SYMBIOSIS INTERNATIONAL UNIVERSITY,

SCHOOL OF LAW, HYDERABAD

Alternative Dispute Resolution – Case Analysis

Case Analysis-

Salem Advocates Bar Association v. UOI

Submitted by

Rushabh Gurav (15010323043)

Division ‘A’, BBA. LL.B.

ON

September, 2019

Under the guidance of Prof. Sanu Rani Paul

BRIEF INTRODUCTION:

The present case, Salem Advocates Bar Association vs. Union of India, is one of the
most important cases based on section 89 of the Code of Civil Procedure. This
provision embodies the mandate to the Hon’ble Court to refer to different ADR
mechanisms, in order to enable the parties to resolve their pending cases through well
established dispute resolution methods, other than litigation. It recognized the need
and importance of ADR even at the post litigation stage.

The law Commission of India and the Malimath Committee, from time to time, had
recommended the introduction of conciliation court system and underlined the
importance of modes of ADR.

On the basis of their recommendations, CPC was amended in the years 1999 and 2002,
which later, led to this instant case.

FACTS OF THE CASE:

This case Salem Advocates Bar Association vs. Union of India is an aftermath of the
earlier and original case of Salem Advocates Bar Association, Tamil Nadu vs. Union
of India. The case is related to some amendments were made to the Code of Civil
procedure in 1999 and 2002.

1. A committee was formed to ensure that the 1999 and 2002 Amendments to the
Civil Procedure Code are effectively implemented and result in quicker dispense
of justice.

2. The report was submitted in three parts,

a) Consideration of various grievances

b) Draft Rules for ADR and mediation

c) Case management conferences

3. The validity of this report and the amendments was challenged before the Court,
in the matter.
RULES APPLIED:

1. Section 26(2) of the Civil Procedure Code

2. Rule 15(4) and Order VI read with Rule 15 of the Civil Procedure Code

3. Order XVIII, Rule 4 of the Civil Procedure Code

4. Order VIII, Rule 1 of the Civil Procedure Code

5. Order VI, Rule 17 of the Civil Procedure Code

6. Section 35 of the Civil Procedure Code

7. Section 80 of the Civil Procedure Code

8. Section 148 of the Civil Procedure Code

9. Section 89 of the Civil Procedure Code

a) In our case analysis, Section 89 of the Code of Civil Procedure is of the

utmost relevance. Therefore, the complete analysis is based on this section
only. Section 89 of the Act provides for Settlement of Disputes outside the
Court.

ISSUE INVOLVED:

1. Whether the 1999 and 2002 Amendments to the Civil Procedure Code were
constitutionally valid?

ANALYSIS:

The Judgment in the instant case was delivered in three different reports, namely,
Report I, Report II and Report III. Report II is relevant to the instant case analysis, as
it contains the consideration of various points raised in connection with draft rules for
ADR and mediation as provided by section 89 of the Act, read with order X Rule 1A,
1B and 1C.

The section provides the discretion to the court as to if it deems fit, that the disputed
between the parties can be settled, then those terms must be formulated and sent to
parties for observation. Although, there is an ambiguity as to the applicability of the
Arbitration and Conciliation Act and CPC, as well. In P Anand Gajapathi Raju vs.
P.V.G. Raju1, it was said that in case where reference is made to Arbitration under
this section, the Arbitration Act shall apply from the stage after reference and not
before. Also, it must be noted that even if the arbitration or any other ADR
mechanism is not successful, the court would not be barred to try the suit afterwards.

The intention of the legislature behind enacting section 89 is that where it appears to
the Court that there exists element of a settlement which may be acceptable to the
parties, they, at the instance of the court, shall be made to apply their mind so as to
opt for one or the other of the four ADR methods mentioned in the Section and if the
parties do not agree, the court shall refer them to one or other of the said modes.
Section 89 uses both the word 'shall' and 'may' whereas Order X, Rule 1A uses the
word 'shall' but on harmonious reading of these provisions it becomes clear that the
use of the word 'may' in section 89 only governs the aspect of reformulation of the
terms of a possible settlement and its reference to one of ADR methods. One of the
modes to which the dispute can be referred is 'Arbitration'.

When the court deems it fit that there is an element of settlement, it shall encourage
the parties to head to these ADR mechanisms and resolve the issue as quickly as
possible. This shows that the sine qua non for referring the parties to an ADR
mechanism within the contemplation of section 89 CPC is the opinion recorded by the
judge concerned regarding the existence of elements of settlement which may be
acceptable to the parties followed by the formulation of the terms of the settlement
followed by re-formulation of the possible terms of the settlement after taking
observations of the parties. The judgement aims at speedy justice and the efficacious
functioning of the judiciary.

1
(2000) 4 SCC 539
Some doubt as to a possible conflict has been expressed in view of use of the word
'may' in section 89 when it stipulates that 'the Court may reformulate the terms of a
possible settlement and refer the same and use of the word 'shall' in Order X, Rule 1A
when it states that 'the Court shall direct the parties to the suit to opt either mode of
settlements outside the Court as specified in Sub-section (1) of section 89'.As can be
seen from section 89, its first part uses the word 'shall' when it stipulates that the
'court shall formulate terms of settlement. The use of the word 'may' in later part of
section 89 only relates to the aspect of reformulating the terms of a possible
settlement. The intention of the legislature behind enacting section 89 is that where it
appears to the Court that there exists element of a settlement which may be acceptable
to the parties, they, at the instance of the court, shall be made to apply their mind so as
to opt for one or the other of the four ADR methods mentioned in the Section and if
the parties do not agree, the court shall refer them to one or other of the said modes.
Section 89 uses both the word 'shall' and 'may' whereas Order X, Rule 1A uses the
word 'shall' but on harmonious reading of these provisions it becomes clear that the
use of the word 'may' in section 89 only governs the aspect of reformulation of the
terms of a possible settlement and its reference to one of ADR method

Anomaly between definitions of ‘mediation’ and ‘judicial settlement’.

One of the major drawbacks of this judgment is that it creates an abnormality by

confusing the definitions of ‘mediation’ and ‘judicial settlement’. It provides the
Court with the power to refer a matter to a person who is qualified and deemed to be a
Lok Adalat. Further, on similar lines with respect to compromises in mediation it uses
a similar procedure.

Although, this view of the Court is against the well established definition of the
concept of mediation, where, a neutral third party must assist the parties in conflict to
reach an amicable situation without opting for trial.

The procedure that has been provided by the court for a judicial settlement, is also a
bit confusing and twisted. The process must primarily involve adjudication by a judge
who has not been assigned officially to adjudicate the matter. Whereas, the Court here
has provided for a person whose qualifications and nature is nowhere specified,
leaving a sense of ambiguity again.

Section 89 CPC makes it obligatory for the courts to explore the possibility of
resolution of the dispute by making reference to one of the several ADR mechanisms
provided therein.2 However the pre condition for referring the matter is satisfaction of
the court that there exist elements of settlement. The court has to form an opinion that
a case is one that is capable of being referred to and settled through any of the ADR
processes. Simultaneously Order X Rule 1A CPC mandates that the court to 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 CPC and on the option of the parties, the court has to fix
the date of appearance before such forum or authority as may be opted by the parties

Against the basic premise of ADR Forum:

Section 89 of the CPC provides every judge before framing issues to identify whether
there is any element of settlement which may be accepted by the parties. This cycle is
followed by the formulation of terms of settlement, a reference to the parties and final
handing over to the dispute resolution mechanism.

But, the loophole in this procedure that has not been dealt with is that since, the entire
procedure is handled by the Court, there is nothing much left to be done by the neutral
third party. Therefore, it allows the judge to interfere in the procedure.

A judge who shall make the reference should only consider the limited question as to
whether there are reasonable grounds to understand if there will be a settlement and
on that ground, one cannot be considered as disqualified. Arbitration is one of the
modes of ADR prescribed by section 89 CPC. Even prior to incorporation of Section
89 in the Code of Civil Procedure, 1908 the parties to litigation, with mutual consent,
could take recourse to arbitration as a mode of resolution of their dispute which was
sub judice before a court of law in terms of the Arbitration and Conciliation Act, 1996
itself. 36 Section 89 CPC now provides for reference of a dispute in a sub judice
matter to Arbitration. The Arbitration and Conciliation Act, 1996 however, did not

2 A.M. Khanwilkar, “Need to Revitalise ADR Mechanism”, available at: http:// bombayhigh
court.nic.in/mediation/Mediation_ Concept_and_Articles/need to revitalis.pdf
contemplate a situation as in Section 89 CPC where the Court asks the parties to
choose any ADR mechanism and the parties choose arbitration as their option.

The objective of Section 89 is to make sure that the court make an endeavour to pave
the way for out of court settlements, before the trial commences.

Section 89 starts with the words where it appears to the court that there exist elements
of a settlement. This clearly shows that cases which are not suited for ADR process
should not be referred under section 89 of the Code. The court has to form an opinion
that a case is one that is capable of being referred to and settled through ADR process.
Having regard to the tenor of the provisions of Rule 1A of Order 10 of the Code, the
civil court should invariably refer cases to ADR process. Only in certain recognized
excluded categories of cases, it may choose not to refer to an ADR process. Where the
case is unsuited for reference to any of the ADR process, the court will have to briefly
record the reasons for not resorting to any of the settlement procedures prescribed
under section 89 of the Code. Therefore, having a hearing after completion of
pleadings, to consider recourse to ADR process under section 89 of the Code, is
mandatory. But actual reference to an ADR process in all cases is not mandatory.
Where the case falls under an excluded category there need not be reference to ADR
process.3

The principles of statutory interpretation are well settled. Where the words of the
statute are clear and unambiguous, the provision should be given its plain and literal
meaning.4

238th Law Commission Report:

This report recommended the changes as were mentioned in the Afcon’s case and also
advocated for restructuring of Section on the contours set out by Supreme Court. The
commission also called for revamp of the current sections to incorporate changes as
provided in Afcon’s Case. Section 89 is an important part of the CPC and works as an
effective method to resolve the disputes between the parties. The objective of the

3 M/S. Afcons Infra. Ltd. & Anr v. M/S Cherian Varkey Constructio Co. (P) Ltd. & Anr..
4 Shri Mandir Sita Ramji v. Lt. Governor of Delhi - (1975) 4 SCC 298)
section is to reduce the burden of the court, ensure to arrive at a stage of some
compromise and move towards a better method of administering justice.5

CONCLUSION

Salem Advocates Bar Association Case is a landmark case, this pair of two cases, one,
laying the amendments and the other providing a report on the amendment’s
feasibility have set up the foundation of providing quick, financially reasonable and
speedy justice. It also intends to bring a decline in the number of suits filed in the
courts every year.

Although ADR programs can accomplish a great deal, however, no single program
can accomplish all these goals. They cannot replace formal judicial systems which are
necessary to establish a legal code, redress fundamental social injustice, provide
governmental sanction, or provide a court of last resort for disputes that cannot be
resolved by voluntary, informal systems. Furthermore, even the best-designed ADR
programs under ideal conditions are labour intensive and require extensive
management. In the development context, particular issues arise in considering the
potential impacts of the ADR. Firstly, some are concerned that ADR programs will
divert citizens from the traditional, community-based dispute resolution systems. To
modernize the ADR in the Civil Procedure Code the mentioned loopholes should be
removed.

5 Sriram Panchu, “The Road less Travelled-An Increasingly Attractive Patha, 19(2) SBR 31 (2007)
A proper interpretation of section 89 of the Code requires two changes from a plain
and literal reading of the section. Firstly, it is not necessary for the court, before
referring the parties to an ADR process to formulate or re-formulate the terms of a
possible settlement. It is sufficient if the court merely describes the nature of dispute
(in a sentence or two) and makes the reference. Secondly, the definitions of `judicial
settlement' and `mediation' in clauses (c) and (d) of section 89(2) shall have to be
interchanged to correct the draftsman's error. Clauses (c) and (d) of section 89(2) of
the Code will read as under when the two terms are interchanged: (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
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 judicial settlement, the court shall
effect a compromise between the parties and shall follow such procedure as may be
prescribed. The above changes made by interpretative process shall remain in force
till the legislature corrects the mistakes, so that section 89 is not rendered meaningless
and infructuous.

SUGGESTIONS

Establishment of Compliance Committee:

One of the biggest problems facing courts today is that even after having efficient
reforms, implementation is very less. Therefore, there should be a body that governs,
regulates and checks the implementation of such guidelines, rules, policies and
ensures their compliance. Such a body shall be headed by the Chief Judge of the
Court.

It should have two-fold effect. It must ensure that the cases are being handled
efficiently and are disposed off speedily. As the Chief Justice is the head of such a
committee, it could work effectively and take the things in right direction.