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Published : May 05, 2010 | Author : ranganathvg@legalserviceindia.com
Category : Civil Laws | Total Views : 6568 | Unrated

V.G.Ranganath, working as Faculty of Law, IFHE University, Hyderabad.

Need For Amalgamation of Alternative Dispute Resolution with Civil Procedure Code

During ancient time arbitration, conciliation and mediation were the means of settlement of disputes outside the formal legal system. In Ramayana, Angadha, the son of Vali approached Ravana and delivered the message of Lord Rama to opt the path of peaceful settlement. In Mahabhartha, Lord Sri Krishna endeavoured to mediate between the Pandavas and Kauravas. These alternative means were recognized not only in India but also in other parts of the world. Thus, settlement of dispute outside the scope of the formal legal system may be called as alternative means of settlement of disputes. However in the context of the law of arbitration the settlement of dispute through a mediator is necessarily treated as an alternative means. The settlement of disputes, outside the scope of the formal legal system was prevailing in India before the advent of Moghul regime. India is a country of villages and among the rural folks the settlement of disputes used to be resolved by rural intellectuals and by prominent persons or villages. On arrival of Englishmen/Britishers in India this system diminished by the inception of formal legal system.

The Judicial system developed by the Britishers was very expensive and time consuming and due to these reasons the people’s faith on such legal system was being diminished. After the independence it was realized that there is need to have such an alternative means of dispute resolving system or machinery which may be economical and less time consuming. Consequently emphasis was put on developing the alternative means for settlement of disputes which should be scientifically designed. Even, the International Community paid attention towards this traditional alternative means for settlement of disputes by way of arbitration, conciliation and mediation. It is to be seen that not only in India but also in China, England and United States of America this traditional alternative means for settlement of disputes was prevailing since long. Now, the international business community is of firm opinion that alternative dispute resolution-ADR is the only means or way to get rid from the demerits of the present legal system.

It is a universally admitted fact that arbitration, conciliation, and mediation are efficient alternative means for resolving disputes. Undoubtedly, these alternative means are less expensive and are not time consuming which are in fact very important for protection of commercial relationship.

In past years it has been witnessed that settling the disputes by the alternative means such as arbitration, conciliation and mediation and its scope have been considerably increased in the business field. Several developed and developing countries have adopted and recognized the alternative dispute resolution for resolving the international commercial disputes. The United States of America is the first country which has not only campaigned for alternative means for settlement for settlement of international commercial disputes but also adopted the system of alternative means of dispute settlement. It should be made clear that the alternative dispute resolution is not an alternative to the formal judicial system but only a supplement to it, its main object being to render economical and speedy disposal of disputes. Notably, negotiation, mediation, arbitration and conciliation are the system which comes within the purview of the alternative means for dispute resolution.

Now a days, disputes are inevitable, there is an urgent need to find a quick and easy method of resolution. These disputes or conflicts hinders the development and disturbs the physical strength and mental peace of human life. To lead a passionate life, the human being should be without any conflicts. But is it possible? For every thing the person is finding litigation and approaching the Courts. There are so many litigations in form of mounting arrears of cases and filing of cases. According to rough estimate, all pending cases, which approximately go beyond two crores in India, would take a minimum of 324 years for final disposal, provided no new suit or proceedings is filed.[2]

In view of increasing importance of alternative means for settlement of disputes, it has become necessary to train the person for this purpose and impart expertise in this field as skilled persons are required to perform under the system of alternative disposal of disputes. Thus with the object to give statutory recognition to alternative means of settlement of disputes, the necessity of an organization was felt. On 4th December 1997 the Chief Ministers of States and the Chief Justices of the High Courts met in New Delhi to discuss at length the alternative means of dispute resolution. In the meeting it was declared that the present justice delivering system is not capable to bear the whole workload and it would be appropriate to deliver justice by the alternative means of disposal of disputes as well. Under this system there is a procedural flexibility and also in time and money saving besides the absence of tension of regular trial.

In this context the legendaries of various fields i.e., commercial, administrative and legal unanimously constituted an institution to be called “International Centre for Alternative Dispute Resolution-ICADR. This institution was established in Delhi on 31st May, 1995 and registered under the Society Registration Act, 1960. It is an autonomous non-beneficial institution. The chief object of this institution is to inculcate and expand the culture of alternative dispute resolution. However, other objects of the International Centre for Alternative Dispute Resolution are as under:-

1. to expand, encourage and popularise the scientific means for settlement of local, national and international commercial disputes;

2. to provide assistance and render facilities for arbitration, conciliation and mediation;

3. to develop the alternative means of dispute resolution among the communities in accordance with their social, economic and other requirements;

4. to appoint conciliator and mediator on the request made by the parties in the dispute. In accordance with the Arbitration and Conciliation Act, 1996 if the parties are unable to appoint the mediator or conciliator or arbitrator they can designate or nominate the person or institution for the appointment of the mediator. Similar power has also been conferred upon the Chief Justice;

Advantages of the Alternative means of Dispute Redressal
1. The alternative means of dispute redressal can be invoked at any time, even if the matter is pending in the Court of Law. Similarly it can be terminated at any time except in case of compulsory arbitration.
2. The disputes can be resolved comparatively more economically and speedily. Disputes can be maintained as the personal subject-matter. Sometime disputes are resolved within one or two days’ time because the procedure adopted by the mediator is controlled and consented by the parties. Thus, real solution of the dispute can be arrived at by the system of alternative means of dispute redressal.
3. The system of alternative means of dispute redressal can be followed without seeking legal assistance from the advocates-lawyers.
4. This system effectively reduces the work-load of the court
5. Finally, this system provides flexible procedure, strict procedure of law is not applicable to alternative means of disputes redressal.

Undoubtedly, the present world is undergoing a kind of revolution, not only in the field of communication and information technology but also in the field of trade and commerce. Even the domestic as well as international trade and commerce are not untouched in the prevailing scenario. It has been realized that the law of arbitration requires to be developed, promoted and also applied so that the regular Court of law which is already over-burdened on account of complexities and disputes in every walk of life is reduced with judicial burden.

Need for ADR:
1. Mounting arrears of matters before Court system
2. Expedite settlement

The Code of Civil Procedure introduced certain provisions giving the power to courts to settle the matters out side the Court. Section 89 provides for the settlement of disputes outsides the Court. The provisons of this section are based on the recommendations made by Law Commission of India and Malimath Committee. It was suggested by 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 to make it obligatory for the Court to refer the dispute, after issues are framed, for settlement either by way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat. It is only when the parties fail to get their disputes settled through any of the alternative dispute resolution method that the suit could proceed further. In view of the above, by Amendment of 1999 a new section 89 has been inserted in order to provide for alternative resolution.

The object of Section 89 appears to promote alternative methods of dispute resolution which may not be bound by any specific procedure and further resolves the dispute expeditiously.

According to the statement of Object and Reasons appended to the Bill (Amendment Act 1999) “this is a special provision made for settlement of disputes outside the courts”. A litigant is free to settle his dispute on a reference made by the court by resorting to any of the following methods:
(a) Arbitration
(b) Conciliation
(c) Judicial Settlement including settlement through Lok Adalat, or
(d) Mediation.

It seems that the special provision has been introduced in order to help the litigant to settle his dispute outside the court instead of going through the elaborate process in the court trial. This is a special procedure for settling the dispute outside the courts by simpler and quicker methods. The decision rendered by different forums shall have the same binding effect as if made by a civil court after an elaborate trial.

Provisions of the section are based on 129th Report of the Law Commission of India as well as Justice Malimath Committee Report.

Settlement of Dispute outside Court

Section 89 provides that where it appears to the court that there exist elements of settlement which may 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, the court may formulate the terms of possible settlement and refer the same for:
(a) arbitration;
(b) conciliation;
(c) judicial settlement including settlement through Lok Adalat; or
(d) mediation

Section further provides that where the dispute is referred to arbitration or conciliation, the provisions of Arbitration and Conciliation Act, 1996 would apply; where referred to Lok Adalat, the relevant provisions of Legal Services Authority Act, 1987 would apply. In case it is referred to mediation, the Court shall affect a compromise between the parties and shall follow such procedure as may be prescribed.

It is, however not clear from the provisions of Section 89 that whether the reference by the court to the alternative method of dispute resolution mechanism is mandatory or directory. It also not set out the stage for such a reference.

The provisions embodied under Section 89 do not suffer from any constitutional infirmity.[3]

Order X of Civil Procedure Code: The provisions of O.X confer on the court a power to examine parties with a view to ascertain the real points in the controversy between them, and to get admissions from them, with a view to eliminate irrelevant issues and evidence and thereby shorten the trial.[4] This rule relates only the ascertainment by statements of the parties themselves or their pleaders whether allegations in the pleadings which were admitted or denied by them. Such ascertainment is to be made when the allegations or not expressly or impliedly admitted or denied by the party against whom they are made[5].

The rule used the expression “first hearing”. What does this expression mean? The expression has not been defined in the Code. It is the day on which the court purposes to apply its mind to determine the points in the controversy between the parties to the suit and to frame the issues if necessary[6]. It is the day the court applied its mind and goes into the pleadings of the parties in order to understand their contentions[7]. After recording the admissions and denials the Court shall direct the parties to settle the matter out of court and adopt the modes embodied in Section 89 of the Code, that is arbitration, conciliation, mediation or Lok Adalat.

The object of the examination under this rule is to ascertain the matters in dispute and not to take evidence or to ascertain what is to be the evidence in the case[8]. Rule 2 has been substituted to make it obligatory on the part of the court to examine the party appearing in person or present in the Court for elucidating the matters in the controversy.

At the first hearing of the suit the Court can examine a party or his witness, orally in order to elucidate the matters in the controversy[9]. Where the party’s pleader refuses or is unable to answer material questions the Court can direct personal attendance of the party himself. If the party fails without lawful excuse to appear on the appointed date, the Court may pronounce judgment against him or make such orders as it thinks fit[10].

The intention of this rule is to enable the Court not only to get obscure points cleared up by obtaining information from either of the parties, but also if possible, to get admission so as to narrow down the issue.

The rule is a penal provision and before the Courts can apply it, its terms have to be strictly complied with. Under this rule an order directing a party to appear in person can only be made if the pleader who represents him has refused or is unable to answer material questions[11].

Civil Procedure Alternative Dispute Resolution and Civil Procedure Mediation Rules, 2005[12]
1. The Court shall after recording admission and denials at the first hearing of the Suit under Rule 1 of Order X and where it appears to the Court that there exists elements of a settlement and give them to the parties, formulate the terms of settlement and give them to the parties for their observations under sub-section (1) of Section 89, and the parties shall submit to the Court their responses within thirty days of the first hearing.[13]

2. The Court shall give guidance to parties while giving direction to opt for ADR, its advantages, relationship between the parties which requires to be preserved.[14]

3. If the suit has been referred for any of the mode mentioned in Section 89 and has not been settled or not be proper in the interests of justice to proceed further with the matter, the suit shall be referred back again to the Court with a direction to the parties to appear before the Court on a specific date.[15]

4. The High Court shall take steps to have training courses conducted in places where the High Court and the District Courts or Courts of equal status are located, by requesting bodies recognized by the High Court or the Universities imparting legal education or retired Faculty Members or other persons who, according to the High Court are well versed in the techniques of alternative methods of resolution of dispute, to conduct training courses for lawyers and judicial officers.[16]

5. The High Court and the District Courts shall periodically conduct seminars and workshops on the subject of alternative dispute resolution procedures throughout the State or States over which the High Court has jurisdiction with a view to bring the awareness of such procedures and to impart training to lawyers and judicial officers.[17]

6. The parties to a suit may all agree on the name of the sole mediator for mediating between them and where there are two sets of parties and are unable to agree on a sole mediator, each set of parties shall nominate a mediator.[18]

7. The following persons shall be treated as qualified and eligible for being enlisted in the panel of mediators[19]:-

(a) Retired Judges of the Supreme Court of India, Retired Judges of the High Court, Retired Judges and Sessions Judges or retired Judges of the City Civil Court or Courts of equivalent status.

(b) Legal Practitioners with at least fifteen years standing at the Bar at the level of the Supreme Court or the High Court or the District Courts or Courts of equivalent status.

(c) Experts or other professionals with at lease fifteen years standing or retired senior bureaucrats or retired senior executives.

(d) Institutions which are themselves experts in mediation and have been recognized as such by the High Court, provided the names of its members are approved by the High Court initially or whenever there is change in membership.

7. The venue for conducting mediation is at any place basing on the consent of the parties.[20]

8. On the expiry of sixty days from the date fixed for the first appearance of the parties before mediator, the mediation shall stand terminated, unless the Court, which referred the matter, either suo-motu, 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 further period of thirty days.[21]

9. The Court to fix a date for recording settlement within seven days of the receipt of any settlement, the Court shall issue notice to the parties fixing a day for recording the settlement, such date not being beyond a further period of fourteen days from the date of receipt of settlement, and the Court shall record the settlement, if it is not collusive.[22]

10. At the time of referring the disputes to mediation, the Court shall, after consulting the mediator and parties, fix the fee of the mediator.[23]

11. The mediator shall follow certain ethics:
(1) not carry on any activity or conduct which could reasonably be considered as conduct unbecoming of a mediator.
(2) uphold the integrity and fairness of the mediation process.
(3) Be faithful to the relationship of trust and confidentiality imposed in the office of mediator.
(4) Disclose any interest or relationship likely to affect impartiality or which might give an appearance of partiality of bias.
(5) Conduct all proceedings related to the resolutions of a dispute, in accordance with the applicable law.

Conclusion: To achieve the inner peace of mind, the parties should attempt to settle the matter in an amicable manner which leads to strong harmony and leads to efficacious results.
[1] The Author is working as an Assistant Professor, Padala Rama Reddi Law College, Hyderabad.
[2] Alternative Dispute Resolution, Negotiation and Mediation-Dr.Madabhushi Sridhar
[3] Salem Advocates Bar Association, Tamilnadu v Union of India, AIR 2003, SC 189.
[4] Ram Krishna v Ram Janaki, AIR 1992 All 335).
[5] Balmiki Singh v. Mathura Prasad, AIR 1967 All 259
[6] Siraj Ahmad Siddiqui v. Prem Nath Kapoor, AIR 1993 SC 2525).
[7] Arjunchiamal Makhijani v.Jamnadas Tuliani, AIR 1959 SC 1599; Siraj Ahmad Siddiqui v. Prem Nath Kapoor, AIR 1993 SC 2525.
[8] Gunga v.Tiluckram, (1888) 15 Cal 533
[9] Collector(District Magistrate) Allahabad v. Rajaram, AIR 1985 SC 1622).
[10] Rule 4 of O.X of CPC
[11] Satu v. Hanmantrao, (1899) ILR 23 Bomb 318
[12] Ins.by G.O.M.S. No.40, Law (LA&JHC-D), dt.2.4.2008 w.e.f. 22.2.2006, Pub. in R.S to Part-I of the A.P.Gaz., No.9, dt.17.7.2008.
[13] Rule 307 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[14] Rule 309 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[15] Rule 311 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[16] Rule 311 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[17] ibid
[18] Rule 314 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[19] Rule 315 and 316 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[20] Rule 318 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[21] Rule 330 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[22] Rule 337 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.
[23] Rule 338 of Andhra Pradesh Civil Rules of Practice and Circular Orders, 1980.

Authors contact info - articles The  author can be reached at: ranganathvg@legalserviceindia.com

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