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Section 89 of the Civil Procedure Code: Is it really necessary?
A case fought in court may offer resolution in terms of the way forward in compensation, but it never really pays heed to the relationship between parties who may never become friends again but will stay adversaries fighting appeal after appeal. Alternate Dispute Resolution (ADR) aims to change this state of mind by allowing parties to communicate their problems and have an open and honest conversation through which they can both compromise and settle for the best option while keeping their pre-existing relationship alive. In India, the overburdened judiciary and the always active legislature have been attempting to encourage dispute resolution by alternate means like arbitration, conciliation, mediation and negotiation but so far, the only steps forward have been taken with the institutionalization of arbitration by the Arbitration and Conciliation Act, 1996. The people of India are still not convinced on the efficiency and effectivity of Alternate Dispute Resolution mechanisms and to alter this, Section 89 was inserted in the Code of Civil Procedure (CPC) to allow court to refer certain disputes to means of Alternate Dispute Resolution if found better suited to it than litigation. The CPC believes that “justice delayed is justice denied” and by allowing for mandatory mediation or arbitration, it tries to avoid multiplicity of litigation, and waste of time and money.
Section 89 takes cognizance of the existing legislations governing each of the alternate dispute resolution mechanisms to state that a reference of a matter to arbitration or conciliation will be governed by the Arbitration and Conciliation Act, 1996; reference to a Lok Adalat or Judicial Settlement will be in accordance with the Legal Services Authorities Act, 1987; and a reference to a mediation procedure will be dealt in accordance with the rules prescribed by the court[1]. The Section also lays down the criteria for the suitability of cases to Alternate Dispute Resolution and provides that cases that involve representative suits which affect public interest, disputes relating to election to a public office, disputes granting relief in rem, cases of fraud/fabrication/forgery/impersonation/coercion, criminal offences, and conflicts regarding the protection of courts, will not be suitable for ADR. However, all other cases or disputes of a civil nature including, but not limited to, consumer disputes, cases of tortious liability, disputes arising out of a strained relationship, are suitable for and likely to be resolved by ADR. Under Section 89, the court can, if it feels necessary, refer the dispute to arbitration, conciliation, mediation, judicial settlement or Lok Adalat. Arbitration is an adjudicatory procedure whereby the arbitrator listens to the parties, assesses the evidence and pronounces an award in the end and this award is enforceable against the parties and by a court of law. It is a process quite similar to a judicial trial and because of a guaranteed resolution it is the most preferred for of alternate dispute resolution. Conciliation, Mediation, Judicial Settlement and Lok Adalat do not involve adjudication of any kind and are merely for the purpose of facilitating a conversation between parties which will allow then to come to a mutually agreeable settlement, the terms of which then become binding on the parties and enforceable by a court[2].
Section 89 suffers from many discrepancies and loopholes and after the verdict in Salem Bar Association v. Union of India[3] which upheld its validity, the Supreme Court in the case of Afcons Infrastructure Ltd. and Anr. v. Cherian Varkey Construction Co. (P) Ltd.[4] discussed the many shortcomings of the section and cleared the ambiguities. First, the meaning of “mediation” and “judicial settlement” as defined by the Code was corrected. Second, Section 89(1) requires the court to formulate terms for settlement which will be discussed by the parties and if approved the dispute will be sent to an ADR forum but this negates the responsibility of the conciliator, mediator or arbitrator and also does not reduce the workload of the court[5]. Third, the Section uses the word “shall”, implying a requirement, and “may”, implying discretion, to define the court’s responsibility in referring a case to ADR but this has now been interpreted as the court having a mandatory responsibility to consider a case for ADR. Furthermore, parties whose cases are referred to alternate dispute resolution mechanisms may humor the court by attempting a resolution but as there is no penalty from withdrawing from an ADR procedure, one party might excuse themselves from the process just to have the case returned to a judicial trial[6]. There is also speculation that lawyers tend to discourage their clients from pursuing any ADR mechanisms for conflict resolution because they fear that it might cost them their fees. All of these reasons make ADR an unappealing choice for parties to a dispute, but this can still be changed.
While the provisions for ADR under the Code of Civil Procedure have many loopholes, it is still a revolutionary concept and in a country that is yet to accept methods of Alternate Dispute Resolution it is necessary to mandate it in certain cases as a start towards institutionalizing it and encouraging voluntary participation in ADR mechanisms.
[1] Editor, Alternative Dispute Resolution under Section 89 of the Code of Civil Procedure, Shodhganga, (Aug. 10, 2013, 8:48 PM), https://shodhganga.inflibnet.ac.in/bitstream/10603/26666/12/12_chapter%206.pdf.
[2] Team, An Analysis of Alternative Resolution under Section 89 of the Civil Procedure Code, LawTimesJournal, (Apr. 11, 2019, 3:19 PM), http://lawtimesjournal.in/an-analysis-of-alternative-dispute-resolution-under-section-89-of-civil-procedure-code/.
[3] Salem Bar Association v. Union of India, (2003) 1 SCC 49.
[4] Afcons Infrastructure Ltd. and Anr. v. Cherian Varkey Construction Co. (P) Ltd, (2010) 8 SCC 24
[5] Justice S. U. Khan, Judicial Settlement under Section 89 C.P.C., IJTR, (Aug. 28, 2016, 7:46 PM), http://ijtr.nic.in/Article_chairman%20S.89.pdf.
[6] Gaurav Prakash, Section 89 of CPC – A Critical Analysis, LegalServiceIndia, (Sep. 23, 2012, 5:19 PM), http://www.legalserviceindia.com/legal/article-385-section-89-of-cpc-a-critical-analysis.html.
- Alternate Dispute Resolution
- Mandatory
- Code of Civil Procedure
