Section 89 CPC

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Section 89 CPC : AN ANALYSIS

Background of Section 89 CPC

Arbitration is well-known in the legal community as a less formal type of adjudication where a decision is made in
one party’s favour and the award may be contested. Since 1987, Lok Adalats (peoples’ courts) have gained
popularity as a speedy means of resolving minor disputes. Conciliation, which is also referred to as mediation, is a
relatively new practice. As a systematic method of dispute resolution, mediation started to gain popularity in the
1970s, first in the United States of America and then in other nations. An impartial party interacts with the parties
during this voluntary and private procedure and assists them in reaching a mutually agreeable resolution of their
conflict. Mediators have undergone training, use a set of skills and strategies, and adhere to a set of rules. In other
nations, courts have established court-annexed mediation centres and are increasingly referring pending cases to
mediation.

What does Section 89 CPC say

“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.

(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 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.”

Order 10 Rule 1 CPC : allied provision to Section 89 CPC

The following extracts from Rules 1A, 1B, and 1C of Order X, CPC, which are related provisions that were included
by the same amending Act, are provided:
Order 10 Rule 1A

Rule 1A deals with the direction of the court to opt for any one mode of alternative dispute resolution. In general
terms, it states that it is in the power of the court to instruct the parties to the lawsuit to choose one of the two
methods of out-of-court settlement as described in subsection (1) of Section 89 after recording the admissions
and denials. Then, the court will set the date of the parties’ presence before the forum or authority of their choice
at their request.

Order 10 Rule 1B

Rule 1B deals with the appearance before the conciliatory forum or authorities. It states that the parties must
appear before the forum or authority for conciliation when a suit is referred under Rule 1A.

Order 10 Rule 1C

Rule 1C deals with the appearance before the court consequent to the failure of efforts of conciliation. It states
that if a lawsuit is referred under Rule 1A and the forum or authority to which the matter has been referred,
determines that, further action would not be desirable in the interest of justice, it shall re-refer the case to the
court and order the parties to appear before the court on the date set by it.

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