Settlement of disputes outside the Court
Full Text
(1) Where it appears to the Court that there exist elements of a settlement which may be 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 of the parties, the Court may reformulate the terms of a possible settlement and refer the same for:—
(a) arbitration;
(b) conciliation;
(c) judicial settlement including settlement through Lok Adalat; or
(d) mediation.
(2) Were a dispute has been referred—
(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation 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 accordance with the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat;
(c) for judicial settlement, 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 mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.
Plain English Summary
Section 89 mandates civil courts to actively explore alternative dispute resolution (ADR) whenever elements of settlement exist, empowering judicial reference of disputes to arbitration, conciliation, Lok Adalat/judicial settlement, or mediation to reduce docket congestion and achieve amicable resolutions.
Key Legal Elements
- Duty to Explore Settlement: Court must identify potential terms of compromise after completion of pleadings (read with Order X Rule 1A).
- Four Statutory ADR Modes: Discretion to refer matter to (a) Arbitration, (b) Conciliation, (c) Lok Adalat / Judicial Settlement, or (d) Mediation.
- Arbitration / Conciliation: Governed by the Arbitration and Conciliation Act, 1996 (mutual written consent of all parties mandatory for arbitration).
- Lok Adalat / Judicial Settlement: Governed by Section 20 of Legal Services Authorities Act, 1987; awards have the status of final, non-appealable civil court decrees.
- Court-Annexed Mediation: Regulated by court mediation rules and now the Mediation Act, 2023, requiring confidentiality and voluntary consensus.
Practical Note
ADR Harmonization, Afcons Guidelines & Procedural Practice: (1) Landmark Authority (*Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co., 2010*): The Supreme Court corrected drafting anomalies in Section 89, holding that courts need not draw up elaborate draft settlement terms before reference; having a brief summary of disputes and party consent suffices. (2) Mandatory Hearing under Order X Rule 1A: After admission of pleadings and before framing of issues under Order XIV, the court MUST mandate party appearance to choose an ADR forum. (3) Consent Requirement: For Arbitration, mutual consent of all parties is mandatory; for Mediation, Conciliation, or Lok Adalat, the court may compel reference even without mutual consent if an amicable element exists. (4) Suitable vs Unsuitable Cases: Representative suits under Order I Rule 8, election disputes, serious fraud, or criminal offenses cannot be referred to ADR; commercial contracts, matrimonial/family disputes, partition, partnership dissolution, and motor accident claims are prime ADR candidates. (5) Refund of Court Fees: Under Section 16 of the Court Fees Act, 1870, entire court fees paid on the plaint are refunded if settled via Section 89 ADR.
हिंदी पाठ
(1) जहाँ न्यायालय को यह प्रतीत होता है कि ऐसे समझौते के तत्व विद्यमान हैं जो पक्षकारों को स्वीकार्य हो सकते हैं, वहाँ न्यायालय समझौते के निबंधनों (शर्तों) को तैयार करेगा और पक्षकारों को उनके विचारों (टिप्पणियों) के लिए देगा और पक्षकारों के विचार प्राप्त करने के पश्चात, न्यायालय संभावित समझौते के निबंधनों को पुनर्गठित कर सकेगा और उन्हें निम्नलिखित के लिए निर्दिष्ट कर सकेगा:—
(क) मध्यस्थता (Arbitration);
(ख) सुलह (Conciliation);
(ग) लोक अदालत के माध्यम से समझौते सहित न्यायिक समझौता (Judicial settlement); या
(घ) मध्यस्थता/सुलह-वार्ता (Mediation)।
(2) जहाँ कोई विवाद निर्दिष्ट किया गया है—
(क) मध्यस्थता या सुलह के लिए, वहाँ मध्यस्थता और सुलह अधिनियम, 1996 (1996 का 26) के उपबंध इस प्रकार लागू होंगे मानो मध्यस्थता या सुलह की कार्यवाहियां उस अधिनियम के उपबंधों के अधीन समझौते के लिए निर्दिष्ट की गई थीं;
(ख) लोक अदालत को, वहाँ न्यायालय उसे विधिक सेवा प्राधिकरण अधिनियम, 1987 (1987 का 39) की धारा 20 की उपधारा (1) के उपबंधों के अनुसार लोक अदालत को निर्दिष्ट करेगा और उस अधिनियम के अन्य सभी उपबंध लोक अदालत को इस प्रकार निर्दिष्ट विवाद के संबंध में लागू होंगे;
(ग) न्यायिक समझौते के लिए, वहाँ न्यायालय उसे किसी उपयुक्त संस्था या व्यक्ति को निर्दिष्ट करेगा और ऐसी संस्था या व्यक्ति को लोक अदालत समझा जाएगा तथा विधिक सेवा प्राधिकरण अधिनियम, 1987 के सभी उपबंध इस प्रकार लागू होंगे मानो वह विवाद उस अधिनियम के उपबंधों के अधीन लोक अदालत को निर्दिष्ट किया गया था;
(घ) मीडिएशन (मध्यस्थता) के लिए, वहाँ न्यायालय पक्षकारों के बीच समझौता कराएगा और ऐसी प्रक्रिया का पालन करेगा जो विहित की जाए।