JAMIA MILLIA ISLAMIA

ALTERNATE DISPUTE
REDRESSAL

Submitted To, Submitted By,

Adv. Madhu Saini Jijo Raj P
Professor, Faculty of Law B.A LL.B(IV Year)
Jamia Millia Islamia Section: B
Jamia Nagar, New Delhi Roll No: 17

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TABLE OF CONTENTS

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ACKNOWLEDGEMENT

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 INTRODUCTION

The focus of this article is on mediation and arbitration and not on unfacilitated negotiation
which is, of course, the most common means by which parties and their counsel resolve legal
disputes outside of court

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The term "alternative dispute resolution" or "ADR" is often used to describe a wide variety of
dispute resolution mechanisms that are short of, or alternative to, full-scale court processes. The
term can refer to everything from facilitated settlement negotiations in which disputants are
encouraged to negotiate directly with each other prior to some other legal process, to arbitration
systems or minitrials that look and feel very much like a courtroom process. Processes designed
to manage community tension or facilitate community development issues can also be included
within the rubric of Alternate Dispute Redressal. ADR systems may be generally categorized as
negotiation, conciliation or mediation, or arbitration systems. It refers to a set of practices and
techniques aimed at permitting the resolution of legal disputes outside the courts. It is normally
thought to encompass mediation, arbitration, and a variety of "hybrid" processes by which a neutral
facilitates the resolution of legal disputes without formal adjudication. These alternatives to
adjudication are advocated on a variety of grounds. Potential benefits are said to include the
reduction of the transaction costs of dispute resolution because ADR processes may be cheaper
and faster than ordinary judicial proceedings; the creation of resolutions that are better suited to
the parties' underlying interests and needs and improved ex post compliance with the terms of the
resolution. The focus of this article is on mediation and arbitration and not on unfacilitated
negotiation which is, of course, the most common means by which parties and their counsel resolve
legal disputes outside of court.

HISTORY OF ALTERNATE DISPUTE REDRESSAL

ADR originated in the USA in a drive to find alternatives to the traditional legal system, felt to be
adversarial, costly, unpredictable, rigid, over-professionalized, damaging to relationships, and
limited to narrow rights-based remedies as opposed to creative problem solving. The American
origins of the concept are not surprising, given certain features of litigation in that system, such
as: trials of civil actions by a jury, lawyers' contingency fees, lack of application in full of the rule
"the loser pays the costs". Beginning in the late nineteenth century, creative efforts to develop the
use of arbitration and mediation emerged in response to the disruptive conflicts between labor and
management. In 1898, Congress followed initiatives that began a few years earlier in
Massachusetts and New York and authorized mediation for collective bargaining disputes. In the
ensuing years, special mediation agencies, such as the Board of Mediation and Conciliation for

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railway labor, (1913) (renamed the National Mediation Board in 1943), and the Federal Mediation
and Conciliation Service (1947) were formed and funded to carry out the mediation of collective
bargaining disputes. Additional state labor mediation services followed. The 1913 New lands Act
and later legislation reflected the belief that stable industrial peace could be achieved through the
settlement of collective bargaining disputes; settlement in turn could be advanced through
conciliation, mediation, and voluntary arbitration.1

At about the same time, and for different reasons, varied forms of mediation for non-labor matters
were introduced in the courts. When a group of lawyers and jurists spoke on the topic to an
American Bar Association meeting in 1923, they were able to assess court-related conciliation
programs in Cleveland, Minneapolis, North Dakota, New York City, and Milwaukee. Conciliation
in a different form also appeared in domestic relations courts. An outgrowth of concern about
rising divorce rates in the postwar 1940's and the 1950's, the primary goal of these programs was
to reduce the number of divorces by requiring efforts at reconciliation rather than to facilitate the
achievement of divorces through less adversarial proceedings. Following privately funded
mediation efforts by the American Arbitration Association and others in the late 1960s, the
Community Relations Service (CRS) of the United States Department of Justice initiated in 1972
a mediation program for civil rights disputes. Although a small number of individual lawyers had
been interested in and were practicing mediation ADR in Britain for some years, it was only in
1989 when the first British based ADR company - IDR Europe Ltd. - bought the idea across the
Atlantic and opened its doors for business. This was the start of ADR Group. Since then many
other ADR organizations, including CEDR (Centre for Dispute Resolution), followed suite and
assisted in the development and promotion of ADR in the UK.2 ADR, or mediation (as it is now
synonymously known as), is used world-wide by Governments, corporations and individuals to
resolve disputes big or small, of virtually any nature and in most countries of the world. In
developing countries where most people opt for litigation to resolve disputes, there is excessive
over-burdening of courts and a large number of pending cases, which has ultimately led to
dissatisfaction among people regarding the judicial system and its ability to dispense justice. This
opinion is generated largely on the basis of the popular belief, “Justice delayed is justice denied”.
However, the blame for the large number of pending cases in these developing countries or docket

1
http://www.ebc-india.com/lawyer/articles/2002v1a3.htm.
2
http://www.adrgroup.co.uk/history.html

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explosion, as it is called, cannot be attributed to the Courts alone. The reason for it being the non-
implementation of negotiation processes before litigation. It is against this backdrop that the
mechanisms of Alternative Dispute Resolution are being introduced in these countries. These
mechanisms, which have been working effectively in providing an amicable and speedy solution
for conflicts in developed economies, are being suitably amended and incorporated in the
developing countries in order to strengthen the judicial system. Many countries such as India,
Bangladesh and Sri Lanka have adopted the Alternative Dispute Resolution Mechanism. However,
it is for time to see how effective the implementation of these mechanisms would be in these
countries.

ALTERNATE DISPUTE REDRESSAL IN INDIA

In our country the justice delivery system through courts has given rise to certain grave problems
like inordinate delays, huge pendency of cases and expensive litigation. Thus, it has become very
difficult for the poor and marginalized people to have access to justice. In these circumstances, it
becomes significantly necessary for all the stake-holders of the judicial system to find out some
mechanism where such grey areas can be effectively and adequately taken care of.

Alternative Dispute Resolution in India is an attempt made by the legislators and judiciary alike to
achieve the “Constitutional goal” of achieving Complete Justice in India. ADR first started as a
quest to find solutions to the perplexing problem of the ever-increasing burden on the courts. A
thought-process that started off to rectify docket explosion, later developed into a separate field
solely catering to various kinds of mechanisms which would resolve disputes without approaching
the Formal Legal System (FLS). The reasoning given to these ADR mechanisms is that the society,
state and the party to the dispute are equally under an obligation to resolve the dispute as soon as
possible before it disturbs the peace in the family, business community, society or ultimately
humanity as a whole.

In a civilised society, principles of natural justice along with the “Rule of Law” should result in
complete justice in case of a dispute. Rule of Law is defined as the state of order in which events
conform to the law. It is an authoritative, legal doctrine, principle, or precept applied to the facts
of an appropriate case. These definitions give us the indication that the Rule of Law is a
authoritative concept which might lead to a win-lose situation in cases of dispute. Therefore, ADR
uses the principles of natural justice in consonance with the Rule of Law, in order to create a

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favourable atmosphere of a win-win situation. Alternative Dispute Resolution (ADR) contains the
effective mechanism to provide speedy and cost-effective justice, it also has the potential to trim
the huge arrears of cases to size. This is much needed in countries like India where litigation causes
a great deal of animosity between the parties due to the agony caused by the long-standing
litigation. ADR, thus, gains its momentum in India today.

Alternative Dispute Resolution in India was founded on the Constitutional basis of Articles 14 and
21 which deal with Equality before Law and Right to life and personal liberty respectively. These
Articles are enshrined under Part III of the Constitution of India which lists the Fundamental Rights
of the citizens of India. ADR also tries to achieve the Directive Principle of State Policy relating
to Equal justice and Free Legal Aid as laid down under Article 39-A of the Constitution.

Alternative Dispute Resolution (ADR) contains the effective mechanism to provide speedy and
cost-effective justice, it also has the potential to trim the huge arrears of cases to size. Parliament
brought about a legislation and introduced section 89 and Rules 1-A, 1-B and 1-C to Order X in
the Code of Civil Procedure, 1908, so as to make effective use of ADR process. The Acts which
deal with Alternative Dispute Resolution are Arbitration and Conciliation Act, 1996 (discussed in
detail later) and the Legal Services Authorities Act, 1987. Section 89 of the Civil Procedure Code,
1908 makes it possible for Arbitration proceedings to take place in accordance with the Acts stated
above.

CONSTITUTIONAL PROVISIONS

Article 39-A of the Constitution of India provides that the State shall secure that the operation of
the legal system promotes justice, on the basis of equal opportunity and shall in particular, provide
free legal aid, by suitable legislations or schemes or in any other way, to ensure that opportunities
for securing justice are not denied to any citizen by reason of economic or other disabilities. Article
14 also makes it obligatory for the State to ensure equality before law and a legal system which
promotes justice on the basis of equal opportunity to all. Thus, access to justice, provision of legal
aid for poor and needy and dissemination of equal and speedy justice are the cherished goals of
our Constitutional Republic.

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OTHER PROVISIONS

Prior to the existence of S. 89 of the Code of Civil Procedure, there were various provisions that
gave the power to the Courts to refer disputes to mediation. Such provisions are in the Industrial
Disputes Act, 1947, Section 23(2) of the Hindu Marriage Act, 1955 and Section 9 of the Family
Courts Act, 1984. We can also find and infer such provisions in Section 80, Order XXIII, Rule 3,
Order XXVII, Rule 5-B, Order XXXII-A & Order XXXVI of the Code of Civil Procedure, 1908.

As regards the Industrial Disputes Act, the Supreme Court observed, “the policy of law emerging
from Industrial Disputes Act, 1947 and its sister enactments is to provide an Alternative Dispute
Resolution mechanism to the workmen, a mechanism which is speedy, inexpensive, informal and
unencumbered by the plethora of procedural laws and appeals upon appeals and revisions
applicable to civil court.3

SECTION: 9 OF THE FAMILY COURTS ACT, 1984

Section 9 of the Family Courts Act, 1984 mandates the family court to assist and persuade the
parties at the first instance, to arrive at a settlement.

SECTION: 107(2) OF THE CODE OF CIVIL PROCEDURE

S. 107(2) of the Code of Civil Procedure provides that subject to such conditions and limitations
as may be prescribed, “………. The appellate court shall have the same powers and shall perform
as nearly as may be the same duties as are conferred and imposed by this Code on courts of original
jurisdiction in respect of suits instituted therein.” Thus, it is inferred that the provisions regarding
Alternative Disputes Resolutions are applicable to appellate courts also.

ORDER 23, RULE 3, CODE OF CIVIL PROCEDURE

Order 23, Rule 3, Code of Civil Procedure mandates the courts to record a full adjustment or
compromise and pass a decree in terms of such compromise or adjustment. But the compromise
decree has to be recorded as a whole so as to gather the intention of the parties.4 The court must
apply its judicial mind while examining the terms of settlement. The compromise shall not be
recorded in a casual manner. The court is under the responsibility to satisfy itself about the

3
Rajasthan State Road Transport Corporation v. Krishna Kant, AIR 1995 SC 1715.
4
Manjulata Sharma v. Vinay Kumar Dubey, AIR 2004 All 92 (94) DB.

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lawfulness and genuineness of the compromise.5 Government of India and State Governments are
the largest litigants in India. The government or statutory authorities are defendants in a large
number of suits pending in various courts in the country.

SECTION: 80 OF CODE OF CIVIL PROCEDURE

Section 80 of CPC and some other statutes require service of notice as a condition precedent for
filing of a suit or other proceedings against the government or authority. It is observed that in a
large number of cases where government is a defendant either the required notice is not replied or
in a few cases where a reply is sent, it is generally vague and evasive. Thus, the object of S. 80,
CPC and similar provisions get defeated. It not only gives rise to avoidable litigation but also
results in heavy expenses and costs to the government exchequer. The object of notice under
section 80, CPC is to give the government sufficient warning of the case which is going to be filed
against it and an opportunity to it to settle the claim without litigation.6 It gives the government an
opportunity to consider its legal position and accordingly settle the claim out of court.7The notice
under section 80, CPC intends to alert the state to negotiate a just settlement or at least have the
courtesy to tell the potential outsiders why the claim is being resisted.8 The underlying object of
section 80, CPC and other similar provisions is to curtail litigation and area of dispute.

The Supreme Court of India in Geeta Iron and Brass Works Ltd. case has emphasised that
governments must be made accountable by Parliamentary social audit for wasteful litigation
expenditure inflicted on the community through its inaction. The Apex Court has directed that all
governments, central or state or other concerned authorities to nominate within a period of three
month, an officer who shall be made to ensure that replies to notice under section 80, CPC or
similar provisions are sent within the stipulated period and the replies shall be sent after due
application of mind. This direction of Supreme Court shall put the government authorities in a
conciliation mode and promote early settlement of disputes.9

5
Banwarilal v. Chano Devi, AIR 1993 SC 1139.
6
Ghanshyam Das v. Domination of India; AIR 1984 SC 1004
7
Raghunath Das v. Union of India; AIR 1969 SC 674.
8
State of Punjab v. Geeta Iron and Brass Works Ltd.; AIR 1978 SC 1608.
9
Salem Advocate Bar Association, Tamil Nadu v. Union of India; AIR 2005 SC 3353

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SECTION: 89 OF CODE OF CIVIL PROCEDURE

Section 89 has been inserted in the Code of Civil Procedure by the CPC (Amendment) Act, 1999.
It became effective from 01.07.2002. Section 89 CPC reads as follows: -

(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 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 a dispute has been referred –

(a) 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.
(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
Authorities 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.
(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 Authorities Act, 1987 (39 of 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.”

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The Supreme Court, in order to correct the draftsman’s error, has held that the definitions of
“judicial settlement” and “mediation” in clauses (c) & (d) of Sec. 89(2), CPC shall have to be
interchanged as follows:10

(c) for “mediation”, the court shall refer the same to a suitable institution or person
and such institution or person shall be Page10 deemed to be a Lok Adalat and all
the provisions of the Legal Services Authorities Act, 1987 (39 of 1987) shall apply
as if the dispute were referred to a Lok Adalat under the provisions of that Act.

(d) for “judicial settlement”, the court shall effect a compromise between the
parties and shall follow such procedure as may be prescribed.

ORDER 10 RULE 1-A

Order 10 Rule 1-A deals with direction of the court to opt for any one mode of alternative dispute
resolution.

According to Order 10 Rule1-A, “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.”

ORDER 10 RULE 1-B

Order 10 Rule1-B deals with appearance before the conciliatory forum or authority.

According to Order 10 Rule1-B, “where a suit is referred under Rule 1-A, the parties shall appear
before such forum or authority for conciliation of the suit.”

ORDER 10 RULE 1-C

Order 10 Rule 1-C deals with Appearance before the court consequent to the failure of efforts of
conciliation.

According to Order 10 Rule 1-C, Where a suit is referred under Rule 1-A and the presiding officer
of conciliation forum or authority is satisfied that it would not be proper in the interest of justice

10
Afcons Infrastructure and others v. Cherian Varkey Construction Company Pvt. Ltd. and others, (2010) 8 SCC 24.

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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.”

Section 89, CPC confers the jurisdiction on the court to refer a dispute to an ADR process whereas
Rules 1-A to 1-C of Order X lays down the manner in which the jurisdiction is to be exercised by
the Court. The scheme is that the court explains the choices available regarding ADR process to
the parties, permit them to opt for a process by consensus, and if there is no consensus, proceeds
to choose the process.

CASES UNSUITABLE AND SUITABLE FOR ADR PROCESSES

In Afcons Infrastructure and others v. Cherian Varkey Construction Company Pvt. Ltd. and others
case, the Supreme Court of India has observed that certain categories of cases, having regard to
their nature, are normally considered to be not suitable or suitable for ADR Processes.

CASES UNSUITABLE FOR ADR PROCESSES

(1) Representative suits under order 1 Rule 8 CPC

(2) Dispute relating to Election to Public Offices (excluding disputes between two groups
regarding management of Societies, Clubs, Association etc.)
(3) Cases involving grant of authority by the Court after enquiry for example, suits for grant
of probate or letter of administration.
(4) Cases involving serious and specific allegations of fraud, fabrication of documents,
forgery, impersonation, coercion, etc.
(5) Cases requiring protection of courts for example, claims against minors, deities and
mentally challenged and suits for declaration of title against the Government.
(6) Cases involving prosecution for criminal offences.

CASES SUITABLE FOR ADR PROCESSES

Except the excluded category of cases, all other suits and cases of civil matters in particular, the
following cases are normally considered to be suitable for A.D.R. processes.

(1) All cases relating to trade, commerce and contracts (including all money cases);
➢ disputes arising out of contracts (including all money claims).
➢ disputes relating to specific performance.

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 ➢ disputes between suppliers and customers.
➢ disputes between bankers and customers.
➢ disputes between developers/builders and customers.
➢ disputes between landlords and tenants or licensors and licensees.
➢ disputes between insurer and insured.
(2) All cases arising from strained or soured relationships, including
➢ disputes relating to matrimonial causes, maintenance, custody of children.
➢ disputes relating to partition/division among family members, coparceners, co-
owners; and
➢ disputes relating to partnership among partners.
(3) All cases where there is a need for continuation of the pre-existing relationship in spite of
the disputes, including
➢ disputes between neighbours (relating to easementary rights, encroachments,
nuisance, etc.).
➢ disputes between employers and employees.
➢ disputes among members of societies or associations or apartment owners or
associations.
(4) All cases relating to tortious liability, including claims for compensation in motor accidents
or other accidents.
(5) All consumer disputes, including where a trader/supplier/manufacturer/service provider is
keen to maintain his business/professional reputation and credibility or product popularity.

The Supreme Court has further observed that the above lists of “suitable” and “unsuitable”
categorization of cases are illustrative and not exhaustive.

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