CIVIL PROCEDURE CODE

ASSIGNMENT

TOPIC: Alternative Dispute Resolution mechanisms under the Civil

Procedure Code: An Analysis

SUBMITTED BY:

VATSAL GALA – A09 – 51001190017

SUBMITTED TO:

ADV. SEEMA MEHTA

SEMESTER IX
5TH YEAR, BLS/LLB

SUBMITTED ON: 29.09.2023.

 INTRODUCTION
Alternative Dispute Resolution (ADR) mechanisms have emerged as essential tools in the field of Indian
jurisprudence, providing parties involved in legal disputes with efficient and cost-effective avenues for
resolving conflicts. In a country with a burgeoning population and an ever-increasing caseload, the need
for such mechanisms is paramount to relieve the strain on the traditional court system. This research paper
endeavors to conduct a comprehensive analysis of the ADR mechanisms enshrined within the Civil
Procedure Code of India, offering an in-depth examination of their legal underpinnings, practical
applicability, and overall impact on the Indian legal landscape.

BACKGROUND AND CONTEXT OF ADR IN INDIA

The Indian legal system, rooted in a rich history and diverse cultural fabric, has traditionally relied on
litigation as the primary means of dispute resolution. Courtroom battles, while fundamental to the delivery
of justice, often entail lengthy and costly proceedings. These factors, coupled with the escalating backlog
of cases, have necessitated the exploration of alternative avenues to alleviate the burden on the judiciary
and provide litigants with swifter access to justice.

Alternative Dispute Resolution mechanisms have evolved in response to these challenges, offering parties
a range of options outside the conventional court process. These mechanisms encompass mediation,
conciliation, arbitration, negotiation, Lok Adalats, judicial settlement, online dispute resolution (ODR),
and mini trials, each with its unique features and advantages.

OVERVIEW OF ADR
Alternative dispute resolution (ADR) encompasses various methods for resolving conflicts without
resorting to formal litigation. The modern ADR movement traces its origins to the United States in the
1970s, driven by the desire to avoid the expenses, delays, and adversarial nature associated with lawsuits.
Consequently, advocates for court reforms aim to promote the use of ADR in developing nations.
In a civilized society, the principles of natural justice, combined with the "Rule of Law," are expected to
deliver complete justice in dispute cases. The "Rule of Law" is a legal doctrine, principle, or guideline
applied to the circumstances of a relevant case. These definitions indicate that the Rule of Law is a concept
that could lead to a situation where one party wins while the other loses in disputes. Therefore, ADR
utilizes the principles of natural justice in harmony with the Rule of Law to create a favourable
environment for win-win outcomes. This is particularly valuable in countries like India, where litigation
often fosters hostility between parties due to the prolonged and emotionally taxing nature of legal battles.
Consequently, ADR is gaining momentum in India today.1

LEGAL FRAMEWORK
Alternative Dispute Resolution (ADR) in India finds its constitutional foundation in Articles 14 and 21,
which guarantee the principles of Equality before Law and Right to life and personal liberty, respectively.
These fundamental rights are an integral part of Part III of the Indian Constitution, which delineates the
Fundamental Rights of Indian citizens. ADR also aligns with the Directive Principle of State Policy,
particularly Equal justice and Free Legal Aid, as articulated in Article 39-A of the Constitution. The
legislative framework for ADR in India is primarily governed by the Arbitration and Conciliation Act,
1996, and the Legal Services Authorities Act, 1987. Section 89 of the Civil Procedure Code, 1908,

1
http://www.icadr.org/news-speechcjhc.html
provides the procedural mechanism for conducting arbitration proceedings in accordance with the
aforementioned Acts.

The initial legislation concerning arbitration in India was the Indian Arbitration Act, 1899, which applied
exclusively to the Presidency towns of Madras, Bombay, and Calcutta. Subsequently, with the enactment
of the Code of Civil Procedure, 1908, the Second Schedule of this code introduced provisions for
arbitration. These legislative developments paved the way for the comprehensive Arbitration Act of 1940.
The Act of 1940 was primarily based on the English Arbitration Act of 1934 and remained in force for
over fifty years.

In 2002, the Indian Parliament introduced an amendment to Section 89 of the Civil Procedure Code, 1908,
which brought about an alternative dispute resolution (ADR) mechanism as an additional option within
Section 89. However, this amendment did not satisfy the Bar at Salem, leading to a legal challenge in the
case of Salem Advocate Bar Assn. vs. Union of India2. In this landmark case, the legality of Section 89
was contested.

The court, in its ruling, upheld the legality of Section 89. Additionally, the court noted that similar
provisions in foreign countries had proven to be highly effective. To further streamline the implementation
of these amendments and address any challenges that might arise, the court established a committee
chaired by Justice M. Jagannadha Rao. The committee's primary task was to assess the practical
difficulties in the functioning of the amendments and propose solutions.

Furthermore, the court instructed the formulation of rules pertaining to mediation and other ADR methods.
In accordance with the committee's recommendations, the Supreme Court of India directed all High
Courts to formulate their own rules for ADR and mediation. The court accepted the committee's
recommendations in subsequent judgments as well, solidifying the importance of ADR and mediation as
legitimate and effective means of dispute resolution in India.

ADR MECHANISMS
There are various ADR methods, but they differ from country to country. In India, these methods have
been frequently practised:

• Arbitration
Arbitration in India is regulated by The Arbitration and Conciliation Act, 1996. It is a dispute resolution
method where one or more impartial individuals are appointed to adjudicate the dispute, serving as third-
party decision-makers. These neutral individuals are referred to as 'arbitrators,' and the decision they
render, essentially a determination of the case's merits, is termed an 'arbitration award.’

The arbitration process is informal, which allows disputes to be resolved amicably and efficiently. This
approach saves time and incurs fewer costs for the parties involved, making it an attractive choice for
dispute resolution. Consequently, parties often opt for arbitration, particularly in the corporate world.
Large corporations, prefer to expedite dispute resolution rather than engaging in long court battles,
recognizing the benefits of a quicker and more cost-effective process.
Arbitral decisions are typically considered final and binding on the parties. This means that once the
arbitrator has made a decision, both parties have to adhere to it. However, there is a limited scope for

2
[(2003) 1 SCC 49].
appealing to these decisions. According to Section 7 of the Arbitration and Conciliation Act, 1996, an
Arbitration clause should be a part of the contract that is the subject of the dispute. It can also be in the
form of a separate document signed by both parties who are entering into the arbitration agreement.

• Conciliation
Conciliation is considered a more informal approach within the realm of arbitration. It does not necessarily
require any prior agreement between the parties involved. In this process, one of the parties can request
the other party to appoint a conciliator. While a single conciliator is often preferred, it's worth noting that
having two or three conciliators is also allowed, provided that they work together in harmony.

In the conciliation process, parties have the option to submit statements to the conciliator outlining the
nature of the dispute and the specific issues under consideration. Each party is required to share a copy of
their statement with the other party involved. The conciliator may seek additional details, arrange to meet
with the parties, or communicate with them either orally or in writing.

Furthermore, parties are not restricted to merely presenting their grievances; they can also propose
potential solutions for settling the dispute to the conciliator. This flexibility and informality make
conciliation a versatile method for resolving conflicts, often allowing parties to reach mutually agreeable
solutions through open communication and negotiation.

• Mediation

Mediation is a form of dispute resolution where a neutral third party, known as the mediator, plays a
crucial role in assisting two or more disputing parties in reaching a mutually agreeable settlement. The
mediator's primary responsibility is to facilitate effective communication between the parties and employ
negotiation techniques that promote understanding of each party's perspective through empathy and
dialogue. Importantly, the mediation process is driven and controlled by the parties themselves.

A distinguishing feature of mediation is that the mediator does not render a decision or impose an outcome
on the dispute. Instead, the resolution is reached collaboratively, with both parties actively participating
and making joint decisions. These agreements typically have a non-binding nature, meaning they are not
legally enforceable until both parties voluntarily choose to formalize them through a separate legal
process.

• Negotiation

Negotiation is indeed a form of dispute resolution where there is no third party involved in making a
decision. Instead, the parties in dispute collaborate to find a mutually acceptable solution or reach a
compromise. While negotiation can involve legal representation by attorneys, it does not rely on a neutral
arbitrator or mediator to adjudicate the matter. It's worth noting that negotiation is not statutorily
recognized in India, and there are no specific statutory rules governing the conduct of negotiations.

Negotiation is a flexible and often pragmatic approach to resolving disputes, offering parties the
opportunity to craft solutions that best align with their specific needs and concerns.

LANDMARK JUDGEMENT
In the case of J&K State Forest Conservation vs. Abdul Karim Wani,3 the Supreme Court of India issued
significant rulings regarding the grant of interim measures in arbitration proceedings. The court
emphasized that interim measures can be granted to facilitate and aid the arbitration process rather than
obstructing it. Importantly, the court clarified that while granting interim relief, it should not delve into
the substance of the dispute; that role is reserved for the arbitral tribunal, not the court.

The central issues in this case revolved around the interpretation of an arbitration clause within a contract
and whether the dispute between the parties should be referred to arbitration. The Supreme Court held
that it should refrain from expressing opinions on the merits of the dispute and instead focus on discerning
the parties' intentions. This intent should be ascertained by interpreting the contract's terms broadly and
clearly, without undue constraints.

Furthermore, the court underscored that the jurisdiction of the court to issue interim orders exists solely
for the purpose of advancing arbitration proceedings and should not be used to obstruct or frustrate the
arbitration process. This ruling underscores the court's commitment to promoting arbitration as an
effective means of dispute resolution and ensures that interim measures are used to facilitate, rather than
hinder, the arbitration process.

In the case of Satish Kumar vs. Surinder Kumar,4 the Supreme Court addressed the important legal
principle concerning the finality of arbitral awards as outlined in Section 35 of the Arbitration Act. This
section establishes that once an arbitral award becomes final, the rights and liabilities of the parties related
to the claims subject to the award can only be determined based on that award. Consequently, no further
legal action can be initiated regarding the original claim that was the subject of the arbitration proceedings.

The Supreme Court in this case affirmed that an arbitral award is, in effect, a conclusive and final
determination by a court regarding the rights and liabilities of the parties involved in the dispute. As such,
it serves as a conclusive adjudication on the merits of the dispute that was submitted for arbitration.

Furthermore, the Supreme Court clarified that if an award affects the partition of immovable property
with a value exceeding Rs. 100, it is necessary for the award to be registered under Section 17(1)(b) of
the Registration Act. This requirement underscores the legal significance of arbitral awards in cases
involving immovable property and ensures that such awards are appropriately recorded for legal purposes.

CONCLUSION
In conclusion, this paper has comprehensively examined the landscape of Alternative Dispute Resolution
(ADR) mechanisms in India, shedding light on their legal framework, historical development, and their
role in facilitating efficient and cost-effective dispute resolution. However, there is always room for
improvement and growth in any legal system, and ADR in India is no exception. To further enhance ADR
mechanisms, it is imperative to consider a multifaceted approach.

Firstly, policymakers should focus on raising awareness and promoting the benefits of ADR among the
general populace. Public outreach campaigns, educational initiatives, and collaborative efforts between
legal institutions and civil society can play a pivotal role in demystifying ADR and encouraging its
adoption. Secondly, streamlining and modernizing the ADR process through legislative reforms and the
incorporation of technology can expedite proceedings and make ADR more accessible. Drawing

3
(AIR 1989 SC 1498)
4
(AIR 1970 SC 833)
inspiration from international best practices in the field of ADR, especially from countries with well-
established ADR systems, can provide valuable insights and benchmarks for reform. Ultimately, a
comprehensive review of ADR policies and practices is essential to ensure that these mechanisms continue
to evolve in a manner that aligns with the evolving needs of India's legal landscape.