Salem Advocate Bar Association, Tamil Nadu Vs.

Union of India (UOI)

Facts of the Case -

The present case Salem Advocate Bar Association v. Union of India is basically an aftermath of the
original case Salem Advocates Bar Association, Tamil Nadu. v. Union of India.

The subject is basically related to Constitution and is a case of civil nature.

In the former case there were certain amendments made to Code of Civil Procedure, 1908 by the
Amendment Acts of 1999 and 2002.

The following amendments were made: -

• In Section 26(2) and Order 6 Rule 15(4) of Code of Civil Procedure, 1908 in this the affidavit filed
under Section 26(2) and Order 6 Rule 15(4) would not be evidence for purpose of trial.

• Written statement – Order 8 Rules 1 and 10 of Code of Civil Procedure, 1908: There was a
limitation for filing written statement. There was restriction regarding extension of time for filing
written statement

• Execution of decree – Section 39 (4) and Order 21 Rules 3 and 48: Section 39 does not authorize
the Court to execute decree outside its jurisdiction but it does not dilute other provisions giving such
power on compliance of conditions stipulated therein. Order 21 Rules 3 and 48 would not be
affected by Section 39(4).

• Sale of attached property - Sections 64 (1) and 64 (2) of Code of Civil Procedure, 1908

• Notice – Section 80 of Code of Civil Procedure, 1908 – Central and State Governments directed to
appoint an Officer in charge of replying notices received by it under Section 80 or under other similar
provisions Contd.

• Alternative Dispute Resolution – Section 89 of Code of Civil Procedure, 1908 and Sections 82 and
84 of Arbitration and Conciliation Act, 1996: Procedure for option to arbitration among four ADRs is
not contemplated by Act of 1996.Under Sections 82 or 84 no application where parties agree to go
for arbitration under Section 89.The act of 1996 would apply only from stage after reference and not
before stage of reference if reference to arbitration made under Section 89 - Judge who makes
reference not disqualified to try suit afterwards if no settlement is arrived at between parties.

• The former case which created the abovementioned amendments was rejected by this Court but
it was noticed in the judgment that modalities have to be formulated for the manner in which
section 89 of the Code and, for that matter, the other provisions, which have been introduced by
way of amendments, may have to be operated

• For this purpose, a Committee was constituted so as to ensure that the amendments become
effective and result in quicker dispensation of justice.
Issue involved in the Case -

Whether the amendments made in the Code of Civil Procedure, 1908 by the Amendment Act of
1999 and 2000 were constitutionally valid?

Judgement The report is in three parts :-

• Report 1- contains the consideration of the various grievances relating to amendments to the Code
and the recommendations of the Committee.

• Report 2- contains the consideration of various points raised in connection with draft rules for ADR
and mediation as envisaged by section 89 of the Code read with Order X Rule 1A, 1B and 1C.

• Report 3 - contains a conceptual appraisal of case management.

Report I-

• Amendment inserting Sub-section (2) to Section 26 and Rule 15(4) to Order VI Rule 15. - Prior to
insertion of aforesaid provisions, there was no requirement of filing affidavit with the pleadings.
These provisions now require the plaint to be accompanied by an affidavit as provided in Section
26(2) and the person verifying the pleadings to furnish an affidavit in support of the pleading [Order
VI Rule 15(4)]

• Order VIII Rule 1 & 10 - Order VIII Rule 1, as amended by Act 46 of 1999 provides that the
defendant shall within 30 days from the date of service of summons on him; present a written
statement of his defence. The rigour of this provision was reduced by Amendment Act 22 of 2002
which enables the Court to extend time for filing written statement, on recording sufficient reasons
therefore, but the extension can be maximum for 90 days.

• Section 39 - Section 39(1) of the Code provides that the Court which passed a decree may, on the
application of the decree-holder send it for execution to another court of competent jurisdiction. By
Act 22 of 2002, Section 39(4) has been inserted providing that nothing in the section shall be
deemed to authorize the Court which passed a decree to execute such decree against any person or
property outside the local limits of its jurisdiction.

• Section 64(2) - Section 64(2) in the Code has been inserted by Amendment Act, 22 of 2002. The
concept of registration has been introduced to prevent false and frivolous cases of contracts being
set up with a view to defeat the attachments. If the contract is registered and there is subsequent
attachment, any sale deed executed after attachment will be valid. If unregistered, the subsequent
sale after attachment would not be valid. Such sale would not be protected.

• Section 80- Section 80 (1) of the Code requires prior notice of two months to be served on the
Government as a condition for filing a suit except when there is urgency for interim order in which
case the Court may not insist on the rigid rule of prior notice. The two months period has been
provided for so that the Government shall examine the claim put up in the notice and has sufficient
time to send a suitable reply. The underlying object is to curtail the litigation. The object also is to
curtail the area of dispute and controversy.

Report 2-

• The amendment brought into the code related to the Alternative Dispute Resolution Mechanism
(Amendment 6) is provided in Report 2.

• 89. Settlement of disputes outside the Court -- 1. 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 given 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 Contd.

2. Where a dispute has been referred –

For 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

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 (39 of 1987) and all other
provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat

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 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the
provisions of that Act

For mediation, the Court shall effect a compromise between the parties and shall follow such
procedure as may be prescribed.

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. On the option of the
parties, the Court shall fix the date of appearance before such forum or authority as may be opted
by the parties.
• 1B. Appearance before the conciliatory forum or authority--Where a suit is referred under Rule 1A,
the parties shall appear before such forum or authority for conciliation of the suit.

• 1C. Appearance before the Court consequent to the failure of efforts of conciliation--Where a suit
is referred under Rule 1A and the presiding officer of conciliation forum or authority is satisfied that
it would not be proper in the interest of justice to proceed with the matter further, then, it shall
refer the matter again to the Court and direct the parties to appear before the Court on the date
fixed by it."

Some doubt as to a possible conflict has been expressed in view of use of the word 'may' in section
89 when it stipulates that 'the Court may reformulate the terms of a possible settlement and refer
the same and use of the word 'shall' in Order X, Rule 1A when it states that 'the Court shall direct the
parties to the suit to opt either mode of settlements outside the Court as specified in Sub-section (1)
of section 89'.As can be seen from section 89, its first part uses the word 'shall' when it stipulates
that the 'court shall formulate terms of settlement. The use of the word 'may' in later part of section
89 only relates to the aspect of reformulating the terms of a possible settlement.

The intention of the legislature behind enacting section 89 is that where it appears to the Court that
there exists element of a settlement which may be acceptable to the parties, they, at the instance of
the court, shall be made to apply their mind so as to opt for one or the other of the four ADR
methods mentioned in the Section and if the parties do not agree, the court shall refer them to one
or other of the said modes. Section 89 uses both the word 'shall' and 'may' whereas Order X, Rule 1A
uses the word 'shall' but on harmonious reading of these provisions it becomes clear that the use of
the word 'may' in section 89 only governs the aspect of reformulation of the terms of a possible
settlement and its reference to one of ADR methods. One of the modes to which the dispute can be
referred is 'Arbitration'.

Section 89 (2) provides that where a dispute has been referred for Arbitration or Conciliation, the
provisions of the Arbitration and Conciliation Act, 1996 (for short '1996 Act') shall apply as if the
proceedings for Arbitration or Conciliation were referred for settlement under the provisions of 1996
Act. Section 8 of the 1996 Act deals with the power to refer parties to Arbitration where there is
arbitration agreement. As held in P. Anand Gajapathi Raju and Ors. v. P.V.G. Raju (Dead) and Ors.[4],
1996 Act governs a case where arbitration is agreed upon before or pending a suit by all the parties.
The 1996 Act, however, does not contemplate a situation as in section 89 of the Code where the
Court asks the parties to choose one or other ADRs including Arbitration and the parties choose
Arbitration as their option. For the purposes of section 89 and Order X, Rule 1A, 1B and 1C, the
relevant Sections in Part X of the Code enable the High Court to frame rules. 1996 Act in relation to
Conciliation would apply only after the stage of reference to Conciliation. The 1996 Act does not deal
with a situation where after suit is filed, the court requires a party to choose one or other ADRs
including Conciliation. Thus, for Conciliation also rules can be made under Part X of the Code for
purposes of procedure for opting for 'Conciliation' and upto the stage of reference to Conciliation.
The 1996 Act comes into play only after the stage of reference upto the award.

A doubt has been expressed in relation to Clause (d) of section 89 (2) of the Code on the question as
to finalization of the terms of the compromise. The question is whether the terms of compromise
are to be finalized by or before the mediator or by or before the court. It is evident that alt the four
alternatives, namely, Arbitration, Conciliation, judicial settlement including settlement through Lok
Adalat and mediation are meant to be the action of persons or institutions outside the Court and not
before the Court. Order X, Rule 1C speaks of the 'Conciliation forum' referring back the dispute to
the Court. In fact, the court is not involved in the actual mediation/conciliation. Clause (d) of section
89(2) only means that when mediation succeeds and parties agree to the terms of settlement, the
mediator will report to the court and the court, after giving notice and hearing the parties, 'effect'
the compromise and pass a decree in accordance with the terms of settlement accepted by the
parties.

The Judge who makes the reference only considers the limited question as to whether there are
reasonable grounds to expect that there will be settlement and on that ground he cannot be treated
to be disqualified to try the suit afterwards if no settlement is arrived at between the parties. The
question also is about the payment made and expenses to be incurred where the court compulsorily
refers a matter for conciliation/mediation. Considering large number of responses received by the
Committee to the draft rules it has suggested that in the event of such compulsory reference to
conciliation/mediation procedures if expenditure on conciliation/mediation is borne by the
government, it may encourage parties to come forward and make attempts at
conciliation/mediation. On the other hand, if the parties feel that they have to incur extra
expenditure for resorting to such ADR modes, it is likely to act as a deterrent for adopting these
methods.

Report 3-

Report No. 3 deals with the Case Flow Management and Model Rules. The case management policy
can yield remarkable results in achieving more disposals of the cases. Its mandate is for the Judge or
an officer of the court to set a time-table and monitor a case from its initiation to its disposal. Model
Case Flow Management Rules have been separately dealt with for trial courts and first appellate
subordinate courts and for High Courts. These draft Rules extensively deal with the various stages of
the litigation. The High Courts can examine these Rules, discuss the matter and consider the
question of adopting or making case law management and model rules with or without modification,
so that a step forward is taken to provide to the litigating public a fair, speedy and inexpensive
justice.
Conclusion

• This case is a landmark case in the history of Indian Judiciary.

• This set of two cases – former one, laying down the amendments and the latter one providing a
report on the amendment’s feasibility have laid down the foundation of providing quick, financially
accessible and proper justice. This basically intends to reduce the number of suits filed in the courts
every year. The case has been referred to in numerous cases of civil nature after the amendments by
the Act of 1999 and 2002.

• Moreover, the model provided to be followed by the trial court is an easily practicable model and
does show the ‘bright light of proper and speedy justice in the darkness of innumerable cases’. The
rules provided in the model are appropriate for the system of Indian Judiciary and hence should be
properly followed.

Bibliography

http://www.legalserviceindia.com/article/l423-Salem-Advocates-Bar-Association-v.-Union-of-
India.html

file:///C:/Users/SOURABH/Downloads/205367068-Cpc.pdf

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