ADR mechanism under code of Civil procedure, 1908 [section 89 read with order 10 rule

1A,1B &1C ]

Section 89 contains 4 alternative forums of dispute resolution, putting an obligation on the Court
that once the issues are framed after considering the contents of the plaint, written statement,
explanation and statement of the parties recorded under Order 10 Rule 1; the Court may consider
as to whether there is any element of settlement which may be acceptable to the parties. It may
formulate those points and give them to the parties for the purpose of their observations and after
receiving their observations, the Court may re-assess and re-formulate a term by a possible
settlement and refer the same for

(a) arbitration,

(b) conciliation,

(c) judicial settlement including Lok Adalat, or

(d) Mediation.

The arbitration and conciliation referred to in Section 89 must be those other than governed by
the agreement of the parties which can be dealt with under the provisions of Act 1996. In case
the matters are referred to arbitration and conciliation under Section 89, procedure prescribed
under the Act 1996 would apply. Section 5 of the Act 1996 provides for non-intervention by
judiciary except as provided under Section 9 for grant of interim relief. Section 8 refers to the
power of reference to arbitration. Section 19 provides for non-application of complicated rules of
Code of Civil Procedure and Evidence Act. Section 61 deals with scope and application for
conciliation. Section 70 puts an embargo not to disclose the information received by the
conciliator from either of the parties. In case the proceedings before him fail, Section 81 provides
that information or statements made by the parties or their agent during the proceedings of
conciliation shall not be admissible in evidence.

So far as procedure governing the Lok Adalat is concerned, it would be as provided under the
provisions of Legal Service Authorities Act 1987. Lok Adalat earlier did not have the statutory
backing. Section 20 provides for cognizance of causes by Lok Adalat. The decision taken by the
Lok Adalat would be deemed to be a decree of the civil court and executable by the court having
jurisdiction. As per the provisions of Section 20 of the Act 1987, in case the party is agreed and
one of them makes an application to the court and the Court is satisfied that it is a fit case for
reference to Lok Adalat, the court would refer the matter to the Lok Adalat which shall decide it
and the award so made by the Lok Adalat would be a decree of civil court, as provided under
Section 21 of the Act 1987. Section 22 D provides that Lok Adalat will not follow the
complicated procedure prescribed under the Code of Civil Procedure or Evidence Act and it may
adopt any fair procedure and observe the principles of natural justice. Section 22 E provides that
the Award so made by the Lok Adalat shall be final and executed by the civil court having
jurisdiction over the matter. (See: B.S. Krishna Murthy v. B.S. Nagraj AIR 2011 SC 794; and
.Ghulam Nabi Dar v. State of J & K, AIR 2013 SC 2950).

Mediation- It provides for the philosophy that parties must mediate and not litigate. The matter
may be referred to a skilled mediator who should be a man of integrity. The mediator shall not
record reasons for failure of proceedings nor such reasoning shall be communicated to the Court
nor the Court would make an attempt to know the reasons for failure. (See also: Moti Ram v.
Ashok Kumar, (2011) 1 SCC 466).

Such a requirement is there so that the Court may not become prejudice against a party, due to
which the proceedings could not succeed. The Courts have to frame the Rules in this regard.

The remedies prescribed by Section 89 has advantage as the parties are in control of their
proceedings. The matter can be settled within short span of period. There will be no strained
relations between the parties, and in case the matter is resolved by any of the procedures
provided under Section 89 of the Code, the plaintiff shall be entitled for claim of refund of the
Court Fees paid by him, as provided under Section 16 of the Court Fees Act,1870.

In order to facilitate the working of alternative forums, as provided under Section 89 of the Code,
the provision contained in Order 10 Rule 1 A provides for a direction of the Court to the party to
opt for any one mode of alternative dispute resolution. Order 10 Rule 1 B similarly provides for a
procedure for appearance etc. when the matter is referred to the conciliatory forum. Order 10
Rule 1 C provides for the reference back to the Court consequent to failure of efforts of
conciliation.

In State of Punjab & Anr. V. Jalour Singh & Ors., (2008) 2 SCC 660, the Hon’ble Court
considered the scope of Section 89 and the provisions of Sections 19 to 22 of the Legal Services
Authorities Act, 1987 and held that the function of the Lok Adalat relate purely to conciliation
and its order must be based on compromise or settlement between the parties. The Lok Adalat
cannot enter into an adversarial adjudication akin to a Court of law. Any award of the Lok Adalat
not based on a compromise or settlement between the parties would be void.

Section 89 proceedings at appellate stage:- There is no dispute to the settled legal provision that
the pleadings can be amended at any stage. A party can also be impleaded at any stage of the
proceedings. In such an eventuality, as the appeal is a continuation of suit, there should be no
problem in resorting to the procedure prescribed under Section 89 by the Court at appellate stage.

The scope and application of the provisions of Section 89 has been dealt with by the Apex Court
in Salem Bar Association (III) (Supra).
Afcons Infrastructure Ltd and Anr v Cherian Varkey Construction Co (P) Ltd & Ors (2010) 8
SCC 24

The Court laid down that the stage at which the court should explore whether the matter should
be referred to ADR processes , comes after the pleadings are complete and before farming the
issues when the matter is taken up for preliminary hearings for examination of parties under
Order 10 of the Code. However, if for any reason, the court had missed the opportunity to
consider and refer to ADR processes under section 89 before farming issues, nothing prevents
the court from resorting to Section 89 even after framing issues. But once evidence is
commenced, the court will be reluctant to refer the matter to ADR processes lest it becomes a
tool for protracting a trial.

In this case court further held as under:

“Section 89 starts with the words "where it appears to the court that there exist elements of a
settlement". This clearly shows that cases which are not suited for ADR process should not be
referred under section 89 of the Code. The court has to form an opinion that a case is one that is
capable of being referred to and settled through ADR process. Having regard to the tenor of the
provisions of Rule 1A of Order 10 of the Code, the civil court should invariably refer cases to
ADR process. Only in certain recognized excluded categories of cases, it may choose not to refer
to an ADR process. Where the case is unsuited for reference to any of the ADR process, the
court will have to briefly record the reasons for not resorting to any of the settlement procedures
prescribed under section 89 of the Code. Therefore, having a hearing after completion of
pleadings, to consider recourse to ADR process under section 89 of the Code, is mandatory. But
actual reference to an ADR process in all cases is not mandatory. Where the case falls under an
excluded category there need not be reference to ADR process. In all other case reference to
ADR process is a must.

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 CPC 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 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 government.

(vi) Cases involving prosecution for criminal offences.

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:

(i) 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;

(ii) 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.

(iii) 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/associations/Apartment owners Associations;

(iv) All cases relating to tortious liability including claims for compensation in motor
accidents/other accidents; and

(v) All consumer disputes including disputes where a trader/supplier/manufacturer/service