Amendment of Section 89 of the Code of Civil Procedure 1908 and ...

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2. Analysis of Section 89 and its Scheme2.1 By the Code of Civil Procedure (Amendment) Act 1999, section 89 had been introducedin the Code of Civil Procedure, 1908 and it became effective from 01-07-2002. Section 89 of theCPC reads as under:“89. Settlement of disputes outside the Court.- (1)Where it appears to the court thatthere exist elements of a settlement which may be acceptable to the parties, the court shallformulate the terms of settlement and give them to the parties for their observations andafter receiving the observations of the parties, the court may reformulate the terms of apossible settlement and refer the same for –a) arbitration;b) conciliation;c) judicial settlement including settlement through Lok Adalat; ord) mediation(2) Where a dispute has been referred-(a) for arbitration or conciliation, the provisions of the Arbitration andConciliation Act, 1996 shall apply as if the proceedings for arbitration orconciliation 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 accordancewith the provisions of sub-section (1) of section 20 of the Legal ServicesAuthorities Act, 1987 and all other provisions of that Act shall apply in respect ofthe dispute so referred to the Lok Adalat;(c) for judicial settlement, the court shall refer the same to a suitable institution orperson and such institution or person shall be deemed to be a Lok Adalat and allthe provisions of the Legal Services Authorities Act, 1987 shall apply as if thedispute were referred to a Lok Adalat under the provisions of that Act;(d) for mediation, the court shall effect a compromise between the parties andshall follow such procedure as may be prescribed.”6
The objective of Section 89 is to ensure that the court makes an endeavour to facilitateout-of-court settlements through one of the ADR processes before the trial commences.2.2 The related provisions which were incorporated by the same amendment Act are thosecontained in Rules 1A, 1B and 1C of Order X, CPC, which are extracted hereunder:“1A. Direction of the Court to opt for any one mode of alternative disputeresolution.—After recording the admissions and denials, the court shall direct the partiesto suit to opt either mode of the settlement outside the court as specified in sub-section(1) of section 89. On the option of the parties, the court shall fix the date of appearancebefore such forum or authority as may be opted by the parties.”“1B. Appearance before the conciliatory forum or authority.– where a suit is referredunder rule 1A, the parties shall appear before such forum or authority for conciliation ofthe suit.”“1C. Appearance before the Court consequent to the failure of efforts ofconciliation.- Where a suit is referred under rule 1A and the forum or authority to whomthe matter has been referred is satisfied that it would not be proper in the interest ofjustice to proceed with the matter further, then it shall refer the matter again to the courtand direct the parties to appear before the court on the date fixed by it.”2.3 With the introduction of these provisions, a mandatory duty has been cast on the civilcourts to endeavour for settlement of disputes by relegating the parties to an ADR process. FiveADR methods are referred to in section 89. They are: (a) Arbitration, (b) Conciliation, (c)Judicial settlement, (d) Settlement through Lok Adalat, and (e) Mediation.2.4 Arbitration as well as Conciliation are governed by the Arbitration and Conciliation Act,1996 (“AC” Act, for short) which superseded the previous Arbitration Act of 1940. Thearbitration unlike conciliation is an adjudicatory process. Once a civil dispute is referred toarbitration, the case will go outside the stream of the court permanently and will not come backto the court. However, in contrast, a dispute referred to conciliation which is a non-adjudicatoryprocess, does not go out of the domain of the court-process permanently. If there is no amicablesettlement, the matter reverts back to the court which has to proceed with the trial after framing7
Page 1 and 2: GOVERNMENT OF INDIALAW COMMISSION O
Page 3 and 4: Amendment of Section 89 of the Code
Page 5: 1. Introduction1.1 The proliferatio
Page 9 and 10: “The distinction between mediatio
Page 11 and 12: 3. The Background to Section 893.1
Page 13 and 14: than those set out therein. In fact
Page 15 and 16: mediator or the Lok Adalat, after g
Page 17 and 18: 4.6 The Supreme Court then declared
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Page 25 and 26: court concerned and in case no awar
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Page 29 and 30: EXTRACT OF SECTION 73(1) OF AC ACT
Page 31 and 32: ANNEXURE IIPARAGRAPHS 43 & 44 OF TH
Page 33: and prejudice. It is therefore advi

Amendment of Section 89 of the Code of Civil Procedure 1908 and ...

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