CPC Mains Questions

Q. Describe the provisions regarding settlement of disputes out side the Court What procedure is to be followed by the Courts, explain with reference to any one mode of alternative dispute resolution ? [MPCJ 2013]

Ans. Provisions: Section 89 of the CPC provides various modes of settlement of disputes out side the court such as arbitration, conciliation, judicial settlement, Lok adalat and mediation . The aforesaid provision under section 89 of the CPC is based on 129th Law commission report and Malimath committee recommendation. Still further, order X-rule 1 A, 1B and 1 C supplements Sec. 89 of the CPC with specification of the stage at which ADR should be resorted. As per Order X- rule 1A of the CPC, the court should explore the possibility of referring the matter to ADR after pleadings are filed and process of seeking admission and denial as prescribed is over. As held in judgment of Afcons Infrastructure and Ors. v. Cherian Verkay Construction and Ors. 2010 (8) SCC 24, if court finds element of settlement then reference to ADR process under section 89 of the CPC is mandatory regardless of the opinion of the parties.

Procedure: Section 89 of CPC casts two-fold duty on the court-

Firstly, In discretion to ascertain in every case whether there exist element of a settlement which may be acceptable to the parties. So, court is vested with discretion to test the suitability of the case for referring to ADR process.

Secondly, when the element of the settlement is found court shall formulate the term of settlement and give the same to the parties for their observation and after receiving the observation of the parties the court may reformulate the terms of a possible settlement and refer the same for ADR process.

Apparently, section 89 of CPC assigns too much task to the court and thereby runs counter the very objective to reduce the burden of the court. Hence, the hon\’ble apex court in Salem Advocate Bar Association vs Union Of India (2005) 6 SCC 344 held that \’term of settlement\’ is equivalent to a summary of dispute. Resultantly, the court is only required to formulate a summary of dispute and not the term of the settlement.

With specific reference to arbitration: As per section 8 of the Arbitration and Conciliation Act,1996 when both the parties have filed their pleading, if court finds that there exists an agreement between them to get the dispute resolved through arbitration then it is mandatory for the court to refer the matter to that forum

However, in absence of the requisite agreement between the parties, the court cannot refer the matter to this mode of ADR. Since, arbitration is a adjudicatory process and the award is binding on the parties and executable as a decree. So, when award is out it becomes executable per se and without taking any recourse to order XXIII of the CPC.