ADR Dissertation

CLINICAL COURSE- ALTERNATE DISPUTE RESOLUTION
Clinical Course-I
Alternate Dispute
Resolution
MIR IRAM JAN
B.A.LLB (Hons.)
Section A
Roll No. 15BLW0033
Jamia Millia Islamia
New Delhi-25
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Brief Contents
Description………………………………… P.no.
i) Acknowledgment…………………………06
ii) Research Methodology…………………...07
iii) Abbreviations………………………. ……08
iv) Statutes……………………………………09
v) Highlights of the ADR
Amendment Act, 2015……………………….10
vi) Report on The National
Seminar on Alternative
Dispute Resolution…………………………..134
vii) Report on The Arbitration
Proceeding Attended………………………..140
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Contents
Chapter 1 Concept of Alternate Dispute

Resolution.
A. INTRODUCTION
B. HISTORY OF ALTERNATE DISPUTE RESOLUTION
C. CONSTITUTIONAL PROVISIONS
D. THE OBJECTIVES OF THE ACT
E. APPLICATION AND SCOPE OF CONCILIATION
F. THE LEGAL SERVICES AUTHORITY ACT, 1987
G. LOK ADALATS
Chapter 2 Scope of Alternative Dispute
Resolution.
A. INTRODUCTION
B. FIVE MODES OF ADR.
C. OTHER MODES OF ADR.
D. DIFFERENCE BETWEEN VARIOUS MODES OF ADR.
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Chapter 3 Cases “Unsuitable” & “Suitable for

ADR Processes
A. INTRODUCTION.
B. CASES “UNSUITABLE” FOR ADR PROCESSES (EXCLUDED
CATEGORY OF CASES).
C. CASES “SUITABLE” FOR ADR PROCESSES.
D. APPROPRIATE STAGE FOR REFERENCE TO ADR
PROCESS.
E. CONSENT OF PARTIES FOR REFERRING THE MATTER TO
ADR PROCESSES.
Chapter 4 Overview of ADR

A. INTRODUCTION
B. CONSEQUENTIAL ASPECTS.
C. KEEPING TRACK OF THE MATTER.
D. COURT TO GUIDE PARTIES TO EXERCISE THEIR
OPTIONS.
E. WHETHER THE REFERENCE TO ADR PROCESS IS
MANDATORY?
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Chapter 5 Importance of ADR System
A. INTRODUCTION.
B. DISPUTE RESOLUTION: WHY SHOULD ONE RESORT TO
ADR?
C. TRAVAILS OF THE LITIGATIVE SYSTEM.
Chapter 6 Shortcomings of Alternative
Dispute Resolution.
A. INTRODUCTION.
B. THE COMPARATIVE FAILURE OF ARBITRATION.
C. MEDIATION AND CONCILIATION: A BETTER
ALTERNATIVE.
D. SUGGESTIONS FOR IMPROVING MECHANISMS.
E. CONCLUSION.
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Acknowledgment
I have an immense regard and honor in submitting my dissertation of clinical
course-I, to an amazing guide/teacher/mentor Adv. Madhu Saini Ma’am. Her
honesty, dedication and passion as a teacher, helped me to avail the valuable
experience of a true learner in the garb of this project. Her unconditional support,
valuable guidance, meticulous supervision and perpetual inspiration provided me
with the strength to be able to put forward this work and transform into a seeker
of further knowledge.
I am blessed to extend my gratefulness to the most hardworking figure of the law
Faculty i.e. Prof. (Dr.) Nuzhat Parveen (Dean, FOL, JMI); who has always been a
great help in every way possible. She not only made the required books available
in the library but also, made sure to bring the culture of live proceedings
participation for every student.
Last but not the least, I would like to extend my regards and indebtedness to my
parents and all my friends who in my worst time, when I had met an accident, and
it seemed only a dream to finish this project, helped me and encouraged me to not
lose hope and work harder irrespective of all odds and achieve this hard task.
New Delhi Iram Jan
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RESEARCH METHODOLOGY
The Methodology used in the assignment is Doctrinal

Method of Research, and the material is collected from
statutes, textbook, published articles, internet
information and other sources which are specified in the
Bibliography page.
Iram Jan
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ABBREVIATIONS
 AIR All India Reporter.

 ADR Alternate Dispute Resolution.
 C.P.C Code of Civil Procedure.
 Cr.P.C Code of Criminal Procedure.
 Ed. Edition.
 HLR Harvard Law Review.
 i.e In Essence.
 Ibid. Ibidem.
 Id. Idem.
 J. Justice.
 JILI Journal of Indian Law Institute
 MACC Motor Accident Compensation Claim.
 No. Number.
 NGO Non-governmental Organization.
 P., PP Page, Pages.
 Rs. Rupees.
 SC Supreme Court.
 SCC Supreme Court Cases.
 SLSA State Legal Service Authority.
 Sec. Section.
 U/S Under Section.
 Viz Vizdelict; Namely
 V./ Vs. Versus.
 Vol. Volume.
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STATUTES
 CONSTITUTION OF INDIA, 1950
 CIVIL PROCEDURE CODE, 1908
 CRIMINAL PROCEDURE CODE, 1973
 THE ARBITRATION AND CONCILIATION ACT,
1996
 LEGAL SERVICES AUTHORITY ACT, 1987
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Highlights of Amendment to the Arbitration and Conciliation Act 1996

via Arbitration Ordinance 2015
The Government of India decided to amend the Arbitration and Conciliation Act, 1996 by
introducing the Arbitration and Conciliation (Amendment) Bill, 2015 in the Parliament. The
Union Cabinet chaired by the Prime Minister, had given its approval for amendments to the
Arbitration and Conciliation Bill, 2015 taking into consideration the Law Commission's
recommendations, and suggestions received from stake holders.
In an attempt to make arbitration a preferred mode of settlement of commercial disputes and

making India a hub of international commercial arbitration, the President of India on 23rd
October 2015 promulgated an Ordinance ("Arbitration and Conciliation (Amendment)
Ordinance, 2015) amending the Arbitration and Conciliation Act, 1996.
Amendments
The following are the salient features of the new ordinance:
1. The first and foremost welcome amendment introduced by the ordinance is with respect
to definition of expression 'Court'. The amended law makes a clear distinction between an
international commercial arbitration and domestic arbitration with regard to the definition of
'Court'. In so far as domestic arbitration is concerned, the definition of "Court" is the same as
was in the 1996 Act, however, for the purpose of international commercial arbitration, 'Court'
has been defined to mean only High Court of competent jurisdiction. Accordingly, in an
international commercial arbitration, as per the new law, district court will have no jurisdiction
and the parties can expect speedier and efficacious determination of any issue directly by the
High court which is better equipped in terms of handling commercial disputes.
2. Amendment of Section 2(2): A proviso to Section 2(2) has been added which envisages
that subject to the agreement to the contrary, Section 9 (interim measures), Section 27(taking of
evidence), and Section 37(1)(a), 37(3) shall also apply to international commercial arbitrations,
even if the seat of arbitration is outside India, meaning thereby that the new law has tried to
strike a kind of balance between the situations created by the judgments of Bhatia International
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and Balco v. Kaiser. Now Section 2(2) envisages that Part-I shall apply where the place of
arbitration is in India and that provisions of Sections 9, 27, 37(1) (a) and 37 (3) shall also apply
to international commercial arbitration even if the seat of arbitration is outside India unless
parties to the arbitration agreement have agreed to the contrary.
3. Amendment to Section 8: (Reference of parties to the dispute to arbitration): In

Section 8, which mandates any judicial authority to refer the parties to arbitration in respect of
an action brought before it, which is subject matter of arbitration agreement . The sub-
section(1) has been amended envisaging that notwithstanding any judgment, decree or order of
the Supreme Court or any court, the judicial authority shall refer the parties to the arbitration
unless it finds that prima facie no valid arbitration agreement exists. A provision has also been
made enabling the party, who applies for reference of the matter to arbitration, to apply to the
Court for a direction of production of the arbitration agreement or certified copy thereof in the
event the parties applying for reference of the disputes to arbitration is not in the possession of
the arbitration agreement and the opposite party has the same.
4. Amendment to Section 9 (Interim Measures): The amended section envisages that if

the Court passes an interim measure of protection under the section before commencement of
arbitral proceedings, then the arbitral proceedings shall have to commence within a period of 90
days from the date of such order or within such time as the Court may determine. Also, that the
Court shall not entertain any application under section 9 unless it finds that circumstances exist
which may not render the remedy under Section 17 efficacious.
The above amendments to Section 9 are certainly aimed at ensuring that parties ultimately
resort to arbitration process and get their disputes settled on merit through arbitration. The
exercise of power under Section 9 after constitution of the tribunal has been made more
onerous and the same can be exercised only in circumstances where remedy under Section 17,
appears to be non-efficacious to the Court concerned.
5. Amendment to Section 11 (Appointment of Arbitrators): In so far as section 11,

"appointment of arbitrators" is concerned, the new law makes it incumbent upon the Supreme
Court or the High Court or person designated by them to dispute of the application for
appointment of arbitrators within 60 days from the date of service of notice on the opposite
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party.
As per the new Act, the expression 'Chief Justice of India' and 'Chief Justice of High Court'
used in earlier provision have been replaced with Supreme Court or as the case may be, High
Court, respectively. The decision made by the Supreme Court or the High Court or person
designated by them have been made final and only an appeal to Supreme Court by way of
Special Leave Petition can lie from such an order for appointment of arbitrator. The new law
also attempts to fix limits on the fee payable to the arbitrator and empowers the high court to
frame such rule as may be necessary considering the rates specified in Fourth Schedule.
6. Amendment to Section 12: Amendment to Section 12, as per the new law makes the
declaration on the part of the arbitration about his independence and impartiality more onerous.
A Schedule has been inserted (Fifth Schedule) which lists the grounds that would give rise to
justifiable doubt to independence and impartiality of arbitrator and the circumstances given in
Fifth Schedule are very exhaustive. Any person not falling under any of the grounds mentioned
in the Fifth Schedule is likely to be independent and impartial in all respects. Also, another
schedule (seventh schedule) is added and a provision has been inserted that notwithstanding
any prior agreement of the parties, if the arbitrator's relationship with the parties or the counsel
or the subject matter of dispute falls in any of the categories mentioned in the seventh schedule,
it would act as an ineligibility to act as an arbitrator. However, subsequent to disputes having
arisen, parties may by expressly entering into a written agreement waive the applicability of
this provision. In view of this, it would not be possible for Government bodies to appoint their
employees or consultants as arbitrators in arbitrations concerning the said Government bodies.
7. Amendment to Section 14: Amendment of Section 14 aimed at filling a gap in the

earlier provision, which only provided for termination of mandate of the arbitrator. If any of the
eventualities mentioned in sub-section (1) arises. The new law also provides for termination of
mandate of arbitration and substitution and his/her substitution by another one.
8. Amendment to Section 17 (Interim Measures by Arbitral tribunal): The old Act had
lacunae where the interim orders of the tribunal were not enforceable. The Amendment
removes that lacunae and stipulates that an arbitral tribunal under Section 17 of the Act shall
have the same powers that are available to a court under Section 9 and that the interim order
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passed by an arbitral tribunal would be enforceable as if it is an order of a court. The new

amendment also clarifies that if an arbitral tribunal is constituted, the Courts should not
entertain applications under Section 9 barring exceptional circumstances.
9. Amendment to Section 23: The new law empowers the Respondent in the proceedings
to submit counter claim or plead a set-off and hence falling within the scope of arbitration
agreement.
10. Amendment to Section 24: It requires the arbitral tribunal to hold the hearing for
presentation of evidence or oral arguments on day to day basis, and mandates the tribunal not to
grant any adjournments unless sufficient causes shown. It further empowers the tribunal the
tribunal to impose exemplary cost where adjournment
11. Insertions of new Section 29A and 29B( Time limit for arbitral award and Fast
Track Procedure) : To address the criticism that the arbitration regime in India is a long drawn
process defying the very existence of the arbitration act, the Amended Act envisages to provide
for time bound arbitrations. Under the amended act, an award shall be made by the arbitral
tribunal within 12 months from the date it enters upon reference. This period can be extended to
a further period of maximum 6 months by the consent of the parties, after which the mandate of
the arbitrator shall terminate, unless the Court extends it for sufficient cause or on such other
terms it may deem fit. Also, while extending the said period, the Court may order reduction of
fees of arbitrator by upto 5% for each month such delay for reasons attributable to the
arbitrator. Also, the application for extension of time shall be disposed of by Court within 60
days from the date of notice to the opposite party.
The Ordinance also provides that the parties at any stage of arbitral proceeding may opt for a
fast track procedure for settlement of dispute, where the tribunal shall have to make an award
within a period of 6 months. The tribunal shall decide the dispute on the basis of written
pleadings, documents and submissions filed by the parties without oral hearing, unless the
parties request for or if the tribunal considers it necessary for clarifying certain issues. Where
the tribunal decides the dispute within 6 months, provided additional fees can be paid to the
arbitrator with the consent of the parties.
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12. Amendment to Section 25: The new Act empowers the tribunal to treat Respondent's
failure to communicate his statement of defence as forfeiture of his right to file such statement
of defence. However, the tribunal will continue the proceedings without treating such failure as
admission of the allegations made by the Claimant.
13. Amendment to section 28: The new law requires the tribunal to take into account the
terms of contract and trade usages applicable to the transaction. In the earlier law, the arbitral
tribunal was mandated to decide disputes in accordance with the terms of the contract and to
take into account the trade usages applicable to the transaction. To that extent, the new law
seeks to relieve the arbitrators from strictly adhering to the terms of the contract while deciding
the case. However, the arbitrator can still not ignore the terms of the contract. Therefore, the
new amendment seems to bring in an element of discretion in favour of the arbitrators while
making of an award.
14. Amendment to Section 31: This provides for levy of future interest in the absence of any
decision of the arbitrator, on the awarded amount @2% higher than current rate of interest
prevalent on the date of award. The current rate of interest has been assigned the same meaning
as assigned to the expression under Clause (b) of Section 21 of the Interest Act, 1978.
In addition, the new Act lays down detailed parameters for deciding cost, besides providing that
an agreement between the parties, that the whole or part of the cost of arbitration is to be paid
by the party shall be effective only if such an agreement is made after the dispute in question
had arisen. Therefore, a generic clause in the agreement stating that cost shall be shared by the
parties equally, will not inhibit the tribunal from passing the decision as to costs and making
one of the parties to the proceedings to bear whole or as a part of such cost, as may be decided
by the tribunal.
15. Amendment of Section 34 (Limiting the gamut of Public Policy of India): As per the
new amendment, an award passed in an international arbitration, can only be set aside on the
ground that it is against the public policy of India if, and only if, – (i) the award is vitiated by
fraud or corruption; (ii) it is in contravention with the fundamental policy of Indian law; (iii) it
is in conflict with basic notions of morality and justice. The present amendment has clarified
that the additional ground of "patently illegality" to challenge an award can only be taken for
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domestic arbitrations and not international arbitrations. Further, the amendment provides that
the domestic awards can be challenged on the ground of patent illegality on the face of the
award but the award shall not be set aside merely on the ground of an erroneous application of
law or by re-appreciation of evidence. The new Act also provides that an application for setting
aside of an award can be filed only after issuing prior notice to the other party. The party filing
the application has to file an affidavit along with the application endorsing compliance with the
requirement of service of prior notice on the other party. A time limit of one year from the date
of service of the advance notice on the other parties has been fixed for disposal of the
application under Section 34. Significantly, there is no provision in the new Act which
empowers the court or the parties to extend the aforesaid limit of one year for disposal of the
application under Section 34.
16. Amendment to Section 36 (Stay on enforcement of award): The Ordinance provides

that an award would not be stayed automatically by merely filing an application for setting
aside the award under Section 34. There has to be a specific order from the Court staying the
execution of award on an application made for the said purpose by one of the parties. The
Ordinance aims to remove the lacunae that existed in the previous Act where pending an
application under Section 34 for setting aside of arbitral award, there was an automatic stay on
the operation of the award. The new law also empowers the Court to grant stay on operation of
arbitral award for payment of money subject to condition of deposit of whole or a part of the
awarded amount.
17. Amendment to Section 37: Under Section 37(1), the new law makes provision for filing
of an appeal against an order of judicial authority refusing to refer the parties to arbitration
under Section 8.
18. As regards enforcement of certain foreign awards, the new law seeks to add explanation
of Sections 48 and 57 thereby clarifying as to when an award shall be considered to be in
conflict within public policy of India. The parameters are the same as are provided under
Section 34. Similarly, the expression "Court" used in Sections 47 and 56 have been defined to
mean only the High Court of competent jurisdiction.
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CHAPTER 1
Concept of Alternate Dispute Resolution
A. INTRODUCTION:
ADR is just the same old thing new. This casual semi-legal executive framework is an old
development. Diverse types of ADR have been in presence for a huge number of years. The
firm Arbitration (a type of ADR) Act was passed in 1698 under William III. This was an Act
for rendering the honor of referees more efficacious in all cases for the last assurance of debates
alluded to them by shippers and dealers, or others. In 1854, Common Law Procedure Art
explicitly engaged courts to dispatch an honor for reexamination by the judges. It planned to
engage courts to remain (stop) an action in court if the gatherings had consented to take the
question to an assertion. Viable, the Arbitration Act, 1440 skilled various modem ventures to
be taken to concur debate between the gatherings: the gatherings designate authorities court
may likewise name judges if the gatherings neglect to do as such; choose the question casually,
make a honor, or settle the debate by intervention, bargain or some other mom; court pass an
announcement in groups of the honor d found the choice was made legitimately, and
Arbitration Tribunal will be capable m delegate master or lawful guide to submit answer to at a
predetermined inquiry or assessor for helping it on specialized issues.
Later in the Arbitration Act 1950, there was a solidification of the Arbitration Acts 1889 and
1934. It incorporated the intensity of a court to remain activities where there was a material
assertion. Furthermore, the Arbitration Act 1975 offered impact to the New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards.
In 1976 Professor Frank Sander said in his book 'Assortments of Dispute Processing', in future,
not just a courthouse but rather a question goals focus, or a multi-entryway courthouse where
disputants would be screened and diverted in an assortment of debate goals procedures such an
intervention, assertion, reality discovering negligence screening board, unrivaled court, or an
ombudsman.
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In 1976 in Bangladesh, Gram Adalat law was passed under the sponsorship of Union Parishad
to settle minor criminal and common claims. The law house offered a UP Chairman or Gram
Adalat Chairman with an intensity of a third hook Magistrate. The court is contained 5
individuals including the Chairman, 2 General individuals and 2 individuals chosen by the
complainant and protector. The judgment of the court will be approved with consistent help or
by a greater part of 4:1. Nobody can bring up any issue with respect to the lawfulness of the
decision.
The Arbitration Act 1979 managed chiefly with controlling the courts' forces to survey
discretion grants and to decide any inquiry of law emerging over the span of intervention.
In 1980, the then Government of Bangladesh had passed a bill for presenting the workplace of
an ombudsman to meet an established official; after a similar a year ago, the Government has
embraced a strategy of presenting ombudsman segment astute and has effectively set up a Tax
Ombudsman.
In 1981, thinking about costs and postponements in a transfer of cases through the legitimate
arrangement of India. A judgment was made by the Supreme Court of India for the situation
'Master Nanak Foundation versus We Rattan Singh and Sons, saying, Interminable, tedious,
mind-boggling and costly court strategies prompted legal scholars to look for an elective
gathering, less formal, more powerful and seedier for goals of debate dodging procedural empty
talk and this drove them to … '
In 1982, Richard Abel, outlines the political uncertainty that instills the historical backdrop of
ADR in The Politics of Informal Justice: "Yet in the event that the objectives of casual equity
are conflicting, and on the off chance that it is unequipped for acknowledging them due to
logical inconsistencies natural in cutting edge free enterprise, in formalism ought not
straightforwardly be revoked as only a fiendishness to be opposed, or be rejected as a minimal
wonder that can securely be overlooked. It is supported by reformers and grasped by disputants
correctly in light of the fact that it communicates values that deservedly evoke wide loyalty: the
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inclination for agreement over clash, for systems that offer equivalent access to the numerous
instead of unequal benefit to the few, that work rapidly and inexpensively, that allow all natives
to take an interest in basic leadership as opposed to constraining specialist to Professionals";
that are recognizable as opposed to exclusive, and that take a stab at and accomplish
substantive equity as opposed to baffling it for the sake of shape.
In 1982, Former Chief Justice W. Burger of the United States Supreme Court asked, Is not
there a Better Way? In the yearly give an account of the stale of the legal executive to the
American Bar Association. Boss Justice Burger's supplication to the legitimate calling to think
about their customary job as healers of a human clash and use all the more completely the
arrangement and mediation forms pursued on the foot rear areas of different activities in the
United States looking at choices to court settling.
Elective Dispute Resolution (hereinafter alluded to as "ADR") is a term for depicting a

procedure of settling common debate instead of the suit and incorporates intervention,
intercession, pacification, master assurance and early impartial assessment by a third
individual. As the name proposes, it just alludes to a substitute method to settle clashes which a
man or corporate element may experience.
The National Alternative Dispute Resolution Advisory Council ("NADRAC") of Australia has
characterized ADR as "an umbrella term for procedures, other than legal assurance, in which a
fair-minded individual helps those in a question to determine the issues between them."
actually, ADR is progressively alluded to as 'proper debate goals', in acknowledgment of the
way that such methodologies are regularly an option, in contrast, to suit as well as might be the
most ideal approach to determine a question.
The formal equity framework was a similarly the last advancement in a lawful scene where
question goals, was a deep-rooted strategy to determine clashes routinely drilled world-over
crosswise over different social orders and networks. What is recently rising today, be that as it
may, is the broad advancement and multiplication of Alternative Dispute Resolution models in
the residential and worldwide market over generally changing it to an official courtroom?
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There are various explanations behind the appearance of Alternative Dispute Resolution;
fundamentally, the layman is plagued by the court and its formal methodology. He would
preferably live with his issues by achieving a trade-off over methodology an official courtroom
to look for equity particularly when the way to accomplish the equivalent is covered with
different impediments including overburdened judges, a complex legitimate technique which is
tedious and the high as can be costs that accompanied bringing an issue under the steady gaze
of the court.
The incomparable Abraham Lincoln, sixteenth President of the United States of India had
himself said-
"Dishearten case. Convince your neighbors to bargain at whatever point you can. Indicate out
them how the ostensible victor is regularly a genuine failure—in charges and exercise in
futility. As a peacemaker, the legal advisor has a predominant chance of being a decent man.
There will, in any case, be business enough."
B. Historical Background of the ADR System in India:
Dispute resolution outside of courts is not new; societies world-over have long used non-
judicial, indigenous methods to resolve conflicts. What is new is the extensive promotion and
proliferation of ADR models, wider use of court-connected ADR, and the increasing use of
ADR as a tool to realize goals broader than the settlement of specific disputes.1
Alternate Dispute Resolution system is not a new experience for the people of this country also.
It has been prevalent in India since time immemorial. Legal history indicates that down the
ages man has been experimenting with procedure for making it easy, cheap, unfailing and
convenient to obtain justice2. Procedure for justice is indicative of the social consciousness of
1
Alternative Dispute Resolution, Practitioners’ Guide, Centre for Democracy and Governance, Washington, 1998
http://www.usaid.gov/our_work/democracy_and_governance/publications/pdfs/pnacb895.pdf
2
Dr. ShraddhakaraSupakar, Law of Procedure and Justice in Ancient India, Deep & Deep Publication, New Delhi,
1986
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the people. Anywhere law is a measuring rod of the progress of the community. Ancient system
of dispute resolution made a considerable contribution, in reaching resolution of disputes
relating to family, social groups and minor disputes relating to trade and property. Village level
institutions played the leading role, where disputes were resolved by elders, comprising
Council of Village (popularly called Panchayats), which was an informal way of mediation. In
earlier days disputes hardly reached courts. Decisions given by the elderly council were
respected by all. But subsequently boon accompanied bane, the very system lost its impression
due to intervention of political and communal elements.
1.1 Position of ADR in Ancient India:
It is generally presumed that the commonly prevalent system of Government in Ancient India
was monarchy and instances of republic were either exceptions or aberrations. The view is
based on the apparent perception that since there were kings in ancient India, the system was
that of monarchy.3
In the beginning of the Vedic age people did not have a settled life and were nomads but with
development in agriculture people started to settle down in groups 4. The first Indian civilization
arose in the Indus valley about 2,600 BC. It straddled modern India and Pakistan. By 6,500 BC
the people of the area had begun farming. By 5,500 BC they had invented pottery. By about
2,600 BC a prosperous farming society had grown up. The farmers used bronze tools. They
grew wheat, barley and peas. They also raised cattle, goats and sheep. Water buffalo were used
to pull carts. The people spun cotton and they traded with other cultures such as modern-day
Iraq. Some of the people of the Indus Valley began to live in towns5. The Indus Valley people
were most likely Dravidians, who may have been pushed down into south India when the
Aryans, with their more advanced military technology, commenced their migrations to India
around 2,000 BCE. Though the Indus Valley script remains undeciphered down to the present
day, the numerous seals discovered during the excavations, as well as statuary and pottery, not
to mention the ruins of numerous Indus Valley cities, have enabled scholars to construct a
3
http://www.samarthbharat.com/files/republic.pdf
4
http://www.culturalindia.net/indian-history/ancient-india/ancient-government.html
5
http://www.localhistories.org/india.html
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reasonably plausible account of the Indus Valley civilization6. Harappans may have developed
the first democracy. Very little evidence has been found of a king in the Indus Valley, except
the one white priest-king idol and a silver crown; not enough to establish that the “royalty”
were the rulers. Instead the empire was divided into regions with half a dozen cities functioning
as capitals and was governed by a group of people. Archeologist Jonathan Mark Kenoyed has
speculated that the Harappan rulers were merchants, ritual specialists and individuals
controlling important resources, instead of just one social group controlling the rest. From the
construction of the cities however it does appear there were some social classes, as the citadel is
usually 20 feet higher than the middle and lower town7.
The decline of the Indus Valley civilization saw the arrival of Aryans in India. From their
original settlements in the Punjab region, they gradually began to penetrate eastward, clearing
dense forests and establishing “tribal” settlements along the Ganga and Yamuna plains between
1500 B.C. and 800 B.C. By around 500 B.C., most of northern India was inhabited and had
been brought under cultivation, facilitating the increasing knowledge of the use of iron
implements, including ox-drawn plows, and spurred by the growing population that provided
voluntary and forced labour. As riverine and inland trade flourished, many towns along the
Ganga became centers of trade, culture and luxurious living. Increasing population and surplus
production provided the basis for the emergence of independent states with fluid territorial
boundaries over which disputes frequently arose8.
In earlier times, disputes were peacefully decided by intervention of kulas (family or clan
assemblies), srenis (guilds of men following the same occupation), parishads (assemblies of
learned men who knew law) before the king came to adjudicate on disputes9. The political
system of the Aryans in their initial days here was amazingly complex, though quite ingenious.
They hung around together in small village settlements (which later grew to kingdoms) and the
basis of their political and social organization was, not surprisingly, the clan or kula. Being of
somewhat militant nature, this was very much a patriarchal society, with the man in the house
expected to keep his flock in control. Groups of kulas together formed a Grama or village,
6
http://www.sscnet.ucla.edu/southasia/History/Ancient/Indus2.html
7
http://www.hyperhistory.net/apwh/essays/comp/cw02summeriansharappans34100118.htm
8
http://www.thisismyindia.com/ancient_india/ancient-india-government.html
9
http://www.sethassociates.com/alternative_dispute_resolution.php
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which was headed by a Gramina. Many villages formed another political unit called a Visya,
headed by a Visyapati. The Visyas in turn collected under a Jana, which was ruled by a Rajana
or king. However, the precise relationship between the grama, the visya and the Jana has not
been clearly defined anywhere10.
In ancient India there were several grades of arbitration, for example the Puga or a board of
persons who belonged to different sects and tribes but lived in the same locality; the Sreni or
assemblies of tradesmen and artisans belonging to different tribes but connected in some way
with each other, the Kula or groups of persons bound by family ties. From early times, the
decisions of Panchayats were accepted as binding. According to Colebrooke (an English
scholar and commentator on ancient Hindu law), Panchayats were different systems of
arbitration subordinate to the regular courts of law. The decision of a Kula or kin group was
subject to revision by the Sreni which, in turn, could be revised by the Puga. From the decision
of the Puga, appeal was maintainable to Pradvivaca and finally to the sovereign and the prince.
In ancient times the Kula, sreni and Gana were the three types of popular courts, each
succeeding one being more important than the preceding one. When and where these three
failed to administer proper justice, the king or his officers were to interfere. Unfortunately,
Sukra does not explain the nature of the above three types of courts. But on the evidence of the
Mitakshara, it can say that kula court consisted of a group of relations near or distant. It is
important to note that in ancient India joint families were the order of the day and they were
usually very large. When therefore, a disagreement or dispute used to take place between two
members of a family, it was usually settled by its elders. If they failed to bring about any
compromise, the sreni or the guild courts used to intervene. Srenis or guilds became a
prominent feature of commercial life in ancient India from 500 B.C. They were well organized
and had their own executive committees of four or five members. The nature of the Gana Court
is difficult to ascertain. Probably it was identical with the Puga Court of Yajnavalkya, which
consisted of persons of different castes and professions but residing in the same place. It was
obviously the popular panchayat courts11.
10
http://voice.indiasite.com/ancient.html
11
P.B. Udgaonkar, Political Institutions and Administration, Motilal Banarsidass Publishers Pvt. Ltd., New Delhi,
1986, p. 209
22 | P a g e
1.2 Ancient Indian Trade- Guilds System:
Ancient Indian guilds are a unique and multi-faceted form of organization, which combined the
functions of a democratic government, a trade union, a court of justice and a technological
institution12. The guilds of ancient India are often referred to by Sanskrit writers as the
‘Srenya’. This term means a fraternal organization of a group of labourers or artisans. A Srenya
is thus primarily a combination of manual workers for some common purposes. The early
Hindu, Jain and Buddhistic traditions often refer to the Srenyas 13. The earliest associations of
manual workers should have been due to the communistic spirit of Indian civilization. Men of
the same profession and so of the same caste had that common caste feeling, which brought
them together. When once these organizations came into being, the cohesive forces added
strength and they became corporate bodies with a separate existence and personality of their
own. These bodies had for their existence, the sanction of religion and hence they occupied
such a large place in the socio-economic structure of the Hindu States. These bodies gradually
acquired some influence in the political affairs of the tribes to which they belonged14.
When the transition from small petty kingdoms to huge empires had taken place, the political
organization had also to change. There was more of centralization and all political power
tended to be concentrated in the hands of the king and of the Royal Council. The territories of
the empire were often so wide as to preclude effective supervision by the king from his far-off
capital. Hence a certain amount of administrative decentralization was necessary. Out of this
decentralization process, the guilds would have gained something. By reason of their corporate
character and organization, they would have been vested with a certain amount of
administrative functions. Thus often the king would have endowed the guilds with judicial
functions. The guilds in the 4th and 3rd centuries B.C. settled disputes among their members.
Form its sentence however there was an appeal to the Royal Courts. Disputes between several
guilds were settled by means of arbitration. The settlement of disputes between or within the
guilds by arbitration is a characteristic feature of the ancient trade guilds system of India 15. In
the judicial arrangements of the state, the guilds occupied a prominent place and should have
12
http://www.infinityfoundation.com/mandala/h_es/h_es_shah_m_sreni_frameset.htm
13
H.S Bhatia, Society, Law and Administration in Ancient India, Vol. 3, Deep & Deep Publications Pvt. Ltd., New
Delhi, 1992, (2nd Ed.), p. 179
14
Id, p. 180.
15
Id, p. 181.
23 | P a g e
performed the duties of a subordinate judiciary subject to the supervision of royal authority. In
this lies one of the unique features of the Indian trade-guild system. It is important to note that
the Somadeva, who flourished in the 10th century, observes that the royal courts could be
approached only after a case was decided by the town or village court. The village court he
refers to must obviously have been the Gana court of the Narada and Sukara. Had it not been
functioning, Somadeva could hardly have laid down that the royal courts should come in the
picture only after a case was decided by the village court. Thus, the village panchayat played an
important part throughout the long course of Indian history. They flourished in India not due to
anarchy as was propounded by Sir Henery Maine but, because the central government was
itself refusing to entertain any suit at the first instance and were deliberately referring all of
them back to the village panchayat. The village panchayat thus reduced the burden of the
central government, helped the cause of justice and encouraged the principle of self-
government.16
1.3 Dispute Settlement during Mauryan Dynasty:
In 322 BC Chandragupta Maurya became king of the powerful and highly centralized state of
Magadha in the North of India. Aided by his able advisor Kautilya Chandragupta created an
empire. After Alexander the Great died his empire had split up. Seleucos took the eastern part.
He attempted to reclaim the Indian provinces once ruled by Alexander. However, his army was
stopped by Chandragupta in 305 BC. Seleucos was then forced to cede most of Afghanistan to
Chandragupta, who also conquered parts of central India. This new empire was rich, and trade
thrived. Its capital was one of the largest cities in the ancient world. In 296 B.C. Chandragupta
abdicated in favour of his son Bindusara who pushed the frontier of the empire further south.
The greatest Mauryan ruler was Ashoka or Asoka (269-232 BC). He conquered Kalinga
(modern day Orissa). Afterwards he declared he was appalled by the suffering caused by war
and decided against any further conquest. After his death the Mauryan Empire declined, as all
empires do. It suffered an economic decline and political instability as different brothers strived
to become king. A general assassinated the last Mauryan ruler in 185 BC. The general then
took over running the empire and founded the Shunga dynasty. However, in 73 BC the last
Shunga ruler was, in turn, assassinated. They were replaced by the Kanva dynasty which ruled
16
Supra Note 11, p. 211.
24 | P a g e
from 73-28BC. The influence of the Mauryans penetrated Southern India. In the time of the
Mauryans the farmers there became more advanced. By the first century BC organized
kingdoms had grown up and trade and commerce were flourishing there.
During Mauryans the king was the head of justice-the fountainhead of law and all matters of
grave consequences were decided by him. At the local level, there were courts formed by
citizens, apart from courts formed by trade guilds and village assemblies. There were special
courts in the cities and villages presided over by the pradesika, mahamatras and rajukas. There
were two kinds of courts:
1. Dharmastheya which dealt with civil matters and was presided over by three amatyas and
three dharmasthas.
2. Kantakasodhana deciding cases of a criminal nature. The criminal courts were special
tribunals presided over by three amatyas or pradestris aided by spies and informers.
In all important cities and headquarters, at least one court and one police head office were set
up. Besides these courts petty cases in the villages were settled by the village elders in their
panchayats. In civil cases the Hindu code of law, as envisaged in the shastras, was
administered17. The law sources, according to Kautilya, were dharma (accepted principles),
vyavahara (legal codes current at the time) charitra or customs and rajasasaru (the king's
decree). Cases were registered, and witnesses were produced. Decision was taken by a body of
arbitrators with a system of appeal to the king. Megasthenes’ account seems to indicate that
theft was a rare occurrence in the Mauryan kingdom. But it appears that crime and breach of
laws were common at the time. The Arthashastra mentions punishments ranging from ‘mild’ to
‘severe’. Megasthenes mentions the punishment of mutilation for false evidence and death for
harming the artisans attached to the royalty. Those who enforced the law had to face
punishments if they themselves broke the law. The penalties mentioned in the Arthashastra
were graded according to Varna hierarchies. Scholars have noted that a shudra was punished
more severely than a Brahman for the same type of offence.
1.4 Dispute settlement during Kushan Dynasty:
17
http://www.preservearticles.com/2011101815640/essay-on-the-judicial-system-of-the-mauryan-rulersindia.html
25 | P a g e
Kushan Empire is one of the most interesting Dynasties which ruled over the land of Jammu &
Kashmir18. After the disintegration of the Mauryan Empire in the second century B.C., South
Asia became a collage of regional powers with overlapping boundaries. India’s unguarded
northwestern border again attracted a series of invaders between 200 B.C. and A.D. 300. The
invaders became “Indianized” in the process of their conquest and settlement. Also, this period
witnessed remarkable intellectual and artistic achievements inspired by cultural diffusion and
syncretism. The Indo-Greeks, or the Bactrians, of the northwest contributed to the development
of numismatics; they were followed by another group, the Shakas (or Scythians), from the
steppes of Central Asia, who settled in western India. Still other nomadic people, the Yuezhi,
who were forced out of the Inner Asian steppes of Mongolia, drove the Shakas out of
northwestern India and established the Kushana Kingdom (first century B.C.-third century
A.D.). The Kushana Kingdom controlled parts of Afghanistan and Iran, and in India the realm
stretched from Purushapura (modern Peshawar, Pakistan) in the northwest, to Varanasi (Uttar
Pradesh) in the east, and to Sanchi (Madhya Pradesh) in the south. For a short period, the
kingdom reached still farther east, to Pataliputra19.
In Kanishka’s time Kushan Kingdom has seen its highest rise (78-123 AD). Kanishka was the
legendary ruler of ancient India and according to most historians the greatest ruler of Kushan
dynasty. He and his descendants called themselves ‘Devputra’ which means son of god, who
ruled Aryavarta, the India. He established an era, commonly known as Shaka era, starts from 78
AD. Shaka era is still in use in India. Huvishka succeeded Kanishka I. He was founder of a city
Hushka in Kashmir named after him (described by Kalhan in Rajatarangini). Kushana Empire
was at its zenith during Kanishka’s and Huvishka’s reign. After Huvishka’s reign, Vasudeva I
took control of this dynasty which by then had lost control over regions beyond Bactria or
perhaps the Bactria itself. The Kushan dynasty had been totally assimilated in Indian culture.
Vasudeva I was the last great king of the dynasty when Kushana empire was at its height of
splendor and prosperity.
Kushan Empire had started its decline soon after Vasudeva’s death. Vasudeva was followed by
his son Kanishka II, who lost all the territories west of river Indus to Sassanians. Vasudeva II,
Vashishka, and Shaka are the kings who followed the Kanisha II. After Vashishka the Kushan
18
http://www.indianmirror.com/dynasty/kushandynasty.html
19
http://www.gatewayforindia.com/history.htm#Golden period of Indian History
26 | P a g e
Empire had completely disintegrated into few small kingdoms. By fourth century AD this
dynasty went into total obscurity with advent of mighty Gupta emperors20.
1.5 Dispute Settlement during Gupta Age:
Gupta age is known as golden age of India. It existed approximately from 320 to 550 AD21. The
administrative system during the Gupta dynasty reign was like that of the Mauryan Empire. The
King was the highest authority and possessed wide powers to enable the smooth functioning of
the empire. During the Gupta period, the empire was classified into separate administrative
divisions like Rajya, Rashtra, Desha, Mandala, etc. The provinces were divided into numerous
districts or Vishayas22. Gupta kings were not autocrats. They shared their powers with ministers
and other high officers. A large number of powers were delegated to the local bodies such as
village Panchayats and town councils. According to Kalidas, there were three ministers- foreign
minister, finance minister and the law minister. Office of minister in charge of law and order
was called VinayasthitiSthapaka23. The Gupta Empire had a separate judicial system. At the
lowest level of the judicial system was the village assembly or trade guild. These were the
councils appointed to settle the disputes between the parties that appear before them. There
were separate councils appointed to decide various matters that came before them. Thus, if
people could not reach to any amicable settlement, it was resolved by the councils. The King
presided over the highest court of appeal. In discharging his duty, the King was assisted by
judges, ministers, priests, etc. Inscriptions of Gupta’s refer to such judicial officers as
‘Mahadanda nayaka’, ‘Mahakshapatalika’ etc. Probably, ‘Mahadandanayaka’ combined the
duties of a judge and a general. The ‘Mahadandanayaka’ was probably the ‘Great keeper of
Records’. It appears that the ‘Kumaramatya’ a ‘Bhondapashika’ and the ‘Uparika’ had each his
separate ‘Adhikarna’ or ‘court or office’ where the transactions pertaining to land were
decided. It is possible that judicial matters were also decided there. According to Fa-Hien,
punishments were very lenient and capital punishment was very rare. However, the testimony
of Fa-Hien is not accepted, and it is pointed out by the Kalidas, Visakhadatta that punishments
20
http://www.gloriousindia.com/history/kushans.html
21
http://www.indianetzone.com/5/gupta_dynasty.htm
22
http://www.theindianhistory.org/Gupta/gupta-empire-administration-and-administrative-system.html
23
http://www.preservearticles.com/2011081610828/essay-on-the-administrative-system-of-guptas.html
27 | P a g e
were pretty-harsh in the Gupta period-such as death, death by elephant etc. Four kinds of
ordeals seemed to have been employed to ascertain the guilt or innocence of a person. These
are by water, by fire, by weighing and by poison. The decision or the judgment of the court was
based on the legal texts, the social customs prevailing during those times, or upon the decision
of the King.24
1.6 Dispute Settlement during Mughal Rulers:
The administrative system of the Mughal Empire was largely the work of Akbar, for the early
two Mughal kings (Babur and Humayun) did not really get the chance to implement much of a
system25. Jalal ud-Din Muhammad Akbar laid the foundation of the first lasting Muslim
dynasty in Hindustan, the Mughal Empire; he ascended the throne in 1556, after the death of
his father, Humayun. At that time, Akbar was only 13 years old. Akbar was the only Mughal
king to ascend to the throne without the customary war of succession. Akbar’s action ultimately
provided the Indian subcontinent with a more efficient form of government than it had endured
under earlier Muslim dynasties. Before the rise of Mughals, Muslim rules had striven tooth and
nail for more than three centuries to impose their authority over most of the Hindu population26.
Nothing like modern legislation, or a written code of laws, existed in the Mughal period. The
only notable exceptions to this were the twelve ordinances of Jahagir and the Fatawa-i-A Xat^
a digest of Muslim law prepared under supervision. The judges chiefly followed the Quranic
injunctions or precepts, the Fatawas or previous interpretations of the Holy Law by eminent
jurists, and the qanunus or ordinances of the Emperors. They did not ordinarily disregard
customary laws and sometimes followed principles of equity.31 Foreign writers like Sir
Thomas Roe point out that in the Mughal period there was no codified law as such. Likewise,
there was no highest court of justice which could finally lay down the law for the country. The
Mughals had three separate judicial agencies, all working at the same time and independent of
each other. Those were the courts of religious law, court of secular law, and political courts. As
regards the courts of religious law, those were presided over by the Qazis who decided cases
according to Islamic law. However, the Qazi was never “considered authoritative enough to lay
24
http://shodhganga.inflibnet.ac.in/bitstream/10603/10373/8/08_chapter%202.pdf
25
http://library.thinkquest.org/C006203/cgibin/stories.cgi?article=government&section=history/mughals&frame=sry
26
http://www.publishyourarticles.org/knowledge-hub/history/akbar-and-the-era-of-multi-religiousempire.html
28 | P a g e
down a legal principle, elucidate an obscurity in the Quran or supplement the Quranic law by
following the line of its obvious intention in respect of cases not explicitly provided by it.” The
Qazis were helped by the Muftis who expounded the law. The Mufti was “urged to spend his
days and nights in reading books on jurisprudence and the reports of cases from which one can
learn precedents.” The Miradls drew up and pronounced the judgment. Muslim Law in India
did not grow and change according to the circumstances and needs of the country.
As regards the courts of secular law, they were presided over by Governors, Faujdars and
Kotwals. In the time of Akbar, Brahmans were appointed to decide the cases of Hindus. The
Panchayats also fell under this category. The courts of secular law were not under the thumb of
the Qazi. Political courts tried political cases like rebellion, rioting, theft, robbery, murders, etc.
They were presided over by Subahdars, Faujdars Kotwals, etc27. Mughal emperors had keen
interest to deliver speedy justice to its citizens. The justice system placed even senior officers
within the law, and perhaps the only person really above the law was the emperor himself. The
Mughal emperors were very keen on justice, but for most of the Mughal period, appealing to
the emperor was a complex procedure. Two notable exceptions were Akbar and Jehangir, who
allowed subjects to directly petition them. In addition to the emperor there were other officers
in charge of justice. The chief justice was known as the Quazi-ul-Quazat. He was in charge of
maintaining the judicial system throughout the empire. For this purpose, he was responsible for
the appointment and management of Quazis all over the empire. Under them there were no
lower courts. Most villagers however resolved their cases in the village courts itself and appeal
to the caste courts or panchayats, the arbitration of an impartial umpire (salis), or by a resort to
force”. The punishments were fairly severe, ranging from imprisonment to amputation,
mutation and whipping. The approval of the emperor was however mandatory for capital
punishment. In the Mughal judicial system, the emperor was the final court of appeal28. Ample
evidence exists to show that the village panchayat court continued to function efficiently even
under the Muslim Rule in the Deccan. We find the Muslim emperor Ibrahim Adil Shah of
Bijapur refusing to entertain the appeal of Bapaji Musalman for the retrial of his case in the
royal court. While there thus exists ample evidence to show that the village panchayats and
27
http://www.preservearticles.com/2012041030124/get-complete-information-on-thejudicial-administration-of-
mughal-empire.html
28
Supra Note 29.
29 | P a g e
guild courts were functioning even in Muslim Rule in Maharashtra, but no contemporary
epigraphical evidence were found to show that they were functioning as suggested by Sukara29.
1.7 Dispute Settlement during Maratha Rulers:
The Maratha administration of justice was simple, and it was suited to the temper and situations
prevailed during that time. The law was not codified, its procedure was not certain, and it was
mostly informal. Justice under Marathas was based upon Dhramashastras, Vijnanesvara,
Vyavaharamayukha and the Dhanakamalakara were the principle authorities while Manu,
Hemadri, Madhava were also quoted by judicial authorities. Similarly, there were special books
embodying various caste-laws such as Jati-nirnaya and Vyvahar-nirnaya which were consulted
in deciding caste disputes30.
There are several salient features of the judicial administration of the Marathas which are as
under:
1. It depended upon the old Sanskrit treatises like Mitakshara school of thought and Manu’s
codes for legal theories.
2. It also banked upon the old customs which prescribed the trial by ordeal. The Maratha judges
allowed the offender to undergo the ordeal of fire and water. They also believed in the divine
intervention and taking oath in sacred temple.
3. The Marathas acted as patriarchs of the old laws. They were little softer on the enforcement
of the civil suits and emphasised on the amicable settlement of these disputes.
4. They gave almost all facilities or chances to the suitor or complainants to prove his case.
5. They also showed some considerations to the defeated party or defend to ensure the good
relations between the parties in future.
Shivaji was one, the famous Maratha king. The situation of judiciary was not satisfactory in
Shivaji’s kingdom. Nor the courts were established according to the prevalent system in the
29
Supra Note 11, p. 210
30
Sumitra Kulkarni, The Satara Raj, 1818-1848: A Study in History, Administration and Culture, p. 128. google
book store
30 | P a g e
neighbouring states neither it was a modern judicial system31. Panchayat was the first
instrument of the civil administration of justice under the Marathas. It was the duty of the Patil
in each village and Shete Mahajan in the town and market places to appoint a Panchayat to
adjudicate cases of simple and minor nature. The disputing parties were to sign an agreement
regarding the abiding of the rules and regulations of the Panchayat. It was the Panchayat to
study the case and pass its judgement impartially or without any bias to any party. Mamlatdar,
the higher officer in the succession of judicial administration was to confirm the judgement. In
case, the Patil refused to conduct lighter judgement or appoint a Panchayat or the disputing
parties declined the adjudication of the dispute in their village, it was the duty of the Mamlatdar
to arrange for Panchayat at another village with the help of Patil and get the dispute
adjudicated. It is also said that if any matter was beyond the jurisdiction of the Patil, the
Mamlatdar was to conduct the hearing of the case and was to finalize it in a fair manner.
Generally, the Patil and the Panchayat used to adjudicate the cases, which were upheld by the
Maratha Government. It was noteworthy that the party never abided by the judgement which
was delivered in his absence. Such judgement was quashed by the appeal of the absent party to
the Government. At that time small scale civil cases were handled by the Panchayat at the
village level while criminal cases were handled by the Patil. Nyayadhish heard the appeals of
the civil and criminal cases. HazirMuzlis was the Maratha Supreme Court. King himself gave
him judgments in major cases. Shivaji did relentless efforts to provide justice to the needy
people. Maratha kingdom did not have written rules and judgments were given according to the
Hindu religious books and rituals. Criminals were sent to prison or fined for minor crimes.
During medieval period we come across several Maratha kings, refusing to entertain any case at
the first instance. Thus, when the dispute about the Patilki-watan of Ravet in Poona pargana
was taken to Shahaji, the father of Shivaji, he ordered that the panchayat of the place concerned
should decide the case. Shivaji also, while declining to entertain the case of one Ramaji
Krishna, makes an interesting statement, which is very important. He said to the plaintiff “if
you so wish, I shall send your case to your own village panchayat if that will meet your desire
or I shall refer it to the district panchayat, if that course itself recommends itself to you. Let me
know what you like.” It is interesting to note here that though Shivaji puts before the plaintiff
31
http://www.indiabuzzing.com/2009/12/31/maratha-administration/
31 | P a g e
several alternatives, he nowhere refers to the possibility of the trial of the case by himself or by
any of his officers.
Shivaji’s son Rajaram also followed the same practice. When a very important dispute
involving the watan right to more than twenty villages was referred to him, he immediately
directed to the local panchayat to decide it32. Chhatrapati Pratap Sinha, the ruler of Satara
between 1808 and 1839 had prepared a list which is known popularly as YADI of all
procedural customs prevailed during the period of Marathas. The ruler emphasised on the
amicable settlement, he further says that in case the parties failed to settle their dispute
amicably, they should move to the arbitrator and get satisfactory settlement for both the parties.
In this case the arbitrator should adjudicate the issue impartially, without fear and favour of any
party. The Maratha king was the fountain of Justice and honour like the king of England. In
towns, there were learned judges, well versed in almost all shastras were appointed for
exercising the judicial duties. These judges were popularly known as Nayadhish. In short, the
theory of separation of power of the Executive, the Legislature and the Judiciary was not
observed.
1.8 Alternative Dispute Resolution during British Period:
The British East India Company opened their first trading centre at Surat, Gujarat in 1612. This
was as per the deed of right Mughal Emperor Jehangir granted to them. Their first major
interference with the internal politics of India was when they supported Mir Kasim, a minister
of Bengal, militarily to sabotage Siraj-ud-Daula, the Nawab. On 23rd June 1757, the Nawab
was defeated by a joint military action of Robert Clive’s troops and those of Mir Kasim in a
battle at Plassey. And this was the turning point where the British formally entered the political
arena of India and began to play a direct role in the administrative supremacy. They managed to
bring under their administrative control most of the princely states of India either by direct
annexation using force or by giving military support. They brought Punjab also under their
control in 1849. Along with Punjab, the North West Frontier Province, which is now under
Pakistan, was also brought under them. And in those states where a legitimate heir apparent to
the crown was not available, they were brought under the British rule. Sattara (1848), Udaypur
(1852), Jhansi (1853), Tanjore (1853), Nagpur (1854), Oudh (1856) were some of the princely
32
Supra Note 11, p. 210.
32 | P a g e
states the British annexed using this excuse – that there was no legitimate heir apparent. When
Tipu was defeated in 1792, they annexed Malabar too33.
Judicial administration was changed during British period. The current judicial system of India
is very close to the judicial administration as prevailed during British period. The traditional
institutions worked as recognized system of administration of justice and not merely
alternatives to the formal justice system established by the British. The two systems continued
to operate parallel to each other34.The system of alternate dispute redressal was found not only
as a convenient procedure but was also seen as a politically safe and significant in the days of
British Raj. However, with the advent of the British Raj these traditional institutions of dispute
resolution somehow started withering and the formal legal system introduced by the British
began to rule35. Alternate Dispute Resolution in the present form picked up pace in the country,
with the coming of the East India Company. Modern arbitration law in India was created by the
Bengal Regulations. The Bengal Regulations of 1772, 1780 and 1781 were designed to
encourage arbitration36. Bengal Resolution Act, 1772 and Bengal Regulation Act, 1781
provided parties to submit the dispute to the arbitrator, appointed after mutual agreement and
whose verdict shall be binding on both the parties. Hence, there were several Regulations and
legislation that were brought in resulting considerable changes from 1772. After several
Regulations containing provisions relating to arbitration Act VIII of 1857 codified the
procedure of Civil Courts except those established by the Royal Charter, which contained
Sections 312 to 325 dealing with arbitration in suits. Sections 326 and 327 provided for
arbitration without the intervention of the court.
After some other provisions from time to time Indian Arbitration Act,1899 was passed, based
on the English Arbitration Act of 1889. It was the first substantive law on the subject of
arbitration, but its application was limited to the Presidency – towns of Calcutta, Bombay and
Madras. Act, however suffered from many defects and was subjected to severe judicial
criticisms. In 1908 the Code of Civil Procedure was re-enacted. The Code made no substantial
33
http://www.indiavideo.org/text/british-colonization-335.php
34
Sarvesh Chandra, ADR: Is Conciliation the Best Choice, in P.C. Rao and William Sheffield (eds.), Alternative
Dispute Resolution: What it is and How it Works, Universal Law Publishing Co., New Delhi, (1997) p. 85.
35
K. Jayachandra Reddy, Alternate Dispute Resolution, in P.C. Rao and William Sheffield (eds.), Alternative
Dispute Resolution: What it is and How it Works, Universal Law Publishing Co., New Delhi, (1997) p. 79.
36
Nripendra Nath Sircar, Law of Arbitration in British India (1942), p. 6 cited in 76’th Report of Law Commission
of India, 1978, p. 6, para 1.14
33 | P a g e
changes in the law of arbitration. The Arbitration Act of 1940 was enacted replacing the Indian
Arbitration Act of 1899 and section 89 and clauses (a) to (f) of section 104(1) and the Second
Schedule of the Code of Civil procedure 1908. It amended and consolidated the law relating to
arbitration in British India and remained a comprehensive law on Arbitration even in the
Republican India until 1996.
1.9 Alternative Dispute Resolution post-independence:
Bodies such as the panchayat, a group of elders and influential persons in a village deciding the
dispute between villagers are not uncommon even today. The panchayat has, in the recent past,
also been involved in caste disputes37. In 1982 settlement of disputes out of courts started
through Lok Adalats. The first Lok Adalat was held on March 14, 1982 at Junagarh in Gujarat
and now it has been extended throughout the country. Initially, Lok Adalats functioned as a
voluntary and conciliatory agency without any statutory backing for its decisions. By the
enactment of the Legal Services Authorities Act, 1987, which came into force from November
9, 1995, the institution of Lok Adalats received statutory status. To keep pace with the
globalization of commerce the old Arbitration Act of 1940 is replaced by the new Arbitration
and Conciliation Act, 1996. Settlement of matters concerning the family has been provided
under Order XXXIIA of the Code of Civil Procedure, 1908 by amendment in 1976. Provisions
for making efforts for reconciliation under Sections 23 (2) and 23 (3) of the Hindu Marriage
Act, 1955 as also under Section 34 (3) of the Special Marriage Act, 1954 are made. Family
Courts Act was enacted in 1984. Under Family Courts Act, 1984 it is the duty of family court
to make efforts for settlement between the parties. Introduction of section 89 and Order X Rule
1A, 1B and 1C by way of the 1999 Amendment in the Code of Civil Procedure, 1908 is a
radical advancement made by the Indian Legislature in embracing the system of “Court
Referred Alternative Disputes Resolution”.
C. 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
37
http://www.nishithdesai.com/Research-Papers/adr.pdf
34 | P a g e
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 based on equal opportunity to all. Thus, access to justice,
provision of legal aid for poor and needy and dissemination of equal and speedy justice is the
cherished goals of our Constitutional Republic.
D. LEGISLATIONS OF ADR IN INDIA
“I realized that the true fiction of a lawyer was to unite parties… A large part of my time
during the 20 years of my practice as a lawyer was occupied in bringing out private
compromise of hundreds of cases. I lost nothing thereby- not even money, certainly not my
soul.”
– Mahatma Gandhi
2. Provisions related to ADR:
The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits
while sections 326 and 327 provided for arbitration without court intervention. The Code of
Civil Procedure (Act 5 of 1908) repealed the Act of 1882. Section 89, CPC and other
provisions – Prior to the existence of S. 89, CPC 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,
35 | P a g e
inexpensive, informal and unencumbered by the plethora of procedural laws and appeals upon
appeals and revisions applicable to civil court.38
S. 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.
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 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 must be recorded to gather the intention of the parties.39
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 lawfulness and genuineness of the compromise40. Government of India
and State Governments are the largest litigants in India. The government or statutory authorities
are defendants in many suits pending in various courts in the country. Section 80, 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 many 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
litigation41. It gives the government an opportunity to consider its legal position and
38
Rajasthan State Road Transport Corporation v. Krishna Kant, AIR 1995 SC 1715
39
Manjulata Sharma v. Vinay Kumar Dubey, AIR 2004 All 92 (94) DB
40
Banwarilal v. Chano Devi, AIR 1993 SC 1139
41
Ghanshyam Das v. Domination of India; AIR 1984 SC 1004
36 | P a g e
accordingly settle the claim out of court42. The 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 resisted43. 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 emphasized 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 disputes44.
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: -
“89. 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 their to the parties for them 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;
42
Raghunath Das v. Union of India; AIR 1969 SC 674
43
State of Punjab v. Geeta Iron and Brass Works Ltd.; AIR 1978 SC 1608
44
Salem Advocate Bar Association, Tamil Nadu v. Union of India; AIR 2005 SC 3353
37 | P a g e
(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.”
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: -
(c) for “mediation”, 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 “judicial settlement”, the court shall effect a compromise between the parties and shall
follow such procedure as may be prescribed45.
Order 10 Rules 1-A:
“1-A. Direction of the court to opt for any one mode of alternative dispute resolution: - 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:
45
Afcons Infrastructure and others v. Cherian Verkay Construction Company Pvt. Ltd. and others, (2010) 8 SCC 24
38 | P a g e
“1-B. Appearance before the conciliatory forum or authority :- 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:
“1-C. Appearance before the court consequent to the failure of efforts of conciliation.- 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 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 way 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.
The second schedule related to arbitration in suits while briefly providing arbitration without
intervention of a court. Order I, Rule 1 of the schedule says that where in any suit, all the
parties agree that any matter in difference between them shall be referred to arbitration, they
may, at any time before judgment is pronounced; apply to the court for an order of reference.
This schedule, in a way supplemented the provisions of the Arbitration Act of 1899.
2.1 Indian Arbitration Act, 1899:
This Act was substantially based on the British Arbitration Act of 1889. It expanded the area of
arbitration by defining the expression ‘submission’ to mean “a written agreement to submit
present and future differences to arbitration whether an arbitrator is named therein or not”46.
2.2 Arbitration (Protocol and Convention) Act 1937:
The Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the
Execution of Foreign Arbitral Awards 1927 were implemented in India by the Arbitration
(Protocol and Convention) Act, 1937. This Act was enacted with the object of giving effect to
the Protocol and enabling the Convention to become operative in India.
46
O P Malhotra, Indu Malhotra, Lexis Nexis, The Law and Practice of Arbitration and Conciliation (2 nd ed., 2006)
39 | P a g e
2.3 The Arbitration Act of 1940:
The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act,
intervention of the court was required in all the three stages of arbitration in the tribunal, i.e.
prior to the reference of the dispute, in the duration of the proceedings, and after the award was
passed.
This Act made provision for-
a) arbitration without court intervention;
b) arbitration in suits i.e. arbitration with court intervention in pending suits and
c) arbitration with court intervention, in cases where no suit was pending before the court.
Before an arbitral tribunal took cognizance of a dispute, court intervention was required to set
the arbitration proceedings in motion. The existence of an agreement and of a dispute was
required to be proved. During the proceedings, the intervention of the court was necessary for
the extension of time for making an award. Finally, before the award could be enforced, it was
required to be made the rule of the court47. This Act did not fulfill the essential functions of
ADR. The extent of Judicial Interference under the Act defeated its very purpose48. It did not
provide a speedy, effective and transparent mechanism to address disputes arising out of
foreign trade and investment transactions49.
2.4 Arbitration and Conciliation Act, 1996:
The government enacted the Arbitration and Conciliation Act, 1996 to modernize the 1940 Act.
In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee
(AALCC), the International Council for Commercial Arbitration (ICCA) and the International
Chamber of Commerce (ICC) met for a consultative meeting, where the participants were of
47
Krishna Sarma, MomotaOinam&Angshuman Kaushik, “Development and Practice of Arbitration in India –Has it
Evolved as an Effective Legal Institution”,
48
Hon’ble Thiru Justice S.B.Sinha, Judge Supreme Court of India, ‘ADR and Access to Justice: Issues and
Perspectives’.
49
Justice R S Bachawat’s, LexisNexis, “Law of Arbitration and Conciliation”, preface commentary, (3 rded., 1999).
40 | P a g e
the unanimous view that it would be in the interest of International Commercial Arbitration if
UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral
procedure. The preparation of a Model Law on arbitration was considered the most appropriate
way to achieve the desired uniformity. The full text of this Model Law was adopted on
21st June 1985 by UNCITRAL. This is a remarkable legacy given by the United Nations to
International Commercial Arbitration, which has influenced Indian Law. In India, the Model
Law has been adopted almost in its entirety in the 1996 Act50. This Act repealed all the three
previous statutes. Its primary purpose was to encourage arbitration as a cost-effective and quick
mechanism for the settlement of commercial disputes. It covers both domestic arbitration and
international commercial arbitration51. It marked an epoch in the struggle to find an alternative
to the traditional adversarial system of litigation in India.
The changes brought about by the 1996 Act were so drastic that the entire case law built up
over the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there
was no widespread debate and understanding of the changes before such an important
legislative change was enacted. The Government of India enacted the 1996 Act by an
ordinance, and then extended its life by another ordinance, before Parliament eventually passed
it without reference to Parliamentary Committee.
Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution,
became one more “inning” in the game. Not only that, the arbitrator and the parties’ lawyers
treated arbitration as “extra time” or overtime work to be done after attending to court matters.
The result was that the normal session of an arbitration hearing was always for a short duration.
Absence of a full-fledged Arbitration Bar effectively prevented arbitrations being heard
continuously on day-to-day basis over the normal working hours, viz. 4-5 hours every day. This
resulted in elongation of the period for disposal.
Veerappa Moily also said in the ADR congress held in the year 2010 that the 1996 Act,
although modeled along international standards, has so far proved to be insufficient in meeting
the needs of the business community, for the speedy and impartial resolution of disputes in
India.
50
O P Malhotra, Indu Malhotra, Lexis Nexis, The Law and Practice of Arbitration and Conciliation (2nd ed., 2006)
ishnaSarma, MomotaOinam&Angshuman Kaushik, “Development and Practice of Arbitration in India –Has it
51
Evolved as an Effective Legal Institution”,
41 | P a g e
The Law Commission of India prepared a report on the experience of the 1996 Act and
suggested several amendments. Based on the recommendations of the Commission, the
Government of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in
the Parliament. The standing committee of law ministry felt that provisions of the Bill gave
room for excessive intervention by the courts in arbitration proceedings52.
The India is no single or lone country buffeted and burdened with arrears of cases. The problem
has beleaguered the entire globe. The developed countries like USA, U.K. France, Hong Kong,
New Zealand, South Africa, Switzerland etc. also suffers from the problem of pendency and
delay in dispensation of justice. These countries have been inspired by USA and have followed
the mechanism of ADR System. The concept of speedy trial and dispensation of timely justice
to the litigants have become the global subject, which could be better adhered to by the
mechanism of ADR system because it encourages the disputants to arrive at negotiated
understanding with a minimum loss of time, money and outside help.53 The globalization of
economy and international commerce is on its expanding horizon and growing rapidly. The
business transactions and disputes are also increasing proportionately but without quick remedy
of dispute resolution. The ADR system except arbitration is almost unknown to the people in
India for want of enough publicity through statutory recognition. The ADR system to be more
successful requires three things. First, the mechanism of ADR needs to be regulated through
good legal provisions as inserted in the Code of Civil Procedure, 1908 as amended by
Amendment Act [46 of 1999] and [22 of 2002] under S. 89 54. Second, it requires to be
equipped with adequate infrastructure facilities to conduct ADR proceedings 55. Third is of the
utmost importance i.e. it requires professionally trained ADR practitioners, who are well versed
in making settlement of dispute. All these facilities in one or other way, lacks in India and
reason thereby the cases are almost decided through a regular trial in the Courts'.
There are ample provisions of ADR system but for want of proper recognition and application
except in few. The shipping and commodity trades of the world are unusual in that they do not
regard litigation or arbitration with abhorrence. On the contrary, they regard it as a normal
52
Government proposes major changes in Arbitration Act, The Times of India, April 9, 2010.
53
See, P.C.Rao & William Sheffield, Alternative Dispute Resolution: What it is and How it Works, Reprint, 2002,
p-24
54
The Code of Civil Procedure, 1908 as amended by [Amendment] Act 46 of 1999 & 22 of 2002, Section 89.
55
Supra Note 1, p-30.
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incident in commercial life - a civilized way of resolving many differences of opinion56. When
the International Chamber of Commerce at Paris started offering the services of its Court of
Arbitration, businessmen in different countries found it convenient to avail themselves of that
facility. N. A. Palkhivala during his speech at International Chamber of Commerce has
emphasized the importance of arbitration that "In course of time that convenience became a
preference, and the preference has now ripened into a necessity.57 The Arbitration and
Conciliation Act, 1996 with new chapter of conciliation is good achievement and form of ADR
System to decide the dispute at international and domestic level.
Preamble to the Act:
The Arbitration and Conciliation Act, 1996 is having its consolidating and amending nature.
The Act contains new features of conciliation and settlement of dispute amicably through
mediation, which is remarkable achievement and improvement over the repealed Acts58. The
new Act of 1996 goes much beyond the scope of its predecessor, 1940 Act. It provides for
domestic arbitration, international commercial arbitration and enforcement of foreign arbitral
awards. The Act in opening words provides that "An Act to consolidate and amend the law
relating to domestic Arbitration, International Commercial Arbitration and enforcement of
Foreign Arbitral awards as also to define the law relating to conciliation and for matters
connected therewith or incidental thereto"59.
H. The Objectives of the Act:
i. To comprehensively cover international commercial arbitration and conciliation as also

domestic arbitration and conciliation,
ii. To make provision for an arbitral procedure which is fair, efficient and capable of meeting
the needs of the specific arbitration?
iii. To provide that the Arbitral Tribunal gives reasons for its arbitral award.
56
Per Mr Justice Donaldson in Panda V Filmo [1975] 1 Q.B. p-742 at 74
57
N.A.Palkhivala, Speech Delivered at the International Chamber of Commerce, New Delhi, February 9,1987.
58
(1) The Arbitration (Protocol and Convention) Act, 1937, (ii) The Arbitration Act, 1940, and (iii) The Foreign
Awards [Recognition and Enforcement] Act, 1961.
59
The Arbitration and Conciliation Act, 1996, the Preamble
43 | P a g e
iv. To ensure that the Arbitral Tribunal remains within the limits of its jurisdiction.
v. To minimize the supervisory role of Courts in the arbitral process.
vi. To permit an Arbitral Tribunal to use mediation, conciliation or other procedures during the
arbitral proceedings to encourage settlement of disputes.
vii. To provide that every final arbitral award is enforced in the same manner as if it were a
decree of the Court.
viii. To provide that a settlement agreement reached by the parties as a result of conciliation
proceedings will have the same status and effect as an arbitral award on agreed terms on the
substance of the dispute rendered by an Arbitral Tribunal.
ix. To provide that, for purpose of enforcement of foreign awards, every arbitral award made in
a country to which one of the two International Conventions relating to foreign arbitral awards
to which India is a party applies, will be treated as a foreign award.60
3. Principles of Arbitration:
The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal
without unnecessary delay or expenses. The parties should be free to agree how their disputes
are to be resolved subject to such safeguards as are necessary in the public interest. In matter
governed by the provision of the Part-I of the Arbitration Act, 1996, the Court should not
intervene except as provided by those provisions. The provisions of Part-! of the Arbitration
Act, 1996 must not be construed as excluding the operation of any rule of law consistent with
those provisions.’
3.1 Construction of References:
[a] Written Communications and receipt:
The Section 3 of the Act deals with service of the notice between the parties inter se or the
arbitrator. The Section provides for mode of services of notice. It provides that any written
communication to the party shall be deemed to have been received if it is delivered to the
addressee personally or at his residence or business place or at any other mailing address. And
60
Ibid, Statement of Object and Reasons published in the Gazette of India, Part-I I dated 19'^ August, 1996.
44 | P a g e
the communication shall be deemed to have been received on the day of its actual delivery'.
The mode of service may be effected by telex, facsimile or electronic mail etc''61.
[b] Waiver of right to object:
The Section 4 of the Act provides that where a party to an arbitration agreement participates in
the arbitration proceedings with clear knowledge that the matter is legally incapable of being
submitted to arbitration, he cannot thereafter raise the question of the lack of jurisdiction or
anything that has not been complied with. The objection is to be submitted within time frame.
If undue delay has been caused, it shall be deemed that the party has waived his right to such
objections’.
[c] Extent of Judicial Intervention: The Section 5 of the Act limits the scope and extent of
judicial intervention in the matter governed by Part I of the Act. It provides that the Court shall
not intervene in the matters pertaining to arbitration except those specifically provided. The
Section specifically debarred the civil Courts from exercising their jurisdiction once, the
arbitration proceeding has been commenced. The proceedings cannot be stayed by an order of
Civil Court. It provides that the Civil Courts have no jurisdiction to interfere or to intervene in
arbitration proceedings. But the language of the Section permits that except to the extent
provided in Part-I, the Court shall have jurisdiction62. This part provides for intervention of
Courts in the cases viz. (i) Section 8 of the Act provides for making reference for arbitration by
a judicial authority before which action is brought during pending suit, (ii) Section 9 - Passing
interim Orders, (iii) Section 11 provides for appointment of Arbitrator, (iv) Section 14(2)
provides for terminating mandate of Arbitrator, (v) Section 27 provides for Court assistance in
taking evidence, (vi) Section 34 provides for setting aside an award, (vii) Section 37 provides
entertaining appeals against certain order, and (viii) Section 39 (2) directing delivery of award.
3.2 Administrative assistance:
The Arbitration and Conciliation Act, 1996 has a unique provision, which was not available in
the repealed Arbitration Act, 1940. The Section 6 of the Act enables the parties and the Arbitral
Tribunal to obtain administrative assistance. In order to facilitate the conduct of the arbitral
61
H.K.Saharay, The Law of Arbitration and Conciliation, (200), p-2
62
Ibid, S. 5.
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proceedings. It has been provided that the parties or the Arbitral Tribunal with the consent of
the parties, may arrange for administrative assistance by a suitable institution or person. The
administrative assistance means the acts of ministerial and clerical nature including the acts for
which one has necessarily to depend upon the skill and experience of another person.
Arbitration agreement:
[a] There must be an Arbitration Agreement:
The existence of written agreement is condition precedent to submit a dispute for arbitration.
Section 2 (1) Sub-Clause (b) defines that "Arbitration Agreement" means an agreement referred
or defined under S. 7 of the Act63. An arbitration agreement as defined under S.7 of the Act
means an agreement by the parties to submit to arbitration all or certain disputes which have
arisen or may arise between them in respect of a defined legal relationship, whether contractual
or not. An Arbitration agreement may be in the form of an arbitration clause in a contract made
between the parties or expressed in the form of a separate agreement 64. The Section 7(3)
envisages that an 'arbitration agreement' shall be expressed in writing, which is the condition
precedent to be an 'Arbitration Agreement' under the law of Arbitration 65. An oral agreement
between the parties to submit a dispute to arbitration is not binding. On the other hand, if the
agreement is in written form that will bind both the parties66. The same version has been
reiterated by the Supreme Court in the case of Union of India V Rallia Ram67 and has held that
'It is not necessary that the agreement should not be on a formal document, nor it is necessary
that the agreement should be signed by both or either party. It is enough that the written
agreement has been orally accepted by the parties or that one has singed and other has
accepted'68.
The Halsbury's Laws of England explain that the agreement between the parties as to any
matter is effective only if it is in writing. There is an agreement in writing if the agreement
made has been ; (i) expressed in writing whether or not the parties sign it; (ii) there is exchange
of communications in writing; (iii) recorded by one of the parties or by a third party, with the
63
Id, S. 2(1)(b).
64
Id, S.7 Clauses (1) and (2).
65
Id, S.7(3).
66
BanarsiDass Vs Cane Comm. A.I.R. 1963 SC, p-14
67
A.I.R. 1963 SC, p-168
68
Union of India Vs Rallia Ram, A.I.R. 1963 SC, p-168
46 | P a g e
authority of the parties to the agreement; (iv) Where the parties agree otherwise than in writing
by reference to terms which are in writing; and (v) exchange of written submissions in arbitral
or legal proceedings, in which the existence of an agreement otherwise than in writing is
alleged by one party against another party and not denied by the other party in his response,
that constitutes an agreement in writing to the effect alleged between those parties.
3.3 Stay of suit - powers of reference to arbitration:
The S.8, clause (1), of the act provides that if any party to an arbitration agreement brings a suit
before the Court and the matter is covered by the arbitration agreement, the other party may
apply for stay of the suit and for order of reference to arbitration and Judicial Authority may
refer for arbitration. S.8 (2), of the Act requires that the application should be accompanied by
the original arbitration agreement or duly certified copies of the original agreement. Where the
party has not filed such copies or the party so applying, the case cannot be referred for
arbitration. S. 8 (3) is more liberal which envisages that despite the matter having pended in the
Court before the Judicial Officer and the application made under S.8(1) of the Act, the
arbitration proceeding can be commenced or continued and in pursuance of that the arbitral
award can be made.
3.4 Interim measures and relief -- powers of Court:
The Section 9 of the Act enables the Court to make an order for interim measures providing
interim relief to the parties. A party may, before or during arbitral proceedings or at any time
after the making of the arbitral award but before it is enforced in accordance with Section 36,
apply to the Court to provide immediate and interim relief^^. The Court may order for (i) the
appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral
proceedings (ii) for the preservation, protection or safety and interim custody or sale of any
goods which are the subject-matter of the arbitration agreement; (iii) to securing the amount in
dispute in the arbitration, (iv) for the detention, preservation or inspection of any property or
thing which is the subject-matter of the dispute in arbitration, or as to which any question may
arise therein and authorizing for any of the aforesaid purposes any person to enter upon any
land or building in the possession of any party, or observation to be made, or experiment to be
tried, which may be necessary or expedient for the purpose of obtaining full information or
47 | P a g e
evidence, (v) for the appointment of a receiver, (vi) for the protection, custody or preservation
of the things as may appear to the Court to be just and convenient.69
3.5 Composition of Arbitral Tribunal:
The Arbitral Tribunal is the creature of an agreement. The parties are free to confer upon
Arbitral Tribunal such powers and prescribe such procedure for it to be followed. But the
agreement must be in conformity with the law and nothing in power or procedure should be
opposed to any law. An arbitrator is neither more nor less than a private judge of a private
Court, which is called Arbitral Tribunal. The arbitrator gives a private judgment and that
judgment is called award. He is a judge in a dispute submitted to him. He is not mere a
investigator but a person before whom material is placed by the parties. He gives a decision in
accordance with his duty to hold the scales fairly between the disputants70. This part contains
some general provisions and provides for the composition of the Arbitral Tribunal, its
jurisdiction, conduct of proceedings, making of awards, termination of proceedings, recourse
against award and enforcement of awards etc.
3.6 Jurisdiction of Arbitral Tribunal:
The section 16 of the Act confers the jurisdiction on the Arbitral Tribunal and has vested with
the powers to rule on its own jurisdiction. The Arbitral Tribunal has powers to decide the
question as to its jurisdiction including the objection as to the existence or validity of the
arbitration agreement. The arbitration clause in a contract, which forms the part of it, shall be
treated as an arbitration agreement independent of the contract. If the Arbitral Tribunal holds
that the contract is null and void it will not result in the automatic invalidity of the arbitration
clause. Because an Arbitrator has no authority or jurisdiction to act beyond that defined by the
terms of the contract or what the parties desire under the contract. The Arbitrator is required to
consider all terms expressed in the contract and he is no authority to abdicate or ignore those
terms and conditions agreed to in the contract71. The Supreme Court while deciding the matter
pertaining to Arbitral Tribunal and its power to rule on its own jurisdiction in Olympus
69
Section 9, Clauses (i), (ii) Sub-Clauses [a -e].
70
Russell on The Law of Arbitration, (1982), p-10
71
IspatEngg& Foundry Works Vs Steel Authority of India Ltd. A.I.R. 2001 SC, p-2516.
48 | P a g e
Superstructure (P) Ltd. Vs Meena Vijay Khetan72 has observed that "The Arbitral Tribunal is
invested with the power to make on its own jurisdiction including ruling on any objection with
respect to the existence or validity of the arbitration agreement. The objections must be raised
before the arbitration proceedings".
The objections pertaining to the jurisdiction to entertain the reference must be filed before the
submission of the statement of defence but not later than such submissions or statement of
defence. A party will not be stopped from raising this plea merely because he was a party and
have actively participated in making the appointment of the Arbitrator. The objections relate to
having entertained matters beyond its jurisdiction or acting beyond the scope of its authority
can be raised before the Arbitral Tribunal as soon as it is possible during the proceedings 73. But
the Arbitral Tribunal, if the parties justify the delay and it deem fit has powers to condone the
delay while entertaining the objections beyond prescribed time. The Arbitral Tribunal under S.
16(4) has powers to entertain the objections pertaining to the lack of jurisdiction or excess of
jurisdiction beyond which the Arbitral Tribunal has acted even beyond the time limit if delay is
justified74. The S. 16(6) provides for challenge of the award made by the Arbitral Tribunal after
rejection of the objections as to lack or excess of jurisdiction. The aggrieved party may make an
application under S.34 of the Act to set aside the award75. The Section 17 of the Act vests the
Arbitral Tribunal with the powers to issue orders or any direction to the parties for taking of
interim measures in respect of the subject matter of the dispute for its protection. The Tribunal
can pass the order if parties do not exclude the exercise of such jurisdiction. The Arbitral
Tribunal may also require and order the parties to provide and furnish appropriate security by
the party for carrying out an interim measure ordered under S. 17(1)76.
3.7 Conduct of arbitral proceedings:
[a] Equality of opportunity:
The Arbitrator after his appointment and undertaking his job must reach a definite conclusion
in order to end the matter of difference between the parties. The parties have appointed him
72
A.I.R. 1999 SC, p-2102.
73
Ibid, S.16 (3)
74
Id, S.16(4).
75
Id, S.16(6).
76
Id, S. 17.
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with great confidence reposing trust in him. 'If an arbitrator could not be trusted to ignore the
negligible, he might as well not be trusted as an arbitrator at all’ 77. The Arbitral Tribunal, like
any other Tribunal performing judicial functions, has the duty to act in accordance with the
essential rules of natural justice. He is required to give equal treatment to both the parties in
conducting the proceedings. The S. 18 of the Act envisages and casts two-fold duty on the
Arbitral Tribunal. First, he must mete out equal treatment to both the parties and for that he
must act independently and impartially. Second, the Arbitrator must give to both the parties'
full opportunity to present their case before him.
[b] Rules of procedure - determination:
The rules and procedure that is required to be followed by the Arbitral Tribunal, the parties are
free to agree on the procedure to be applied in conducting its proceedings. But the Arbitral
Tribunal is not bound by the procedure prescribed by the Code of Civil Procedure, 1908 or the
rules and principles governed by the Indian Evidence Act, 1872. S. 19(1) provides that the
Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 are not applicable and
binding in conducting arbitration proceedings. The Act makes the provisions that the parties
may fix or lay down the procedure to be followed in the arbitration proceedings. In the absence
of any such agreement between the parties the Arbitral Tribunal may prescribe and follow any
procedure which it considers appropriate under the circumstances and reference beforehand.
The Section 19 (3) and (4) does not in any way allow the Arbitral Tribunal to conduct the
proceedings in accordance with the Civil Procedure Code and the Indian Evidence Act. The
Section 19(4) confers powers on the Arbitral Tribunal to determine the rules and admissibility
of evidence, their relevance, materiality and weight keeping in view the reference and dispute
between the parties.
[c] Place of Arbitration:
The venue and place for conducting the arbitral proceedings is most important, which must suit
to both the parties. The S.20 of the Act prescribes the procedure to fix the place and venue to
conduct the arbitral proceedings. The S. 20(1) provides freedom to the parties to agree upon the
77
Mr Justice Megaw, In Horsnell Vs Alliance Assurance Co. Ltd., (1967), 205, E.G.,p-319at321.
50 | P a g e
place of arbitration by an agreement that the arbitration proceedings will be held on such place.
The Arbitral Tribunal can also fix the place to conduct the arbitration proceedings. The Arbitral
Tribunal can fix the venue and decide the place in cases where there is no agreement between
the parties about the place of arbitration proceedings. The Act specifically requires the Arbitral
Tribunal to see nature and circumstances of case and the convenience of the parties, where they
can attend the proceedings easily and without much loss of time and money. The S.20(3)
envisages that if the place of arbitration has been fixed by mutual agreement between the
parties either under S. 20(1) or by the Arbitral Tribunal under S. 20(2) of the Act, even then,
the Arbitral Tribunal may meet at any other place that it considers appropriate and convenient.
But the place or venue must be selected only for the purpose of consultations among its
members, for hearing witnesses or experts, for hearing the parties or for inspection of
documents, goods or other property, which is the subject matter of reference and dispute
between the parties.
[d] Commencement of the Arbitral Proceedings:
The parties are free to determine by an agreement the time and date for commencement of the
arbitral proceedings. The parties can fix from which date the arbitral proceedings shall
commence. If there is no such agreement between the parties or the contract clauses are silent
about commencement of proceedings, then S. 21 of the Act comes into play which prescribes
that such date shall be the date on which a request is received by one party from the other to
make a reference of the dispute to arbitration.78
[e] Ex Parte proceedings:
Once, the statements of claim have been filed, it is mandatory to serve the notice on the other
party and give sufficient time to present his statements of defence. Where enough notice has
been served on the party and he is absent at the time of hearing; an Arbitrator is authorized to
proceed in his absence and may decide ex parte. The Act provides that If the claimant fails to
file any statements of claim in accordance with the provision of Section 23(1), the Arbitral
Tribunal shall terminate the proceedings. On the other hand, if the respondent fails to submit
his statements of defence, the Arbitral Tribunal shall continue the proceedings ex parte. In case,
78
Id, S.21.
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after filing the statements by the parties, one of them fails to appear at the oral hearing or
produce any documentary evidence before the Arbitral Tribunal, the Tribunal may continue
proceedings ex parte and may make an award accordingly79.
[f] Appointment of Expert by Arbitral Tribunal:
In the absence of any contract to contrary between the parties, the Arbitral Tribunal can appoint
expert or more than one expert to report on any specific issue and may direct a party to give the
expert any relevant information pertaining to the reference. The Arbitral Tribunal may appoint
expert to produce or to provide access to any relevant documents, goods or other property for
his inspection.80 The expert can be asked by the Arbitral Tribunal to participate in the hearing
after he has submitted his report either oral or in writing, if the Arbitral Tribunal considers it
necessary and on the request of the parties81. The expert may on the request of the parties be
required to make available to them for examination of all relevant documents, goods or other
property with which he was so entrusted and required to prepare his report.82
3.7 Arbitral award and termination of proceedings:
[a] Application of substantive law in domestic arbitration:
The Arbitral Tribunal in arbitration proceedings other than international commercial arbitration,
where the place of arbitration is situated in India shall decide the arbitral dispute in accordance
with the substantive law. Neither the Arbitrator nor Tribunal can oppose the law or grant
anything beyond the permissible limits of the law. The Act under S. 28 provides that the
Arbitrator shall have to resort to the substantive law of the country in domestic arbitration83.
The expression 'substantive law' means the law of the land, which includes the Code of Civil
Procedure, 1908, the Indian Evidence Act, 1872 and all other laws applicable for the time being
and in force in India.
[b] Rules Applicable in International Commercial Arbitration:
79
Id, S.25.
80
Id, S.26(1) Sub-Clauses (a) and (b).
81
Id. S.26 (2).
82
Id, S.26 (3).
83
Id, S.28 [1] Sub Clause (a).
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The law applicable in an international commercial arbitration during conduct of arbitration

proceedings shall be the rules designated and framed by the parties, which shall mean the
substantive law of that country. If there is no such prescription by the parties then, the Arbitral
Tribunal shall apply any rules of law that consider it fit and to be appropriate under the given
circumstances and surrounding the dispute. But nothing should be in conflict or inconsistent
with rules of that substantive law84. The Act provides safeguards to the Arbitral Tribunal that
the decision of the Arbitral Tribunal shall be in accordance with the terms of the contracts and
the Arbitral Tribunal shall also consider the usages of the trade applicable to the transaction85.
In case the parties authorize the Arbitral Tribunal to decide and apply the law or rules on its
own, the Arbitral Tribunal shall have to decide the dispute according to ex aequo at bono which
means according to good senses of the Arbitral Tribunal and that deems fair and good. On the
other hand, the Arbitral Tribunal may decide the dispute as Amiable Compositeur, which
means based on amicable settlement. But in both the conditions it can be done if the parties
empower and authorize the Arbitral Tribunal to do so in this respect 86. The term ex aequo at
bono means what is just and good. A power explicitly conferred on Arbitrators by the parties in
their arbitration agreement or compromise permit the Arbitrator to go outside the bounds of law
in order to reach a decision based primarily on concepts of fair dealing and good faith. The
parties in international disputes, public or private, must expressly state in their arbitration
agreement that the Arbitrator is authorized to decide ex aequo at bono87. Whereas the term
Amiable Compositeur means where the power is given to Arbitrator to render award what he
believes to be just and fair. It is known as amiable composition88.
[c] Majority decision in case of disagreement among Arbitrators:
The award of the Arbitral Tribunal shall be made by a majority decision. It happens only if
there is more than one Arbitrator and there is disagreement among them. The Arbitration and
Conciliation Act, 1996 does not permit even number of Arbitrator89. The Act provides that in
the absence of any agreement and where there is more than one Arbitrator, the decision of the
84
Ibid, S. 28 (1) Sub Clause (b) [i – iii]
85
Ibid, S. 28 (3).
86
Id, S. 28 (2).
87
Katharine Seide and Henry Brown and Arthur Marriott: ADR Principles and Practice, referred in H.K.Saharay,
The Law of Arbitration and Conciliation, (2001), Appendix 26, p-851.
88
Ibid, at p- 845
89
Supra Note 94, S. 10
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Arbitral Tribunal shall be made by most of its members. But the question or any other matters
pertaining to procedure shall be decided by the Presiding Arbitrator alone.90
[d] Settlement through Conciliation:
The Arbitration and Conciliation Act, 1996 has made commendable provision for settlement of
dispute through compromise, mediation or conciliation between the parties by inserting the
Section 30 in the Act. This Section is complete answer to the mechanism of ADR system in
India. The Section 30'provides that the Arbitral Tribunal with the agreement of the parties may
settle the dispute through mediation, conciliation or other procedures conducive towards
amicable settlement. The settlement of the dispute can be done at any time during the arbitral
proceedings. It is implicit under the Act that encouragement of such a settlement shall not be
incompatible or in derogation with an arbitration agreement made between the parties.
The Act under S.30 further provides that in case the settlement reached between the parties, the
Arbitral Tribunal shall terminate the arbitration proceedings. The settlement reached between
the parties shall, if the parties desire and request the Arbitral Tribunal to do so and the Tribunal
does not have any objection, be reduced in writing. The settlement reduced in writing shall be
maintained in the form of an award on agreed terms. It must be stated that it is an award and it
has been made in accordance with the requirements of Section 31 of the Act and shall have the
same status and force and in the same manner as if it were an arbitral award on the substance of
the dispute.
[e] Form and contents of award:
The Act makes ample provisions that how the arbitral award is to be made. The S. 31 of the Act
provides that the arbitral award shall be made in writing, which must have been signed by all
the members of the Arbitral Tribunal. In case the Arbitral Tribunal consists of more than one
Arbitrator, it will be enough if majority of its members have signed the arbitral award. But the
Act creates bounden duty on the Tribunal that the reasons must be expressed for any omitted
signature91.
90
id, S. 29
91
, S. 31 (3), Sub Clauses (a) and (b)
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The Section 31(4) provides that the arbitral award must state the date of the award on which it
has been announced and signed. The arbitral award must name out the place of arbitration,
which has been determined either by the parties under the agreement or Arbitral Tribunal
required under Section 20 of the Act. The award shall be deemed to have been made at that
place92. The signed copies of the arbitral award shall be provided to each party as required
under S.31 (5). The S. 31 (6) of the Act empowers the Arbitral Tribunal to make an interim
award during the arbitral proceedings. The Section 2 (1) (c) of the Act defines that the award
includes interim awards. The interim award shall be made only on those matters with respect to
which the Arbitral Tribunal can make a final award.93
The S. 31(7) of the Act provides for the grant of interest by the Arbitral Tribunal on an award
for the payments of money for the period between the date on which cause of action arose and
the date on which the award is made. The Arbitral Tribunal is competent to grant interest at any
rate, which it considers reasonable under the circumstances. In cases where the arbitral award
pertains to the payment of money, the Arbitral Tribunal may add a sum by way of interest to
the amount awarded at such rate, as the Tribunal deems just and reasonable. The Section 31(7)
further provides for the grant of interest on the sum of money awarded for the period from the
date of the award until the date of payment, subject to maximum of eighteen percent per
annum94. The Section 31(8) provides for the Arbitral Tribunal to fix the cost of arbitration
proceedings unless agreed by the parties themselves that what cost may be paid. It shall specify
by who [party] and to whom and in what manner the cost shall be paid95. But the cost shall be
reasonable including the fees and expenses of the arbitrator, witnesses’ expenses, legal fees,
administration fee of the institution, which is supervising the arbitration and other allied
expenses incurred in connection with the arbitral proceedings and till the final arbitral award"96.
[g] Termination of Proceedings:
The Act provides modes for termination of arbitral proceedings in two situations. First,
automatic termination of arbitral proceedings. The automatic termination of arbitration
proceedings shall take place when the Arbitral Tribunal has made final award and thereafter
92
Ibid, S. 31 (4).
93
Id, S. 31 (6).
94
Ibid, S. 31 (7) Sub Clauses (a) and (b)
95
Id, S. 31(8) Sub Clauses (a) and (b) [i-ivj.
96
Id, S. 31 (8) Explanation.
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existence of Tribunal is not required. In such situation arbitration proceeding stand

automatically terminated.97 Second, termination of proceedings by the Arbitral Tribunal.
Section 32 (2) explains that Arbitral Tribunal by issuance of orders may terminate the
arbitration proceedings when;
1. the claimant withdraws his claim as submitted in the statements of claims before the
Arbitral Tribunal. But the section prohibits the unilateral withdrawal by the claimant. The
withdrawal is subject to the condition that if the respondent objects his withdrawal from
arbitration proceedings and the Arbitral Tribunal identifies that the interest of the respondent is
legitimate and genuine in final settlement, the Arbitral Tribunal may reject the withdrawal of
the claimant,
2. the parties to the arbitration proceedings mutually agree to terminate the arbitration
proceedings, the Arbitral Tribunal may pass an order to this effect,
3. the continuation of the arbitration proceedings has become impossible or are
unnecessary.98
The Section 32 further provides that the mandate and authority of the Arbitral Tribunal, subject
to Section 33 and Section 34 (4), comes to an end with the termination of arbitration
proceedings99. It means the provisions under S. 33 and S. 34(4) are exceptions and the Arbitral
Tribunal cannot become a functus officio when;
I.the party with the notice and knowledge of other party makes request to the Arbitral Tribunal
for purpose of rectification or corrections of computational, clerical or typographical errors in
the arbitral award,
II. the party makes request to the Arbitral Tribunal for interpretation of specific point or any part
of the arbitral award made in the course of arbitration proceedings,
III. the Arbitral Tribunal is in the receipt of an application from the party for purpose of making an
additional award100, and
IV.the party has resorted to initiate proceedings in the Court for setting aside the arbitral award. On
receipt of an application under Section 34(1), the Court may adjourn the proceedings for a
97
Id, S. 32(1).
98
Id, S.32 (2) Sub Clauses [a - c].
99
Id, S. 32, Sub Clause (3).
100
Id, S. 33.
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period determined by it to give the Arbitral Tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the opinion of the Arbitral Tribunal will eliminate
the grounds for setting aside the arbitral award.101
[h] Recourse against Arbitral Award:
The Act under Section 34(1) provides for setting aside the arbitral award made by the Arbitral
Tribunal. The Judicial Courts enjoy exclusive powers to set aside arbitral award on an
application made by a party on the grounds that (i) the party was under some incapacity and
could not look after and protect his interest during arbitral proceedings; (ii) the arbitration
agreement is not valid under the law or is failing any indication thereon under the law in force;
(iii) the party was not given proper notice of the appointment of an Arbitrator and arbitral
proceedings; (iv) the arbitral award deals with a dispute not contemplated by reference or not
falling within the terms of the reference submitted to arbitration, or the arbitral award deals
with the subject-matter, which was beyond the scope of arbitration proceedings; (v) the
composition of the Arbitral Tribunal was not made according to agreement between the parties
or the arbitral procedure has not been followed according to the agreement of the parties or the
procedure prescribed by the Act has not been followed during the course of arbitral
proceedings102; (vi) the Court finds that the subject matter of the dispute is not capable of
settlement by arbitration under the existing law; and (vii) the Court finds that the arbitral award
is in conflict with the public policy of India as such the arbitral award has been induced or
affected by fraud or corruption or was in confidentiality of matters relating to conciliation
proceedings103.
[i] Time limit for setting aside the arbitral award:
The Act prescribes the maximum three months’ time for submission of an application before
the Court to set aside the arbitral award. The application cannot be filed after the expiry of three
months and the time shall run from the date on which the party received the arbitral award or
from the date of the disposal of the application under Section 33 made for rectification of errors
or interpretation of specific point in the award etc. The proviso appended to S.34(3) makes
101
Id, S. 34 (4).
102
Id, S. 34 (2) Sub Clause (a) [i - v]
103
Id, S. 34 (2) Sub Clause (b) (i) & (11)
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provision for extension of time limit beyond three months if the party can justify the cause and
reason of delay104. The Section 34(4) provides that when an application has been made before
the Court for setting aside an arbitral award, the Court may adjourn the proceedings for the time
being to enable the Arbitral Tribunal to resume proceedings to eliminate those grounds and
accomplish the task105.
[j] Finality and enforcement of arbitral award:
The Section 35 of the Act makes the award binding on all the parties and upon those claiming
the arbitral award or having any interest there upon. Finality clause means that neither there can
be further award on the same subject matter for which the reference had been made nor there
will be any challenge to award made by the Arbitral Tribunal 106. The Act makes ample
provisions for enforcement of arbitration award. The arbitral award is a decree and is directly
enforceable in the same manner as if it were a decree of the Court. But the arbitral award shall
be enforceable only when the time for setting award under Section 34 of the Act has been
expired. The arbitral award shall not be enforceable unless the application made by the party
for setting aside the award has been refused, rejected or made imfructuous107. Under the
Arbitration Act, 1940 there were some obstacles during the enforcement of arbitral award.
First, an arbitral award had to be duly filed in the Court and that Court shall convert the same
into a judgement in terms of the award, which was known as "making the award a rule of the
Court". Thereafter, it was converted into a decree for its enforcement. The Arbitration and
Conciliation Act, 1996 has removed the deficiency. As soon as the time limitation under
Section 34 is over the award becomes enforceable immediately under the Code of Civil
Procedure and without any further interference by the Court.108
104
Id, S. 34 (3).
105
Id, S. 34 (4).
106
Id, S. 35.
107
Id, S. 36.
108
Union of India Vs. Popular Construction Co., (2001) 8 SCC, p- 470.
58 | P a g e
[k] Provisions for Appeals:
There are two types of appeals under the Arbitration and Conciliation Act, 1996. First from the
orders or against the orders of the Court. Second against the orders of the Arbitral Tribunal.
[a] Appeal against the orders of the Court: The Section 37 of the Act provides that an appeal
shall lie to the Court authorized by law to hear appeals from the original decrees of the Court
passing the order where (i) the Court either granting or refusing to grant any measure under
Section 9 of the Act; (ii) the orders made by the Court under Section 34; setting aside or
refusing to set aside an arbitral award.
[b] Appeal against the orders of Arbitral Tribunal: The Act provides for an appeal against the
orders of the Arbitral Tribunal made under Section 16 (2) & (3) for accepting the pleas referred
to under this Section. The appeal shall also lie against the orders of the Arbitral Tribunal made
under Section 17 granting or refusing to grant an interim measure of protection. But no second
appeal shall lie from an order passed in appeal under Section 37. The Act further explains that
there is no provision of second appeal under the Arbitration and Conciliation Act, 1996. But the
right of the parties to appeal to the Supreme Court under Article 136 [SLP] of the Constitution
of India has not been affected under this section.109
I. Application and scope of conciliation:
[I] statutory recognition for Conciliation in India:
Before the advent and commencement of the Arbitration and Conciliation Act, 1996 there were
very few provisions of conciliation process in India. The mechanism of conciliation process for
dispute resolution in Indian statutes was available in the enactments viz. (i) Order XXXI l-A,
Rule 3 of the CPC, which creates duty of the Court to make efforts for settlement of every
family dispute by way of conciliation]; (ii) Section 12 of the Industrial Disputes Act, 1947
requires the Conciliation Officer to initiate and bring about a settlement in an industrial dispute;
(iii) the Section 23 of the Hindu Marriage Act, 1955; and (iv) the Section 34 of the Special
Marriage Act, 1954 provides for reconciliation of matrimonial disputes before the judicial
109
Id, S. 37(3)
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officer. But after enactment of the Act of 1996, ample provisions have been made under Part -
III of the Act, which deals with the conciliatory provisions.110
[ii] Application and scope of conciliation:
Section 61 requires that the Part-Ill of the Act shall apply to conciliation of disputes, which
arises out of legal relationship. The provisions apply to both type of disputes whether
contractual or not. The section saves the provisions contained in any other law except where the
parties have otherwise agreed. The dispute must have been arisen out of legal relationship
between the parties and that is mandatory for conciliation. The dispute must be of such nature
as to give one party the right to sue and other party the liability to be sued 111. But Part III of the
Act does not apply and prohibits those disputes, which cannot be submitted to conciliation by
virtue of any law for the time being in force112.
[iii] Commencement of conciliation proceedings:
The conciliation proceedings are initiated by one party and other party is called for settlement
of dispute. The Section 62 provides that the party initiating conciliation must send a written
notice of invitation to the other side to conciliate upon dispute. The notice so sent must specify
the subject matter of dispute. The conciliation proceedings are deemed to have commenced
when the other party accepts written notice or invitation113. The Section further provides that
where the other party rejects the invitation or notice of conciliation, there will be no
conciliation proceedings. The offer and acceptance of written notice to conciliate is condition
precedent and that must be done within stipulated period. The Section 62(4) requires that reply
to an invitation or notice must be sent with in the period of thirty days. In case no reply to the
invitation is received within thirty days from the date on which the invitation is sent or within
extended time granted or desired, the sender of the invitation may elect to treat the invitation as
a rejection. He shall also inform the decision of rejection in writing to the other party
accordingly.114
[iv] Number and strength of Conciliators:
110
Id. Ss.61 to 81.
111
Id. S.61(1).
112
Id, S.61(2).
113
Id, 8.62(1) and (2).
114
Id, S.62 (3).
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The Act generally provides that there shall be one Conciliator. The Section 63 of the Act gives
liberty to the parties to decide upon numbers of Conciliators. The parties to the dispute may by
an agreement provide for two or three Conciliators. In case where the number of Conciliators is
more than one, it is binding upon them that they should act jointly.115
[v] Procedure for appointment of Conciliators:
The Section 64 of the Act provides for appointment of Conciliators. There are three rules
prescribed under this section. First, if there is only one Conciliator appointed to conduct the
conciliation proceedings, the parties may agree on the name of single Conciliator. Secondly, if
there are two Conciliators each party has an opportunity to appoint one Conciliator of their
choice. Third, in case there are three Conciliators each party can appoint one Conciliator and
the parties may agree on the name of the third Conciliator who shall be designated as the
Presiding Conciliator116. The Section further provides that the parties to conciliation
proceedings may obtain the assistance of a suitable institution or person for the appointment of
Conciliator and that may recommend the name to act as Conciliators. The parties may also
agree and write to the institution or person that the appointment of one or more Conciliators be
made directly by such institution or persons117. But the proviso appended to the Section 64(2)
requires that the institution or person recommending or appointing individuals to act as
Conciliators shall have regard to such considerations as are necessary to secure the appointment
of an independent and impartial conciliator to secure balanced justice. The nationality of a
Conciliator in making the appointment of a sole or third Conciliator must be considered, and it
is advisable to appoint the Conciliator of nationality other than that of the parties118.
[vi] Submission of statements:
The Section 65 of the Act requires that the Conciliator upon his appointment may request the
parties to submit to him a brief written statement of their claims. The statements must contain
the description and nature of their dispute including the points at issue for conciliation. The first
party must send a copy of such statements to the other party. The conciliator may require each
party to submit to him a further written statement of his position and the facts and grounds in its
115
Id, S.63.
116
Id, S.64(1).
117
Id, S.64 (2).
118
Id, S.64 (2), PROVISO.
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support. The Act under Section 65(2) provides that written statements may be supplemented by
appropriate documents and evidences. The party is again required to send a copy of such
statements, documents and related evidences to the other party. The Conciliator is also
empowered to call for any additional information from the parties, which he may deem
appropriate at any stage of the conciliation proceedings119. The Explanation appended to
Section 65 explains that 'Conciliator' under any section of Part III applies to a sole, two or three
Conciliators120''.
[vii] Application of Procedural Codes:
The Section 66 of the Act provides that the Conciliator is not bound by the rules contained in
the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. The Act under Part Hi
provides some rules of procedure to be applied and adhered to during conciliation proceedings.
The Conciliator may not be bound by the technicalities of rules prescribed under these
procedural codes121.
[viii] Role of Conciliator and principles in conciliation proceedings:
[a] independence and Impartiality:
The Act prescribes the rules of independence and impartiality. The Conciliator should be
independent and impartial in conducting the conciliation proceedings and is required to assist
the parties in fair manners while attempting to reach an amicable settlement of dispute.122
[b] Objectivity, fairness and justice:
The Conciliator should be guided by the principles of objectivity, fairness and justice. The Act
envisages that the Conciliator must take into consideration, inter-alia, the rights and obligations
of the parties and the usages of the trade concerned. The Conciliator must keep in mind the
circumstances surrounding the dispute, including any previous business practices being
followed between and by the parties in order to reach a just and fair settlement123.
[c] Speedy settlement through oral hearing:
119
Id, S.65.
120
Id, S.65, Explanation.
121
Id, S.66.
122
Id, S.67(1).
123
Id, S.67 (2)
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The main purpose of these provisions is to provide speedy justice to the litigant parties apart
from cheap and with minimum loss of time and value. The Act provides for the Conciliator to
conduct the conciliation proceedings in such a manner as he considers appropriate keeping in
view the circumstances of the case. He must consider the wishes of the parties they express
before him. The Conciliator, at the request of the parties, may hear oral statements instead of
written submission with a view to make speedy settlement of the dispute124.
[d] Proposals of settlement:
The Conciliator enjoys discretionary powers to make proposals for a settlement of the dispute
to the parties at any stage of the conciliation proceedings. The Conciliator is not bound to make
such proposals in writing to the parties. The proposal so made need not be accompanied by a
statement of the reasons to be explained by the Conciliator125.
[e] Disclosure of information:
When the Conciliator has received an information about any factual position relating to the
dispute from a party, he should disclose the substance of that information to the other party
also. The purpose behind the incorporation of this provision is to enable the other party to plan
and present his defence, which he may consider appropriate and conducive towards amicable
settlement of their dispute.126
[f] Rules of confidentiality:
The Proviso appended to the Section 70 is a rule of confidentiality. It provides that the
Conciliator must keep any information made to him by the parties confidential and he is bound
under the provisions of the Act not to disclose any information to the other party127. The
Section 75 of the Act also requires the Conciliator and parties to keep all information and
matters pertaining to the conciliation proceedings confidential and the rule of confidentiality
shall extend to the settlement agreement. But there is difference in two sections. The provisions
under S. 70 of the Act apply to the Conciliator only who is bound not to disclose the
information to the other party. Whereas Section 75 requires both the Conciliator and parties not
124
Id, S.67 (3).
125
Id, S.67 (4).
126
Id, S. 70.
127
Id, S. 70, Proviso.
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to disclose the information and matters relating to conciliation proceedings and keep that
confidential128.
[g] Rules of co-operation:
It is trite proposition that nothing could be solved or achieved without the co-operation of each
other in any field. The Section 71 of the Act has also been incorporated on the same lines. It
requires that both the parties to conciliation should in good faith co-operate with the Conciliator
in all matters in order to make settlement of the dispute. The parties should submit the written
materials and provide evidences as required by the Conciliator. They should make endeavour to
attend all the meetings and comply with all the requests made by the Conciliator during
conciliation proceeding.129
[h] Communication between Conciliator and the parties:
The Section 69 of the Act provides that the Conciliator may invite the parties to meet him at
any time. He may have meetings with the parties together or with each of them separately in
order to facilitate for the right settlement. He may invite and communicate with both the parties
orally or in writing whatever is convenient130.
[i] Place of meetings:
Section 69 of the Act provides to choose and fix the place of meetings to conduct the
conciliation proceedings. First, the parties under the Act have full freedom to fix the place
where meetings may be conducted with the Conciliator. This can be done by an agreement
between the parties. In case there is no such agreement between the parties, the place of
meeting will be fixed by the Conciliator. But in doing so he is required to fix such place of
meeting only after full consultation with the parties. Because the nature and circumstances of
conciliation proceedings will have a prime importance in fixing the place of meetings.131
[j] Administrative Assistance:
128
Id, S. 75.
129
Id, S. 71.
130
Id, S.69(1).
131
Id, S. 69 (2)
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The Conciliator and the parties during conciliation proceedings may have to face difficulties of
any kinds. There may be problem pertaining to infrastructure etc. The Section 68 provides that
the parties and the Conciliator may seek administrative assistant from a suitable institution or
the person in order to facilitate the conciliation proceedings. But the assistance can be obtained
with the consent of the parties132.
[k] Rule of suggestions:
The role of the Conciliator as provided under Section 67 of the Act is to assist the parties in an
independent and impartial manner to reach an amicable settlement of the dispute by making
proposals to them. The proposal contains statement of suggestions to conciliate upon the
dispute. The Section 72 of the Act also provides for the parties to make suggestion to the
Conciliator in order to make proper and early settlement of the dispute. The section envisages
that any party may, either on his own initiative or at the invitation of the Conciliator submits
their suggestions for the settlement of the dispute in right perspectives133
[ix] Role of Conciliator in other proceedings:
Besides, the independence and impartiality of the Conciliator, the Section 80 of the Act further
puts two restrictions on the role of the Conciliator while conducting conciliation proceeding.
First under Section 80 (a), the Act prohibits the Conciliator to act as an arbitrator. It further
requires that the Conciliator should not act as representative or Counsel of a party in any
arbitral or judicial proceedings in respect of a dispute, which is subject-matter of the
conciliation proceedings also. Second Section 80 (b) of the Act places restriction on the parties
that none of the party may produce the Conciliator as a witness in any arbitral or judicial
proceedings that pertains to the conciliation proceedings.134
[x] Admissibility of evidence in other proceedings:
The Section 81 of the Act places restriction on the admissibility of evidence and creating bars
on some admissions to be made by the parties in and during conciliation proceedings. The
parties cannot rely on and introduce as evidence in arbitral or judicial proceedings [i] any views
expressed or suggestions made by the other party in respect of a possible settlement of the
132
Id, S. 68.
133
Id, S. 72.
134
Id, S.80.
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dispute; [ii] an admission made by the other party in the course of the conciliation proceedings;
[iii] any proposals made by the Conciliator, which may help or prejudice the conciliation
proceedings; [iv] the fact that the other party had indicated his willingness to accept a proposal
for settlement made by the conciliator135.
[xi] Settlement agreement in conciliation proceedings:
The settlement of the dispute between the parties is the last urge to close the topic of the
conflict forever. The contour of settlement agreement is to be finally drawn up by the
Conciliator. The Act provides that as and when it appears to the Conciliator that there exist
elements of a settlement and that are likely to be accepted by the parties, he shall formulate the
terms of a possible settlement and submit the same to the parties for their observations136.
Thereafter, the Conciliator on having received the observations of the parties may reformulate
the terms of a possible settlement. The Section 73 of the Act requires that the settlement
agreement should be done or prepared in the light of observations made by the concerned
parties. In case the parties have reached at an agreement and settled the dispute, they will draw
up a written settlement agreement which they will sign. The parties may request the Conciliator
to assist them if they feel inconvenience in preparing the settlement agreement and he may
draw up or assist the parties in drawing up the settlement agreement accordingly137. Once the
parties have signed the settlement agreement either prepared by them or by the Conciliator with
their consultations, it becomes final and binding on the parties. The settlement agreement shall
also be binding upon the persons and other parties claiming under them138. Thereafter, the
Conciliator shall authenticate the settlement agreement and furnish its copy to all the parties139.
The settlement agreement so made or reduced is a document of much importance. The Supreme
Court in the case of Mysore Cements Ltd.Vs SvedalaBarmac Ltd 140 has observed that 'It is only
that agreement which has been arrived at in conformity with the manner stipulated and form
envisaged and got duly authenticated in accordance with Section 73 of the Act, alone can
135
Id, S. 81.
136
Id, S. 73(1).
137
Id, S. 73 (2).
138
Id, S. 73 (3).
139
Id, S. 73 (4).
140
AIR (2003) 10 sec, p-375.
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assign the status of a settlement within the meaning of and for effective purposes of the Act,
and not otherwise.
[xii] The status and effect of settlement agreement:
The settlement agreement so formed shall have the same status and effect as if it is an arbitral
award. The settlement agreement is enforceable in the same manner as if it were the decree of
the Court. The Act provides that the settlement agreement shall have the same status and effect
as an arbitral award on agreed terms under Section 30 of the Act. It shall be treated as a decree
of the Court and enforceable in the same manner.
[xiii] Termination of conciliation proceedings modes:
The conciliation proceedings initiated to settle the dispute between the parties shall also be
terminated on having finalized the settlement agreement and after obtaining the signature of the
parties. The Act provides four different modes as to how the conciliation proceedings shall be
terminated:
[a] By signature of the parties: The Act provides that the conciliation proceedings shall stand
terminated by singing the settlement agreement between the parties. The date of termination of
conciliation proceedings will be the date on which the settlement agreement has been drawn up
and singed by the parties141.
[b] Failure of Settlement: The Act under S.76 provides that the conciliation proceedings shall
stand terminated when the conciliator declares in writing that further efforts on conciliation
proceedings are no longer required or justified. The date of termination shall be the date of
declaration made by the Conciliator.142
[c] Written declaration by parties to the Conciliator: The Act under S. 76 further provides that
conciliation proceedings shall stand terminated by written declaration of parties. The
declaration shall be addressed to the Conciliator to the effect that the conciliation proceedings
141
Ibid, S. 76. Sub Clause (a).
142
Id, S. 76 Sub Clause (b).
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have been terminated. The date of termination of proceedings shall be the date of declaration
made by the parties in writing143.
[d] Unilateral declaration: The conciliation proceedings are also terminated by the act of single
party. The party so intends shall declares in writing to the other party and the Conciliator that
the conciliation proceedings may not continue and stand terminated. The date of termination
shall be the date of declaration by the party144.
[xiv] Bar on arbitral or judicial proceedings:
The parties are free to choose judicial or nonjudicial forum for dispute resolution. The party
may resort to conciliation or arbitral process. Once the mode of conciliation under the Part III
of the Act has opted, the party cannot initiate proceedings in any Court for the same cause
simultaneously. The Act bars other proceedings and provides that the parties cannot not initiate
arbitral or judicial proceedings during the conciliation proceedings in respect of the same
dispute, which is the subject-matter of the conciliation proceedings under this Part. The Section
relaxes the provisions that the party may initiate arbitral or judicial proceedings if in his opinion
such proceedings in another Court are necessary for preservation of his rights145.
[xv] Powers of High Court and Central Government to make rules:
The Act confers powers on the High Court to make rules to effectuate the proceedings under
the Act. The rules made shall not be inconsistent with any provision of Act146. The Central
Government has also been conferred rule making powers by the Act in order to carry out the
provisions of this Act. The rules, as soon as may be, laid before each House of the Parliament
while the House is in session.
4. CONCILIATION UNDER THE CONSTITUTION OF INDIA:
The Constitution of India under Article 51 also provides for promotion of international peace
and security and to encourage settlement of international disputes by arbitration. The Article 51
(a) provides that the State shall endeavour to promote international peace and security. The
Article 51(b) requires maintaining just and honourable relations between the Nations. The
143
Id, S. 76 Sub Clause (c).
144
Id, S. 76 Sub Clause (d).
145
Id, S. 77
146
Id, S. 82
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Article 51(c) emphasized that the State shall foster respect for international law and treaty
obligations in the dealings of organized people with one another. The Article 51(d) requires the
State to encourage settlement of international disputes by arbitration. It can be concluded that
the Mechanism of ADR system is not new rather the generations are oblivious of the system.
The Article 51 of the Constitution is a good example of ADR System, which provides disputes
resolution through compromise settlement maintaining peace and security at international
level147.
4.1 CONCILIATION UNDER THE CODE OF CIVIL PROCEDURE:
[i] Conciliation at examination stage: The CPC vide Order X, Rule 1 empowers the Court to
make examination of both the parties. The Court at the first hearing of the suit shall ascertain
from each party or their pleaders whether they admit or denies such allegations of fact as are
made in the plaint including written statement of the opposite party. The Court shall record
such admissions and denials and other plan of defense put forward by the parties148. But after
the amendment made to the CPC by an amendment Act 46 of 1999, has clothed the Court to
resort to the mechanism of ADR for dispute resolution. The Parliament have inserted three
additional rules viz. 1A, 1B, 1C, which has made it mandatory on the part of the Judicial
Officer to direct the parties to opt for any of ADR modes to resolve the dispute by way of
mutual settlements. The Order X, Rule 1A requires that after the recording the admissions and
denials, the Court shall direct the parties to the suit to opt either mode of settlement outside the
Court as specified in Sub-Section (1) of Section 89 viz. arbitration, conciliation, judicial
settlement including settlement through Lok Adalat or Mediation. In case the parties accept the
option, the Court shall fix the date of appearance before such forum or authority to conduct
settlement as may be opted by the parties149. The Order X, Rule 1B provides that where a suit
has been referred under rule 1A, the parties shall appear before such forum or authority for
conciliation of the suit150. In case, where a suit was referred under rule 1A and the presiding
officer of conciliation forum is satisfied that it would not be proper in the interest of justice to
proceed with the matter and because there is no chance of compromise or conciliation, the
147
The Constitutional Law of India, Art.
148
The Code of Civil Procedure, 1908 as amended by [Amendment] Act 46 of 1999 & 22 of 2002, Order X, Rule 1.
149
Ibid, Order X. Rule 1
150
Id. Order X, Rule IB.
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conciliation forum or authority shall refer the matter again to the Court along with directions to
the parties to appear before the Court on the date fixed by it for trial of the case and decision.151
Settlement by an agreement between the parties:
The CPC Vide Order XXIII, Rule 3 provides for the parties to make adjustment of their claim
in suit either wholly or in part by lawful agreement or compromise between them and without
recourse to any Court, Authority or Tribunal. But the agreement must be expressed in writing
and signed by each party. In such a situation if the Court is satisfied and it is proved before the
judicial officer that suit has been adjusted wholly or in part by an agreement, the Court shall
order such agreement or compromise to be recorded and pass a decree to this effect 152. But
defendant must satisfy the plaintiff in respect of the whole or part of the subject matter, which
is an essential requirement of the Order XXIII. The adjustment or satisfaction so alleged by one
party should not be denied by another. The Court shall decide the question without further
adjournment unless the Court thinks fit to grant such adjournment and for doing so the reasons
must be recorded in writing153.
Settlement of Dispute under Section 89:
The Section 89 has been reinserted to the CPC154 amendment Act, 46 of 1999. The section
provides for settlement of dispute outside the Court. The enactment of these provisions under
section 89 is based on the recommendations made by the Law Commission of India and the
Mallimath Committee. The Law Commission has emphasized the desirability of the Courts
being empowered to compel parties to a private litigation to resort to arbitration, conciliation or
mediation155.
The Section 89 to CPC requires for settlement of disputes outside the Court where it appears to
the Court that there exists an element of a settlement to the proceedings before him and that
may be acceptable to the parties. The Section 89 provides that the Court shall formulate the
terms of settlement and give them to the parties for their observations. After receiving the
151
Id, Order X, Rule 1C
152
Id, Order XXIII Rule 3.
153
Id. Order XXIII. Rule 3, Proviso.
154
The Section was repealed by Act 10 of 1940 and has been again inserted by Act 46 of 1999 and came into force
w.e.f. 1" July, 2002.
155
The Law Commission of India, 129"^ Report [on Urban Litigation].
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observations from the concerned parties, the Court may reformulate the terms of a possible
settlement and refer the suit or proceedings for arbitration, conciliation, and judicial settlement
including through Lok Adalat or mediation. The Section 89 further provides that in the event of
reference under this section for arbitration or conciliation, the provisions of the Arbitration and
Conciliation Act, 1996 shall be applicable in the same manner as if the proceedings for
arbitration or conciliation were referred under the provisions of Arbitration and Conciliation
Act, 1996. In case the settlement of dispute has been resorted through Lok Adalat, the Court
shall refer in accordance with the provisions of Section 20(1) of Legal Services Authority
Act,1987 and all other provisions of Legal Services Authority Act, 1987 shall apply to the
proceedings. Where the dispute has been referred for judicial settlement, the Court shall refer
the same to a suitable institution or person, which shall be deemed to be a Lok Adalat and all
provisions of the Legal Services Authority Act, 1987 shall apply accordingly. In the event of
mediation, the Court shall effect a compromise between the parties and shall follow such
procedure as may be prescribed.
J. THE LEGAL SERVICES AUTHORITY ACT, 1987:

I.Meaning and object of Legal Aid: The Legal-Aid means to provide free legal assistance to the
poor persons in any judicial proceedings before the Court or Tribunals. The Legal Aid may also
be provided to the litigants during conciliation proceedings because its main objective is to
provide free legal assistance to those who are not able to enforce their right through judicial
proceedings for want of pecuniary assistance. Mr. Justice P.N. Bhagwati in his report submitted
to the Government of India has observed that 'the legal aid means providing an arrangement in
the society so that the machinery of administration of justice become easily accessible and is
not out of reach of those who have to resort to it for enforcement of rights given to them by
law. The poor and illiterate should be able to approach the Court and their ignorance and
poverty should not be an impediment in the way of their obtaining justice from the Court'156.
The Legal Aid also means to provide legal advice in the conduct of a case or legal proceedings
before any Judicial Court, Authority or Tribunal including (i) providing advocates at the State
expenses; (ii) paying Court fee on behalf of the eligible persons; (ill) bearing expenses
156
The Legal Aid Committee Report, (1971), p-5.
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regarding preparation of documents; (iv) paying expenses for the summoning of witnesses; and
(v) paying other incidental expenses incurred in connection with litigation157.
II.Provisions of Legal Aid under Constitution of India: The Preamble to the Constitution of India
envisages that we the people of India solemnly resolved to constitute India Sovereign, Socialist,
Secular, Democratic and Republic and to secure equality of justice to all the citizens, social,
economic and political. The Article 14 of the Constitution provides that the State shall not deny
to any person equality before law or the equal protection of the laws within the territory of
India158. The Article 21 of the Constitution provides that no person shall be deprived of his life
or personal liberty except according to procedure established by law159. The Article 38
envisages that the State shall strive to promote the welfare of the people by securing and
protecting as effectively as possible it may be160. The Article 39-A provides for the concept of
free legal aid and requires that the State shall secure that the operation of the legal system
promotes justice based on equal opportunity irrespective of status. The legal system shall,
provide free legal aid by suitable legislation or schemes or in any other way, to ensure that the
opportunity for securing justice are not denied to any citizen by reasons of economic or other
disabilities161. These Articles are precursor for enactment of the Legal Services Authority
Act,1987 [LSA Act]. The provisions of free legal aid are of such a importance that these
requires periodical review by the Government. The conference of the Law Ministers and Law
Secretaries, 2005 held at Shimla on 10th and 11th" June, 2005 is an evidence to review the legal
aid programmes in the country162.
III.Legal Aid to indigent person under the CPC :
The CPC vide Order XXXIII Rule 9A provides that where a person who is permitted to sue as
an indigent person, is not represented by a pleader, the Court may, keeping in view the nature
and circumstances of the case where it is expedient and so require, assign a pleader to an
indigent person and the fee shall be paid by the Government. The Order XXXIII, Rule 9A
under sub-rule (2) empowers the High Court, with the prior approval of the State Government,
157
Justice A.B.Srivastava, The Legal Services Authorities Act with Central & State Rules & Regulations, (!999), p-
xxxv
158
The Constitution of India, Article 14.
159
Id, Article 21
160
Id, Article 38
161
Id, Article 39-A.
162
The Conference Agenda Papers of the Law Ministers and Law Secretaries, held at Shimla dated the 10th and 11th
June, 2005.
72 | P a g e
to make rules to facilitate the mode of making selection of the pleaders and other facilities to be
provided to such pleaders by the Court. The High Court may also make any other rules on other
matter, which is required to be or may be provided by the rules for giving effect to the
provisions of sub-rule (1).
IV.Legal Aid under the Code of Criminal Proicedure,1973:
The Legal Aid provisions are not available to the economically poor and indigent in the cases
of civil nature only but the Legal Aid is also available to the accused in criminal offences. The
person accused of criminal offence is also entitled to be represented by a lawyer at the state
expenses. The Criminal Procedure Code, 1973 under Section 304 provides legal aid to the
accused under trial of criminal case, where the accused in a trial before the Court of Session is
not represented by a pleader and the Court is satisfied that the accused has not sufficient means
to engage a pleader, the Court shall assign a pleader for his defence at the State Expenses. The
Section 304 empowers the High Courts of the States, with the prior approval of the concerned
State Government, to make rules and prescribe the procedures for selecting the pleaders, the
facilities to such pleaders and fees payable by the Government for carrying out the purposes of
the section.163
V.Constitution of National Legal Services Authority:

The LSA Act under Section 3 provides that the Central Government shall constitute a body to
be called the National Legal Services Authority to exercise the powers and perform the
functions conferred on or assigned to the Central Authority. The Central Authority according to
Section 2(1) (aa) means the National Legal Services Authority constituted under Section 3 of
the LSA Act. The Central Authority shall consist of the Chief Justice of India who shall be the
Patron-in-Chief. The President of India in consultation with the Chief Justice of India shall
nominate the executive Chairman to the Central Authority amongst from serving or retired
Judges of the Supreme Court. The Central Authority shall consist of such number of other
members, who are to be nominated by the Government in consultation with the Chief Justice of
India. The members must possess the experience and qualification, which shall be prescribed
by the Central Government for their appointments. The Section 3(3) requires that there shall be
a Member-Secretary of the Central Authority who shall be appointed by the Central
163
The Code of Criminal Procedure, 1973, S. 304.
73 | P a g e
Government in consultation with the Chief Justice of India. The Member Secretary shall be
under the Executive Chairman of the Central Authority to discharge and perform such duties as
assigned to him by the Central Government. He shall assist the Executive Chairman in
discharging his official duties. The Central Authority under Section 3(5) may appoint such
number of officers and other employees as may be prescribed by the Central Government for
the efficient discharge of its functions under this Act. The Section 3(4) provides that the terms
and conditions of office of Members and the Member Secretary shall be for such period as may
be prescribed by the Central Government in consultation with the Chief Justice of India. The
Section 3(6) provides that the salary and other allowances of the officers^ and other employees
of the Central Authority shall be prescribed by the Central Government commensurate to their
duties. The Section 3(7) envisages that the administrative expenses of the Central Authority and
the salaries, allowances and pensions payable to the Member-Secretary, Officer and other
employees shall be defrayed out of the Consolidated Fund of India.164
VI.Supreme Court Legal Services Committee:

The Section 3A provides that there shall be a Supreme Court Legal Services Committee, which
shall be constituted by the Central Authority for the purpose of exercising such powers and
performing such functions as may be determined by regulations made by the Central Authority.
The Section 3A (2) requires that the Committee shall be consisting of Chairman who shall be
appointed amongst the sitting Judges of the Supreme Court and such number of other members
possessing such experience and qualifications as required and prescribed by the Central
Government. These appointments shall be made on the nomination made by the Chief Justice
of India. The Section 3A (3) empowers the Chief Justice of India to appoint a person who shall
be the of Secretary to the Committee and he must possess that experience and qualifications as
may be prescribed by the Central Government. The terms of office and other conditions relating
to the members and Secretary shall be determined by regulations made by the Central
Authority. The Section 3A (5) of the LSA Act further empowers the Committee to appoint such
number of officers and other employees as may be prescribed by the Central Government in
order to discharge its functions efficiently. All the officers and employees of the Committee
shall be entitled to such salary and allowances and shall be subject to such other conditions of
164
The Legal Services Authorities Act, 1987, S.3.
74 | P a g e
service as may be prescribed by the Central government. But these appointments shall not be
made, or salary and allowances of the officer shall not be fixed by the Central Government
without the consultation of Chief Justice of India.165
VII.Functions of the Central Authority:

The LSA Act under Section 4 prescribes the functions and other duties to be discharged by
Central Authority. The Central Authority shall (i) formulate the policies and principles in order
to make legal services available under the provisions of this Act; (ii) frame all those schemes
which are most effective and economical for the purpose of making legal services available;
(iii) utilize the funds at its disposal and make appropriate allocations of funds to the State and
District Authorities; (iv) take necessary steps by way of social justice litigation with regard to
consumer protection, environmental protection or any other matter of special concern to the
weaker sections of the society and for this purpose, give training to social workers in legal
skills; (v) organize legal aid camps especially in rural areas, slums or labour colonies with a
view to educating the weaker sections of the society about their rights and may encourage them
for settlement of disputes through Lok Adalats; (vi) encourage the settlement of disputes by
way of negotiations, arbitration and conciliation being best and fine modes of ADR system;
(vii) undertake and promote research in the field of legal services with special reference to the
need for such services among the poor; (viii) take necessary steps for purpose of ensuring
commitment towards the fundamental duties of citizens enshrined under Part IVA of the
Constitution; (ix) monitor and evaluate implementation of the legal aid programmes at periodic
intervals and provide for independent evaluation of programmes and other scheme; (x) provide
grants-in-aid for specific schemes to various voluntary social services institutions and the State
and District Authorities out of the amounts placed at its disposal for the implementation of legal
services schemes; (xi) develop programmes for clinical legal education, promote guidance and
supervise the establishment and working of legal services clinic in universities, law colleges
and other institutions in consultation with the Bar Council of India; (xii) work for spreading
legal literacy and legal awareness amongst the people, (xiii) make special efforts to enlist the
support of voluntary social welfare institutions engaged at grass-root level, particularly among
the scheduled castes and the scheduled tribes, women and rural & urban labour; (xiv)
165
Ibid, S.3A.
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coordinate and monitor the functioning of State Authorities, District Authorities, Supreme
Court Legal Services Committee, High Court Legal Services Committees, Taluk Legal Services
Committees and voluntary social service institution and other legal services organization. It
may give general directions for the proper implementation of the legal services programmes166.
The Central Authority shall act in coordination with other governmental and non-governmental
agencies, universities and other agencies engaged in the work of promoting the cause of legal
services to the poor and weaker Section of the society167.
VIII.State Legal Services Authority:
The LSA Act makes the provisions of the State Legal Services Authority to effectuate the legal
aid services in the State. The Section 6 of LSA Act requires that every State Government shall
constitute a body to be called the Legal Services Authority for the State to exercise the powers
and perform the functions conferred on or assigned to a State Authority under this Act. The
Section 6(2) provides that a State Authority shall be consisting of the (i) Chief Justice of the
High Court who shall be the Patron-in-Chief, (ii) Executive Chairman who shall be serving or
retired Judge of the High Court and to be nominated by the Government inconsultation with the
Chief Justice of the High Court, and (iii) such number of other members to be nominated by
that Government in consultation with the Chief Justice of the High Court. It prescribes that they
shall possess such experience and qualifications as may be prescribed by the State Government.
The Section 6 (3) provides that the State Government shall make the appointment of Member-
Secretary of the State Authority. The appointment to this post should not be made without
consulting the Chief Justice of the High Court. The appointment of the Member Secretary shall
be made of persons belonging to the State Higher Judicial Service who shall not be lower in
rank than that of a District Judge. His appointment shall be made to exercise such powers and
perform such duties under the Executive Chairman of the State Authority as may be prescribed
by that Government or as may be assigned to him by the Executive Chairman of that authority.
The proviso appended to section 6 (3) envisages that a person functioning as Secretary of a
State Legal Aid and Advice Board immediately before the date of constitution of the State
Authority may be appointed as Member-Secretary of that Authority even though he is not
qualified to be appointed as such under this sub-section. But the appointment shall not exceed
166
Id, Section 4, Clauses [a - n].
167
Id, Section 5
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the period of five years168. The Section 6 (4) of the LSA Act provides that the terms of office
and other conditions of Members and the Member Secretary of the State Authority shall be
prescribed by the State Government in consultation with the Chief Justice of the High Court.
The Section 6 (5) empowers the State Authority to make appointment of such number of
officers and other employees, which may be fixed and prescribed by the State Government. But
it should also be done in consultation with the Chief Justice of the High Court. The salary and
allowance of officers and other employees of the State Authority shall be prescribed by the
State Government. The Administrative expenses of the State Authority, including the salaries,
allowances and pensions payable to the Member-Secretary, officers and other employees of the
State Authority shall be defrayed out of the Consolidated Fund of the State. The Section 6(8)
provides that all order and decisions of the State Authority shall be authenticated by the
Member Secretary or any other officer of the State Authority authorized by the Executive
Chairman. Whereas Section 6 (9) provides safeguards that no act or proceedings of a State
Authority shall be invalid on the ground of the existence of any vacancy or any defect in
constitution of the State Authority.169
IX.Functions of the State Authority:
The Central Authority is a superior body and can issue the direction to the State Authority to
effectuate the legal aid services in the States. It shall be the duty of the State Authority to give
effect to the policy and directions issued by the Central Authority from time to time. The State
Authority shall perform all or any of the functions namely; (i) provide legal service to person
who satisfies the criteria laid down under the LSA Act; (ii) conduct Lok Adalat for District and
High Court cases; (iii) undertake preventive and strategic legal aid programmes; (iv) perform
such other functions as it may, in consultation with the Central Authority, fix by regulations170.
The State Authority in the discharge of its functions shall act in coordination with other
governmental and non-governmental voluntary social service institutions including universities
and other bodies engaged in the work of promoting the cause of legal services to the poor.171
X.Constitution of High Court Legal Services Committee:
168
Id, Section 6.
169
Id, Section 6
170
Id, Section 7.
171
Id, Section 8.
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XI.The Section 8A of LSA Act empowers the State Authority to constitute High Court Legal
Services Committee for every High Court for the purpose of exercising such powers and
performing such functions as determined by the State Authority. The High Court Committee
shall be consisting of (i) Chairman, who shall be a sitting Judge of the High Court and (ii) such
number of other members determined by State Authority. The State Authority shall by
regulations, provide for experience and qualification to be possessed by them. The Chief Justice
of High Courtshall nominate the Chairman and other members to the Committee. The Chief
Justice of the High Court is empowered under Section 8A(3) to appoint a Secretary to the
Committee. The State Government shall prescribe the qualification and experience to the post
of Secretary. The State Authority under Section 8A(4) shall in exercise of the powers under the
LSA Act determine the terms of office and other conditions relating to the Members and
Secretary of the Committee. The High Court Committee under Section 8A (5) may appoint
such number of officer and other employees for efficient discharge of its functions as
prescribed by the State Government. But their appointment should not be done without
consultation with the Chief Justice of the High Court. The officer and other employees
appointed and working in the Committee shall also be entitled to the salary and other
allowances fixed by the State Government in consultation with the Chief Justice of the High
Court172.
XII.District Legal Services Authority:
The State Government under Section 9 (1) is empowered to constitute the District Legal
Services Authority for every District in the State. The State Government while constituting the
District Legal Services Authority shall consult the Chief Justice of the High Court. The District
Authority shall exercise the powers and performs all those functions conferred on or assigned
under this Act. The Section 9 (2) envisages that the District Authority shall be consisting of (i)
Chairman, who shall be the District Judge and (ii) and such number of other members
possessing such qualifications and experience, which shall be prescribed by the State
Government. These members shall be nominated by the State Government in consultation with
the Chief Justice of the High Court. The Section 9(3) empowers the State Authority to appoint,
in consultation with the Chairman of the District Authority, a person belonging to the State
Judicial Services. He should not be lower in rank than that of a Subordinate Judge or Civil
172
Id, Section 8A.
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Judge posted at the seat of the District Judiciary and working as Secretary of the District
Authority. The Secretary shall exercise suchpowers and performs the duties assigned to him by
the Chairman of that Committee. The terms of office and other conditions of members and the
Secretary of the District Authority shall be determined by the State Authority in consultation
with the Chief Justice of High Court. The District Authority under Section 9 (5) may appoint
such number of other officers and other employees as may be required for efficient discharge of
functions. All the officers and other employees of the District Authority shall be entitled to the
salary and other allowances as fixed by the State Government. The salary and allowances shall
be fixed in consultation with the Chief Justice of the High Court. The Section 9 (7) envisages
that the administrative expenses of every District Authority including salaries and other
allowances and pensions etc. payable to the Secretary and other officers and employees shall be
defrayed out the Consolidated Fund of the State. The Section 9(8) provides that all order and
the decisions of the District Authority shall be authenticated by the Secretary or by any other
officer of the District Authority duly authorized by the Chairman. The section further provides
that no act or proceedings of the District Authority shall be invalid on the ground of the
existence of any vacancy or any defect in the Constitution of the District Authority. It means
that these are curable irregularities under the LSAAct.173
XIII.Functions of District Authority:
The Section 10 of LSA Act provides that every District Authority shall perform such of
functions of the State Authority in the District as may be delegated by it. Besides, without
prejudice to these functions referred to in S.10 (1), the District Authority shall also performs the
functions namely ; (i) co-ordinate the activities of the Taluk Legal Services Committee and
other Legal Services in the District; (ii) organize Lok Adalats within the District; and (iii)
perform such other functions as the State Authority may fix and delegate to it by regulations174.
But the LSA Act requires that the District Authority in the discharge of its functions under
thisAct shall act in coordination with other governmental and non-governmental institutions,
universities and other bodies engaged in the work of promoting the cause of legal services to
173
Id, Section 9
174
Id, Section 10.
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the poor. The District Authority shall also be guided by such directions as the Central Authority
or the State Authority give to it in writing from time to time for this purpose.175
XIV.Taiuk Legal Services Committee:
The State Authority under Section 11A (1) is empowered to constitute a Taluk Legal Services
Committee. The Taluk Legal Services Committee shall be constituted and work each for Taluk
or Mandal or for group of Taluks or Mandals. The Committee shall be consisting of (i) the
senior-most Judicial Officer operating within the jurisdiction of the Committee who shall be the
Ex-Officio Chairman; and (ii) such number of other members, possessing such experience and
qualifications, as prescribed by the State Government for their appointment. But these members
shall be nominated by the Government in consultation with the Chief Justice of the High Court.
The Committee under Section 11A (3) may appoint such number of officers and other
employees as are prescribed by the State Government for the efficient discharge of its
functions. The officers and other employees of the Committee shall be entitled to such salary
and allowances and shall be subject to such other conditions of service as may be prescribed by
the State Government. The salary and other allowances so fixed by the State Government shall
be fixed in Consultation with the Chief Justice of the High Court. The Section 11A (5) provides
that the District Authority shall defray the administrative expenses of the Committee out of the
District Legal Aid Fund.176
XV.Functions of Taluk Legal Services Committee:

The Section 11B envisages that Taluk Legal Services Committee shall (i) coordinate the
activities of legal services in the taluk; (ii) organize Lok Adalats within the taluk; and (iii)
perform suchother functions as the District Authority may assign to it from time to time to
effectuate the legal services in those areas.177
XVI.Entitlement to legal services and criteria thereof: The main purpose of legal aid services is to
enable every person who intends to avenge his right through the law Courts. It is trite
proposition that none should be deprived of his legal right for want of legal and economic
assistance. But the right to legal aid services is available only to those who are economically
175
Id, Section 11.
176
Id, Section 11 A.
177
Id, Section 11B.
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downtrodden. The Section 13 of LSA Act provides that the person who satisfy the conditions
and criteria specified under Section 12 of LSA Act shall be entitled to receive legal services.
The authority providing legal aid services should be satisfied by the seeker through an affidavit
that the person has a prima facie case either to prosecute or defend 178. The Section 12 of LSA
Act lays down that the person seeking legal aid shall be; (i) a member of Scheduled Caste or
Scheduled Tribe; (ii) a victim of trafficking in human beings or beggar as referred to in Article
23 of the Constitution (iii) a Woman or a Child; (iv) a person with disability as defined in
Section 2 clause (i) of the Persons with Disabilities [Equal Opportunities, Protection of Rights
and Full Participation] Act, 1995 (1 of 1996); (v) a person who is a victim of a mass disaster,
ethnic violence, caste atrocity, flood, drought, earthquake or industrial disaster, or an industrial
workman; (vi) a person who is in custody, including custody in a protective home within the
meaning of clause (g) of Section 2 of the Immoral Traffic (Prevention) Act, 1956 (104 of 1956)
or in juvenile home within the meaning of clause G) of Section 2 of the Juvenile Justice Act,
1986 or in a psychiatric hospital or psychiatric nursing home within the meaning of Clause (g)
of Section 2 of the Mental Health Act, 1987 (14 of 1987); (vii) a person who is in receipt of
annual income less than rupees nine thousand or such other higher amount as may be
prescribed by the State Government, if the case is before a Court other than the Supreme Court;
and (viii) a person who is in receipt of annual income less than rupees twelve thousand or such
other higher amount as may be prescribed by the Central Government, if the case is before the
Supreme Court179.
XVII.National Legal Aid Fund:
The Section 15 of LSA Act imposes a duty upon the Central Authority to establish a fund to be
called the National Legal Aid Fund. The section requires that (i) all sums of money given as
grants by the Central Government under Section 14; (ii) any grants or donations that may be
made to the Central Authority by any other person for the purposes of this Act; and (iii) any
amount received by the Central Authority under the order of any Court or from any other
source shall be credited to the National Legal Aid Fund. The Section 15 (2) requires that the
National Legal Aid Fund shall be applied for meeting the cost of legal services provided under
this Act including grants made to State Authorities, and the cost of legal services provided by
178
Id, Section 13.
179
Id, Section 12.
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the Supreme Court Legal Services Committee including any other expenses which are required
to be incurred by the Central Authority.180
XVIII.State Legal Aid fund:
The Section 16 of LSA Act imposes a duty upon a State Authority to establish the State Legal
Aid Fund. The Section requires that (i) all sums of money paid to it or any grants made by the
Central Authority for the purposes of this Act; (ii) any grants or donations that may be made to
the State Authority by the State Government or by any person. ; and (iii) any other amount
received by the State Authority under the orders of any Court or from any other source shall be
credited to a State Legal Aid Fund. The fund shall be applied for meeting the cost of functions
referred to in Section 7 and the cost of legal services provided by the High Court Legal
Services Committees or any other expenses to be incurred by the State Authority181.
XIX.District Legal Aid fund:
The Section 17 of LSA Act imposes duty upon every District Authority to establish the District
Legal Aid fund. The section requires that (i) all sums of money paid or any grants made by the
State Authority to the District Authority for the purposes of this Act, (ii) any grants or
donations that may be made to the District Authority by any person, with the prior approval of
the State Authority, for the purposes of this Act, and (iii) any other amount received by the
District Authority under the orders of any Court or from any other source shall be credited there
to. The subclause (2) requires that the District Legal Aid Fund shall be applied for meeting the
cost of functions referred to in Section 10 and 11B. The District Legal Aid Fund may also be
used to mitigate the expenses, which are required to be met by the District Authority182
XX.Accounts and Audit:
The Section 18 of the LSA Act requires that all the Central Authority, State Authority and the
District Authority shall maintain proper accounts and other relevant records and prepare an
annual balance statement of accounts pertains to the legal aid funds under their control. The
accounts of Authorities shall be audited by the Comptroller and Auditor General of India. The
Comptroller and Auditor-General of India and any other person appointed by him in connection
with the auditing of the accounts of any authority under this Act shall have the same rights and
privileges and authority in connection with such audit as the Comptroller and Auditor-General
180
Id, Section 15.
181
Id, Section 16.
182
Id, Section 17.
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of India possess. The accounts of the Authorities, as certified by the Comptroller and Auditor-
General of India or any other person appointed by him in this behalf shall be forwarded
annually by the Authorities to the Central Government or the State Governments together with
the audit report. The Central Government shall cause the accounts to be laid, as soon as may be,
before each House of Parliament and the StateGovernments shall cause the accounts and the
audit report to be laid before the State Legislature.183
K. LOK ADALATS:
[i] Conduct of Lok Adalats-
Organization and Authorities: The Section 19 of the LSA Act empowers every State Authority,
District Authority, Supreme Court Legal Services Committee, High Court Legal Services
Committee and Taluk Legal Services Committee to organize Lok Adalats at such intervals,
places and area for exercising jurisdiction as it thinks fit. The Authority may fix the number of
persons for its organization. The Section 19(2) envisages that every Lok Adalat organized for
an area shall consist of such number of serving or retired judicial officers and other persons of
that area as may be specified by the authority conducting or organizing the Lok Adalat 184. The
Authority working for Lok Adalat shall prescribe the qualification and experience of its other
members. The Section 19(3) provides that the experience and qualifications for other persons
referred to in clause (b) of Sub-Section (2) for Lok Adalats organized by the Supreme Court
Legal Services Committee shall be prescribed by the Central Government in consultation with
the Chief Justice of India. The experience and qualifications for other persons referred to in
clause (b) of Sub-Section (2) for Lok Adalats other than referred to in sub-section (3) shall be
prescribed by the State Government in consultation with the Chief Justice of the High Court.185
[ii] Jurisdiction of LokAdalats:The Section 19 (5) provides that a Lok Adalat shall have
jurisdiction to determine and to arrive at a compromise settlement between the parties to a
dispute in respect of any case pending before any Court for which the Lok Adalat is organized.
The Lok Adalat has jurisdiction to arrive at compromise settlement on any matter, which
isfalling within the jurisdiction of any Court and has not brought before it. But the LSA Act
183
Id, Section 18.
184
Id, Section 19(1) and (2)
185
Id, Section19. (3)&(4).
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under Proviso clause appended to Section 19(5) restricts its jurisdiction to exercise powers in
respect of any case or matter relating to an offence not compoundable under any law186.
[iii] Cognizance of cases by Lok Adalat: The Lok Adalat shall take cognizance of those matters
referred by the Courts. The Court under Section 20(1) can refer a pending matter either on the
agreement of the parties or on an application made by one of the parties. The parties have to
show their willingness for such settlement to be arrived at by or through Lok Adalat. The Court
under Section 20 (2) of LSA Act has power to make an independent reference if the Court is
satisfied that the case is an appropriate one and there exist an element of settlement. But in
every such matters or case the parties shall be given reasonable opportunity of hearing on the
matter187.
[iv] Procedure to be applied by Lok Adalat: The Section 20(3) provides that where the
reference has been made by the Court to the Lok Adalat upon an agreement between the
parties, it clothed the Lok Adalat with the responsibility to initiate the proceedings and dispose
of the case by way of compromise settlement. The Lok Adalat shall undertake the proceedings
immediately and make settlement as expeditiously as possible. The Lok Adalat must proceed in
the case on the basis of principles of justice, equity and fair play including other legal
principles. This has been made with a view to remove the scope of bias or any suspicion in the
minds of the parties. The Section 20 (5) provides that where no award could be made, or the
Lok Adalat fails in its efforts to bring about a compromise or settlement between the parties, it
shall return the matter and relevant record to the Court from which the reference has been made
so that the Court may dispose it off in accordance with the law. The Lok Adalat shall advise the
parties to seek remedy in a Court and the Court shall proceed to deal withsuch case from the
stage at which it had been reached before such reference to the Lok Adalat.188
[v] Award of Lok Adalat: The Section 21 provides that an award of the Lok Adalat shall be
deemed to be a decree of a Civil Court or an order of any other Court. The award made by a
Lok Adalat shall be final and binding upon all the parties to the dispute and no appeal shall lie
to any Court against the award. The Section 20(1) provides that where a compromise or
186
Id, Section 19. (5
187
Id, Section 20.
188
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settlement has been arrived at by a Lok Adalat in a case, the Court-fee paid in such case shall
be refunded in the manner provided under the Court Fees Act, 1870189
[vi] Powers of Lok Adalat or Permanent Lok Adalat: The Lok Adalat or Permanent Lok Adalat
shall for purposes of holding any determination under this Act, have the same powers as are
vested in a Civil Court under the Code of Civil Procedure, 1908 in the matters; (i) the
summoning and enforcing the attendance of any witness and examining him on oath; (ii) the
discovery and production of any document; (iii) the reception of evidence on affidavits; (iv) the
requisitioning of any public record or document or copy of such record or document from any
Court or office; and (v) such other matters as may be prescribed by regulations. The Section 22
(2) envisages that without prejudice to the generality of the powers contained in 22 (1), every
Lok Adalat or Permanent Lok Adalat shall have the requisite powers to specify its own
procedure for the determination of any dispute coming before it. The Section 22(3) provides
that all proceedings before a Lok Adalat or Permanent Lok Adalat shall be deemed to be
judicial proceedings within the meaning of Sections 193, 219 and 228 of the Indian Penal Code
(45 of 1860). Every Lok Adalat or Permanent Lok Adalat shall be deemed to be aCivil Court
for the purpose of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2
of 1974)190
[vii] Pre-Litigation Conciliation and Settlement: The Section 22A envisages that "Permanent
Lok Adalat', 'Public Utility Service' and other services may be called the Public Utility Service.
The Central Government or the State Government may, in public interest by notification,
includes and declare any service to be public utility service.
[viii] Constitution of Permanent Lok Adalat, Chairman and other Members: The Section 22B
provides that the Central Authority and the State Authority shall establish the Permanent Lok
Adalats. These Authorities may issue notification to this effect and create Permanent Lok
Adalats at such places where they consider it to be appropriate and just for exercising
jurisdiction in respect of Public Utility Services. There shall be a Chairman to preside over the
Permanent Lok Adalat. He shall be appointed amongst the persons who is, or has been, a
District Judge or Additional District Judge or has held judicial office, which is higher in rank
than that of a District Judge. The Central Government or the State Government shall appoint by
189
Id, Section 21.
190
Id, Section 22.
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nomination two other persons to assist the Chairman having adequate experience in Public
Utility Service to the Permanent Lok Adalat. The nomination can be made on the
recommendation of the Central Authority or the State Authority and these Authorities may fix
other terms and conditions for the appointment of the Chairman and other person and as are
prescribed by the Central Government. 191
[ix] Cognizance of cases by Permanent Lok Adalat:

The Section 22C (1) provides that any party to a dispute may by an application submit the
dispute to the Permanent LokAdalat for settlement. The party shall submit the dispute before it
is brought to any Court. But the Permanent Lok Adalat shall not have jurisdiction in respect of
any matter relating to an offence not compoundable under any law or where the value of the
property in dispute exceeds rupees ten lakhs. The Central Government is empowered to
increase the limit of ten lakhs in consultation with the Central Authority. The LSA Act creates a
bar on the party to invoke jurisdiction of any Court simultaneously in the same dispute if an
application is made under sub-section (1) to the Permanent Lok Adalat.192
[x] Procedure in Permanent Lok Adalat : The Section 22C (3) envisages that where an
application is made to a Permanent Lok Adalat, it shall direct each party to file a written
statement stating therein the facts and nature of dispute, points or issues including grounds
upon which the party support their case. The party may file additional statement before it at any
stage of the conciliation proceedings. The documents furnished shall also be communicated to
the other party enabling them to present their reply and plan of defence 193. The Section 22C (4)
provides that after submission of the statements or additional statements the Permanent Lok
Adalat shall keeping in view the nature and circumstances of the dispute, conduct the
conciliation proceedings. The Permanent Lok Adalat shall assist the parties in their attempt to
reach an amicable settlement of the dispute in an independent and impartial manner. The parties
shall also co-operate the Permanent Lok Adalat. If the Permanent Lok Adalat find that there
exists element of settlement, it may formulate the terms for settlement of the dispute and give it
to the parties concerned for their observations. If the parties agreed, the Permanent Lok Adalat
shall sign the settlement agreement and pass an award, furnish a copy of the same to the parties.
191
Id, S. 22B.
192
Id, S. 22C
193
Id, S. 22C.
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Where the parties fail to reach at an agreement under Sub-Section (7), the Permanent Lok
Adalat shall decide the dispute provided the dispute does not relate to anyoffence 194. The
Section 22D requires that during conciliation proceedings or on deciding a dispute on merit, the
Permanent Lok Adalat shall be guided by the principles of natural justice, objectivity, fair play
and equity. The Permanent Lok Adalat shall not be bound by the Code of Civil Procedure, 1908
(5 of 1908) and the Indian Evidence Act, 1872 (1 of 1872).195
[xi] Finality of Award:

The Section 22E provides that every award made by the Permanent Lok Adalat shall be final
and binding on all the parties thereto including on persons claiming under them. The award of
the Permanent Lok Adalat shall be by most of the persons constituting the Permanent Lok
Adalat and be deemed to be a decree of a Civil Court. No Award shall be called in question in
any original suit, application or execution proceeding. The Permanent Lok Adalat may transmit
any award made by it to a Civil Court having local jurisdiction and the Civil Court shall
execute the order as if it were a decree made by that Court196.
[xii] Miscellaneous Provisions:

The Section 23 of LSA Act provides that the Members and Member-Secretary, Secretary of
Central Authority, State Authorities, District Authorities, Supreme Court Legal Services
Committee, High Court Legal Services Committees, Taluk Legal Services Committees and
Officers and other employees of these Authorities, Committees including the members of the
Lok Adalats or other persons constituting Permanent Lok Adalats shall be deemed to be public
servants within the meaning of Section 21 of the Indian Penal Code (45 of 1860)197.
[xiii] Rule making powers of Central and State Government:

The Section 27 of the LSA Act provides that the Central Government in consultation with the
Chief Justice of India may, bynotification, make the rules to carry out the provisions of this
194
Id, S. 22C Clauses (4). (5), (6). (7) and (8
195
Id, S. 22D.
196
Id, S. 22E.
197
Id, S. 23.
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Act198. The Section 28 empowers the State Governments to make rules in consultation with the
Chief Justice of the High Court to carry out the provisions of this Act199. These powers relate to
the experience and qualification of Chairman, Members, Member Secretary and other Officers
and Employees of Central and State Authority including other Service conditions.
[xvi] Powers of Central and State Authority to make regulations:

The Section 29 provides that the Central Authority may, by notification, make regulations,
which are not inconsistent with the provisions of this Act and are necessary or expedient for the
purposes of giving effect to the provisions of this Act. The Central Authority is empowered to
make regulations for exercise of the powers and functions of the Supreme Court Legal Services
Committee. The Central Authority may fix the terms of office and other conditions relating
thereto, of the Members and Secretary of the Supreme Court Legal Services Committee200. The
State Authority under Section 29A has been empowered to make regulation, which are
necessary or expedient for the purposes of giving effect to the provisions of this Act. But
nothing should be inconsistent with the provisions of this Act. These regulations pertain to
some other functions, which are to be performed by the State Authority, High Court Legal
Services Committee and its powers with regard to fix the number of members of the High
Court Legal Services Committee including their experience and qualification. The State
Authority may issue the regulations of the terms of office and other conditions relating to the
Member and Member Secretary of High Court Legal Services Committee and District
Authority including Taluk Legal services Committee201.
198
Id, S.27.
199
Id, S.28.
200
Id, S.29.
201
Id, S.29A.
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CHAPTER 2
Modes of Alternate Dispute Resolution
1. Types of Alternative Dispute Resolution (ADR):
The most common types of ADR for civil cases are Arbitration, Conciliation, Mediation,
Judicial Settlement and Lok Adalat. In India, the Parliament has amended the Civil Procedure
Code by inserting Section 89 as well as Order 10 Rule 1-A to 1-C. Section 89 of the Civil
Procedure Code provides for the settlement of disputes outside the Court. It is based on the
recommendations made by the Law Commission of India and Malimath Committee. It was
suggested by the Law Commission of India that the Court may require attendance of any party
to the suit or proceedings to appear in person with a view to arriving at an amicable settlement
of dispute between the parties and make an attempt to settle the dispute between the parties
amicably. Malimath Committee recommended making it obligatory for the Court to refer the
dispute, after issues are framed, for settlement either by way of Arbitration, Conciliation,
Mediation, Judicial Settlement through Lok Adalat. It is only when the parties fail to get their
disputes settled through any of the alternate disputes resolution method that the suit could
proceed further. In view of the above, new Section 89 has been inserted in the Code in order to
provide for alternative dispute resolution. It is worthwhile to refer Section 89 of the Civil
Procedure Code, which runs as follows: -
Sec. 89. 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 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.
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(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."
Thus, the five different methods of ADR can be summarized as follows: -
1. Arbitration
2. Conciliation
3. Mediation
4. Judicial Settlement &
5. Lok Adalat
1. ARBITRATION:
Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution of
disputes outside the courts, where the parties to a dispute refer it to one or more persons –
arbitrators, by whose decision they agree to be bound. It is a resolution technique in which a
third party reviews the evidence in the case and imposes a decision that is legally binding for
both sides and enforceable. There are limited rights of review and appeal of Arbitration awards.
Arbitration is not the same as judicial proceedings and Mediation. Arbitration can be either
voluntary or mandatory. Of course, mandatory Arbitration can only come from s statute or from
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a contract that is voluntarily entered into, where the parties agree to hold all existing or future
disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur.
The advantages of Arbitration can be summarized as follows: -
a) It is often faster than litigation in Court.
b) It can be cheaper and more flexible for businesses.
c) Arbitral proceedings and an arbitral award are generally nonpublic, and can be made
confidential.
d) In arbitral proceedings the language of arbitration may be chosen, whereas in judicial

proceedings the official language of the competent Court will be automatically applied.
e) There are very limited avenues for appeal of an arbitral award.
f) When the subject matter of the dispute is highly technical, arbitrators with an appropriate
degree of expertise can be appointed as one cannot choose judge in litigation.
However, there are some disadvantages of the Arbitration, which may be summarized as
follows: a) Arbitrator may be subject to pressures from the powerful parties.
b) If the Arbitration is mandatory and binding, the parties waive their rights to access the
Courts. c) In some arbitration agreements, the parties are required to pay for the arbitrators,
which add an additional cost, especially in small consumer disputes.
d) There are very limited avenues for appeal, which means that an erroneous decision cannot be
easily overturned.
e) Although usually thought to be speedier, when there are multiple arbitrators on the penal,
juggling their schedules for hearing dates in long cases can lead to delays.
f) Arbitration awards themselves are not directly enforceable. A party seeking to enforce
arbitration award must resort to judicial remedies. In view of provisions of Section 89 of the
Civil Procedure Code, if the matter is referred to the Arbitration then the provisions of the
Arbitration and Conciliation Act, 1996 will govern the case.
2. CONCILIATION:
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Conciliation is an alternative dispute resolution process whereby the parties to a dispute use a
conciliator, who meets with the parties separately in order to resolve their differences. They do
this by lowering tensions, improving communications, interpreting issues, providing technical
assistance, exploring potential solutions and bring about a negotiated settlement. It differs from
Arbitration in that. Conciliation is a voluntary proceeding, where the parties involved are free
to agree and attempt to resolve their dispute by conciliation. The process is flexible, allowing
parties to define the time, structure and content of the conciliation proceedings. These
proceedings are rarely public. They are interest-based, as the conciliator will when proposing a
settlement, not only take into account the parties' legal positions, but also their; commercial,
financial and /or personal interests202. The terms conciliation and mediation are interchangeable
in the Indian context. Conciliation is a voluntary process whereby the conciliator, a trained and
qualified neutral, facilitates negotiations between disputing parties and assists them in
understanding their conflicts at issue and their interests in order to arrive at a mutually
acceptable agreement. Conciliation involves discussions among the parties and the conciliator
with an aim to explore sustainable and equitable resolutions by targeting the existent issues
involved in the dispute and creating options for a settlement that are acceptable to all parties.
The conciliator does not decide for the parties, but strives to support them in generating options
in order to find a solution that is compatible to both parties. The process is risk free and not
binding on the parties till they arrive at and sign the agreement. Once a solution is reached
between the disputing parties before a conciliator, the agreement had the effect of an arbitration
award and is legally tenable in any court in the country.203
Most commercial disputes, in which it is not essential that there should be a binding and
enforceable decision, are amenable to conciliation. Conciliation may be particularly suitable
where the parties in dispute wish to safeguard and maintain their commercial relationships. The
following types of disputes are usually conducive for conciliation:
• commercial,
• financial,
• family,
202
See http://www.dispute-resolution-hamburg.com/conciliation/what-is-conciliation/
203
See http://www.ficci-arbitration.com/htm/whatisconcialation.htm
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• real estate,
• employment, intellectual property,
• insolvency,
• insurance,
• service,
• partnerships,
• environmental and product liability.
• Apart from commercial transactions, the mechanism of Conciliation is also adopted for
settling various types of disputes such as labour disputes, service matters, antitrust matters,
consumer protection, taxation, excise etc.
Conciliation proceedings:
Either party to the dispute can commence the conciliation process. When one party invites the
other party for resolution of their dispute through conciliation, the conciliation proceedings are
said to have been initiated. When the other party accepts the invitation, the conciliation
proceedings commence. If the other party rejects the invitation, there are no conciliation
proceedings for the resolution of that dispute. Generally, only one conciliator is appointed to
resolve the dispute between the parties. The parties can appoint the sole conciliator by mutual
consent. If the parties fail to arrive at a mutual agreement, they can enlist the support of any
international or national institution for the appointment of a conciliator. There is no bar to the
appointment of two or more conciliators. In conciliation proceedings with three conciliators,
each party appoints one conciliator. The third conciliator is appointed by the parties by mutual
consent. Unlike arbitration where the third arbitrator is called the Presiding Arbitrator, the third
conciliator is not termed as Presiding conciliator. He is just the third conciliator. The conciliator
is supposed to be impartial and conduct the conciliation proceedings in an impartial manner. He
is guided by the principles of objectivity, fairness and justice, and by the usage of the trade
concerned and the circumstances surrounding the dispute, including any previous business
practices between the parties. The conciliator is not bound by the rules of procedure and
evidence. The conciliator does not give any award or order. He tries to bring an acceptable
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agreement as to the dispute between the parties by mutual consent. The agreement so arrived at
is signed by the parties and authenticated by the conciliator. In some legal systems, the
agreement so arrived at between the parties resolving their dispute has been given the status of
an arbitral award. If no consensus could be arrived at between the parties and the conciliation
proceedings fail, the parties can resort to arbitration.
A conciliator is not expected to act, after the conciliation proceedings are over, as an arbitrator
unless the parties expressly agree that the conciliator can act as arbitrator. Similarly, the
conciliation proceedings are confidential in nature. Rules of Conciliation of most of the
international institutions provide that the parties shall not rely on or introduce as evidence in
arbitral or judicial proceedings, (a) the views expressed or suggestions made for a possible
settlement during the conciliation proceedings; (b) admissions made by any party during the
course of the conciliation proceedings; (c) proposals made by the conciliator for the
consideration of the parties; (d) the fact that any party had indicated its willingness to accept a
proposal for settlement made by the conciliator; and that the conciliator shall not be produced
or presented as a witness in any such arbitral or judicial proceedings.
Conciliation has received statutory recognition as it has been proved useful that before
referring the dispute to the civil court or industrial court or family court etc., efforts to concile
between the parties should be made. It is similar to the American concept of court-annexed
mediation. However, without structured procedure & statutory sanction, it was not possible for
conciliation to achieve popularity in the countries like USA & also in other economically
advanced countries Justice M. Jagannadha Rao has, in the article 5.2 “CONCEPTS OF
CONCILIATION AND MEDIATION AND THEIR DIFFERENCES”, stated as under204:
“In order to understand what Parliament meant by ‘Conciliation’, we have necessarily to refer
to the functions of a ‘Conciliator’ as visualized by Part III of the 1996 Act. It is true, section 62
of the said Act deals with reference to ‘Conciliation’ by agreement of parties but sec. 89
permits the Court to refer a dispute for conciliation even where parties do not consent, provided
the Court thinks that the case is one fit for conciliation. This makes no difference as to the
meaning of ‘conciliation’ under sec. 89 because; it says that once a reference is made to a
204
Judge, Supreme Court of India. See http://lawcommissionofindia.nic.in/ adr_conf/concepts
%20med%20Rao%201.pdf
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‘conciliator’, the 1996 Act would apply. Thus, the meaning of ‘conciliation’ as can be gathered
from the 1996 Act and has to be read with sec. 89 of the Code of Civil Procedure.
Now under section 65 of the 1996 Act, the ‘conciliator’ may request each party to submit to
him a brief written statement describing the “general nature of the dispute and the points at
issue”. He can ask for supplementary statements and documents. Section 67 describes the role
of a conciliator. Sub-section (1) states that he shall assist parties in an independent and
impartial manner. Subsection (2) states that he shall be guided by principles of objectivity,
fairness and justice, giving consideration, among other things, to the rights and obligations of
the parties, the usages of the trade concerned and the circumstances surrounding the dispute,
including any previous business practices between the parties. Subsection (3) states that he
shall take into account “the circumstances of the case, the wishes the parties may express,
including a request for oral statements”. Subsection (4) is important and permits the
‘conciliator’ to make proposals for a settlement. It states as follows:
“Section 67(4) - The conciliator may, at any stage of the conciliation proceeding, make
proposals for a settlement of the dispute. Such proposals need not be in writing and need not be
accompanied by a statement of the reasons therefore.”
Section 69 states that the conciliator may invite parties to meet him. Sec. 70 deals with
disclosure by the conciliator of information given to him by one party, to the other party. Sec.
71 deals with cooperation of parties with the conciliator, sec. 72 deals with suggestions being
submitted to the conciliator by each party for the purpose of settlement. Finally, Sec. 73, which
is important, states that the conciliator can formulate terms of a possible settlement if he feels
there exist elements of a settlement. He is also entitled to ‘reformulate the terms’ after receiving
the observations of the parties. Subsection (1) of sec. 73 reads thus:
“Sec. 73(1) settlement agreement: (1) when it appears to the Conciliator that there exist
elements of a settlement which may be acceptable to the parties, he shall formulate the terms of
a possible settlement and submit them to the parties for their observations. After receiving the
observations of the parties, the Conciliator may reformulate the terms of a possible settlement
in the light of such observations.”
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The above provisions in the 1996 Act make it clear that the ‘Conciliator’ under the said Act,
apart from assisting the parties to reach a settlement, is also permitted to make “proposals for a
settlement” and “formulate the terms of a possible settlement” or “reformulate the terms”.
3. MEDIATION:
Now, worldwide mediation settlement is a voluntary and informal process of resolution of

disputes. It is a simple, voluntary, party centered and structured negotiation process, where a
neutral third party assists the parties in amicably resolving their disputes by using specified
communication and negotiation techniques. Mediation is a process where it is controlled by the
parties themselves. The mediator only acts as a facilitator in helping the parties to reach a
negotiated settlement of their dispute. The mediator makes no decisions and does not impose
his view of what a fair settlement should be205.
In the mediation process, each side meets with a experienced neutral mediator. The session
begins with each side describing the problem and the resolution they desire – from their point
of view. Once each side’s respective positions are aired, the mediator then separates them into
private rooms, beginning a process of “Caucus Meeting” and thereafter “joint meetings with the
parties”. The end product is the agreement of both the sides. The mediator has no power to
dictate his decision over the party. There is a win – win situation in the mediation.
4. JUDICIAL SETTLEMENT:
Section 89 of the Civil Procedure Code also refers to the Judicial Settlement as one of the
modes of alternative dispute resolution. Of course, there are no specified rules framed so far for
such settlement. However, the term Judicial Settlement is defined in Section 89 of the Code. Of
course, it has been provided therein that when there is a Judicial Settlement the provisions of
the Legal Services Authorities Act, 1987 will apply. It means that in a Judicial Settlement the
concerned Judge tries to settle the dispute between the parties amicably. If at the instance of
judiciary any amicable settlement is resorted to and arrived at in the given case then such
settlement will be deemed to be decree within the meaning of the Legal Services Authorities
Act, 1987. Section 21 of the Legal Services Authorities Act, 1987 provides that every award of
205
An Article “Disputes among Business Partners should be Mediated or Arbitrated, Not Litigated” by William
Sheffield, Judge, Supreme Court of California (Ret.) published in book “Alternative Dispute Resolution – What it is
and how it works” Edited by P. C. Rao and William Sheffield, page No.291
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the Lok Adalat shall be deemed to be a decree of the Civil Court. There are no written
guidelines prescribed in India as to judicial settlement.
5. LOK ADALAT:
The concept that is gaining popularity is that of Lok Adalats or people’s courts as established
by the government to settle disputes through conciliation and compromise. It is a judicial
institution and a dispute settlement agency developed by the people themselves for social
justice based on settlement or compromise reached through systematic negotiations. The first
Lok Adalats was held in Una aim the Junagadh district of Gujarat State as far back as 1982.
Lok Adalats accept even cases pending in the regular courts within their jurisdiction. Section 89
of the Civil Procedure Code also provides as to referring the pending Civil disputes to the Lok
Adalat. When the matter is referred to the Lok Adalat then the provisions of the Legal Services
Authorities Act, 1987 will apply. So far as the holding of Lok Adalat is concerned, Section 19
of the Legal Services Authorities Act, 1987 provides as under: -
Section 19 Organization of Lok Adalats .
(1) Every State Authority or District Authority or the Supreme Court Legal Services Committee
or every High Court Legal Services Committee or, as the case may be, Taluka Legal Services
Committee may organise Lok Adalats at such intervals and places and for exercising such
jurisdiction and for such areas as it thinks fit.
(2) Every Lok Adalat organised for an area shall consist of such number of:-
(a) serving or retired judicial officers; and
(b) other persons, of the area as may be specified by the State Authority or the District
Authority or the Supreme Court Legal Services Committee or the High Court Legal Services
Committee, or as the case may be, the Taluka Legal Services Committee, organising such Lok
Adalat.
(3) The experience and qualifications of other persons referred to in clause (b) of sub-section
(2) for Lok Adalats organised by the Supreme Court Legal Services Committee shall be such as
may be prescribed by the Central Government in consultation with the Chief Justice of India.
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(4) The experience and qualifications of other persons referred to in clause (b) of sub-section
(2) for Lok Adalats other than referred to in subsection (3) shall be such as may be prescribed
by the State Government in consultation with the Chief Justice of the High Court.
(5) A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or
settlement between the parties to a dispute in respect of -
(i) any case pending before it; or
(ii) any matter which is falling within the jurisdiction of, and is not brought before any court
for which the Lok Adalat is organised :
Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter relating
to an offence not compoundable under any law.
The Lok Adalat is presided over by a sitting or retired judicial officer as the chairman, with two
other members, usually a lawyer and a social worker. There is no court fee, thus making it
available to those who are the financially vulnerable section of society. In case the fee is
already paid, the same is refunded if the dispute is settled at the Lok Adalat. The Lok Adalat
are not as strictly bound by rules of procedure like ordinary courts and thus the process is more
easily understood even by the uneducated or less educated. The parties to a dispute can interact
directly with the presiding officer, which is not possible in the case of normal court
proceedings. Section 21 of the Legal Services Authorities Act, 1987 is also required to be
referred to here which runs as follows: -
Section 21 Award of Lok Adalat:
(1) Every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the
case may be, an order of any other court and where a compromise or settlement has been
arrived at, by a Lok Adalat in a case referred to it under subsection (1) of section 20, the court-
fee paid in such case shall be refunded in the manner provided under the Court Fees Act, 1870
(7 of 1870).
(2) Every award made by a Lok Adalat shall be final and binding on all the parties to the
dispute, and no appeal shall lie to any court against the award.
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In view of the aforesaid provisions of the Legal Services Authorities Act, 1987 if any matter is
referred to the Lok Adalat and the members of the Lok Adalat will try to settle the dispute
between the parties amicably, if the dispute is resolved then the same will be referred to the
concerned Court, which will pass necessary decree therein. The decree passed therein will be
final and binding to the parties and no appeal will lie against that decree.
On the flip side, the main condition of the Lok Adalat is that both parties in dispute have to be
agreeable to a settlement. Also, the decision of the Lok Adalat is binding on the parties to the
dispute and its order is capable of execution through legal process. No appeal lies against the
order of finality attached to such a determination is sometimes a retarding factor for however be
passed by Lok Adalat, only after obtaining the assent of all the parties to dispute. In certain
situations, permanent Lok Adalat can pass an award on merits, even without the consent of
parties. Such an award is final and binding. From that, no appeal is possible206
his is not to the say that Lok Adalat don’t have many advantages. Lok Adalat are especially
effective in settlement of money claims. Disputes like partition suits, damages and even
matrimonial cases can also be easily settled before a Lok Adalat as the scope for compromise is
higher in these cases. Lok Adalat is a definite boon to the litigant public, where they can get
their disputes settled fast and free of cost. The appearance of lawyers on behalf of the parties, at
the Lok Adalats in not barred. Lok Adalat are not necessarily alternatives to the existing courts
but rather only supplementary to them. They are essentially win-win systems, an alternative to
‘Judicial Justice’, where all the parties to the dispute have something to gain.
There are certain hybrids of Alternative Dispute Resolution that also deserve a mention. These
processes have evolved in combination of various Alternative Dispute Resolution mechanisms
with the ultimate objective of achieving a voluntary settlement. The purpose of many of these
hybrids is that the principle objective of achieving a settlement is kept in mind and all
permutations and combinations should be utilized towards that objective to reduce the burden
of the adjudicatory process in courts. The different Alternative Dispute Resolution processes
and their hybrids have found solutions to different nature of disputes and thus the knowledge of
these processes can be a significant aid.
206
ADR – Its Facets, by Snajay Kishan Kaul. J. Chairman, Overseeing Committee Delhi High Court Mediation and
conciliation centre written in SAMADHAN –Reflections – 2006 – 10 page. 97.
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B. Apart from these main modes there are few other modes which help in resolving
disputes via ADR and those are:
1. Med-Arb: It is a mixture of arbitration and mediation that combines the benefits of these
two methods. Basically, parties commence with mediation, and if an agreement had not been
reached, they move on to arbitration. The same or different third-party neutral may conduct the
mediation and the arbitration sessions of Med-Arb.
2. Mini-trial: It is a mechanism for the parties to test their case and shed light on settlement
discussions. In a mini-trial, each party’s attorney presents an abridged version of the case. The
information is presented to a panel of representatives chosen by both parties. The panel
representatives actually decide a mini-trial outcome. Unlike other ADR mechanisms, mini-trial
is unique in that it often occurs after commencement of formal litigation.
3. Summary Jury Trial (SJT): It is essentially a mock trial with a neutral jury that
produces a verdict. It is similar to a mini-trial but is ordered by the court rather than being
stipulated by the parties. After hearing the verdict, the court usually requires parties to attempt
settling their case before litigating in court.
4. Early Neutral Evaluation (ENE): It usually occurs when a case has just been filed. The
early neutral evaluation may be conducted by a judge-appointed evaluator from whom provides
parties learn insights about the case. For example, after case examination, an evaluator may
educate parties about their arguments' relative strengths, chances of winning, and settlement
options.
C. DIFFERENCE BETWEEN VARIOUUS MODES OF ADR:
2. Difference Between Arbitration and Conciliation- The primary difference between

arbitration and conciliation is that arbitration is the process by which parties select an
independent person, who renders a decision regarding the case. Conversely, conciliation
attempts to make parties come to an agreement, about the problem at hand.
There are several differences between arbitration and conciliation. While both represent a
meeting that is assembled to discuss a settlement, they are handled in completely different
fashions. In arbitration, each of the parties meets together in one room, while during
conciliation, they are kept separate. Arbitration is handled by a representative of the court and
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any agreement is binding under regional law. Conciliation is much more informal and has no
legal significance.
The major difference between arbitration and conciliation is that one is an actual legal
proceeding while the other is an informal attempt to settle a matter without the courts. Both
methods are alternative dispute resolution procedures designed to help parties settle their
differences. During arbitration, each side would gather at a courthouse and discuss the matter in
detail, and in many instances, the conversations become quite tense. It is not uncommon in
arbitration for the arbitrator to temporarily stop the proceedings because the arguments become
counterproductive, and this professional's job is to ensure that negotiations move along in a
way that will ultimately create a resolution. The arbitrator has complete authority over the
meeting.
During conciliation, both parties are kept separate to avoid the tense moments that occur in
arbitration. The conciliator relays messages back and forth between the two sides and steers the
conversation towards a settlement that everyone can agree on. While both arbitration and
conciliation allow each party to show their case and argue for a favorable verdict, the
conciliator is very limited in what he can legally do. For example, he cannot subpoena
witnesses nor can he make actual recommendations to the court. If a settlement is not reached
after the conciliation process, then the meeting was essentially for nothing.
Conciliation and arbitration are also seen differently by the courts. When a contract is signed
during an arbitration hearing, it is considered a binding legal document that both parties will be
forced to adhere to. A conciliation resolution has much less legal authority and either side is
free to change its mind without the other side having legal recourse.
Although arbitration and conciliation have distinct differences in terms of legal authority, both
methods have high success rates in settling disputes without involving an actual trial. Each of
these methods saves everyone involved legal fees and simplifies the entire process so that an
immediate resolution can be obtained. Since both sides are made well aware that a failure in
arbitration and conciliation would mean a costly trial, each party is normally willing to
negotiate to find an agreeable resolution.
2.1 Difference between Mediation and Conciliation:
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 The basic difference between mediation and conciliation is based on the role played by
the third party who is selected by the parties seeking a settlement, in consensus. In mediation,
the mediator acts as a facilitator who helps the parties in agreeing. Conversely, in conciliation,
the conciliator is more like an interventionist who provides probable solutions to the parties
concerned, to settle disputes.
 The process of dispute resolution in which a third party intervenes in an attempt to
resolve it, by enabling communication between parties is called mediation. On the other hand,
conciliation implies a process of settling the dispute between the parties, in which a neutral
third party provides potential solutions to the parties so as to resolve the issue.
 Mediation is governed by Code of Civil Procedure Act, 1908. Conversely, Arbitration
and Conciliation Act, 1996 regulates conciliation.
 Both mediation and conciliation are premised on confidentiality. However, in mediation,
confidentiality relies on the trust and in conciliation, the law determines the extent of
confidentiality.
 In mediation, the role of the third party is a facilitator, who facilitates interaction between
the parties. As against, in conciliation, the role played by the third party is beyond facilitator,
who not only facilitate communication but also provide solutions to their problem as an expert.
 Mediation process completes with an agreement between the parties concerned, whereas
conciliation ends with a settlement agreement between the parties.
 The contract of agreement between the parties under mediation is enforceable by law. On
the contrary, the settlement agreement between the parties is binding upon parties like an
arbitral award.
2.2 DIFFERENCE BETWEEN THE MEDIATION AND OTHER DISPUTE

RESOLUTION PROCESS: -
The alternative dispute resolution procedures can be broadly classified into two groups, first
those that are adjudicative and adversarial, and second those, which are consensual and non-
adversarial. The latter group includes mediation207. Sir Robert A. Baruch Bush and Joseph P.
Folger, in, “The promise of mediation” say that, in any conflict, the principal objective ought to
207
Manka, ADR: What Is It And Why Do You Need To Know? 47 J Mo Bar 623, 625.
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be to find a way of being neither victims nor victimizers, but partners in an ongoing human
interaction that is always going to involve instability and conflict208
There are several types of different dispute redressal methods that have evolved owing to the
different needs and circumstances of the society. The study of the differences between them
will help the disputant in choosing the best and the apt method of resolving their disputes
according to their needs. The dominant form of dispute redressal method that is broadly
adopted for the resolution of a dispute is, by filing of case before the Court of law. With the
bird eye view, it can be said that, in the process of adjudication through Court of law, someone
has to lose among the disputing party. The litigation route has now become slow, expensive,
and uncertain in its outcome. The Courts and Tribunals do not 'resolve' a dispute, but they only
“decide” a dispute or “adjudicate” on them. Whereas, in the case of mediation, the parties can
try to agree with one another, were a mediator acts as a facilitator. Mediation has the advantage
as it can lead to finality because, it allows for informed and un-coerced decisions to be taken by
everyone involved. Disputes are resolved in the process of mediation through consensual
interaction between the disputants209. The mediator in promoting or in other words, facilitating
resolution of the dispute by the parties themselves does not purport to decide the issue between
them. Mediation is more flexible, quick and less expensive than the process of adjudication
through Court of Law. Thus, the study reveals that, litigation produces provides for fair and just
results, but it is procedurally disadvantages as compared to mediation. Mediation affords a far
greater degree of flexibility, relative informality, confidentiality and control over its resolution.
Comparative study of the process of ‘mediation’ and ‘arbitration’ shows that, mediation is a
form of expedited negotiation. The parties control the outcome. Mediator has no power to
decide. Settlement in the dispute is done only with party approval. Exchange of information is
voluntary and is often limited. Parties exchange information that will assist in reaching a
resolution. Mediator helps the parties define and understand the issues and each side's interests.
Parties vent feelings, tell story, and engage in creative problem solving. Mediation process is
informal and the parties are the active participants. Joint and private meetings between
individual parties and their counsel are held in this process. Outcome based on needs of parties.
Result is mutually satisfactory and finally a relationship may be maintained or created.
208
See Robert A. Baruch Bush and Joseph P. Folger, The promise of mediation (1994) at 229- 59
209
Tania Sourdin, Alternative Dispute Resolution,(2002) p 2,3.
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Mediation when compared with arbitration is of low cost. It is private and confidential.
Facilitated negotiation is an art. Mediator is not the decision maker. Mediator is a catalyst. He
avoids or breaks an impasse, diffuse controversy, encourages generating viable options. He has
more control over the process. The process of mediation gives the parties many settlement
options. Relationship of parties is not strained in the process of mediation. There is a high
degree of commitment to settlement. Parties’ participation is there in the decision-making
process. Thus, there is no winner and no loser in this process, only the problems are resolved.
In this process the disputed parties maintain the confidentiality of proceedings.210
The ‘Conciliator’ under the Arbitration and Conciliation Act, 1996, apart from assisting the
parties to reach a settlement, is also permitted to make “proposals for a settlement” and
“formulate the terms of a possible settlement” or “reformulate the terms”. ‘Conciliation’, is a
procedure like mediation but the third party called the conciliator, takes a more interventionist
role in bringing the two parties together and in suggesting possible solutions to help the
disputed parties to reach a settlement. The difference between the process of mediation and
conciliation lies in the fact that, the ‘conciliator’ can make proposals for settlement, ‘formulate’
or ‘reformulate’ the terms of a possible settlement, while a ‘mediator’ would not do so but
would merely facilitate a settlement between the parties. Under Section 30 and Section 64(1)
and Section 73(1) of the Arbitration and Conciliation Act, 1996, the conciliator has a greater or
a pro-active role in making proposals for a settlement or formulating and reformulating the
terms of a settlement. A mediator is a mere facilitator. The meaning of these words in India is
the same in the UNCITRAL211 and Conciliation Rules and in UK and Japan. Conciliation and
Mediation process is distinguishable from Arbitration as the parties’ willingness to submit to
mediation or conciliation does not bind them to accept the recommendation of the conciliation
or mediator but an arbitrator’s award, by contrast, is binding on the parties212.
210
L, Boulle, Mediation: Principles, process, practice (Butterworths, Sydney,1996) p10-14.
211
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW
212
Robert Merkin, Arbitration Law edn 2004,p 168, para 6.6.
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CHAPTER 3
Cases “Unsuitable” & “Suitable” for ADR Processes
A. INTRODUCTION:
In Afcon’s case (supra), Supreme Court of India has observed that the following categories of
cases, having regard to their nature, are normally considered to be not suitable or suitable for
ADR Processes: -
B. Cases “unsuitable” for ADR Processes (Excluded category of cases)
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.
C. Cases “suitable” for ADR Processes:
Except the excluded category of cases (as mentioned above), all other suits and cases of civil
matters, the following cases are normally considered to be suitable for A.D.R. processes:
(i) All cases relating to trade, commerce and contracts (including all money cases):
 disputes arising out of contracts (including all money claims);

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 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/licensors 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 despite 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.
(v) 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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D. Appropriate Stage for Reference to ADR Process:
The appropriate stage for considering reference to ADR processes is after the pleadings are
complete and before framing the issues. But nothing prevents the court from resorting to S. 89
even after framing issues. But once evidence is commenced, the court will be reluctant to refer
the matter to the ADR processes because if the reference is made at the stage when the
evidence has started, it may become a tool for protracting the trial.
In family disputes or matrimonial matters, the ideal stage for mediation will be immediately
after service of notice on respondent and before the respondent files objections/written
statement because in such cases the relationship becomes hostile on account of various
allegations in the petition and the hostility will be further aggravated by the counter allegations
made in the objections/written statement.
E. Consent of Parties for referring the matter to ADR Processes:
The consent of all the parties to the suit is necessary for referring the case for arbitration under
section 89, CPC. The court exercising power under section 89, CPC cannot refer a suit to
arbitration unless all the parties to the suit agree to such reference. The Supreme Court has
observed that where there is no pre-existing arbitration agreement, the parties to the suit can
agree for arbitration by means of a joint application or joint affidavit before the court or by
record of the agreement by the court in the order sheet signed by the parties.
Similarly, the consent of all the parties to the suit is necessary for referring the case for
conciliation under section 89, CPC (if the parties are not agreeable for arbitration). If the parties
are not agreeable for either arbitration or conciliation, the court has to consider which of the
three other ADR Processes (Lok Adalat, Mediation and Judicial Settlement) is suitable for
reference. In Afcon’s case (supra) the Supreme Court has observed that three ADR Processes –
Lok Adalat, Mediation and Judicial Settlement do not require the consent of parties for
reference, but the court must use its discretion in choosing the ADR Process judiciously,
keeping in view the nature of disputes, interests of parties and expedition in dispute resolution.
However, absence of consent for reference does not affect the voluntary nature of the
mechanism of mediation as the parties still retain the freedom to agree or not to agree for the
mediation settlement.
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CHAPTER 4
OVERVIEW OF ADR
A. INTRODUCTION
Afcon’s case (supra), Supreme Court has given general guidelines regarding the following
issues relating to settlement by ADR methods:
(A) Procedure to be adopted by a court under Sec. 89, CPC:
(1) When the pleadings are complete and before framing the issues, the court shall fix a date
for preliminary hearing and appearance of parties, to know about facts of the case and nature of
the dispute between the parties.
(2) The court should first consider whether the case falls within the excluded category of cases
which are unsuitable for ADR processes. If the court finds that the case falls under any
excluded category, it should record a brief order mentioning the nature of the case and why it is
not fit for reference to ADR Processes. In such cases, the court will proceed with framing of
issues and trial. (3) In other cases (which can be referred to ADR Process) the court will
explain the choice of five ADR Mechanisms to the parties to enable them to exercise their
option.
(4) The court should first ascertain whether the parties are willing for arbitration. The court
should inform the parties that: -
a) Arbitration is an adjudicatory process by a chosen forum and reference to arbitration will

permanently take the suit outside the ambit of the court.
b) The cost of arbitration will have to be borne by the parties. It is significant to note that
matter should be referred to the arbitration only if both the parties agree for arbitration.
(5) If the parties do not agree for arbitration, the court should ascertain whether the parties are
agreeable for reference to conciliation. If the parties agree, the court can refer the matter to
conciliation in accordance with S. 64 of the Arbitration and Conciliation Act, 1996.
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(6) The matters referred to arbitration or conciliation will be governed by the provisions of the
Arbitration and Conciliation Act.
(7) If the parties do not agree for arbitration or conciliation, the court should consider the
preferences/options of the parties and refer the matter to any of the other ADR Processes; i.e.-
a) Lok Adalat
b) Mediation, and
c) Judicial Settlement.
(8) In simple cases relating to the matters where 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.
(9) Complicated cases which may require several rounds of negotiations, may be referred to
mediation. 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.
(10) If the reference to the ADR Process fails, the court shall proceed with the hearing of the
suit. (11) If there is a settlement, the court shall examine settlement and make a decree in terms
of it, keeping in view the principles of Order 23, Rule 3, CPC.
(12) If the settlement includes disputes which are not subject matter of the suit, the court may
direct that the same will be governed by:
a) S. 74 of the Arbitration and Conciliation Act, if it is a conciliation settlement, or

b) S. 21 of the Legal Services Authority Act, 1987 (if it is a settlement by a Lok Adalat or
by Mediation)
B. Consequential aspects:
(1) If the reference is to arbitration or conciliation, the court must record that the reference is by
mutual consent and nothing further is required to be mentioned in the order sheet.
(2) If the reference is to any other ADR Process, the court should briefly record that having
regard to the nature of the dispute, the case deserves to be referred to Lok Adalat, or Mediation
or Judicial Settlement.
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C. Keeping track of the matter:
(1) In order to avoid delay of trial as also to prevent any misuse of the provisions for reference
to ADR, the courts should keep track of the matter. If the court refers the matter to ADR
processes, other than arbitration, it should keep track of the matter by fixing the date of hearing
for ADR report. The date for a week or so may be fixed. Normally, the period allotted for the
ADR Processes should not exceed two months, but the same may be extended in exceptional
cases depending upon the availability of the alternative forum and the nature of the case etc.
(2) Normally the court should not send the original record of the case when referring the matter
to an ADR forum (for this purpose, when pleadings are filed, the court may insist upon filing of
an extra copy).
(3) Regarding the time limit for completion of mediation, rule 19 of the Uttar Pradesh Civil
Procedure Mediation Rules, 2009 provides as under: -
“on the expiry of 60 days from the date fixed for the first appearance of the parties before the
mediator, the mediation shall stand terminated, unless the court, which referred the matter,
either suo moto or upon request by the mediator or any of the parties, and upon hearing all the
parties, is of the view that extension of time is necessary or may be useful, but such extension,
shall not be beyond a further period of 30 days.”
D. Court to guide parties to exercise their options:
When the Court considers that the case is a suitable one for reference to ADR, the consent and
option of the parties is to be obtained. According to the U.P. Civil Procedure Alternative
Dispute Resolution Rules, 2009, it is the duty of the court to give proper guidance to the parties
to facilitate them to exercise their options. While giving such guidance attention of the parties,
may be drawn to following factors:
1. That settlement through ADR mechanism would save time and expenses of the parties and
thus it would be to the advantage to the parties to opt for any of the ADR mechanism for the
settlement of their disputes rather than to seek a trial.
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2. When there is no relationship between the parties which needs to be preserved, then it is in
the better interest of the parties to give their consent for arbitration.
3. When there is relationship between the parties which needs to be preserved, then it is in the
better interest of the parties to give option to refer their matter for settlement through
Conciliation or Mediation. It is worth mention that disputes arising out of matrimonial,
maintenance and child custody matters etc., may be considered as cases where a relationship
between the parties requires to be preserved.
4. When the parties are interested in a final settlement which may lead to a compromise, it will
be in the interest of the parties to seek reference of the matter to Lok Adalat or Judicial
settlement.
E. Whether the reference to ADR Process is Mandatory?
The plain reading of the words in S. 89, CPC “where it appears to the court that there exist
elements of a settlement”, clearly shows that the cases which are not suitable for ADR Process
should not be referred under section 89. In Afcons’s Case213 the Apex Court has specified an
excluded category of cases which are considered not to be suitable for ADR Processes.
Therefore, having a hearing (after completion of pleadings) to consider recourse to ADR

Processes under section 89 CPC, is mandatory. But actual reference to an ADR Process in all
cases is not mandatory. The court must consider as to whether the case falls under an excluded
category, if yes, then it is not to be referred to ADR Process. In such cases of excluded
category, the court 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 issue and trial.
In all other cases (except excluded category), reference to ADR Process is a must.
213
Afcons Infrastructure and others v. Cherian Verkay Construction Company Pvt. Ltd. and others, (2010) 8 SCC 24
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CHAPTER 5
Importance of ADR System
A. INTRODUCTION
Through ADR, reliable information regarding the case can be gathered and amicable settlement
of the case can be arrived at. In judicial system parties are reluctant to part with such
inconvenient information. In Mediation or Conciliation, disputants themselves take the
decisions. There are lesser formalities in ADR than the traditional judicial system. Settlement
through ADR Process is cost effective and less time consuming.
ADR system brings about a win-win situation for the parties whereas in the court procedure
there is a win-lose situation. Through ADR system the result is final.
1. Advantages of Mediation:
(a) Mediation is participative, and the parties directly participate in the negotiation.
(b) Parties have control over the mediation. They have the right to decide whether to settle
the dispute and the terms of settlement.
(c) The procedure of mediation is speedy, efficient and cost-effective.
(d) The process is conducted in an informal, cordial and conducive environment.
(e) Mediation is a confidential process.
(f) Mediation process facilitates better and effective communication between the parties.
(g) Mediation helps to maintain, improve and restore relationships between the parties.
(h) Mediation process is voluntary because the parties are at liberty to opt out of it at any
stage. If any party feels that the mediation process is not helping him, he can opt out of it.
(i) Mutually beneficial settlement is reached out in mediation.
(j) The process of mediation always considers the long term and underlying interests of the
parties at each stage of the dispute resolution process.
(k) In the case of settlement in court referred mediation, refund of court fees is permitted as
per rules.
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Richard Hill, a lawyer from Switzerland who was highly skilled in arbitration matters, summed
up the whole of mediation like this:-
Two persons have a legitimate claim to on orange but neither of them is willing to accept half
the orange. If the claim is resolved in accordance with a judicial paradigm, one of them will get
some portion (possibly none) of the orange, and the other will get the remaining portion. But
then a mediator is called in: who asks each person what they intend to do with the orange. The
first-person answers that she intends to use the rind to make perfume, while the second answers
that she intends to use the pulp to make orange juice. Hence, the mediation process yields
solutions that is fair and better satisfies the interests of the parties than could any solution based
on adversarial process214 . Pointing out the advantage of mediation, the Supreme Court
observed that there is always a difference between winning a case and seeking a solution. Via
mediation, the parties will become partners in the solution rather than partners in problems. The
beauty of settlement through mediation is that it ensures a just solution to the satisfaction of
parties and acceptable to all the parties to dispute, thereby achieving a win-win situation.215
2. Significance of Lok Adalats:
The Apex Court, emphasizing the importance of Lok Adalats has observed216:
“Lok Adalats have been created to restore access to remedies and protections and alleviate the
institutional burden of the millions of petty cases clogging the regular courts. Experience has
shown that not only huge numbers of cases are settled through Lok Adalats, this system has
definite advantages, some of which are listed below:
(a) speedy justice and saving from the lengthy court procedures;
(b) justice at no cost;
(c) solving problems of back-log cases, and
(d) maintenance of cordial relations.”
214
“The Theoretical Basis of Mediation and Other Forms of ADR: why the work”, published in „Arbitration
International Volume 14 No. 2 (1998) page 181
215
Vikram Bakshi v. Sonia Khosla; 2014 (6) SCALE 514
216
Madhya Pradesh State Legal Services Authority v. Prateek Jain and Antoher; (2014) 10 SCC 690
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B. Dispute Resolution: why should one resort to ADR?
The Arbitration and Conciliation Act of 1996217 marked an epoch in the struggle to find an
alternative to the traditional adversarial system of litigation in India. It heralded the dawn of a
new regime of negotiated settlement and consensual dispute resolution, as a means of
combating the insuperable impediments posed by the decrepit and anachronistic civil justice
system. The progeny of the Act, section 89 of the Civil Procedure Code 218, which infused the
Court with the duty of referring certain disputes for alternative remedies, was a stepping-stone
towards achieving the ineffable ideal of judicial efficiency.
The progression of time has led to a gradual realization of the fact that the judicial institution
must perpetuate economic growth and financial stability. The role of the judiciary goes beyond
the mere setting of precedents. Ordinary litigants do not concern themselves with the finer
deliberations of the law, preferring rather, an expeditious settlement of their own disputes.
Market reforms, globalization and liberalization, the encouragement of foreign direct
investment, and several other institutional reforms in the Indian economy have led to the
emergence of global partnerships and business interests which transcend national boundaries.
These concerns have a special interest in the efficient, effective and expeditious administration
of justice. The judicial institution, therefore, must facilitate and encourage economic
development.
When a dispute arises between commercial parties, the ‘normal’ forum for dispute resolution is
to litigate through the courts, but it is worth knowing the alternative forums available and their
advantages.
We will consider litigation and arbitration as the ‘most common’ dispute resolution forums in
commercial contracts. In our next article, we will look at alternative dispute resolution in more
detail.
217
Act no. 26 of 1996 [hereinafter the Act].
218
As amended by Code of Civil Procedure (Amendment) Act, 1999 (46 of 1999). The earlier section was repealed
by Act 10 of 1940.
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C. Travails of the Litigative System:
Our judicial system is based on the Anglo-Saxon model of jurisprudence, better known as the
adversarial system of law. Under this model, two opposing parties represented by their
respective counsel, present conflicting views as a necessary adjunct to the pursuit of justice.
This system is rooted in the belief that by means of such adverse opinions and contentions,
eventually the truth will emerge. However, one finds that in the bargain, the adversarial system
acts as an impediment to efficiency and expedition.
The rationale behind the adoption of a system of ADR is undoubtedly the need to find a method
of circumventing and eventually effacing the tremendous problems which beset the litigative
system. These problems can be broadly classified into:
(1) delay;
(2) expense;
(3) rigidity of procedures; and
(4) a reduction in the participatory role of parties.
1. Delay
Delay and backlog go hand in hand. The typical life span of a civil litigation depicts a morose
picture of the litigative system of India. The Parliamentary Standing Committee on Home
Affairs found that as of 2001, there were 21 High Courts in the country and 35.4 lakh cases
pending219. The position in the subordinate courts was even more alarming, as there was a
backlog of 2 crore cases for as long as 25 to 30 years. The result of this tremendous backlog is
an inordinate delay in the disposal of matters, spanning a period of 15-20 years.
Delay in the judicial system of a country results inevitably in a loss of public confidence in the
concept of justice. It has a corrosive effect on the canons of public interest, which enunciate the
maxim: 'justice delayed is justice denied'. Consequently, it acts as a deterrent to those who have
been legally wronged, as they stay away from the Courts, fearful of the time that would have to
be spent on litigation.
219
J. Venkatesan, "Panel Concern over Backlog in Courts", The Hindu, New Delhi, March 10th, 2003.
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2. Expense
Justice Brennan of the U.S. Supreme Court has stated: "Nothing rankles more in the human
heart than a brooding sense of injustice...when only the rich enjoy the law as a luxury and the
poor who need it the most cannot have it because its expenses put it beyond their reach."220
The expenses that ordinarily must be incurred by the litigant, such as court fees, lawyers’ fees
etc., exclude the poor from the purview of judicial remedy, whereas it is they who are in the
greatest need of it. The multiplicity of procedures and the inordinate delay adds to the
burgeoning cost of litigation.
3. Rigidity of Procedures
The functioning of courts is governed by a prescribed set of procedures brought about either by
statute or custom. Over a period, these procedures have attained a substantial amount of
rigidity. While the rigidity of procedures does sub serve the object of dispensing even handed
justice, this objective is fulfilled at a pyrrhic cost.
In perpetuating such rigid procedures, we forego the possibility of amicable settlement, which
can only be achieved through a moderate amount of flexibility. Further, apart from adding to
the delay of the litigative system, rigid procedures are responsible for the apprehension of
ordinary persons who shy away from courts, fearful of the sacrosanct procedures of which they
know nothing.
4. Participatory Role of Parties
The adversarial system often results in the marginalization of litigants, whose participation in
judicial proceedings is extinguished. Bereft of legal advice, litigants who appear before the
court in person are often seen giving vent to their emotions, opinions, perceptions and interests,
none of which are of any significance in a court of law.
Simple justice therefore demands a system of redressal of disputes, where the emotions,
opinions, perceptions and interests of the litigant are taken into consideration, while moving
toward an amicable settlement.
220
Quoted by S.S. Visweswariah in Legal Services presented at the National Seminar on service sectors organized
under the auspices of the Institute of Management Education and Research, Belgaum, Karnataka, on the 22nd and
23rd of March, at p.2
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In devising a system of alternative dispute resolution, two principles must be adhered to.
Firstly, such a system must remedy the self-reinforcing problems which beset the traditional
litigative system. However, it is of aphorismic importance that at the same time, the peremptory
norms of law, such as those of judicial accountability and integrity, are not lost in our
impassioned search for an alternative. Therefore, it is imperative that the system of ADR
overcomes the litigative impediments through the permissible means, ensuring that the pillars
of justice do not crumble in the name of an efficient alternative system.
It must be thoroughly understood that ADR is not intended to replace nor supplant the courts of
the land. It is not an 'alternative' in such a restrictive sense. The need for public adjudication
and normative judicial pronouncements on the momentous issues of the day, is fundamental to
the evolution of the laws of the land. ADR is necessary to complement and preserve this
function of the Courts. The objective of ADR is the provision of an outlet where petty and non-
contentious disputes can be disposed of, in a simple and speedy manner.
Thus, a system of ADR has certain instrumental and intrinsic functions. It is instrumental
insofar as it enables the amicable settlement of disputes through means which are not available
to courts. It is intrinsic because it enables the parties themselves to settle their disputes. There
are several commercial reasons apart from personal ones that required to be settled peacefully
and outside court in order to maintain the future prospect of the dealings of the parties such as
in:
Domestic and International Contracts:
Two English companies would ordinarily choose the courts of England and Wales. However,
the negotiation can be more complex in respect of international contracts between parties in
different countries; each may prefer their home courts and domestic law.
This can lead to uncertainty and disputes around the appropriate forum and applicable law. It is
for this reason that dispute resolution clauses in commercial contracts became paramount and
exclusive jurisdiction clauses commonplace. By exclusive jurisdiction, we mean the parties
agree the dispute resolution forum and applicable law (when they enter into the original
contract).
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Dispute Resolution Clause:
When negotiating a dispute resolution clause in a contract, the parties should consider whether
litigation, arbitration or some other alternative dispute resolution forum is appropriate. If the
parties decide on litigation, then the dispute resolution clause should define both the applicable
court and law. Ordinarily, if the dispute resolution clause provides for the courts of England
and Wales, it would also be stated that English law was to apply. However, whilst unusual, the
parties could choose the English courts as the appropriate forum and then agree that the
applicable law be that of another jurisdiction.
If the parties choose litigation and define the forum as the courts of England and Wales with
English law applicable, then the Civil Procedure Rules would ordinarily apply (subject to any
specialist procedures which may apply within a particular judicial division.) There is very little
procedural flexibility in this instance.
Arbitration Clause:
An arbitration clause will not only decide on a jurisdiction (by designating the “seat” or
designated city / country of the arbitration) but also the applicable rules. These may be the
rules of an institution (e.g. the London Court of International Arbitration (“LCIA”) Arbitration
Rules) or the legislation of the applicable seat (e.g. for England, this would be the Arbitration
Act 1996).
Litigation vs Arbitration:
There are several advantages that arbitration can have over litigation. However, it is important
to examine each supposed advantage within the context of every individual transaction.
Factors to consider include:
1. Enforcement – ease of enforcement is often an important deciding factor in favor

of arbitration. The New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards provides an established enforcement regime for
international arbitration awards. Most states have signed up to the New York
Convention, and there are very few grounds for a signatory state to refuse to
recognize an arbitration award. There is no real equivalent for the enforcement of
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court judgments. Legislation in each state may allow for similar enforcement, but
this is very dependent on each state’s own rules. It is essential to check the
position for cross-border enforcement of judgments and arbitral awards before
finalizing the dispute resolution clause.
2. Certainty – as with an exclusive jurisdiction clause, an effective arbitration
clause will also give the parties a degree of certainty. It is particularly useful
where there is a cross-border element to the dispute. An effective clause should
sidestep entirely the complex rules of private international law governing
jurisdiction.
3. Procedural flexibility – arbitration can allow the parties to tailor procedures to
the needs of a dispute and is generally thought to allow the parties more freedom
to agree a suitable procedure. It is also thought that arbitration has a greater
influence over procedure than is possible in court proceedings. That being the
case, many commercial parties tend to opt for institutional arbitration and simply
adopt the standard rules and procedures of their chosen institution (e.g. the
London Court of International Arbitration).Generally, in arbitration, procedural
deadlines can be more flexible and informal. This can be an advantage for the
parties in terms of reducing arguments and applications over time extensions and
deadlines, but it can be frustrating if one party continually fails to comply with the
procedural timetable.
In litigation, procedural deadlines are more rigid, and the courts have greater
powers (and the appetite to use those powers) to penalize parties in respect of
breaches of procedural deadlines.
4. Expertise – parties can choose their arbitral tribunal. This allows them to choose
arbitrators with the relevant technical or other expertise for the dispute.
5. Privacy – arbitration hearings are usually held in private and the fact that a party
is involved in arbitration proceedings is confidential. In contrast, the fact that a
party is involved in English litigation is a matter of public record.
English law also recognizes an implied duty of confidentiality which prevents the
disclosure to third parties of most documents produced or disclosed in
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arbitration. However, different jurisdictions will have different rules regarding the
duties of confidentiality in respect of arbitration, so it is advisable to check the
relevant position before completing any arbitration agreement.
6. Neutrality – in arbitration, the parties can refer their disputes to a neutral forum.
This is often attractive to commercial parties, especially if they are wary of
referring disputes to the home courts of the other party. Arbitration will also
enable the parties to ensure that the composition of the tribunal, as well as the seat
of the arbitration and the location of hearings, is neutral.
7. Cost – arbitration is sometimes cheaper than litigation, particularly where the
parties achieve procedural efficiencies by agreement. However, this is not always
the case. In a court claim, there are some court fees, but essentially the parties
obtain the services of the court and the judge for free. In arbitration, the parties
need to pay the fees of the tribunal plus administrative costs and these can be
substantial. They will also need to deal with the practical arrangements and the
organization for any hearing.
8. Delays – sometimes arbitration is a quicker way of resolving disputes than
litigation. Significant delays can still occur in arbitration, particularly in cases
where one party deliberately breaches procedural deadlines and seeks to delay
proceedings. The powers of the arbitration tribunal to deal with such issues are
less than those of the courts.
9. Finality – the opportunities for appealing or challenging an arbitration award are
more limited than those relating to court judgments. Therefore, the parties are
less likely to become caught up in lengthy appeals. Of course, this is not such an
advantage if the arbitral tribunal does not decide in your favor.
10. Multiparty disputes – the right to arbitrate is contractual and comes from the
arbitration agreement. This means that there is no power to join third parties
unless all the parties, and the third party, agree. Joining a party could save costs,
however most parties will not agree for tactical reasons. This can result in a
cumbersome and inconvenient procedure with a risk of inconsistent findings and
could prejudice settlement.
Arbitration cannot easily accommodate class action litigation.
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11. Summary determination – although an arbitral tribunal can determine claims

and defenses summarily, in practice, they are often less willing than a court to do
so. English courts on the other hand can be quite forceful in disposing of
meritless claims or defenses at an early stage in proceedings.
12. No precedent – arbitration awards are generally confidential to the parties. They
do not give rise to any binding precedent on other parties. In cases where a final
and binding ruling on a point of law and/or construction is required, litigation will
generally be the better option.
There is no one size that fits all. The appropriate dispute resolution forum should be a matter
for serious consideration and negotiation between the parties. However, it often gets
overlooked and deemed less significant than the substance of the commercial contract.
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CHAPTER 6
Shortcomings of Alternative Dispute Resolution
A. INTRODUCTION:
"To be, or not to be: that is the question: ...For who would bare the whips and scorns of time,
the oppressor's wrong, the proud man's contumely, the pangs of despised love, the law's
delay..."
William Shakespeare, Hamlet
Despite the ameliorating position of ADR in India, one finds that the system is still lacking in
certain respects. There is a dire need to modify section 89 of the Civil Procedure Code 221. The
problem exists inasmuch as the section mandates that where it appears to the Court that there
exists an element of settlement which may be acceptable to the parties, the Court shall
formulate the terms of settlement and after receiving comments of the parties, may reformulate
the terms of possible settlement after which parties may be referred to arbitration, mediation
etc. This imposed function places on Courts a significant burden. The Court must determine the
terms of possible settlement whereas the objective of mediation is to place the parties under the
facilitative function of a mediator who will then enable them to explore their options for
negotiated settlement.
Further, the development of mediation as a viable alternative is in the incipient stages in India.
ADR has met with a considerable amount of antipathy from the legal fraternity. Strategies for
successful implementation must be carefully assessed and a conscious effort must be made
towards encouraging the evolution of a process that will be acceptable to society at large. The
chief issues in this regard include:
(1) Developing awareness;
(2) Advocacy;
(3) Building Capacities;
221
As amended by Code of Civil Procedure (Amendment) Act, 1999 (46 of 1999). The earlier section was repealed
by Act 10 of 1940.
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(4) Creation of an institutional framework;
(5) Actual Implementation.
B. The Comparative Failure of Arbitration:
Arbitration was the first method of ADR recognized by statutory law in India222. Realizing the
need for the expeditious settlement of disputes to promote business prospects, contracting
parties decided to enter into arbitration agreements, to settle disputes between themselves in
the performance of the contract. Arbitration acknowledged the pivotal role of the parties in
resolving their own disputes, and for the first time, the participatory role of parties was
enhanced by enabling them to choose an arbitrator who would best suit their needs.
While arbitration did avoid some of the problems of the litigative system, it did not fulfill the
intrinsic function of ADR, failing to become an end. The extent of judicial interference which
was permitted under the Act of 1940 defeated the very purpose of speedy justice, making
"lawyers laugh and legal philosophers weep."223 This failure of arbitration was further
emphasized by the High Court at Calcutta which stated: "the law of arbitration [is] a cripple,
which walks permanently on the crutches of legal precedents. It is no exaggeration to say that
almost every controversial arbitration of any importance always waits for a second bout of
legal fight in the public courts proving the truth of the old cynical statement that only fools go
to arbitration because they pay two sets of costs: one before the arbitrators, and the other
before the courts where they came home to roost."224
The Act of 1996, thereafter, did remedy some of the shortcomings of the 1940 Act. The
procedural rigidity involved in the ordinary courts of law was done away with in
an arbitration, as the Civil Procedure Code and the Indian Evidence Act were both excluded
from the ambit of arbitration. Judicial intervention under the new Act was limited to:
(1) reference of parties to arbitration where there is an arbitration agreement [Section 8];
(2) issuance of interim orders as 'measures of protection' [Section 9];
(3) appointment of arbitrators [Section 11];
222
The Arbitration Act of 1940 (10 of 1940) [hereinafter the 1940 Act].
223
Guru Nanak Foundation v. Rattan Singh, AIR 1981 SC 2075.
224
Saha& Co. v. Ishar Singh, AIR 1956 Cal 321 at 341.
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(4) termination of the mandate of arbitrators [Section 14 (2)];
(5) providing evidence to arbitral tribunals [Section 27];
(6) setting aside or remission of the award [Section 34];
(7) power to hear appeals [Section 37];
(8) power to order delivery of awards on payment of costs to the court [Section 38(2)];
(9) power to make an order on cost of arbitration where no enough provision is made in the
award [Section 39 (4)];
(10) power to direct determination of any question in connection with insolvency proceedings
by arbitration under certain circumstances [Section 41 (2)];
(11) power to extend time for reference to arbitration to time barred future disputes [Section
43 (3)].
However, arbitration does not do justice to the term 'Alternative Dispute Resolution'. First and
foremost, the traditional adversarial system based on the Anglo-Saxon model of jurisprudence
continues in arbitral proceedings, where there is a claimant and a respondent225. Secondly,
arbitral proceedings are emasculated by delay as both parties take a significant amount of time
in presenting their submissions, resulting in adjournments and delays in the final award.
Thirdly, the cost of arbitration is as hefty as that of the litigative system, automatically
excluding the poor from the conveniences of arbitration. Lastly, the participatory role of
parties, though an improvement from the litigative system, is not satisfactory as submissions
are almost always made by the parties' counsel226.
C. “Mediation and Conciliation: A Better Alternative:
Mediation is structured facilitated negotiation. It is an informal, confidential, consensual and

non-binding process aimed at enabling the parties to a dispute, to discuss their differences in
total privacy with the assistance of a neutral third party (mediator). The process is interest
225
Alternative dispute resolution,” Ed. P.C. Rao and William Sheffield, 1st ed. 1997, Universal Law Publishing Co.
Pvt. Ltd., Delhi.
226
S.R. Myneni, “Arbitration, Conciliation and Alternative Dispute Resolution Systems,” 1st ed. 2004, Asia Law
House, Hyderabad.
124 | P a g e
based, future looking, and aimed at a durable win-win situation. It must be noted that there is
no great difference between the terms 'mediation' and 'conciliation'227, the latter of which is
given statutory recognition in the 1996 Act.9
Mediation is absolutely consensual. The proceedings are instituted at the written behest of both
parties, and any party can opt out of the proceedings at any time. Any information which is
submitted to the mediator may be kept confidential, if the party providing such information
requests the same. Further, the proceedings of mediation cannot be used as evidence in a court
of law, nor can the mediator be asked to give evidence in judicial proceedings. This enables the
parties to engage in risk-free communication, fostering a healthy and amicable environment for
facilitated negotiation.
It is often seen that two parties which have a healthy business relationship, wish to continue
their relationship despite a prevalent dispute between themselves. The adversarial system in
traditional courts ruptures relationships as it sets one party against the other. Further, in a court
of law, a decision tends to result in one party 'winning' the dispute and the other 'losing' it. The
striking feature of mediation is that both parties 'win' the dispute as they find solutions that
accommodate the fundamental needs of each party. The mediator does not make a binding
decision, and such a decision is not thrust upon the parties. He may present the parties with a
solution, reformulate the same etc., and such a solution can either be agreed upon or rejected by
both parties. This inevitably engenders and encourages a continuing business relationship.
Role of the Mediator:
The mediator is not an adjudicator. The facilitative role of the mediator signifies the
quintessence of mediation. The mediator is neither a trier of fact nor an arbiter of disputes. The
role of the mediator is to create an environment in which parties before him are facilitated
towards resolving the dispute in a purely voluntary settlement or agreement. The mediator may
invite the parties to meet him together or may ask each of them to meet him separately in order
to open the channels of communication. The mediator must review the dispute from an overall
business, professional or personal perspective.
227
Bryan A. Garner, A Dictionary on Modern Legal Usage, p. 5554 , 2nd Edition, 1995.
125 | P a g e
A mediator is equipped with certain tools of negotiation which are not available to a judge in a
court of law:
(a) Position Based Bargaining:
The mediator may narrow the differences between the parties and their conflicting positions in
law. This may be done by exposing them to the uncertainties of the legal process, and the
advisability of settling their disputes in a consensual manner.
(b) Interest Based Bargaining:
Interest based bargaining can be illustrated by means of the apocryphal story of the two girls,
each of whom wanted an orange. The judge will consider the questions: who had it first?
(property), who purchased it? (Contract), who needs it more? (Equity). The arbitrator will split
the difference awarding half to each girl. However, the mediator will ask the girls why they
each need the orange. If one wants juice and the other wants the rind from the skin, the girls
themselves will quickly agree to a distribution that meets the interests of both.
(c) Integrative Bargaining:
The mediator may integrate the interests and needs of both parties to reach an amicable
solution. An example is seen in our daily lives, where two law students required the same book
for an essay competition. After much dispute, a senior student finally tells them to write the
essay jointly, thus increasing both their chances, and enabling both to participate in the
competition.
Armed with these tools of negotiation, the mediator must have personal qualities which enable
him to relate comfortably with the parties. He must have the humility to be nonjudgmental in
relation to each party's mind-set and the readiness to empathize with their respective points of
view. He is an information gatherer, a reality-tester and a problem solver.
D. Suggestions for Improving Mechanisms:
The evolution of ADR mechanisms was not of that much success. Thereby, the trend is the
imposition of responsibility and duty on Court
126 | P a g e
i) Courts are authorized to give directives for the adoption of ADR mechanisms by the parties
and for that purpose Court has to play important role by way of giving guidance. Power is also
conferred upon the courts so that it can intervene in different stages of proceedings. But these
goals cannot be achieved unless requisite infrastructure is provided and institutional frame
work is put to place.
ii) The institutional framework must be brought about at three stages, which are:
1. Awareness: It can be brought about by holding seminars, workshops, etc. ADR literacy
program has to be done for mass awareness and awareness camp should be to change the
mindset of all concerned disputants, the lawyers and judges.
2. Acceptance: In this regard training of the ADR practitioners should be made by some
University together with other institutions. Extensive training would also be necessary to be
imparted to those who intend to act as a facilitator, mediators, and conciliators. Imparting of
training should be made a part of continuing education on different facets of ADR so far as
judicial officers and judges are concerned.
3. Implementation: For this purpose, judicial officers must be trained to identify cases
which would be suitable for taking recourse to a particular form of ADR. [36]
iii) ADR Mechanisms to be made more viable: The inflow of cases cannot be stopped because
the doors of justice cannot be closed. But there is a dire need to increase the outflow either by
strengthening the capacity of the existing system or by way of finding some additional outlets.
iv) Setting up of Mediation Centres in all districts of each state with a view to mediate all
disputes will bring about a profound change in the Indian Legal system. These Mediation
centres would function with an efficient team of mediators who are selected from the local
community itself.
v) Not many Indians can afford litigation. This kind of state of affairs makes common people,
especially rural people, cynical about judicial process. We must take the ADR mechanism
beyond the cities. Gram Nyayalayas should process 60 to 70 percent of rural litigation leaving
the regular courts to devote their time to complex civil and criminal matters.
127 | P a g e
vi) More and more ADR centers should be created for settling disputes out-of-court. ADR
methods will achieve the objective of rendering social justice to the people, which is the goal of
a successful judicial system228.
vii) The major lacuna in ADR is that it is not binding. One could still appeal against the award
or delay the implementation of the award. “Justice delayed is justice denied.” The very essence
of ADR is lost if it is not implemented in the true spirit. The award should be made binding on
the parties and no appeal to the court should be allowed unless it is arrived at fraudulently or if
it against public policy.229
E. CONCLUSION:
Because justice is not executed speedily men persuade themselves that there is no such thing as
justice. Sharing the same sentiments, Chief Hustice Bhagwati said in his speech on Law Day, “I
am pained to observe that the judicial system in the country is on the verge of collapse. These
are strong words I am using but it is with considerable anguish that I say so. Our judicial
system is creaking under the weight of errors.” Arrears cause delay and delay means negating
the accessibility of justice in true terms to the common man. Countless rounds to the Courts
and the lawyers’ chambers can turn any person insane. Even then loitering and wasting time in
the corridors of Courts has become a way of life for a majority of Indians who day by day are
becoming litigous. Some of the main reasons for delay in the disposal of cases are abnormal
increase in the number of cases going to Courts and Tribunals, mainly due to faulty legislation
enacted hurriedly, arbitrary administrative orders, increased consciousness of one’s rights and
gambler’s instinct in a litigant due to multiplicity of appeals and revisions provided in law.”
The disputants want a decision and that too as quickly as possible. As the problem of
overburdened Courts has been faced all over the world, new solutions were searched. Various
228
Government of India, Law Commission of India, 222 nd report, ’Need for Justice-dispensation through ADR etc.’,
at ¶ 1.69.
229
Nishita Medha, Alternative Dispute Resolution in India-A study on concepts, techniques, provisions, problems in
Implementation and solutions.
128 | P a g e
Tribunals were the answer to the search. In India, we have a number of Tribunals. However, the
fact of the matter is that even after the formation of so many Tribunals, the administration of
justice has not become speedy. Thus, it can be safely said that the solution lies somewhere else.
All over the globe the recent trend is to shift from litigation towards Alternative Dispute
Resolution. It is a very practical suggestion, which if implemented, can reduce the workload of
Civil Courts by half. Thus, it becomes the bounden duty of the Bar to take this onerous task of
implementing ADR on itself so as to get matters settled without going into the labyrinth of
judicial procedures and technicalities. The Bar should be supported by the Bench in this
herculean task so that no one is denied justice because of delay. It is important here to mention
the statement made by John F. Kennedy in this respect: “Let us never negotiate out of fear but
let us never fear to negotiate.”
129 | P a g e
Bibliography and References
1.“Alternative dispute resolution,” Ed. P.C. Rao and William Sheffield,

1st ed. 1997, Universal Law Publishing Co. Pvt. Ltd., Delhi
2. S.R. Myneni, “Arbitration, Conciliation and Alternative Dispute

Resolution Systems,” 1st ed. 2004, Asia Law House, Hyderabad.
3. Avtar Singh, “Law of Arbitration and Conciliation with Alternative

Dispute Resolution Systems”, 11th ed. 2018, EBC, Delhi.
References:
4.Dr. Shraddhakara Supakar, Law of Procedure and Justice in Ancient

India, Deep & Deep Publication, New Delhi, 1986.
5. Bharat Chugh : ‘The journey that refuses to end…thy name is

litigation’ www.lawstudentscollective.blog.com.
6. Alternative Dispute Resolution, Practitioners’ Guide, Centre for
Democracy and Governance, Washington, 1998.
7. Appadorai, Chapter 5, “Vyasa’s Mahabharata- Shanti Parva,” Indian
Political Thinking through the Ages, New Delhi. Khaam Publishers,
1992, note 35, p. 90.
8. H.S Bhatia, Society, Law and Administration in Ancient India, Vol.
3, Deep & Deep Publications Pvt. Ltd., New Delhi, 1992, (2nd
Ed.), p. 179
130 | P a g e
Internet sites
http://www.icadr.org/news-speechcjhc.html
http://pib.nic.in/feature/feyr2002/fjan2002/f140120021.html
http://www1.worldbank.org/publicsector/legal/adr.htm
http://www1.worldbank.org/publicsector/legal/ADR%20Workshop.pdf
http://lawcommissionofindia.nic.in/alt_dis.pdf
http://www.hindu.com/thehindu/mp/2003/01/08/stories/200301080022
0400.htm
http://www.thehindubusinessline.com/businessline/2001/07/02/stories/
040220sa.htm http://www.ielrc.org/content/n0401.htm
http://kelsa.nic.in/lokadalat.htm http://www.britishcouncil.org/adr.doc
http://www.adrgroup.co.uk/history.html
http://www.adrgroup.co.uk/types.html
http://courts.state.de.us/Courts/Superior%20Court/ADR/ADR/adr_histo
ry.htm http://en.wikipedia.org/wiki/Arbitration.
131 | P a g e
18. REPORT ON THE NATIONAL SEMINAR ON

ALTERNATIVE DISPUTE RESOLUTION
A One-Day National Seminar was organized by the Faculty of Law, Jamia Millia Islamia,
New Delhi on the Topic ‘Emerging Trends of Alternative Dispute Resolution in India’ on
9th October, 2018.
It was attended by as many as above 120 participants (Students, Research Scholars,

Academicians, Professors, etc.) either in the category of contributing by presenting a paper or
by attending the seminar as Attendees. Participants had come from various colleges and
Universities of India.
After the Introductory Speech, the Seminar was carried forward in separate Technical Sessions
allotted in different Session-Rooms, which was further concluded by a Valedictory Session
followed by the distribution of Certificates at the end of all the Technical Sessions, which
marked the ending of the One-day National Seminar.
I participated in the Seminar in the capacity of a Rapporteur- Technical Session IV, which was
presided over by Dr. Ghulam Yazdani (Chair) and Dr. Gaurav (Co-Chair).
As many as 20 participants presented their research papers and expressed their views relating to
the various topics on Alternative Dispute Resolution in India.
The session was started by Mannat Singh presenting her work on the topic ‘ Mediation in
cases of Cruelty against husband and his family. Synopsis:
 Mediation in cases of cruelty against Husband and his family: Blessing or Sin?
 Subsistence of an arbitration agreement: the need for written proof or is oral evidence
enough?
 Third party funding in arbitration: Legislation of a Guerilla Tactic.
132 | P a g e
The team of Sulabh Gupta and Devesh Tripathi also discussed their work on Mediation in
Family Law and Matrimonial Disputes stressing over why is Mediation better than Litigation.
Synopsis:
 Mediation in family (nice medium) and matrimonial disputes.

 Personal Problems- Informal manner, a win-win situation.
 Saves time and money.
 Social and emotional factors are taken care of.
 Domestic Violence in mediation-controversial.
 Sec. 498 A, Sec 89- CPC.
 Conclusion.
The team of Gurukh Kaur Sidhu and Kinat Singh discussed their work subsistence of
evidence in Arbitration and importance of Arbitration Agreement and stating the International
Mechanisms such as The Model Law and New York Conventions and Section 34 of The
Arbitration and Conciliation Act, 1996. (Synopsis):
 UNCITRAL Model Law.

 Sec 2(1)(1) of 1996 Indian Act.
 History London Court of Arbitration.
 ICA & ICC- 70% of dispute resolution.
 142 countries participated in 2017.
 BALCO case.
 Arbitration and Conciliation Amendment Act, 2015
Further, Apoorva Bhonsle discussed her work on ‘Construction Law in India- An analysis with
reference to ADR.’ Throwing light on the Labour Laws, Taxation Laws, and Industrial Laws
and why is ADR the most suitable technique to solve disputes. (Synopsis):
 Construction law (construction industries).

 Relevance of ADR in construction industries.
 Consolidate, Umbrella Law.
 Arbitration most suited in Indian Context.
133 | P a g e
The team of ManakGoel and Nur Tandon presented their work on ‘The role of judiciary in
ADR’ stating the 5 kinds of techniques in ADR in India which are Arbitration, Conciliation,
Mediation, Negotiation and Lok Adalat out of which Lok Adalats are the most popular. They
stated that Judiciary plays a wide role in ADR and that it is a promoter of ADR. They further
discussed Section 89, CPC , Section 77, The Arbitration and Conciliation Act, 1996 and the
Report of Justice Malimuth Committee on Plea Bargaining. (synopsis):
 Plea bargaining
 Victim offender
 Dishonor of cheque cases etc.
 Backlogs of cases
Also, Vivek Sharma discussed his work on 3rd Party Funding in Hong Kong Arbitration and
explained as to why do we need a legislation on 3rd Party Funding. Synopsis:
 Subsistence of an arbitration agreement: the need for written proof or is oral evidence
enough?
 Third party funding in arbitration: Legislation of a Guerilla Tactic.
The team of Dheeraj Kumar and Asha Sreedhar further presented their work on ‘Legislation
and ADR Practices in India’ discussing the kinds, needs of ADR and the 1996 Act and
concluded with the suggestions of training of Judges and Lawyers involved and an unbiased ,
independent Judiciary, citing the statements of N.A. Palkiwala and Justice Bhagwati. Synopsis:
 Concept of speedy trial

 ICC Conference- Palkiwala
 ADR- a necessity
The team of Aura Das and Diksha Khullar further presented their work on ‘Promoting and
Strengthening the efficiency of Institutional ADR in India’ and what can be the improvements
done to it. Synopsis:
 India and ADR

 Ad hoc arbitration- most preferred
 Selection of Arbitrators
134 | P a g e
 Flexibility V. Predictability
 Delay in disposal of cases
 Awards.
Moving further, the team of Shiva Vishnoi and Shivani Chaudhary presented their work on
‘Role of Lok Adalats in India for the development of Society: ADR. They discussed the kinds
and needs of ADR and that Lok Adalats are a contribution of India to the World Jurisprudence,
stating that the first Lok Adalat was established in Gujarat in the year 1982 which is successful
since then. They also discussed the Legal Services Authority Act and its Amendment in the
year 2002. Synopsis:
 1987- Statutory recognition

 LS Act 1987
 Less power what vests in it.
The team of Vidhi Marwaha and Yash Dhawan presented their work on ‘ Mediation in
Family Disputes’. They stated as to how and Mediation is the best remedy and its advantages
and that the cases of utmost torture and Domestic Violence cannot be referred for Mediation as
it would make it an easy escape for the culprit. Synopsis:
 Negotiation, Mediation, Arbitration and Conciliation.

 Advantages and Disadvantages.
 Mediation in family (nice medium) and matrimonial disputes.
The team of Anamika Agnihotri and Kritika Yadav presented their work on ‘ADR
Mechanism: Growth and Contemporary challenges’ stating that Justice delayed is Justice
denied. They discussed the kinds of ADR, the advantages of ADR and the 2018 Amendement.
Synopsis:
 Foreign investors and Institutional ADR

 Ad hoc- delayed proceeding and insufficient awards
 Outdated rules of procedures
 2016- 307 cases by SIAC Singapore out of which 163 were Indian cases.
 Amendment Bill 2018
135 | P a g e
 Sri Krishna Committee
The team of Tushti Arya and Megha Mukherjee presented their work on ‘ International
Commercial Arbitration: Law and Recent Developments.’ They discussed the UNCITRAL
Model Law and the New York Conventions and shed light on the Gender-Neutral Approach in
ADR and that representation of women has been on an increase from 2016-2017.
Muskan Banga and Anushka presented their work on ‘ ADR and its role in Consumer
Disputes’. Synopsis:
 ADR and its roles in Consumer disputes.

 Plea bargaining.
 Pre-trial negotiation.
Harmanpreet Kaur further presented her work on ‘Online Dispute Resolution: A road less
travelled’ stressing over the Section 89, CPC, The Arbitration and Conciliation Act, 1996 and
IT Act, 2000 citing the benefits of ADR. Synopsis:
 Importance of Section 89 of CPC.

 Amendment in the IT Act, 2000.
 Online registration of complaints.
Prerna M.S. further presented her work on ‘Role of ADR in Modern World’ discussing the
discrepancies in the 1996 Act that led to 2015 Amendment stressing over Fast-Track
Arbitration Courts. Synopsis:
 Growing necessity for the Alternate Dispute Resolution in the business world.
 Discrepancies of the 1996 Act and its repercussions.
 Need of the amendment and its importance.
 Speedy trials of the arbitration matters.
In the last but not the least, The team of Fahad Abdullah and Maaz Akhtar Hashmi
presented their work on ‘Marriage Conflicts and ADR’ talking about marriage conflicts and
failure of marriages, role of ADR and specifically Lok Adalats and Advantages of ADR,
Highlighting the 3 legal remedies of Mediation, Resolution and Marriage Counseling, stressing
over the need of Pre-Marital Counseling in India. Synopsis:
136 | P a g e
 Importance of mediation over civil suits for matrimonial issues.

 Privacy of the parties.
 Counseling and Suggestions for the better understanding of the issues by mediator.
 Free legal aid and easy accessibility.
Hence, the whole pursuit of understanding the importance, relevance and need of the ADR was
truly achieved by many, by attending this Seminar. It was a great and informative experience
where there was a lot to learn from panelists and some phenomenal work presented by the
participants from all-over India in this great seminar held by the Faculty of law Jamia Millia
Islamia, under the esteemed deanship of Prof.(Dr.) Nuzhat Parveen and the rest of the faculty
staff.
It not only created a better understanding as to why we need Alternative Dispute Resolution in
India, but also opened the doors of various intellectual capacities of all the students to research
and work towards the betterment of this system, by taking steps that can improve the ADR
System in the World.
137 | P a g e
19. Report on The Arbitration Proceeding attended

The Arbitration Proceeding that I attended on 22nd October, 2018 was under the guidance of
our respected teacher Adv. Madhu Saini. The respective Arbitration Proceeding was seated at
the Paragola Terrace, India International Centre, New Delhi.
The proceeding was Presided by the Hon’ble Sole Arbitrator, SH. S.M. AGGARWAL and
the parties to the proceedings were:
Arbitration Case Number: 32 of 2017
M/S SIMPLEX PROJECTS LTD. (CLAIMANT)
AND
NEW DELHI MUNICIPAL COUNCIL(RESPONDENT)
Mr. S.D. SINGH, appeared as the Advocate for the Claimant, and
Mr. R.N. VATS, appeared as the standing counsel for the respondent, i.e., NDMC.
Mr. Sanjay Verma appeared on behalf of NDMC, i.e., Respondent.
Statement of Defence and Statement of Claims were submitted before the Hon’ble Sole
Arbitrator.
The Evidence in an arbitration proceeding is filed by way of affidavits by parties like any civil
proceeding.
Arbitration is Quasi-Judicial in nature and a Notary can attest unlike in courts where only oath
commission can attest.
In the month of October, the Claimant sought extension of time under section 29A of the
Arbitration and Conciliation Act, 1996 from Hon’ble Delhi High Court.
Hence the time has been extended only upto December, 2018 for deciding and publishing the
Arbitral Award.
The statement of claims regarding the Old Block- Talkatora were filed which read as following
in brief:
138 | P a g e
1) Against work done and not paid – Rs. 4.61 crores.

2) Claim against Prolongation of Contract- Rs. 1.21 crores.
3) Claim of Escalation under Clause 10CC for Cement, Steel, Construction Material and
Labour- Rs.56.53 lakhs.
4) Claim of Material Testing Charges- Rs. 1.28 lakhs.
5) Claim of Scaffolding Material used by other NDMC Contractors – Rs. 42.89 lakhs.
6) Claim of loss of opportunity – Rs. 2.64 crores.
7) Claim against wrongful withholding of E.O.T Dues- Rs. 0.54 lakhs.
8) Claim of loss of interst- Rs. 12.01 crores.
9) Claim of loss of market credibility- Rs. 2.00 crores.
Hence the claims in total herein filed by the Claimant amounted to the extent of approximately
Rs. 23.49 Crores.
I also witnessed the Cross-Examination of a witness concerned herein the case. Overall as I
could see, Arbitration Proceedings are much more relaxed and informal than the court
proceedings, and in fact are also, much speedier. There is no such thing as literal litigation here,
it is just the two parties discussing on the claims and the Arbitrator listening and then deciding
upon it. The rules of CPC are not applied to the arbitration proceedings, making it quite
informal, yet it has the standing and authority of the Civil Court only, also the decorum of the
proceedings are maintained quite sensibly.
Hence, it was overall a very nice and informative experience and above all a privilege to have
attended this Arbitration Proceeding under the guidance of our respected teacher/guide/mentor
Adv. Madhu Saini Ma’am, who took all the trouble and effort to make this experience as a
core memory for our future.
139 | P a g e
140 | P a g e

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CLINICAL COURSE- ALTERNATE DISPUTE RESOLUTION

MIR IRAM JAN

Chapter 1 Concept of Alternate Dispute

Chapter 2 Scope of Alternative Dispute

Chapter 3 Cases “Unsuitable” & “Suitable for

Chapter 4 Overview of ADR

Chapter 5 Importance of ADR System

Chapter 6 Shortcomings of Alternative

New Delhi Iram Jan

The Methodology used in the assignment is Doctrinal

 AIR All India Reporter.

 CONSTITUTION OF INDIA, 1950

 CIVIL PROCEDURE CODE, 1908

 CRIMINAL PROCEDURE CODE, 1973

 THE ARBITRATION AND CONCILIATION ACT,

 LEGAL SERVICES AUTHORITY ACT, 1987

Highlights of Amendment to the Arbitration and Conciliation Act 1996

In an attempt to make arbitration a preferred mode of settlement of commercial disputes and

The following are the salient features of the new ordinance:

3. Amendment to Section 8: (Reference of parties to the dispute to arbitration): In

4. Amendment to Section 9 (Interim Measures): The amended section envisages that if

5. Amendment to Section 11 (Appointment of Arbitrators): In so far as section 11,

7. Amendment to Section 14: Amendment of Section 14 aimed at filling a gap in the

passed by an arbitral tribunal would be enforceable as if it is an order of a court. The new

16. Amendment to Section 36 (Stay on enforcement of award): The Ordinance provides

Concept of Alternate Dispute Resolution

Elective Dispute Resolution (hereinafter alluded to as "ADR") is a term for depicting a

B. Historical Background of the ADR System in India:

1.1 Position of ADR in Ancient India:

1.2 Ancient Indian Trade- Guilds System:

1.3 Dispute Settlement during Mauryan Dynasty:

1.4 Dispute settlement during Kushan Dynasty:

1.5 Dispute Settlement during Gupta Age:

1.6 Dispute Settlement during Mughal Rulers:

1.7 Dispute Settlement during Maratha Rulers:

1.8 Alternative Dispute Resolution during British Period:

1.9 Alternative Dispute Resolution post-independence:

D. LEGISLATIONS OF ADR IN INDIA

2. Provisions related to ADR:

(c) Judicial settlement including settlement through Lok Adalat; or

(2) Where a dispute has been referred –

Order 10 Rules 1-A:

2.1 Indian Arbitration Act, 1899:

2.2 Arbitration (Protocol and Convention) Act 1937:

2.3 The Arbitration Act of 1940:

This Act made provision for-

a) arbitration without court intervention;

2.4 Arbitration and Conciliation Act, 1996:

Evolved as an Effective Legal Institution”,

Preamble to the Act:

H. The Objectives of the Act:

i. To comprehensively cover international commercial arbitration and conciliation as also

v. To minimize the supervisory role of Courts in the arbitral process.

3.1 Construction of References:

[a] Written Communications and receipt:

[b] Waiver of right to object:

3.2 Administrative assistance:

[a] There must be an Arbitration Agreement:

3.3 Stay of suit - powers of reference to arbitration:

3.4 Interim measures and relief -- powers of Court:

3.5 Composition of Arbitral Tribunal:

3.6 Jurisdiction of Arbitral Tribunal:

3.7 Conduct of arbitral proceedings: