THE

CONCEPT
OF
MEDIATION
 INTRODUCTION

ALTERNATIVE DISPUTES RESOLUTION:

Alternative Disputes Resolution (ADR) refers to a variety of

techniques for resolving disputes by means other than litigation. ADR system
seeks to provide cheap, simple, quick and accessible justice. ADR is a process
distinct from normal judicial process. Under this, disputes are settled with the
assistance of third party, where proceedings are simple and are conducted, by and
large, in the manner agreed to by the parties. ADR methods, in the broader and
larger spectrum, supplement the court based methods of resolving disputes. In
India these methods are rather promoted, recognized and adopted by the judicial
system itself.
 DEFINITION

MEDIATION IN AFCONS INFRASTRUCTURE:

In Afcons infrastructure case supra, the Hon'ble Supreme

Court of India adopted the following definition of 'mediation' suggested in the
model mediation rules. 'Settlement by 'mediation' means the process by which a
mediator appointed by parties or by the court, as the case may be, mediates the
dispute between the parties to the suit by the application of the provisions of the
Mediation Rules, 2003 in Part II, and in particular, by facilitating discussion
between parties directly or by communicating with each other through the
mediator, by assisting parties in identifying issues, reducing misunderstandings,
clarifying priorities, exploring areas of compromise, generating options in an
attempt to solve the dispute and emphasizing that it is the parties' own
responsibility for making decisions which affect them.

'Mediation' is a facilitative process in which “disputing

parties engage the assistance of an impartial third party, the mediator, who helps
them to try to arrive at an agreed resolution of their dispute. The mediator has no
authority to make any decisions that are binding on them, but uses certain
procedures, techniques and skills to help them to negotiate an agreed resolution
of 3 their dispute without adjudication.” After the Afcons judgment, the dispute
for mediation is to be referred to a suitable person or institution which is to be
deemed to be a Lok Adalat. The reference to mediation in terms of section 89
CPC can also be made even without the consent of the parties.
 SECTION 89 CPC

SETTLEMENT OF DISPUTES OUTSIDE THE COURT –

(1) Where it appears to the Court that there exist elements of a settlement
which may be acceptable to the parties, the Court shall formulate the terms of
settlement and give them to the parties for their observations and after
receiving the observations of the parties, the Court may re-formulate the terms
of a possible settlement and refer the same for-

 arbitration
 conciliation
 judicial settlement including settlement through Lok Adalat
 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 Authority Act, 1987 (39 of 1987) and all other
provisions of that Act shall apply in respect of the dispute so referred to
the Lok Adalat

(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 (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.

Section 89 of the Code of Civil Procedure, 1908 embodies the legislative mandate
to the court to refer sub judice disputes to various ADR mechanisms enunciated
therein where it finds it appropriate to do so, in order to enable the parties to
finally resolve their pending cases through well-established dispute resolution
methods other than litigation. While giving effect to Section 89 CPC, the court
should briefly record that having regard to the nature of dispute, the case deserves
to be referred to mediation. There is no need for an elaborate order for making
the reference.
 MAIN POINTS OF AFCONS JUDGEMENT

(1) The procedure to be adopted by a court under Section 89 of the Code is as

under:

(a) When the pleadings are complete, before framing issues, the court shall
fix a preliminary hearing for appearance of parties. The court should acquaint
itself with the facts of the case and the nature of the dispute between the parties.

(b) The court should first consider whether the case falls under any of the
category of the cases which are required to be tried by courts and not fit to be
referred to any ADR processes. If it finds that the case falls under any excluded
category, it should record a brief order referring to the nature of the case and why
it is not fit for reference to ADR processes. It will then proceed with the framing
of issues and trial.

(c) In other cases (that is, in cases which can be referred to ADR
processes) the court should explain the choice of five ADR processes to the
parties to enable them to exercise their option.

(d) The court should first ascertain whether the parties are willing for
arbitration. The court should inform the parties that arbitration is an adjudicatory
process by a chosen private forum and reference to arbitration will permanently
18 take the suit outside the ambit of the court. The parties should also be informed
that the cost of arbitration will have to be borne by them. Only if both parties
agree for arbitration, and also agree upon the arbitrator, the matter should be
referred to arbitration.

(e) If the parties are not agreeable for arbitration, the court should
ascertain whether the parties are agreeable for reference to conciliation which will
be governed by the provisions of the AC Act. If all the parties agree for reference
to conciliation and agree upon the conciliator(s), the court can refer the matter to
conciliation in accordance with Section 64 of the AC Act.

(f) If the parties are not agreeable for arbitration and conciliation, which
is likely to happen in most of the cases for want of consensus, the court should,
keeping in view the preferences/options of parties, refer the matter to any one of
the other three ADR processes:

 Lok Adalat
 mediation by a neutral third-party facilitator or mediator
 a judicial settlement, where a Judge assists the parties to arrive at a
settlement

(g) If the case is simple which may be completed in a single sitting, or

cases relating to a matter where the legal principles are clearly settled and there
is no personal animosity between the parties (as in the case of motor accident
claims), the court may refer the matter to Lok Adalat. In case where the questions
are complicated or 19 cases which may require several rounds of negotiations,
the court may refer the matter to mediation. Where the facility of mediation is not
available or where the parties opt for the guidance of a Judge to arrive at a
settlement, the court may refer the matter to another Judge for attempting
settlement.

(h) If the reference to the ADR process fails, on receipt of the report of
the ADR forum, the court shall proceed with hearing of the suit. If there is a
settlement, the court shall examine the settlement and make a decree in terms of
it, keeping the principles of Order 23 Rule 3 of the Code in mind.

(i) If the settlement includes disputes which are not the subject-matter of
the suit, the court may direct that the same will be governed by Section 74 of the
AC Act (if it is a conciliation settlement) or Section 21 of the Legal Services
Authorities Act, 1987 (if it is a settlement by a Lok Adalat or by mediation which
is a deemed Lok Adalat). If the settlement is through mediation and it relates not
only to disputes which are the subject-matter of the suit, but also other disputes
involving persons other than the parties to the suit, the court may adopt the
principle underlying Order 23 Rule 3 of the Code. This will be necessary as many
settlement agreements deal with not only the disputes which are the subject-
matter of the suit or proceeding in which the reference is made, but also other
disputes which are not the subject-matter of the suit.

(j) If any term of the settlement is ex facie illegal or unenforceable, the

court should draw the attention of parties thereto to avoid further litigation and
disputes about executability.

2. The court should also bear in mind the following consequential aspects, while
giving effect to Section 89 of the Code:

a) If the reference is to arbitration or conciliation, the court has to record that

the reference is by mutual consent. Nothing further need be stated in the
order-sheet.
b) If the reference is to any other ADR process, the court should briefly record
that having regard to the nature of dispute, the case deserves to be referred
to Lok Adalat, or mediation or judicial settlement, as the case may be.
There is no need for an elaborate order for making the reference.
c) The requirement in Section 89(1) that the court should formulate or
reformulate the terms of settlement would only mean that the court has to
briefly refer to the nature of dispute and decide upon the appropriate ADR
process.
d) Avoiding apprehensions of bias and prejudice. If the Judge in charge of the
case assists the parties and if settlement negotiations fail, he should not
deal with the adjudication of the matter, to avoid apprehensions of bias and
 prejudice. It is therefore advisable to refer cases proposed for judicial
settlement to another Judge.
e) Keeping track of the matter If the court refers the matter to an ADR process
(other than arbitration), it should keep track of the matter by fixing a
hearing date for the ADR report. The period allotted for the ADR process
can normally vary from a week to two months (which may be extended in
exceptional cases, depending upon the availability of the alternative forum,
the nature of case, etc.). Under no circumstances the court should allow the
ADR process to become a tool in the hands of an unscrupulous litigant
intent upon dragging on the proceedings.
f) Not sending Original Record Normally the court should not send the
original record of the case when referring the matter to an ADR forum. It
should make available only copies of relevant papers to the ADR forum.
(For this purpose, when pleadings are filed the court may insist upon filing
of an extra copy). However if the case is referred to a court annexed
mediation centre which is under the exclusive control and supervision of a
judicial officer, the original file may be made available wherever
necessary.
 PROCESS IN NUTSHELL

 know the dispute

 exclude 'unfit' cases
 ascertain consent for arbitration or conciliation
 if there is no consent, select Lok Adalat for simple cases and mediation for
all other cases, reserving reference to a Judge-assisted settlement only in
exceptional or special cases.
 CASES NOT SUITABLE FOR ADR PROCESS

The following categories of cases are normally considered to be not suitable for
ADR process having regard to their nature:

(i) Representative suits under Order 1 Rule 8 Civil Procedure Code which
involve public interest or interest of numerous persons who are not
parties before the court. (In fact, even a compromise in such a suit is a
difficult process requiring notice to the persons interested in the suit,
before its acceptance).
(ii) Disputes relating to election to public offices (as contrasted from
disputes between two groups trying to get control over the management
of societies, clubs, association, etc.).
(iii) Cases involving grant of authority by the court after enquiry, as for
example, suits for grant of probate or letters of administration.
(iv) Cases involving serious and specific allegations of 10 fraud, fabrication
of documents, forgery, impersonation, coercion, etc.
(v) Cases requiring protection of courts, as for example, claims against
minors, deities and mentally challenged and suits for declaration of title
against the Government.
(vi) Cases involving prosecution for criminal offences.
 CASES SUITABLE FOR ADR PROCESSES

a) All other suits and cases of civil nature in particular the following
categories of cases (whether pending in civil courts or other special
tribunals/forums) are normally suitable for ADR processes:
b) All cases relating to trade, commerce and contracts, including disputes
arising out of contracts (including all money claims); disputes relating to
specific performance; disputes between suppliers and customers; disputes
between bankers and customers; disputes between developers/builders and
customers; disputes between landlords and tenants/licensor and licensees;
disputes between insurer and insured
c) 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.
d) All cases where there is a need for continuation of the preexisting
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/associations/apartment owners' associations
e) All cases relating to tortious liability, including claims for compensation in
motor accidents/other accidents
f) All consumer disputes, including disputes where a
trader/supplier/manufacturer/service provider is keen to maintain his
business/professional reputation and credibility or product popularity. The
above enumeration of "suitable" and "unsuitable" categorization of cases
is not exhaustive or rigid. They are illustrative, which can be subjected to
just exceptions or addition by the courts/ tribunals exercising its
jurisdiction/discretion in referring a dispute/case to an ADR process. In
spite of the categorization mentioned above, a referral judge must
independently consider the suitability of each case with reference to its
facts and circumstances.
 CONSEQUENCES OF NON-ATTENDANCE OF PARTIES

Consequences of non-attendance of parties at sessions on due dates. If a party

fails to attend a session notified by the mediator on account of deliberate or willful
act, the other party or the mediator can apply to the Court in which the suit or
proceeding is pending, in that case Court may issue the appropriate directions
having regard to the facts and circumstances of the case.