Introduction: Dispute Resolution Beyond Courts
In a country like India, where courts are overburdened with millions of pending cases, Alternative Dispute Resolution (ADR) mechanisms offer much-needed relief. Section 89 of the Code of Civil Procedure, 1908 (CPC) plays a pivotal role in integrating ADR methods like arbitration, conciliation, mediation, judicial settlement, and Lok Adalats into the civil justice system. It encourages parties to explore settlement outside traditional litigation, saving both time and resources.
Understanding Section 89 CPC: The Legislative Mandate
Section 89 CPC was introduced by the Amendment Act of 1999 and came into effect on 1 July 2002. The objective is to provide a statutory framework for courts to refer disputes for ADR mechanisms wherever possible.
Text of Section 89 (Simplified):
If it appears to the court that elements of a settlement exist, it shall formulate the terms of settlement and refer the matter to:
- Arbitration,
- Conciliation,
- Judicial settlement (including settlement through Lok Adalat),
- Mediation.
Significance of Section 89 in Dispute Settlement
1. Reduces Burden on Courts
The massive backlog of cases in Indian courts makes ADR a welcome route. Section 89 allows civil courts to refer cases for ADR, significantly reducing caseloads.
2. Encourages Speedy Justice
ADR mechanisms resolve disputes faster than traditional litigation. Section 89 makes it mandatory for courts to explore settlement options, promoting speedier outcomes.
3. Cost-Effective Justice
Litigation is costly. ADR options—especially mediation and conciliation—are relatively inexpensive. Section 89 opens the door for affordable justice.
4. Promotes Confidentiality
Unlike court proceedings, ADR processes are private. Section 89 empowers parties to protect sensitive business or personal information through closed-door settlements.
5. Encourages Voluntary Resolution
ADR emphasizes consensus-based decisions. Under Section 89, courts help parties resolve disputes without adversarial conflict.
Judicial Interpretation of Section 89 CPC
1. Salem Advocate Bar Association v. Union of India (2003 & 2005)
This landmark case upheld the constitutional validity of Section 89. The Supreme Court emphasized that ADR must be promoted to fulfill the goal of justice under Article 21 (Right to Life).
2. Afcons Infrastructure Ltd. v. Cherian Varkey Construction (2010)
The Supreme Court clarified procedural doubts under Section 89. It stated that referral to ADR is not optional—courts must consider ADR before trial begins.
3. M.R. Krishna Murthi v. New India Assurance Co. Ltd. (2019)
The Court highlighted the need to make pre-litigation mediation mandatory, reinforcing Section 89’s spirit to resolve disputes amicably.
Section 89 and ADR Mechanisms: Detailed Overview
| ADR Mechanism | Nature | Court Involvement | Binding? |
|---|---|---|---|
| Arbitration | Adjudicatory | Referral only | Yes |
| Conciliation | Negotiatory | Referral + oversight | Yes, if settlement is signed |
| Mediation | Facilitatory | Court or private mediator | Yes, after agreement |
| Judicial Settlement | Semi-formal | Court-directed | Yes |
| Lok Adalat | Statutory body | Organized by courts | Yes, enforceable like decree |
Procedure Under Section 89 CPC
- Preliminary Hearing – Court identifies scope for settlement.
- Formulation of Terms – Court may suggest settlement points.
- Referral to ADR Mechanism – Suitable process chosen.
- Resolution through ADR – ADR experts help parties reach consensus.
- Report Back to Court – If settled, court passes decree; if not, case resumes.
Limitations of Section 89 CPC
While Section 89 has great intent, it also faces challenges:
1. Lack of Clarity
Earlier versions of Section 89 lacked clear procedural rules, leading to confusion among litigants and judges.
2. Poor Infrastructure
India lacks sufficient trained mediators and ADR centers, especially in rural and semi-urban areas.
3. Reluctance by Lawyers
Some legal practitioners discourage ADR due to lower fees compared to full litigation.
4. Lack of Awareness
Many litigants are unaware of their right to ADR, and courts often skip ADR referrals due to tight schedules.
Recent Reforms and Recommendations
- Mediation Bill, 2023 (Now Mediation Act, 2023) promotes pre-litigation mediation as mandatory for many civil disputes.
- Legal Services Authorities are strengthening Lok Adalats and awareness programs.
- Judicial Training Academies are now focusing on ADR sensitization for judges.