay an amount of Rs. 55,54,600 In instalments.
However, the respondent frustrated the settlement agreement and the lower court referred the
case to the Delhi High Court.

Issue:
 1. Whether it is permissible to refer a criminal matter such as under S. 138 NI Act, for
settlement through mediation?
2. What would be the consequences of breach of such settlement accepted by the Court?

Observation and Decision:

• The court observed that though neither the CrPC nor the NI act provides for any
particular provision which gives power to a criminal court to refer a case for mediation,
the court can still refer a criminal case for mediation as compounding of criminal cases
is permissible under section 320 of CrPC. The court relied on Section 19(5) Of the
Legal Services Authority Act 1987 which confers jurisdiction on Lok Adalat to settle
‘any case’ pending before or falling under jurisdiction of any court.
• The court relied on precedents of Gian Singh & Kaushalya Devi - where it was held
that a criminal case of cheque bounce can be referred for the mediation even by lower
courts.
• The court also observed that even if a settlement agreement is concluded after the
mediation and confirmed by the magistrate, the possibility of breach cannot be avoided.
• The court also provided a safeguard mechanism and held that in cases of default by the
accused, ‘the magistrate would pass an order under S 431 read with S. 421 CrPC to
recover the amount agreed to be paid by the accused in the same manner as a fine would
be recovered. Moreover, the accused will also be punished for ‘civil contempt’.

Conclusion: The judgement was a welcome decision as it promotes settlement of criminal

cases having civil nature by alternative dispute resolution mechanism. The Court rightly relied
on the reasoning of the Supreme Court in the case Kaushalya Devi to hold that the crime under
S. 138 is of civil nature unlike other heinous crimes under the Indian Penal Code and involved
a private dispute between parties. Furthermore, it is a compoundable offence and can be settled
through mediation.
However, the judgement carried loopholes.
• The court relied excessively on provisions of CPC to elucidate and establish a power
of criminal court to refer a criminal case for mediation. This goes against the
fundamental concept of separation of criminal and civil domain of law.
• It relied on the jurisdiction of Lok Adalat to establish power of criminal court to ‘refer’
a criminal case for mediation despite the fact that no statute provides such power to a
criminal court.
• The court emphasised on the inherent power Of High Court under section 482 of CrPC
and case of Gian Singh Highlight that criminal cases of civil nature can and have been
referred for out of court settlement by the courts. But this observation clearly suggests
that only a High Court has such inherent and lower criminal court lacks power to refer
a criminal case for mediation.
• The safeguard in case of default, laid down by the Court seems to be insufficient and
unsatisfactory - in case an accused is acquitted and proceedings are quashed, any
coercive process would hardly be effective to secure his appearance before the Court.
And in case of default in payment of fine, the punishment of imprisonment is 6 months
which is hardly satisfactory. The punishment for civil contempt of court is merely a
fine of Rs. 2000 which be easily paid off by an offender to escape liability.