JAMIA MILLIA ISLAMIA

FACULTY OF LAW

ASSIGNMENT FOR LEGAL METHODS

TOPIC: ALTERNATIVE DISPUTE RESOLUTION

PRESENTED BY:

NAME: SHAJI AHZAM

ROLL No. : 57

SEMESTER: III rd Semester

COURSE: B.A.LL.B (Hons.)

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 TABLE OF CONTENTS

Sr. No. TOPIC Pg. No.

1. ACKNOWLEDGEMENT 3

2. ALTERNATIVE DISPUTE RESOLUTION 4 - 19

3. CONCLUSION 20

4. BIBLIOGRAPHY 21

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 ACKNOWLEDGEMENT

Firstly, I would like to thank the most respected Dean, Ma’am Nuzhat Parveen Khan to provide
this opportunity to me. Further I would like to thank my subject teacher Sir Sukesh Mishra for
the subject Constitutional law who gave me this golden opportunity to research on the topic –
“Alternative dispute resolution”. This assignment work assigned to me has proved to be very
fruitful in acquiring a deep understanding and knowledge regarding the topic. I have come across
many subtleties regarding the topic and got to learn many new things.

Finally, I would like to thank my Parents, who always supported and promoted my interest
without whose constant support and blessings this assignment would not have been completed.

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 INTRODUCTION
In every civilized society there are two sets of laws that govern the lives of citizens– (i)
substantive laws and (ii) procedural laws. While the substantive laws determine the rights and
obligations of citizens, procedural laws provide for the framework for enforcement of the same.
Despite the fact that substantive laws are comparatively more important, but the efficacy of
substantive laws in contingent upon the qualitative deliverance of procedural laws.The latter
needs to be efficient, simple, expeditious and inexpensive, lest the substantive provisions fail in
fulfillment of their purpose and object.

Throughout the history of civilized states, it has been determined that for proper dispensation of
justice the procedural and substantive law have to work hand in hand. The same cannot be held
to contradict each other, as one provides the manner of realization of the objective of the other.
As such, both streams of law work in consonance with each other, wherein neither exceeds the
scope, which is determined to be in the other’s field.

The Code of Civil Procedure, 1908 (hereinafter the Code) is a consolidated document that is the
primary procedural law relating to all civil disputes in India. The Code is a collection of all the
laws that relate to the procedure adopted by civil courts and parties appearing thereunder. After
three different formulations that governed the British colony of India in the late 19th century, the
Code in its present form was formally brought into force in 1908. Over the years a number of
amendments have been passed to ensure the Code is more efficient and justice oriented but still a
judicial lag exists in India. The number of cases keep on rising day by day while the adjudicators
are limited. In light of the same, a provision is provided under Section 89 of the Code which calls
for settlement of disputes outside courts.

The long drawn nature of litigation which ironically subverts the ends of justice due to delay
makes it viable for parties to resort to alternate dispute resolution would indeed curb delays and
the limitations of the traditional system, such as limited number of judges, voluminous number
of cases etc.

The provision under Section 89 is an attempt to bring about resolution of disputes between
parties, minimize costs and reduce the burden of the courts. It is provided for with the sole
objective of blending judicial and non-judicial dispute resolution mechanism and bringing
alternate dispute mechanism to the centre of the Indian Judicial System. The long drawn process
of litigation, the costs incurred by both parties for the same have and limited number of
adjudicators have made Alternate Dispute Resolution an important aspect of the Judicial system
to ensure swifter and speedier justice.

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 HISTORY AND BACKGROUND OF THE SECTION
Section 89 of the Code of Civil procedure was introduced with a purpose of amicable, peaceful
and mutual settlement between parties without intervention of the court. In countries all of the
world, especially the developed few, most of the cases (over 90 per cent) are settled out of court.
The case/ dispute between parties shall go to trial only when there is a failure to reach a
resolution. Section 89 of the Code of Civil Procedure States that:

(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 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

(d) mediation.

(2) Where a dispute had 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 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 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.

Section 89 came into being in its current form on account of the enforcement of the CPC
(Amendment) Act, 1999 with effect from 1/7/2002. At the commencement of the Code, a

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provision was provided for Alternate Dispute Resolution. However, the same was repealed by
the enactment of the Arbitration Act ( Act 10 of 1940) under Section 49 and Sch. 10. The old
provision had reference only to arbitration and it procedure under the Second Schedule of the
Code. It was believed after the enactment of the Arbitration Act, 1940, the law had been
consolidated and there was no need of Sec 89.

However, the Section was revived with new alternatives and not only restricted to arbitration. A
new Section 89 came to be incorporated in the Code by Section 7 of the CPC Amendment Act,
1999 to resolve disputes without going to trial and pursuant to the recommendations of Law
Commission of India and Malimath Committee report.

Section 89 along-with rules 1A, 1B and 1C of Order X of First schedule have been implemented
by Section 7 and Section 20 of the CPC Amendment Act and cover the ambit of law related to
Alternate Dispute resolution. The clauses under Order X are specified to ensure proper exercise
of jurisdiction by the court. Sub-Section (1) refers to the different mediums for alternate
resolution and sub-section (2) refers to varous Acts in relation to the mentioned alternate
resolutions.

The changes brought in by the CPC Amendment Act, 1999 have no retrospective effect and shall
not affect any suit in which issues have been settled before commencement of Section 7 of CPC
Amendment Act, 1999 and shall be dealt as if Section 7 and 20 of CPC Amendment Act never
came into force.

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 Importance of ADR in India

To deal with the situation of pendency of cases in courts of India, ADR plays a significant role in
India by its diverse techniques. Alternative Dispute Resolution mechanism provides
scientifically developed techniques to Indian judiciary which helps in reducing the burden on the
courts. ADR provides various modes of settlement including, arbitration, conciliation, mediation,
negotiation and lok Adalat. Here, negotiation means self-counseling between the parties to
resolve their dispute but it doesn’t have any statutory recognition in India.

ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality
before law and right to life and personal liberty respectively. ADR’s motive is to provide social-
economic and political justice and maintain integrity in the society enshrined in the preamble.
ADR also strive to achieve equal justice and free legal aid provided under article 39-A relating to
Directive Principle of State Policy(DPSP).

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 Advantages of Alternative Dispute Resolution
Less time consuming: people resolve their dispute in short period as compared to courts. Cost
effective method: it saves lot of money if one undergoes in litigation process. It is free from
technicalities of courts, here informal ways are applied in resolving dispute. People are free to
express themselves without any fear of court of law. They can reveal the true facts without
disclosing it to any court. Efficient way: there are always chances of restoring relationship back
as parties discuss their issues together on the same platform. It prevents further conflict and
maintains good relationship between the parties. It preserves the best interest of the parties.

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 Various modes of Alternative Dispute Resolution

Arbitration
The process of Arbitration cannot exist without valid arbitration agreement prior to the
emergence of dispute. In this technique of resolution parties refer their dispute to one or more
persons called arbitrators. Decision of arbitrator is bound on parties and their decision is called
‘Award’. The object of Arbitration is to obtain fair settlement of dispute outside of court without
necessary delay and expense.

Any party to a contract where arbitration clause is there, can invoke arbitration clause either
himself or through their authorized agent which refer the dispute directly to the arbitration as per
the Arbitration clause. Here, arbitration clause means a clause that mention the course of actions,
language, number of arbitrators, seat or legal place of the arbitration to be taken place in the
event of dispute arising out between the parties.

What is the procedure to be followed once the arbitration clause is invoked?

Initially, applicant initiates an arbitration by filing a statement of claim that specifies the relevant
facts and remedies. The application must include the certified copy of arbitration agreement.
Statement of claim is a written document filed in the court or tribunal for judicial determination
and a copy also send to the defendant in which claimant described the facts in support of his case
and the relief he seeks from the defendant. The respondent reply to the arbitration by filing an
answer against the arbitration claim of claimant that specifies the relevant facts and available
defenses to the statement of claim. Arbitrators selection is the process in which the parties
receive lists of potential arbitrators and select the panel to hear their case. Then there is the
exchange of documents and information in preparation for the hearing called ‘Discovery’. The
parties meet in persons to conduct the hearing in which the parties present the arguments and
evidences in support of their respective cases. After the witnesses examined and evidences are
presented, then there in conclusion arbitrator gives an ‘Award’ which is binding on the parties.
Now the intricacies of the proceedings vary with the arbitration agreement. For example, there
could be a timeline which must be followed. This timeline would be stipulated in the agreement.

Section 8 of Arbitration and Conciliation Act, 1996 provides if any party disrespects the arbitral
agreement and instead of moving to arbitration, moves that suit to civil court, other party can
apply the court for referring the matter to arbitration tribunal as per the agreement but not later

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the submission of the first statement. The application must include a certified copy of arbitration
agreement and if courts satisfy with it, the matter will be referred to arbitration.

Mediation
Mediation is an Alternative Dispute resolution where a third neutral party aims to assist two or
more disputants in reaching agreement. It is an easy and uncomplicated party centered
negotiation process where third party acts as a mediator to resolve dispute amicably by using
appropriate communication and negotiation techniques. This process is totally controlled by the
parties. Mediator’s work is just to facilitate the parties to reach settlement of their dispute.
Mediator doesn’t impose his views and make no decision about what a fair settlement should be.

Conciliation
Conciliation is a form of arbitration but it is less formal in nature. It is the process of facilitating
an amicable resolution between the parties, whereby the parties to the dispute use conciliator
who meets with the parties separately to settle their dispute. Conciliator meet separately to lower
the tension between parties, improving communication, interpreting issue to bring about a
negotiated settlement There is no need of prior agreement and cannot be forced on party who is
not intending for conciliation. It is different from arbitration in that way. Actually, it is not
possible for the parties to enter into conciliation agreement before the dispute has arisen. It is
clear in Section 62 of The Arbitration and Conciliation Act, 1996 which provides the party
initiating conciliation shall send to the other party a written invitation to conciliate under this
part, briefly identifying the subject of the dispute. Conciliation proceedings shall commence
when the other party accepts in writing the invitation to conciliate. If the other rejects the
invitation, there will be no conciliation proceedings. Above provision clearly states conciliation
agreement should be an extemporary agreement entered into after the dispute has but not before.
Parties are also permitted to engage in conciliation process even while the arbitral proceedings
are on(section 30).

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Lok Adalat
Lok Adalat is called ‘People’s Court’ presided over by a sitting or retired judicial officer, social
activists or members of Legal profession as the chairman. National Legal Service
Authority(NALSA) along with other Legal Services Institutions conducts Lok Adalats on regular
intervals for exercising such jurisdiction. Any case pending in regular court or any dispute
which has not been brought before any court of law can be referred to Lok Adalat. There is no
court fees and rigid procedure followed, which makes the process fast. If any matter pending in
court of referred to the Lok Adalat and is settled subsequently, the court fee originally paid in the
court when the petition filed is also refunded back to the parties.

Parties are in direct interaction with the judge, which is not possible in regular courts. It depends
on the parties if both the parties agree on case long pending in regular court can be transferred to
Lok Adalat. The persons deciding the cases have the role of statutory conciliators only, they can
only persuade the parties to come to a conclusion for settling the dispute outside the regular court
in the Lok Adalat. Legal Services Authorities (State or District) as the case may be on receipt of
an application from one of the parties at a pre-litigation stage may refer such matter to the Lok
Adalat for which notice would then be issued to the other party. Lok Adalats do not have any
jurisdiction to deal with cases of non-compoundable offenses.

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 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.

The Law Commission in its 129th Report1 advocated the need for amicable settlement of
disputes between parties and the Malimath Committee 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.

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.

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. The positive results from the experiment in
Himachal Pradesh paved the way for revival of alternate forums. Furthermore, it may be stated
that it is the duty of the judges to assit parties in arriving at settlements in certain suits, as has
been elucidated under Rule 5-B of Order XXVII and Rule XXIII-A of the Code of Civil
Procedure. The conciliation process casts a duty on judges to take appropriate steps, where there
is scope of settlement, to bring about reconciliation in certain suits and to come up with a
conclusive resolution on an expeditious basis.

The aim and objective of reviving Section 89, as stated in the Statement and Objects of the Bill
Code of Civil Procedure (Amendment) Bill initiated in 1997, was to ensure effective
implementation of Conciliation schemes, following recommendations of the 129th Law
Commission and make it obligatory for courts to refer to disputes to alternate forums. Initiation
of suits in courts shall be the last resort of parties if all other alternatives fail.

1
129th Report of Law Commission of India.

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 ANALYSIS OF SECTION 89
Delay, one of the major inadequacies present in our legal system, is said to have been overcome
by ADR. ADR was formulated with a purpose of reducing the burden of the burdened system
and render expeditious justice. Section 89 was introduced to empower different forums and was
more practically applicable than any other option of reducing judicial lag, such as increasing
number of judges or infrastructure.

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. In arbitration, the decision binding on parties is taking by a private
judge (Arbitrator) while in the other 3 mediums party autonomy in final decision is still
maintained. Amongst the five specified alternate forums, ( arbitration, conciliation, judicial
settlement, Lok Adalatas and mediation), the most sought after is arbitration while at the all five
are at the same footing in the eyes of the law. Arbitration is a process only available at the
consent of the parties.

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.2 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.3 Judicial
settlement, as under Sec 89(1)(c) and Sec 89 (2) (c), could only be in terms of Legal Services
Authority Act. Lok Adalats derive power from the aforementioned Act and the power to issue an
award by court is only on account of consent of parties towards the same. The Lok Adalats lacks
authority to adjudicate on any aspect and its awards are not binding, as mentioned under Section
19 of LSLA.

To proceed towards alternate means of resolution, the court must identify that there exist scope
of resolution/ settlement and the same may be acceptable to parties. Court is given powers to
surpass the decision of litigants under Section 89 but the same must be invoked only in those
cases where there is scope for settlement and the parties to the dispute are open to the idea of
settlement. The incorporation of the word ‘may be acceptable to parties” in the Section is with a
purpose to take all essentials/stakeholders into consideration. The term “may” in Section 89
governs aspect of reformulation of the terms of a possible settlement and its reference to one of
AR methods. The court must also consider the eccentric and peculiar nature of the dispute and
nature of the parties to the dispute before proceeding towards alternate means of resolution. The
Court must guide the litigants towards which course or means to resolve a dispute, taking into
consideration the legal acumen and knowledge of the judges and the appropriate forum for the
dispute, only after the above stated element are taken into consideration. A senseless recourse to
Section 89 may turn out to be counter productive and add to further delays in implementation of
2
BOC India Ltd v. Instant Sales Pvt Ltd, AIR 2007 Cal 275 at 276.
3
K Venkulu v. State of AP, AIR 2004.

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justice in the legal system. Courts, may take a recourse to ADR as a statutory duty, in case of a
number of cases arising out of matrimonial dispute4 or in a suit for partition within the family, to
separate issues to be dealt by ADR’s and those adjudicated upon by Courts.5

The legal position with regard to ADR practices was cleared in the case of Afcons
Infrastructure Ltd. v. Cherian Varkey Consturction Co. (P) Ltd.6 Arbitration was referred to as
a means of ADR is undertaken on account a prior agreement between parties to resolve disputes
by arbitration or by filing an application/joint memo before the court, the latter occurs in the case
of no arbitration agreement before hand. The award of the Arbitrator, the presiding officer, is
binding as a decree of the court7 or any settlement arrived at by parties during arbitration
proceedings shall also have the same effect.8

In cases of Arbitration, the cases is moved out of the court (Arbitration and Conciliation Act,
1996 will be applicable) but resorting to conciliation or judicial settlement or mediation won’t
result in the same as courts retain control/jurisdiction over such matters as the settlement
agreement in conciliation or the Lok Adalat award will have to be placed before the court
recording it and disposal in its terms. When matter is settled through conciliation or Lok Adalats,
both are as effective as a decree of a court as has been specified in the relevant statutes.

The controversy under Section 89 lies in the distinction between mediation and conciliation.
Many referring to the former as a case in which the conciliator is a trained professional
mediating the dispute and the latter is a case in which a third party, inexperienced and not
trained, insists on parties to arrive at a settlement. Such a distinction may be incorrect. However,
these are one of the few anomalies of this section which shall be discussed later. Judicial
Settlement as defined under Black Law’s Dictionary is “the settlement of a civil case with the
help of a Judge who is not assigned to adjudicate the dispute.” In India, it may be deemed to a
negotiated deal arrived at by the assistance of the court overlooking the matter or by reference to
another judge.

4
T. Vineed v. Mnau S. Nair AIR 2008 (NOC).
5
Vidyodaya Trust v. Mohan Prasad R. : 2008.
6
(2010) 8 SCC 24.
7
Section 36 of the Arbitration and Conciliation Act, 1996.
8
Section 30 of the Arbitration and Conciliation Act, 1996

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 ARBITRATION AND CONCILIATION ACT, 1996 AND SECTION 89
There are various modes for the settlement of disputes in India. One such mode is the Alternative
Dispute Resolution modes which is summarized and formulated in terms of Section 89 of the
Civil Procedure Code. Alternative Dispute Resolution in itself involves Arbitration, Conciliation
and mediation. Section 89(2) provides that where a dispute has been referred for Arbitration or
Conciliation, the provisions of the Arbitration and Conciliation Act, 1996 would apply and thus,
it would imply that the proceedings of such a matter for Arbitration and Conciliation took place
under the provisions of the 1996 Act. The power of the Court to refer the parties to arbitration is
dealt by Section 8 of the 1996 Act. This however is subjected to the presence of an arbitration
agreement between the parties involved.

A point of difference between the Arbitration and conciliation Act and Section 89 of the code is
that under the Act, the parties would referred to arbitration whereas under the Code, the court
actually asks the parties to choose one or other ADRs including Arbitration and parties may
choose accordingly. Thus, Section 89 cannot be resorted to for interpreting Section 8, Arbitration
and Conciliation Act, 1996 as it stand son a different footing and it would be applicable even in
case where there is arbitration agreement.9 The High Court is empowered to make rules to all
proceedings before the Court under the provisions of the Arbitration and Conciliation Act, 1996
under Section 82. These rules however have to be consistent with the said Act. The same power
is conferred upon the Central Government under Section 84 of the Act. Contrary to this, when
parties agree to go for arbitration under section 89 of the code, the option of the parties to choose
arbitration and the procedure for the same is not contemplated by the Arbitration and
Conciliation Act, 1996 and Section 82 and 84 has no application under these circumstances.
Arbitration and Conciliation Act, 1996 would apply to proceedings only after the stage of
reference and not before the stage of reference when options are given under section 89 of the
code, if reference to arbitration is made by the parties under Section 89. Drawing analogy on the
same, it will be only after the stage of reference to conciliation that the 1996 Act pertaining to
conciliation would apply.

A similar analogy can be drawn with respect to the Legal Services Authority Act, 1987 or the
rules formed by the State government cannot act as impairment upon the High Court making
rules under Part X of the Code incorporating within itself the option that Lok Adalats can also be
made one the modes provided under Section 89. Similar to the Arbitration and Conciliation Act,
1996, the Legal services Authority Act, 1987 also does not provide to the parties the option to
choose one of the four ADR methods as mentioned in Section 89.Section 89 makes applicable
1996 Act and 1987 Act from the stage after exercise of options and making of reference. The
power under Section 89(1)(a) and 89(2)(a) to refer the parties for arbitration would and must
necessarily include , imply and inhere in it the power and jurisdiction to appoint the Arbitrator
9
Sukanya Holdings Pvt. Ltd. v. H. Jayes Pandya : AIR 2003 SC 2252.

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also. When the Arbitration and Conciliation Act which is a special law provides for a forum to
adjudication, Section 89 Code of Civil Procedure cannot be resorted to refer a dispute for
arbitration unless there is mutual consent of all parties or arbitration agreement.10 It was also held
by a SC judgement that Section 5 of the Act does not debar a revision being filed against the
order passed by a civil court in an appeal under Section 37 of the act.11

As aforementioned, Section 89 of the Civil procedure Code cannot be used to interpret and
understand the provisions under Section 8 of the Arbitration and Conciliation Act,1996. Still, for
this purpose, the court has to apply its mind to the condition contemplated under Section 89 of
the Code and even if the application under Section 8 is rejected, the Court is bound to follow the
procedure as laid down under the said section.

10
Southern Structurals Ltd. v. K.S.E Board : 2008.
11
I.T.I.Ltd. v Siemens Public Communication Networks Ltd. AIR 2003 SC 2252.

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 NO COMPULSION UNDER SECTION 89
Section 89 of the Code of Civil Procedure does not create an obligation for the Court to
necessarily conduct arbitration, but merely permits the Court to refer the dispute to arbitration or
conciliation etc., where it is satisfied with respect to a reference to the dispute in a pending suit
that there is a possibility of settlement of the same by way of arbitration or conciliation.

However, The Government of India or any party can create a compulsion or obligation on the
Civil Court to necessarily arbitrate the matter between the parties depending upon the nature of
the agreement entered by the parties. The fact that Government is one of the parties to the
arbitration agreement makes no difference. The mandate under Section 89 ought to be made to
settle the matter and every endeavor should be made for amicable settlement. It appears from
Section 89(1) of the code of Civil Procedure that a duty is cast upon the court to refer the dispute
either by way of arbitration, conciliation, judicial settlement including settlement through Lok
Adalats or mediation if it appears that there are elements of settlement. The constitutional
validity of Section 89 of the Code was upheld by the Supreme Court of India in Salem Advocate
Bar Association, Tamil Nadu vs. Union of India. All endeavours shall be made by the Court at
the earliest point of time to settle the dispute under Section 89 of the Code through any of the
mechanisms provided under it. However, the Court cannot compel a party to surrender to ADR if
any of the part did not settle for settlement. Under the guise of this provision, a party cannot be
allowed to prolong the litigation when the trail is in progress and more particularly when it is
ready for disposal. The Parliament has not conferred the jurisdiction on any personal designate
but on regular Courts properly constituted which must be held or assumed to be held by
competent trained officials. When a reference has been made for arbitration under Section 89(1)
of the Code, it is to be kept in mind that it would thus bring the suit to a termination before that
Court and such decision will certainly be amenable to challenge in revision even under Section
115 of the Code. However, the above mentioned situation will occur only if reasons are given
and such reasons are considered by Superior Courts discharging revisional and supervisory
jurisdiction.

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 APPLICABILITY OF PROVISIONS OF LOK ADALAT ACT
Section 89(2)(b) of the Code of Civil Procedure also provides that where a dispute has been
referred to the Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with
the provisions of sub-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 Lok Adalat. Parties are
entitled to refunding of full Court fee where the parties settled the matter without the intervention
of the Court. The Lok Adalats while resolving the disputes are guided by the principles of
justice, equity and fair play, and aim to settle the dispute by explaining the pros and cons to the
parties of their respective claims. Similar to the amendments made by the State Government in
Central Court Fee Act by virtue of the amendments to the code, the State Government can also
consider making similar amendments to State Court Fee Legislations.

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 238TH LAW COMMISSION REPORT
The 238th Law Commission Report 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. The Commission stated it would be unsuitable to deem a Lok Adalat as
a mediator and treating the Lok Adalat award as a mere agreement arrived at on account of the
Mediato and stated that an appropriate course would be for the Mediator to submit the terms of
settlement reached as a result of mediation to the court so that the court, after due scrutiny, can
pass a decree in accordance with the compromise arrived at between the parties.

The Report was deemed it be unwise to refer the award of Lok Adalat arrived at through
conciliation to be referred to a Court, which would be empowered to pass a decree in consonance
with the compromise arrived at. Such sort of an implementation, as prescribed under paragraph
38 of the Afcons case, would be in contravention with Section 21 of the LSA Act and further
review by courts is considered unwarranted. Such sort of a recommendation would even hamper
the conciliatory practices and go against the validity of settlement agreement as provided for
under Section 76 and 30 of the Arbitration and Conciliation Act. The objective of Section 89
shall be served if the further step of passing a decree with regard to Alternate forums is not
undertaken.

The Report called for a revamp of the current section to incorporate certain changes as had been
highlighted in the Afcons case such as court shall record its opinion in favor of ADR before
setting the issues to be dealt with in order to reduce the burden of the court. Copies of settlement
agreement need be provided to the courts by Conciliators to rectify any mistakes or errors in the
same with the consent of parties.

The more important recommendation was with respect to rules under Order X, as the committee
recommended the removal of Rule 1B of Order X which calls for attendance of parties before
alternate forums.

The Law Commission dealt with the problem of court fees as the literal interpretation of Section
16 of the Court-fees Act may render the trial of a suit free of cost. The said section, introduced
along with section 89 of the Code by the same Act, provides for court fees to be refunded to the
plaintiff when recourse to alternate forums is avoided. The problem lies in the fact that, there
may be no settlement or resolution by alternate forums and the matter may be reverted back to
the court and the suit may move on to trial proceedings without any fees or cost incurred by the
plaintiff. Such a provision is also in conflict section 21 of the Legal Services Authorities Act,
1987 as it provides for court fees being refunded only when a settlement is arrived at between
parties. Thus, parties while initiating proceedings, to avoid costs, could abuse the provision
under Section 16 and a need to make this section in consonance with other such provisions such
as Section 20 of the LSLA act is paramount. The court fees must only be refunded when the
matter has been resolved outside court through alternate forums prescribed under Section 89.

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 CONCLUSION
Section 89 is an important part of the Code of Civil Procedure and is an effective method to
resolve dispute between parties where there is scope for the same. The section is right in its spirit
as the objective has been to reduce the burden of the court, ensure a compromise is arrived at
between parties and move towards speedier/ effective method of administrating justice. Alternate
Dispute Resolution is a means of increasing access to justice without decreasing the quality of
justice. However, as has been highlighted in the entire paper, the Section suffers from many
anomalies, which have reduced its efficiency and act as a hindrance in delivering justice to the
people. The recommendations of the 238th Law Commission report strike at the heart of the
matter and there is a need for amendments specified by the Report. Apart from the legal aspect of
the inefficiency of the provision, another major reason for section failing to fulfil its purpose is
the lack of legal knowledge among the people. Rather than going for Alternate means which are
much more cheaper and less time consuming, citizens continue to go for trial hoping to secure a
larger award from the Court. The alternate forums accorded under Section 89 are economically
more viable as there are relatively lesser amount of transaction costs and thus, there is a need to
make people aware about the same. Hence, the provision under Section 89 is right in its essence
but its purpose is defeated due to legal intricacies, draftsmen’s error and lack of awareness
among individuals.

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 BIBLIOGRAPHY

BOOKS CONSULTED
LEGAL METHOD – DR. G.P. TRIPATHI

LEGAL RESEARCH AND WRITING METHODS - ANWARUL YAQIN

WEBSITE REFERRED
WWW.LAWOCTOPUS.COM

BLOG.IPLEADERS.IN

WWW.LEXISNEXIS.COM

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