The Code of Civil Procedure, 1908 provides a mechanism for ‘out of court settlements’ to augment amicable as well as time & cost-efficient dispute resolution. Section 89 of the C.P.C. r/w Order 10 Rules 1(A), 1(B), and 1(C) of the C.P.C. provide the express provisions for Alternate Dispute Resolution.
Section 89 C.P.C.:
The Section lays down that the court has a duty to refer the case for settlement outside the court, if it finds that a possibility that the case may be settled through any means out of Arbitration, Conciliation, Mediation, Judicial Settlement or Lok Adalat. While referring the case for such settlement to the respective authority, it shall formulate the terms of settlement and may even re-formulate the terms of settlement wherever needed.
The proceedings thereafter shall be governed by the Arbitration & Conciliation Act, the Mediation Act, or the Legal Services Authority Act, respectively.
Order 10 Rule 1(A) to (C):
This is the procedural aspect of the mechanism so provided under Section 89 of the Code, and it says that after recording the admissions and denials, the court will direct the parties to the suit to opt for a mode of settlement from the list mentioned in Section 89(1). After that, the court will fix the date for appearance before such forum or authority as may be opted by the parties, and the parties will appear before the respective authority on the date so fixed.
In cases where the authority feels that it will not be proper in the interest of justice, it will refer the parties back to the Court. Once the parties return to the court, the court shall commence the proceedings from the same stage, from where it was referred for the ADR.
Afcons Infrastructure Ltd. and Ors. vs. Cherian Verkay Constructions & Ors., 2010 (8) SCC 24
In this landmark case, the Hon’ble Supreme Court clarified certain procedural anomalies along with certain drafting mistakes under Section 89. The Mediation and Judicial Settlements were held to be read at each other’s clause due to a mistake in the mentioned applicability of the laws therefor. Also, it was held that referring to the ADR is not mandatory at all, as the Section itself expressly mentions such intention. However, it was held that in cases that are not in the excluded category, the court has to mention the reason why it did not refer the case for ADR.
The Hon’ble Court further mentioned the kinds of cases that are part of the excluded category and cannot be sent for ADR. The cases are as follows:
- The suits specified in Order I, Rule 8 of the CPC that implicate the public interest or the interests of many non-parties.
- Election disputes as to public offices.
- Cases which are related to serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, or coercion under the IPC.
- Special cases which involve protection of the interests of a party through the courts, for instance, claims against minors and mentally challenged, suits for declaration of title against the government, and so on.
- Proceedings which involve prosecution for criminal offences.
- Suits dealing with the grant of certain authority by a party to the other, like probate, etc.
Thus, the Code of Civil Procedure, 1908, as amended in the year 2002, provides a productive provision for relief through ADR, which enables the parties to the suit to settle their disputes through ‘Out of Court Settlements’, which not only saves time but also saves money and the party even gets rid of the complex court procedures.
Contributed by- Adv. Shivam Mani Tripathi