International Journal of Law, Justice and Jurisprudence 2023; 3(1): 04-09

E-ISSN: 2790-068
P-ISSN: 2790-0673
IJLJJ 2023; 3(1): 04-09 Arbitration and ADR mechanisms under the scope of
Received: 09-11-2022
Accepted: 14-12-2022 section 89 of code of civil procedure, 1908
Rakesh Kumar Chaudhary
Former Additional Advocate Rakesh Kumar Chaudhary
General, U.P. President, Oudh
Bar Association High Court of
Judicature, Sitting at Abstract
Lucknow, Uttar Pradesh, Section 89 of CPC provides for settlement of disputes outside the court, wherein it appears to the court
India 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 observation. After receiving the
observation of the parties, if the dispute has been referred for arbitration and /or conciliation, the
provisions of the Arbitration and Conciliation Act 1996 shall apply. In this article analysis of section 89
of CPC, applicability of provisions of Lok Adalat Act and 238th Law Commission Report has been
discussed with conclusions and suggestions.

Keywords: Code of civil procedure, settlement of disputes, outside the court, terms, arbitration,
conciliation Lok Adalat, mediation compromise, malimath committee, no obligation, binding nature of
settlement

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 fulfilment 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
Correspondence objective of blending judicial and non-judicial dispute resolution mechanism and bringing
Rakesh Kumar Chaudhary
Former Additional Advocate
alternate dispute mechanism to the centre of the Indian Judicial System. The long drawn
General, U.P. President, Oudh process of litigation, the costs incurred by both parties for the same have and limited number
Bar Association High Court of of adjudicators have made Alternate Dispute Resolution an important aspect of the Judicial
Judicature, Sitting at system to ensure swifter and speedier justice.
Lucknow, Uttar Pradesh,
India

~4~
International Journal of Law, Justice and Jurisprudence https://www.lawjournal.info/

History and background of the section under Order X are specified to ensure proper exercise of
Section 89 of the Code of Civil procedure was introduced jurisdiction by the court. Sub-Section (1) refers to the
with a purpose of amicable, peaceful and mutual settlement different mediums for alternate resolution and sub-section
between parties without intervention of the court. In (2) refers to varous Acts in relation to the mentioned
countries all of the world, especially the developed few, alternate resolutions.
most of the cases (over 90 per cent) are settled out of court. The changes brought in by the CPC Amendment Act, 1999
The case/ dispute between parties shall go to trial only when have no retrospective effect and shall not affect any suit in
there is a failure to reach a resolution. Section 89 of the which issues have been settled before commencement of
Code of Civil Procedure States that: Section 7 of CPC Amendment Act, 1999 and shall be dealt
as if Section 7 and 20 of CPC Amendment Act never came
(1) Where it appears to the court that there exist into force.
elements of a settlement which may be acceptable to the The decision of the forums specified under Section 89 shall
parties, the court shall formulate the terms of settlement be as effective, having same binding effect, as court
and give them to the parties for their observations and orders/decrees and arrived at a relatively cheaper cost and
after receiving the observation of the parties, the court within a short span of time. The rules inserted under Order
may reformulate the terms of a possible settlement and X provide for when court may direct to take recourse to
refer the same for alternate means to resolve disputes, the duty of parties to
a) Arbitration appear before such forums and the responsibility of the
b) Conciliation presiding officer to act in interest of justice and return the
c) Judicial settlement including settlement through Lok suit if better suited for the court.
Adalat
d) Mediation. Malimath committee report and the 129th law
commission report
2) Where a dispute had been referred The enormous arrears of cases, multiple appeals/revisions,
a) For arbitration or conciliation, the provisions of the procedural shackles and the adversarial system, all result in
Arbitration and Conciliation Act, 1996 shall apply as if creating a judicial lag of sorts and an effective remedy
the proceedings for arbitration or conciliation were against the same is settlement through alternate forums. The
referred for settlement under the provisions of that Act. same was brought to light in the Malimath Committee and
b) To Lok Adalat, the court shall refer the same to the Lok the 129th Law Commission report.
Adalat in accordance with the provisions of sub-section The Law Commission in its 129th Report advocated the
(1) of section 20 of the Legal Services Authority Act, need for amicable settlement of disputes between parties
1987 and all other provisions of that Act shall apply in and the Malimath Committee recommended to make it
respect of the dispute so referred to the Lok Adalat; mandatory for courts to refer disputes, after their issues
c) For judicial settlement, the court shall refer the same to having been framed by courts, for resolution through
a suitable institution or person and such institution or alternate means rather than litigation/trials.
person shall be deemed to be a Lok Adalat and all the Malimath committee called for a “legal sanction to a
provisions of the Legal Services Authority Act, 1987 machinery for resolution of disputes and resort thereto is
shall apply as if the dispute were referred to a Lok compulsory” which the sole objective of reducing he large
Adalat under the provisions of that Act. influx of commercial litigation in courts of civil nature,
d) For mediation, the court shall effect a compromise number of appeals to higher courts lessened and the
between the parties and shall follow such procedure as efficiency of courts revitalized by such implementation.
may be prescribed.] The Law Commission recommended the establishment of
Conciliation Courts all over the country to with the authority
Section 89 came into being in its current form on account of to initiate conciliation proceedings in all cases at all levels.
the enforcement of the CPC (Amendment) Act, 1999 with The aims of both these committees were to further the cause
effect from 1/7/2002. At the commencement of the Code, a of justice and ensure efficient working of the judicial
provision was provided for Alternate Dispute Resolution. system. The Commission called for a replication of the
However, the same was repealed by the enactment of the Himachal Pradesh High Court’s Conciliatory practices
Arbitration Act (Act 10 of 1940) under Section 49 and Sch. before, during and post-trial for litigants which majorly
10. The old provision had reference only to arbitration and it covered issues related to partition, inheritance, wills etc. The
procedure under the Second Schedule of the Code. It was positive results from the experiment in Himachal Pradesh
believed after the enactment of the Arbitration Act, 1940, paved the way for revival of alternate forums. Furthermore,
the law had been consolidated and there was no need of Sec it may be stated that it is the duty of the judges to assit
89. parties in arriving at settlements in certin suits, as has been
However, the Section was revived with new alternatives and elucidated under Rule 5-B of Order XXVII and Rule XXIII-
not only restricted to arbitration. A new Section 89 came to A of the Code of Civil Procedure. The conciliation process
be incorporated in the Code by Section 7 of the CPC casts a duty on judges to take appropriate steps, where there
Amendment Act, 1999 to resolve disputes without going to is scope of settlement, to bring about reconciliation in
trial and pursuant to the recommendations of Law certain suits and to come up with a conclusive resolution on
Commission of India and Malimath Committee report. an expeditious basis.
Section 89 along-with rules 1A, 1B and 1C of Order X of The aim and objective of reviving Section 89, as stated in
First schedule have been implemented by Section 7 and the Statement and Objects of the Bill Code of Civil
Section 20 of the CPC Amendment Act and cover the ambit Procedure (Amendment) Bill initiated in 1997, was to
of law related to Alternate Dispute resolution. The clauses ensure effective implementation of Conciliation schemes,

~5~
International Journal of Law, Justice and Jurisprudence https://www.lawjournal.info/

following recommendations of the 129th Law Commission implementation of justice in the legal system. Courts, may
and make it obligatory for courts to refer to disputes to take a recourse to ADR as a statutory duty, in case of a
alternate forums. Initiation of suits in courts shall be the last number of cases arising out of matrimonial dispute or in a
resort of parties if all other alternatives fail. The resuscitated suit for partition within the family, to separate issues to be
Section 89 incorporated Conciliation, Judicial Settlement dealt by ADR’s and those adjudicated upon by Courts.
including Lok Adalats and Mediation in addition to The legal position with regard to ADR practices was cleared
Arbitration. in the case of Afcons Infrastructure Ltd. v. Cherian Varkey
Construction Co. (P) Ltd. Arbitration was referred to as a
Analysis of Section 89 means of ADR is undertaken on account a prior agreement
Delay, one of the major inadequacies present in our legal between parties to resolve disputes by arbitration or by
system, is said to have been overcome by ADR. ADR was filing an application/joint memo before the court, the latter
formulated with a purpose of reducing the burden of the occurs in the case of no arbitration agreement beforehand.
burdened system and render expeditious justice. Section 89 The award of the Arbitrator, the presiding officer, is binding
was introduced to empower different forums and was more as a decree of the court or any settlement arrived at by
practically applicable than any other option of reducing parties during arbitration proceedings shall also have the
judicial lag, such as increasing number of judges or same effect.
infrastructure. In cases of Arbitration, the cases is moved out of the court
The language of the Section clearly states that there are 4 (Arbitration and Conciliation Act, 1996 will be applicable)
alternate resolution forums, including arbitration and all the but resorting to conciliation or judicial settlement or
4 forums are treated identically and as such there is no mediation won’t result in the same as courts retain
distinction mentioned in the Section. In arbitration, the control/jurisdiction over such matters as the settlement
decision binding on parties is taking by a private judge agreement in conciliation or the Lok Adalat award will have
(Arbitrator) while in the other 3 mediums party autonomy in to be placed before the court recording it and disposal in its
final decision is still maintained. Amongst the five specified terms. When matter is settled through conciliation or Lok
alternate forums, (arbitration, conciliation, judicial Adalats, both are as effective as a decree of a court as has
settlement, Lok Adalatas and mediation), the most sought been specified in the relevant statutes.
after is arbitration while at the all five are at the same The controversy under Sectin 89 lies in the distinction
footing in the eyes of the law. Arbitration is a process only between mediation and conciliation. Many referring to the
available at the consent of the parties. former as a case in which the conciliator is a trained
Arbitration or conciliation can only be on account of the professional mediating the dispute and the latter is a case in
consent of parties to a dispute and it is not within the powers which a third party, inexperienced and not trained, insists on
of the court to refer disputes for arbitration in absence of parties to arrive at a settlement. Such a distinction may be
consent of parties. Moreover, notwithstanding the fact that a incorrect. However, these are one of the few anomalies of
government is one of the parties to arbitration agreement, a this section which shall be discussed later. Judicial
court functions in accordance with the jurisdiction conferred Settlement as defined under Black Law’s Dictionary is “the
in on them. Judicial settlement, as under Sec 89(1) (c) and settlement of a civil case with the help of a Judge who is not
Sec 89 (2) (c), could only be in terms of Legal Services assigned to adjudicate the dispute.” In India, it may be
Authority Act. Lok Adalats derive power from the deemed to a negotiated deal arrived at by the assistance of
aforementioned Act and the power to issue an award by the court overlooking the matter or by reference to another
court is only on account of consent of parties towards the judge.
same. The Lok Adalats lacks authority to adjudicate on any
aspect and its awards are not binding, as mentioned under Anamolies in section 89
Section 19 of LSLA. Even after more than a decade of its implementation, the
To proceed towards alternate means of resolution, the court provision provided for ADR under Section 89 suffers from
must identify that there exist scope of resolution/ settlement many anomalies. The constitutional validity of this section
and the same may be acceptable to parties. Court is given was upheld but the frequency with which ADR is utilized
powers to surpass the decision of litigants under Section 89 for resolution of disputes remains minute, which arises due
but the same must be invoked only in those cases where to lack of knowledge about the same or on account of the
there is scope for settlement and the parties to the dispute reluctance of the parties.
are open to the idea of settlement. The incorporation of the The Section in itself suffers from many anomalies which
word ‘may be acceptable to parties” in the Section is with a need to be looked at to ensure the objective of the Section is
purpose to take all essentials/stakeholders into achieved and there is swifter and speedier form of justice.
consideration. The term “May” in Section 89 governs aspect The drafting of the Section 89 was said to be done in a
of reformulation of the terms of a possible settlement and its haphazard manner and the interpretation of the Section was
reference to one of AR methods. The court must also observed to be, in the Afcons’ case, “A trial judge’s
consider the eccentric and peculiar nature of the dispute and nightmare.” The wording of the Section 73(1) of the
nature of the parties to the dispute before proceeding Arbitration and Conciliation Act is borrowed under this
towards alternate means of resolution. The Court must guide section defeating the objective with which the the section
the litigants towards which course or means to resolve a was revived as was observed by the Court in the Afcons
dispute, taking into consideration the legal acumen and case.
knowledge of the judges and the appropriate forum for the The terms “shall formulate the terms of settlement”
dispute, only after the above stated element are taken into specified under Section 89 (1) of the Code, imposes a heavy
consideration. A senseless recourse to Section 89 may turn and unnecessary burden on the courts. The formulation and
out to be counterproductive and add to further delays in reformulation of the issues to be dealt with by the courts and

~6~
International Journal of Law, Justice and Jurisprudence https://www.lawjournal.info/

specifying the method to be adopted may leave the the Court do so, the object of Section 89 is lost and it would
provision meaningless and out of place at the pre-ADR most definitely obstruct a freely negotiated settlement.
stage. Formulation of terms of settlement for reference to However, the most consequential anomaly is related to
ADR forums especially Arbitration would make the Court fees. The Code of Civil Procedure (Amendment) Act,
appointment of the Arbitrator hollow as the entire dispute is 1999 by which Section 89 was amended into the Code also
meant to be transferred to the Arbitrator and not the terms of amended a new Section 16 in the Court Fees Act, 1870
settlement. which states the following:
It is a redundant process which further burdens the court and Refund of fee: Where the court refers the parties to the suit
strikes at the foundation of the ADR system. The right to any one of the mode of settlement of dispute referred to
manner of interpretation of the Section 89 would be if it is in Section 89 of the Code of Civil Procedure, 1908 the
read with Order X Rule 1-A where the Court may only plaintiff shall be entitled to a certificate from the court
direct the parties to refer to ADR forums and no need to authorizing him to receive back from the Collector, the full
formulate terms of settlement arises. amount of the fee paid in respect of such plaint.
Another error in drafting as observed by the Court in the However, this act is applied only in certain States. Other
Afcons case was intermingling of definitions of ‘mediation’ States have their own Acts governing court fees. There may
and ‘judicial settlement’. “Mediation” should be replaced by also be some States who have yet not amended a
“Judicial settlement” in clause (c) of section 89 (2) and the corresponding provision for refund of court fees.
latter replaced by the former in clause (d). An agreement/ The main problem arise that when a dispute could not be
negotiated settlement by court being termed as Mediation is resolved by ADR processes and is brought back to the same
a misnomer and reference to another forum to arrive at a Court, and there has already been refund of the Court fees
compromise should not be termed as a “judicial settlement”. before reference is made to ADR. There is no provision in
The court observed these as a draftsmen’s error and the the said circumstance to impose fresh Court fees and this
changes with regard to the same shall be kept in place till creates a situation where the suit becomes free which is not
the legislature corrects the mistakes, so that Section 89 is possible.
not rendered meaningless and infructuous.
Justice R.V Raveendran holds the view that Section 89 of Arbitration and conciliation act, 1996 and section 89
the Code was drafted in a hurry. It is not happily worded. There are various modes for the settlement of disputes in
Supreme Court in Salem Advocate Bar Association, Tamil India. One such mode is the Alternative Dispute Resolution
Nadu vs. Union of India was of the view that there were modes which is summarized and formulated in terms of
some “creases” in Section 89 but it did not refer to Section 89 of the Civil Procedure Code. Alternative Dispute
anomalies. It felt that the creases could be ironed out by Resolution in itself involves Arbitration, Conciliation and
formulating appropriate rules and regulations to implement mediation. Section 89(2) provides that where a dispute has
the section. In his article, the Hon’ble Justice puts forward been referred for Arbitration or Conciliation, the provisions
some additional anomalies associated with Section 89. of the Arbitration and Conciliation Act, 1996 would apply
Another anomaly occurs while making Mediation Rules and thus, it would imply that the proceedings of such a
under Section 82 (2) (d) of the Code. Making Mediation matter for Arbitration and Conciliation took place under the
Rules under Section 82 (2) (d) is clearly applicable to provisions of the 1996 Act. The power of the Court to refer
conciliation by a third party (individual or institution), the parties to arbitration is dealt by Section 8 of the 1996
however Section 89 (2) (d) is aimed at court-stimulated Act. This however is subjected to the presence of an
settlement. This leads to another anomaly wherein when arbitration agreement between the parties involved.
mediator’s intervention leads to a settlement and such A point of difference between the Arbitration and
settlement is also authenticated by the mediator, still it is not conciliation Act and Section 89 of the code is that under the
regarded as a decree. Notwithstanding, when the same Act, the parties would referred to arbitration whereas under
mediator is called as a conciliator, the settlement reached the Code, the court actually asks the parties to choose one or
through him is regarded as a decree. other ADRs including Arbitration and parties may choose
Converting mandatory requirement into a directory accordingly. Thus, Section 89 cannot be resorted to for
provision also leads to an anomaly. Section 89(1) states that interpreting Section 8, Arbitration and Conciliation Act,
“where it appears to the court that there exists elements of a 1996 as it stand son a different footing and it would be
settlement which may be acceptable to parties”, this would applicable even in case where there is arbitration agreement.
necessarily mean that the Court will refer the matter to ADR The High Court is empowered to make rules to all
processes only when it finds elements of settlement in the proceedings before the Court under the provisions of the
dispute and not otherwise. This however converts what was Arbitration and Conciliation Act, 1996 under Section 82.
expected to be an obligatory provision as a discretionary These rules however have to be consistent with the said Act.
provision. The same power is conferred upon the Central Government
Another such example of anomaly occurs while importing under Section 84 of the Act. Contrary to this, when parties
final process of conciliation into pre-ADR reference. agree to go for arbitration under section 89 of the code, the
Section 89 of the Civil Procedure Code necessitates the option of the parties to choose arbitration and the procedure
court to formulate the terms of settlement and then provide for the same is not contemplated by the Arbitration and
them to parties to reflect upon the same and then again Conciliation Act, 1996 and Section 82 and 84 has no
reformulate the terms of a potential settlement and then application under these circumstances. Arbitration and
discuss the same for ADR processes. Many regard this as Conciliation Act, 1996 would apply to proceedings only
unnecessary and the conciliator or the mediator or members after the stage of reference and not before the stage of
of the Lok Adalat should undertake such sort of a task when reference when options are given under section 89 of the
reference has been made to them respectively. By making code, if reference to arbitration is made by the parties under

~7~
International Journal of Law, Justice and Jurisprudence https://www.lawjournal.info/

Section 89. Drawing analogy on the same, it will be only party cannot be allowed to prolong the litigation when the
after the stage of reference to conciliation that the 1996 Act trail is in progress and more particularly when it is ready for
pertaining to conciliation would apply. disposal. The Parliament has not conferred the jurisdiction
A similar analogy can be drawn with respect to the Legal on any personal designate but on regular Courts properly
Services Authority Act, 1987 or the rules formed by the constituted which must be held or assumed to be held by
State government cannot act as impairment upon the High competent trained officials. When a reference has been
Court making rules under Part X of the Code incorporating made for arbitration under Section 89(1) of the Code, it is to
within itself the option that Lok Adalats can also be made be kept in mind that it would thus bring the suit to a
one the modes provided under Section 89. Similar to the termination before that Court and such decision will
Arbitration and Conciliation Act, 1996, the Legal services certainly be amenable to challenge in revision even under
Authority Act, 1987 also does not provide to the parties the Section 115 of the Code. However, the above mentioned
option to choose one of the four ADR methods as situation will occur only if reasons are given and such
mentioned in Section 89. Section 89 makes applicable 1996 reasons are considered by Superior Courts discharging
Act and 1987 Act from the stage after exercise of options revisional and supervisory jurisdiction.
and making of reference. The power under Section 89 (1)
(a) and 89 (2) (a) to refer the parties for arbitration would Applicability of provisions of lok adalat act
and must necessarily include, imply and inhere in it the Section 89 (2) (b) of the Code of Civil Procedure also
power and jurisdiction to appoint the Arbitrator also. When provides that where a dispute has been referred to the Lok
the Arbitration and Conciliation Act which is a special law Adalat, the Court shall refer the same to the Lok Adalat in
provides for a forum to adjudication, Section 89 Code of accordance with the provisions of sub-section 20 of the
Civil Procedure cannot be resorted to refer a dispute for Legal Services Authority Act, 1987 and all other provisions
arbitration unless there is mutual consent of all parties or of that Act shall apply in respect of the dispute so referred to
arbitration agreement. It was also held by a SC judgement Lok Adalat. Parties are entitled to refunding of full Court
that Section 5 of the Act does not debar a revision being fee where the parties settled the matter without the
filed against the order passed by a civil court in an appeal intervention of the Court. The Lok Adalats while resolving
under Section 37 of the act. the disputes are guided by the principles of justice, equity
As aforementioned, Section 89 of the civil procedure Code and fair play, and aim to settle the dispute by explaining the
cannot be used to interpret and understand the provisions pros and cons to the parties of their respective claims.
under Section 8 of the Arbitration and Conciliation Act, Similar to the amendments made by the State Government
1996. Still, for this purpose, the court has to apply its mind in Central Court Fee Act by virtue of the amendments to the
to the condition contemplated under Section 89 of the Code code, the State Government can also consider making
and even if the application under Section 8 is rejected, the similar amendments to State Court Fee Legislations.
Court is bound to follow the procedure as laid down under
the said section. 238th Law commission report
The 238th Law Commission Report advocated for the same
No obligation under section 89 changes as were specified in Afcons case and called for
Section 89 of the Code of Civil Procedure does not create an restructuring of the Section on the contours set out by the
obligation for the Court to necessarily conduct arbitration, Supreme Court with certain reservations. The Commission
but merely permits the Court to refer the dispute to stated it would be unsuitable to deem a Lok Adalat as a
arbitration or conciliation etc., where it is satisfied with mediator and treating the Lok Adalat award as a mere
respect to a reference to the dispute in a pending suit that agreement arrived at on account of the Mediation and stated
there is a possibility of settlement of the same by way of that an appropriate course would be for the Mediator to
arbitration or conciliation. submit the terms of settlement reached as a result of
However, The Government of India or any party can create mediation to the court so that the court, after due scrutiny,
a compulsion or obligation on the Civil Court to necessarily can pass a decree in accordance with the compromise
arbitrate the matter between the parties depending upon the arrived at between the parties.
nature of the agreement entered by the parties. The fact that The Report was deemed it be unwise to refer the award of
Government is one of the parties to the arbitration Lok Adalat arrived at through conciliation to be referred to a
agreement makes no difference. The mandate under Section Court, which would be empowered to pass a decree in
89 ought to be made to settle the matter and every endeavor consonance with the compromise arrived at. Such sort of an
should be made for amicable settlement. It appears from implementation, as prescribed under paragraph 38 of the
Section 89 (1) of the code of Civil Procedure that a duty is Afcons case, would be in contravention with Section 21 of
cast upon the court to refer the dispute either by way of the LSA Act and further review by courts is considered
arbitration, conciliation, judicial settlement including unwarranted. Such sort of a recommendation would even
settlement through Lok Adalats or mediation if it appears hamper the conciliatory practices and go against the validity
that there are elements of settlement. The constitutional of settlement agreement as provided for under Section 76
validity of Section 89 of the Code was upheld by the and 30 of the Arbtration and Conciliation Act. The objective
Supreme Court of India in Salem Advocate Bar Association, of Section 89 shall be served if the further step of passing a
Tamil Nadu vs. Union of India. All endeavours shall be decree with regard to Alternate forums is not undertaken.
made by the Court at the earliest point of time to settle the The Report called for a revamp of the current section to
dispute under Section 89 of the Code through any of the incorporate certain changes as had been highlighted in the
mechanisms provided under it. However, the Court cannot Afcons case such as court shall record its opinion in favour
compel a party to surrender to ADR if any of the part did of ADR before setting the issues to be dealt with in order to
not settle for settlement. Under the guise of this provision, a reduce the burden of the court. Copies of settlement

~8~
International Journal of Law, Justice and Jurisprudence https://www.lawjournal.info/

agreement need be provided to the courts by Conciliators to 2. Tshe Arbitration and Conciliation Act, (Act No.26 of
rectify any mistakes or errors in the same with the consent 1996); c1996.
of parties. (Recommendations 6.2) 3. The Malimath Committee was headed by Justice V.S.
The more important recommendation was with respect to Malimath and submitted its recommendations for
rules under Order X, as the committee recommended the reforms of criminal justice system in; c2003.
removal of Rule 1B of Order X which calls for attendance 4. Afcons Infrastructure Ltd.v Cherian Yarkey
of parties before alternate forums. (Recommendation 6.3) Construction Co. 2010, (8)SCC 24
The Law Commission dealt with the problem of court fees 5. The Court Fees Act (Act 07 of 1870); c1870.
as the literal interpretation of Section 16 of the Court-fees 6. The Legal Services Authorities Act, (Act No 39 of
Act may render the trial of a suit free of cost. The said 1987); c1987.
section, introduced along with section 89 of the Code by the 7. Lokadalats have been given statutory status under The
same Act, provides for court fees to be refunded to the Legal Services Authorities Act.
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. It may be
draftsmen’s error which has caused such an anomaly to arise
but there is a need to alter the same. (Recommendation
6.4.3)

Critique and 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 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.

References
1. The Code of Civil Procedure, (Act No 05 of 1908);
c1908.

~9~