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Report No. 163


Q.3. Section 89 (to be inserted) (settlement of disputes outside the court): Clause 7 of the Bill

The Bill proposes to insert a new section (as section 89), seeking to provide that "Where it appears to the court, that there exist elements of 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". After observations of the parties, the court (it is proposed) may re-formulate the terms of a possible settlement and refer the same for arbitration, conciliation "judicial settlement" including settlement through Lok Adalat) or mediation.

Where the reference of the dispute is for arbitration or conciliation, the Bill proposes that the Arbitration and Conciliation Act, 1996 shall apply, "as if the proceeding for arbitration or conciliation were referred for settlement under the provisions of the Act".

Where the reference is to Lok Adalat or "judicial settlement", the Legal Services Authority Act, 1989 is to apply.

Where the dispute is referred for mediation, the proposal is that "the court shall effect a compromise between the parties and shall fallow such procedure as may be prescribed".

It should also be mentioned that while clause 7 of the Bill requires such attempts at "settlement", "only where there exist elements of settlement", clause 20(i) of the Bill proposes to introduce Order 10, rule 1A, whereunder, after the admissions and denials of the parties are recorded by the court, "the court shall direct the parties to the suit to opt either mode of settlement outside the court as specified in sub-section (1) of section 89". [See Q.22, infra].

(Thus, one or other mode must be opted for, by the parties, under proposed Order 10, rule 1A).

The object of the proposal in the Bill is obviously to promote alternative methods of dispute resolution. However, on the proposals as formulated in the Bill, certain points of substance as well as points of form, arise for consideration. Opinion is therefore invited on the following points:

(a) Would the proposal in clause 3 make for quicker resolution or would it lead to the insertion of one more step in the chronology of the suit?

(b) Should the reference by the court to the alternative method be discretionary (with the court) or should it be mandatory?

(c) Should the stage for reference be set out in proposed section 89 itself?

(d) Where the reference is to arbitration or conciliation, would the formula in proposed section 89(2)(a) "as if the proceedings were referred for settlement under the provisions of that Act (i.e. the Arbitration and Conciliation Act, 1996)" be appropriate and in conformity with the language of that Act?

(e) Should the court itself be required to frame the agreement or, would it be better to permit the parties to enter into an agreement? (This needs deep thinking, because the Act of 1996 is basically structured upon the concept of an arbitration agreement).

(f) In case of arbitration, several points of detail may arise, e.g. - who will be the arbitrator, what will be his jurisdiction, what will be the venue, what will be the arbitrator's fees, etc. How will these issues be dealt with?

(g) Where mediation is decided upon, then, under section 89 as (proposed), "the court shall effect a compromise between the parties". What will be the situation, if the parties do no agree on a compromise?

[Some further points may also arise in the context of clause 20, seeking to insert Order 10, rule 1A - See Q.22 below].

The Code of Civil Procedure (Amendment) Bill, 1997 Back

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