S.

S JAIN SUBODH LAW COLLEGE, JAIPUR

A PROJECT ON
MEDIATION, CONCILIATION AND ARBITRATION
LL.B. II Year

Topic

Alternate Dispute Resolution Mechanism: Mediation And Mediation

Process

SESSION-2022-23

Submitted To: Submitted By:

Ms. Preeti Swami Nishtha jain

 ACKNOWLEDGEMENT

Before we get into thick things, I would like to add few words of appreciation for the people
who have been a part of this Project right from its inception. The writing of this project has
been one of the significant academic challenges I have faced and without the support,
patience and guidance of the people involved in this task would not have been completed. It
is to them I owe my deepest gratitude.

It gives me immense pleasure in presenting this project on the topic Alternate Dispute
Resolution Mechanism: Mediation And Mediation Process. The success of this project is
a result of sheer hard work and determination put in by me with the help of my project guide
and takes the opportunity to express my gratitude to Ms. Preeti Swami (Asst. Prof.) of S.S.
Jain Subodh Law College, Mansarovar, Jaipur, who played a significant role in my project.
I hereby, take this opportunity to add a special note of thanks to the vice- principal, Ms.
Anjali Bhatia, for constant encouragement at every step.

I also feel heartiest sense of obligation to my library staff members and seniors who helped
me in collection of data and resource material and also in its processing as well as in drafting
manuscript. The project is dedicated to all those people, who helped me while doing this

project.

Date: Submitted by

Student name & Signature

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 CERTIFICATE

This is to certify that Nishtha Jain of LL.B. II Year has carried out this Project titled
Alternate Dispute Resolution Mechanism: Mediation And Mediation Process under my
supervision for the partial fulfilment of LL.B. Degree offered by S.S. Jain Subodh Law
College, Mansarovar, Jaipur, during the academic year 2022-23. The student has completed
the research work in stipulated time and according to the matter prescribed for the purpose.

Date:

Name of Supervisor: Ms. Preeti Swami (Asstt. Prof)

Signature of Supervisor

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 TABLE OF CONTENTS

S.No. Particulars Page No.

1. PART A- Introduction

1. Alternative Dispute
Resolution System 5-
2. Mediation And The Mediation Process

2. PART B-
 A Report on the Mediation
session 9-11
 Settlement Agreement
3. PART C- Case Analysis
Afcon Infrastructure vs. Cherian Varkey 12-17
construction, (2010) 8 SCC 24

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PART- A

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INTRODUCTION-

1. ALTERNATIVE DISPUTE RESOLUTION SYSTEM:

Alternative Dispute Resolution or ADR is fine substitute for the more common judicial
process. ADR includes methods like negotiation, arbitration, conciliation and mediation. All
these modes have some common features, which make ADR a very viable and preferable
mode in dealing with disputes. Most commonly, these have shorter time duration a compared
to the court route. The cost is considerably less than the court and legal fees. Privacy,
neutrality of the proceedings and of the decision and possibilities of customizing the
procedures are some more attractive features. To resolve the issue before going to court, you
can also utilize an ADR process. These methods usually involve a third party, who helps
them in settling the disputes. In many cases, ADR methods are used alongside the litigation
process as well through court authorization. The main advantages of ADR are speed, secrecy,
flexibility and less stressful.

PROS AND CONS OF ADR

 PROS:-
 Less expensive.

 Less time consuming.

 Without worrying about providing these facts to the courts, the parties are free to express
their disagreement and talk about it with one another.

 There is no feeling of enmity between the parties as there is no winning and losing side.
They also get their grievances redressed and their relationship remains as it was before,
therefore, they can conduct future business deals with each other.

 Allows for risk management and Being confidential

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CONS:

 ADR is useless when a dispute must be resolved based on a precedent.

 ADR would not be useful when involved parties are in an unfair powerful position.

 ADR would not be useful when live, professional evidence and analysis are required
in a case.

2. MEDIATION AND THE MEDIATION PROCESS:

Mediation is an informal practice gives parties the chance to talk about their problems
with one another with the assistance of a neutral third party. Taking part in the mediation
process will be responsible for coming to a mutually agreeable conclusion; the mediator
will not impose one on the parties. The mediators' job is to help the parties identify the
issues, conduct a courteous and safe dialogue, and determine if a settlement or resolution
is feasible. The mediators are impartial, trained individuals. Parties are also allowed to
stop participating in the process altogether or temporarily at any point.

It is process by which a neutral third party, the mediator, works with the parties in
dispute and helps them reach an agreement that they both accept, and which puts an end
to the dispute.

Mediation is voluntary process. It may be terminated by either party at any time

before an agreement is reached. It is a private procedure. The parties have the entire
chance to participate in the resolution of their dispute through mediation. It allows you
the best chance to talk to each other, clear up any confusion, better comprehend the
situation, and trade settlement suggestions.

The mediator should avoid from using threats, intimidation, or other forms of
pressure. They should also show that they know how to communicate by using effective
speaking and listening techniques, paying attention to nonverbal signals, as well as other
signals coming from the mediation's surroundings, and possibly providing their own
knowledge and experience. The parties should concentrate on the issues and avoid using
personal attacks, the mediator should instruct.

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 The parties have complete control over this procedure. The entire objective of the
mediator's role is to assist the parties in trying to resolve their dispute. The mediator
does not impose his opinions or determine what a just settlement should be.

Mediation works in Various Stages. These are,

 OPENING STATEMENT:
Initially in the opening statement mediator provides all the information the
regarding his appointment in the opening speech and says he has no connection
with either party and no claim in the issue.

 JOINT SESSION:
In the joint session, by inviting both parties to present their cases and put up their
views without interruption during the joint session, he gets all the information and
gains an understanding of the facts and problems surrounding the dispute. The
mediator seeks to mediate the parties' interruptions and outbursts during this session
while fostering and promoting discussion.

 SEPARATE SESSION:
The next step is a separate session where he trying to understand the dispute at a
deeper level and gets specific information by speaking alone with both parties.

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 PART- C
CASE ANALYSIS

AFCON INFRASTRUCTURE VS. CHERIAN VARKEY CONSTRUCTIONS, (2010) 8 SCC 24

Case Name: AFCONs Infrastructure Ltd. and ors. V. Cherian Varkey

Construction Co. (P) Ltd

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Citation: 2010 (8) SCC 24

Court: Supreme Court of India

Bench: Hon’ble Justice R. V. Raveendran and J. M. Panchal, JJ.

Decided on: July 26, 2010.

Parties: Appellants - M/s Afcons Infrastructure Ltd. &Anr.

Respondent- M/s Cherian Varkey Construction Co.(p) Ltd.&Ors

BACKGROUND

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Soon after the application and counter application were filed by both parties to the trial court,
it was held that because the dispute was related to work/construction, it would be nothing but
only appropriate that the differences get resolved through arbitration.

When the judgment of the trial court came out, the aggrieved party I.e., Afcon’s
Infrastructure Ltd. Filed an appeal (for the revision of the order of a trial court) before the
High Court of Kerala which was soon dismissed. The court’s reasoning behind the dismissal
was that ‘under section 89 (1) of Civil Procedure Code, 1908 the court, (in appropriate
situations which differ a from case-to-case basis) can refer the reformulated terms to
arbitration even if both the parties are unwilling to do so.

The High Court also cited the Arbitration and Conciliation Act, 1996, and laid emphasis on
the fact that the pre-existing arbitration agreement which is compulsory as per the Arbitration
and Conciliation Act, 1996 providing for referring disputes to arbitration is inapplicable
within the purview of section 89 of CPC, 1908. After the judgment of the High Court, the
same was challenged by the way of an appeal by Afcon’s Infrastructure Ltd. Before the apex
court of India.

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 BRIEF FACTS OF THE CASE

An agreement was entered upon by the Cochin Port Trust and Afcon’s Infrastructure Ltd. On
20th April 2001 wherein Cochin Port Trust appointed Afcon’s Infrastructure Ltd. for a
development project which included construction/building some bridges and roads.

A few months later i.e., on the 1st of August, 2001, Afcon’s Infrastructure Ltd. subcontracted
with Cherian Varkey Construction to complete part of the work of the development project,
the agreement did not mention about Alternate Dispute Resolution methods in case of a
dispute.

A) Accordingly, a recovery claim for the total sum of Rs. 2.10 Cr which included the amount
due to Afcon’s Infrastructure Ltd. From the employer with an interest of eighteen percent per
annum.

A writ of attachment aka order of attachment (seizing of assets as a pre-trial remedy) was also
attached in the same suit amounting to Rs. 2.25 Cr. The order of attachment was filed on the
15th of September, 2004.

Under Section 89 of the Civil Procedure Code, 1908 Cherian Varkey Construction Co.
(Respondent 1) filed an application in March 2005 before the district court contending and
citing section 89 and praying that formulation of the terms of final settlement should be held
by the court as the agreement fails to mention about the same and the matter should be
referred to arbitration.

A few months later on the 24th of October, 2005 Afcon’s Infrastructure Ltd. (Petitioner) filed
a counter-petition to the application submitted by the Cherian Varkey Construction Co. In
which denial can be observed for referring the matter to arbitration or any other Alternate
Dispute Resolution methods for that matter under section 89 of the Civil Procedure Code,
1908.

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 ISSUES BEFORE THE COURT

The issues raised after taking into consideration all the contentions from both the parties
before the Hon’ble Supreme Court of India are as follows ;

1.What is the procedure to be followed by a court in implementingS.89and Order 10

Rule 1A of the CPC?

Section 89 was incorporated in the Code of Civil Procedure, 1908 by the Amendment Act of
1999 to resolve the disputes without going to trial and pursuant to recommendations of the
Law Commission and Malimath Committee report. The object, purpose, scope, and tenor of
Section 89 was dealt in-depth by the apex court in this case.

Section 89 of CPC deals with Settlement of disputes outside the court and it reads- 1)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-

a) arbitration

b) conciliation

c) judicial settlement including settlement through Lok Adalat; or

d) mediation

2) where the dispute has been referred –

a) for arbitration or conciliation, the provisions of Arbitration and Conciliation Act,1996 shall
apply as if the proceedings for the arbitration or conciliation were referred for the 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 sub-section (1) of section 20 of the Legal Services Authority Act,1987 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 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;

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d) for mediation, the Court shall affect a compromise between the parties and shall follow
such procedure as may be prescribed.

Order 10 Rule 1A- Direction of the Court to opt for any one mode of alternative dispute
resolution- After recording the admissions and denials, the Court shall direct the parties to the
suit to opt either mode of the settlement outside the Court as specified in sub-section (1) of
Section 89.

A bare perusal of Section 89 can seem to be nothing more than importation of Section 73 of
the Arbitration and Conciliation Act,1996 which to a much extent is like its replica. Section
73 of the 1996 Act has provision for settlement agreement and it reads- 1) When it appears to
conciliator that there exist elements of settlement which may be acceptable to the parties, he
shall formulate the terms of a possible settlement and give them to the parties for their
observations. After receiving the observations of the parties, the conciliator may reformulate
the terms of a possible settlement in light of such observations.

2.Whether or not the consent of both the parties to a dispute is necessary before
referring a case to Alternate Dispute Resolution methods like arbitration under section
89 of the Civil Procedure Code, 1908?

As per the Black’s Law dictionary whenever it comes before the court regarding the method
of interpretation of stature, the most common plain/ordinary method of interpretation should
be availed whenever applicable which is unlikely in the present case and hence the issue
arises as to which procedure to be followed by the court while interpreting and enforcing the
section 89 (1) of the and Order 10 Rule 1 A of the Civil Procedure Code, 1908.

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 PROVISIONS RELATED TO THE CASE

Section 89 of CPC is inculcated under part V (special proceedings- arbitration) of the act
which mentions the settlement of disputes outside the court.

Section 89 (1) states that ‘whenever it deems appropriate to the court that there is a
possibility which exists which includes the elements of a settlement which may or may not be
acceptable to the parties, the court can formulate the terms and conditions of the settlement
and offer the parties to view and state their desired proposals after which the court can
reformulate the same accordingly and then refer it to.

Section 89 (2) mentions the procedure and the respective statute to be referred if the dispute
undergoes a specific ADR method.

Section 89 (2) states that, ‘ whenever a dispute has been referred to:

Arbitration or conciliation – the provisions of the Arbitration and Conciliation Act, 1996
(26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for
settlement under the provisions of that Act.

Lok Adalat – All the provisions of the Legal Services Authority Act, 1987 especially sub-
section (1) of section 20 shall be applied whenever a dispute is referred to the Lok Adalat.

Judicial Settlement – a suitable person or an institution to b e referred by the court which

shall be deemed to be a Lok Adalat and the provisions of the Legal Services Authority Act,
1987 shall apply.

Mediation – a compromise between the parties to be reached by resolving the differences

between the parties through a middle ground; this shall be done by the court and appropriate
procedure should be followed as maybe prescribed.’

Order 10, Rule 1A of Civil Procedure Code, 1908:

Section 89 is very often read with Order 10, Rule 1A of the Civil Procedure Code, 1908 as it
states about the procedure to be followed by the court for any one mode of alternate dispute
resolution –

Order 10, Rule 1A states that after receiving the prayers/contentions from both the parties, the
court shall analyze the same and direct the parties to the dispute to opt for any mode of ADR
for settlement outside the court as specified in sub-section (1) of section 89.

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 JUDGEMENT

Firstly, the observation given by the court is that section 89 has to be read with Rule 1-A of
Order 10 which requires to direct the parties to opt for any five modes of alternative dispute
resolution processes and on their option refer the matter.
In addition to that, the said rule does not require the court to either formulate or reformulate
the terms of the settlement.
After the observation the practical way to reading section 89 and order 10, Rule1-A is that
after pleadings are complete and after seeking admission/denials. The Court will have
recourse to section 89 of the code. Further, the court described it as sufficient to describe the
nature of the dispute (in a sentence or two) and make the reference.
Secondly, the definition of “judicial settlement” and “mediation” in clauses (c) and (d) of
section 89(2) shall have to be interchanged. The Apex Court observed it has a poorly drafted
provision of law. The Supreme Court held that if there is no agreement between the parties
for reference to arbitration, the court cannot refer the matter to arbitration under Section 89
and that the same is clear from the provisions of the Arbitration and Conciliation Act. The
court observed that a court has no power, authority, or jurisdiction to refer unwilling parties
to arbitration if there is no arbitration agreement. Albeit the legal position in India has
consistently been that Section 89 mandates reference to alternative dispute resolution
processes, reference to arbitration under Section 89 can be made only with the consent of
both sides. The Court drew out inference that even in the absence of Arbitration agreement,
Parties can go for ADR process through Mutual Consent and
Finally, the Supreme court enlightened in this matter by delivering landmark judgment
stating that: The trial court did not adopt the proper procedure while enforcing Section 89 of
the Code. Failure to invoke Section 89 Suo moto after completion of pleadings and
considering it only after an application under Section 89 was filed, is erroneous.

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 CONCLUSION

The judgment is quite an important one from the eye of the main principle of free consent on
which enough emphasis was laid out by stating that the free will of parties is necessary before
referring out any dispute to any Alternate Dispute Resolution forums under section 89 (1) of
the Civil Procedure Code. Free consent is given a priority in ADR cases while seeking a
remedy. The cases which can be referred to arbitration are only referred and the decree
arising from that is treated as a decree from the court. As a result, Afcon’s Infrastructure turns
out to be a landmark case as it puts off the main contention arising in the ADR mechanism.

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