The article shall focus on dealing with the legislative background pertaining to Section 89 of the Code of Civil Procedure i.e. to trace the historical growth or evolution of Section 89. For the sake of clarity, this has been divided into three different subgroups. The same has been diagrammatically depicted in the table below.
Pre- Amendment Scenario
The gems of a strong & effective alternative forum for dispute resolution were sown way back in 1989. It was since then that the legislators have been endeavouring [through varied amendments] to bring in a system that met the requirements of the astronomical growth in litigations. It is only through such amendments that Section 89 got evolved. This article endeavours to find a link between these amendments and how have they led to the evolution of the present Section 89 CPC. To analyze the same, three pieces of legislations have been selected, that would indicate the consciousness of the lawmakers to deliberate upon an effective alternative remedy i.e.
- Code of Civil Procedure 1859
- Code of Civil Procedure 1908
- Arbitration Act 1940
Code of Civil Procedure, 1859
The story behind the creation of a strong Alternative dispute forum started way back in 1859. With the amendment of the Code of Civil Procedure, 1859 the legislators had first endeavoured to lay the foundations of a simple yet effective regime of ADR. It can safely be said that this was the first legislation that called for and understood the varied significance of alternative modes of settlement. Herein Section 312 to 317 related to ADR.
Code of Civil Procedure 1908
Again in the Code of Civil Procedure 1908, there existed provisions that enabled the parties to the civil suit to seek reference of disputes for ADR. Additionally, such provisions also empowered the courts to refer the dispute for arbitration, which has control over arbitral proceedings and adjudicate on the validity of awards.
The Arbitration Act, 1940
Through legal and legislative evolution processes with regard to the same, the Arbitration Act, 1940 came into being. It repealed these provisions of CPC as it existed in the 1908 Act and instead re-produced them with slight changes by way of Section 21 and Section 24. However, it can be seen that the 1940 Act also contained provisions similar to the old Act qua the reference of disputes for ADR.
Main Intention behind Amendments- From 1859 to 1940
A brief reference to the main Intention behind such amendments is of prime significance at this juncture. The prime reason was that such amendments were that through these amendments the legislators mainly intended to provide for a simple, speedy, and less expensive alternative system of dispute resolution. Another main intention in the mind of the legislators was to reduce the burden of the Courts. However, this failed to produce desired results as was expected.
Interferences by the Court – Prime Reason For Failure
It must, however, be noted that the abovementioned noble intentions did not see the light of the day and merely assumed the position of a paper tigress. The basic reason for the same was the wide power given to Courts to interfere with the functioning of the arbitral forums at all the stages. This power also extended to the level of interfering with awards passed by the arbitrators.
Result of Court Interferences- Failure of the 1940 Act
The reasons as mentioned above led to the most apprehensible conclusions to the extent that the 1940 Act failed to realize its objects. This could be best explained by the views as expressed by the courts in the M/s. Guru Nanak Foundation Vs M/s. Rattan Singh & Sons, wherein the Court went on to clearly explain the deplorable condition of the alternative forums of justice as existing in India.
Recommendations by various Bodies
The failure of the 1940 Act led to the realization of the fact that the current system needs to be revamped and changed. It is here that recommendations of the successive Law Commissions proposed drastic changes to the existing law. Again it is worth mentioning the Justice Malimath Committee’s Report. This report recommended a number of ADR forums to reduce the heavy pendency of cases in the Courts. Thus it is in this phase, wherein we saw a growing consciousness towards building a stronger legal regime towards effective alternate fora. The policymakers are seen to have taken proactive steps in highlighting not only the lacunae in the existing legal framework but also emphasizing the need to structure a new regime altogether. It is thus, in the opinion of the authors, this could be seen as a phase that could be categorized as the raison d’ etre for the enactment of Section 89. In other words, it is from here that the enactment of Section 89 started in full flow.
Legislating the 1996 Act
In light of the above-mentioned circumstances, the process of coming up with new legislation got fastened. Additionally several other national and International Policy decisions are taken by the Govt. of India made it imperative for the Lawmakers to adopt a completely new legal regime. It is here that the authors wish to highlight the policy of liberalization in the field of industry and commerce adopted by the Government of India that opened floodgates for foreign investment. It is primarily this that impelled the Government to follow UNCITRAL Model Law in bringing out the new enactment. The new enactment was in the form of the Arbitration and Conciliation Act, 1996 that repeated the 1940 Act. This Act sought to reduce the burden of the pending cases on courts. The enactment of his Act was seen as the revolution that finally led to the evolution of the present Section 89 C.P.C.
The Amendment Phase
A study of Section 89 C.P.C
It is necessary to understand as to what exactly was the amendment which was incorporated by the 1996 Act and how this was different from the other enactments in as much as it provided for Court annexed mediation.
C.P.C. Amendments Brought – An Analysis of Section 89
Parliament promulgated several amendments to the Civil Procedure Code of 1908 in the year 1999 to Section 27 and Section 100. One of the significant amendments for the purposes of Section 89 was that it provided for the settlement of disputes outside the Court. Section 89 primarily provided for Court Annexed ADR. In sum and substance herein the Court directs the parties to choose among several ADR mechanisms, they being Lok Adalats, Arbitration, Conciliation, and Mediation. If the Court deems it a fit case, the Court can, without the consent of parties, refer the disputes to such mechanisms. In case the attempt by the Mediator/Conciliator at settlement fails, the parties can go back to the Court for disposal under the normal procedures.
Purpose of Section 89
The prime purpose of Section 89 was to try and see that the Court itself need not necessarily decide all the cases that are filed in Court. Such a scheme was thought best, keeping in mind the laws delay and a limited number of judges, that it became imperative to make use of ADR Mechanism in the manner as provided under Section 89. It is primarily because of the delays caused in the disposal of cases in addition to the tiresome procedure of the Courts and also the scarcity of judges that the policymakers adopted for a Court Annexed ADR Mechanism in India.
Heavy Burden of Cases on the Courts- Is Section 89 an Effective Remedy?
The biggest inability of the FLS in India was that it could not provide for speedy disposal of cases. The backlog of cases increased manifold. It is in this regard that studies were conducted by various bodies to highlight the alarming rate at which cases are pending in the Courts. It is worth mentioning the observations of The Parliamentary Standing Committee on Home Affairs 2001 that statistically located the heavy backlog of cases in the Indian Judicial System. Another significant study in this regard is the Reports submitted by the Indian Law Institute with collaboration with the Institute of Developing Economies, Japan. In March 2001, this study further contributed statistically towards the poor number of cases disposed of by the district and subordinate courts. Hence the alarming situation with respect to the heavy backlog of cases was no more a fiction but a stark reality that was challenging the very effectiveness of the Indian Legal System and its future. To overcome the problem of a growing backlog of cases The Law Commission of India’s 120th Report in 1988 recommended various solutions to overcome the alarming rate at which cases were pending in the Courts all over the country. The simpleton solution as recommended by the Law Commission was to simply increase the number of Judges. Recommended that the state should immediately increase the ratio from 10.5 judges per million of the Indian population to at least 50 judges per million within the period of the next five years. But the actual scenario remains quite different from what was actually aimed at. According to studies conducted in this regard even in the year 2001, the ratio remained at 12 or 13 judges per million population.
Reducing the Backlog of cases- The Best Remedy Available
Hence we see that the condition of the Indian Judicial System with respect to the strength of judges seems to be in a deplorable state. The number of judges is still below what was recommended by the Law Commission way back in 1988. Assuming that the poor strength of the judiciary would remain to be in this dismal state for days to come other factors remaining centers paribes what else could be the solution to reduce the heavy burden of cases on the Courts. The solution simple lies in the introduction of a separate mode of Court annexed ADR mechanism in the country.
Hence, keeping all factors in mind Section 89 seems to be the best answer for reducing the heavy burden of cases on the Courts wherein the Court is not bound to decide each case itself. It rather can if it deems it a fit case, can, without the consent of parties, refer the disputes to another alternative mechanism as Arbitration, Mediation, Judicial Settlement, or Lok Adalats mechanisms. In case the attempt by the Mediator/Conciliator at settlement fails, the parties can go back to the Court for disposal under the normal procedures.
Section 89 C.P.C. – An Effective Remedy or a Paper Tigress?
Several legal luminaries have raised questions with respect to the effectiveness of Section 89. They have raised doubts that Section 89 in its present forms is an incomplete code and does not provide for an operational backing. It is here that Section 89 at times as been called a paper tigress in as much as it only provides for legal jargon on paper, however the same does not hold water when applied in practical and real situations. To understand whether Section 89 actually provides for an effective and efficacious remedy or is it merely a paper tigress that only looks good on paper we first have to understand the very structure of Section 89 in its full form. A Diagrammatical representation of the same has been provided for a better understanding of the same and also for the benefit of the readers.
A plain reading of Section 89 makes it clear that if it appears to the Court that there exists an element of settlement that is acceptable to the parties then the Court shall formulate terms of the settlement and give them to the parties for their observations. After receiving the observations from the parties, the Court shall reformulate the terms of the settlement and refer the same for Arbitration, Conciliation, Judicial Settlement, and Mediation. Hence section 89 (1) provides for a stepwise procedure to be followed in this regard. They are:
- Existence of ‘elements of settlement’.
- Such elements of the settlement must be agreeable to the parties.
- The court to formulate terms of the settlement.
- Observations of the parties were recorded with respect to such terms of the settlement.
- After receipt of such observations the court to reformulate the terms of the agreement.
- The matter to be referred to alternative modes of dispute settlement.
Again Section 89 Sub-section (2) refers to different acts in relation to arbitration, conciliation or judicial settlement including settlement through Lok Adalats and mediation.
|Serial No.||Section Details||Provision Contained Therein|
|1.||Section 89 (2) (a)||For Arbitration or Conciliation, the provisions of the Arbitration and Conciliation Act 1996 shall apply.|
|2.||Section 89 (2) (b)||For Lok Adalats, the provisions of the Legal Services Authority Act, 1987 shall apply.|
|3.||Section 89 (2) (c )||For Judicial settlement, the Court shall refer the same to a suitable institution and that shall be deemed to be a Lok Adalats and all provisions of the Legal Services Authority Act would apply therein.|
|4.||Section 89 (2) (d)||With regard to mediation the section provides that the parties “shall follow the procedure as may be prescribed.”|
Hence we see that there still exists scope for making Section 89 operation in all aspects. Without proper procedure being prescribed by law, the provisions shall not have any effect whatsoever. It must be stated that in view of the authors it is exactly here that the problem with respect to mediation rules in India exists. It is primarily for this reason that Section 89 is often termed as a paper tigress with regard to Section 89 (2) (d) which does not provide for proper operational requirements for Mediation to work in India.
The attitude of the Legal Community- Section 89 Amendment
The lawyer’s reaction was not at all favourable. The lawyers resorted to strikes to the nationwide protest against amendments to the Code of Civil Procedure. There were prime agitations in Tamil Nadu and Delhi High Courts. The advocates argued vehemently against the Inclusion of such amendments in the C.P.C. There were heated debates between the Lawyer community and the law Minister with regard to such amendments.
Result of such widespread opposition
As a result of this widespread opposition with regard to Inclusion of Section 89 including other C.P.C amendments, from the practising bar, these amendments were suspended indefinitely.
Reintroduction of Section 89 in the year 2002
However again in the year 2002, July the Parliament decided to put the amendments including Section 89 into full effect. This re-inclusion of Section 89 into the C.P.C. was primarily done to lessen the overwhelming burden of pending cases on the courts as has already been discussed.
Post Amendment Scenario
Constitutional Challenge to C.P.C. Amendments
The post amendment scenario in this regard finally saw the inclusion of Court Annexed Mediation in the Indian Legal System by virtue of Section 89 (2) (d). However, even after its inclusion, it had to cross many hurdles. Following the effectuation of Section 89, in October 2002 a Bar Association in Tamil Nadu brought a Constitutional Challenge in the In re: Salem Bar Association Case. The Salem Bar Association of Tamil Nadu challenged as ultra vires the amendments Introduced by Amendment Acts 46 of 1999 and 22 of 2002.
Salem Bar Association Case- Introductory Outline
The instant case is a very significant instance wherein the very constitutionality of the C.P.C amendments including Section 89 was challenged in the Supreme Court. At the very outset when the notice was issued the petitioner [Salem Advocate Bar Association] sought leave of the Supreme Court to withdraw the writ petition. By order 16-9-02, the prayer to withdraw the writ petition was declined, as the Court observed that the petition was filed in the public interest. The Bench is comprised of three judges of the Hon’ble Supreme Court. However, two lawyers were appointed Amicus Curie to assist the court in the matter.
Observations of the Supreme Court
The court while delivering its judgment interestingly pointed out that neither Mr. Vaidyanathan nor Mr. K.S. Vishwanathan made any submission to the effect that any of the amendments made were without legislative competence or violative of any provisions of the Constitution. They, on the other hand, pointed out practical difficulties involved in implementing the Amendments of the C.P.C
Practical difficulties in implementing the Amendments
However, Mr. Vidyanathan drew the attention of the court to some of the amendments that have been made with a view to show that there may be some practical difficulties in implementing the same. The Bench dealt with sections 27 and 100A, Order 7 Rule 1 of the Civil Procedure Code (Amendment) Act, which was perceived to have practical difficulties in implementation. The Bench was appreciative of the practical difficulties in implementing Section 89, introduced through the Amendment Act. Section 89 (2) (d) provides that the parties shall follow the procedure as may be prescribed. Hence section 89 (2) (d) contemplates appropriate rules being framed with regard to mediation. Hence modalities have to be formulated so that Section 89 becomes operational in its full effect. In the absence of these finer modalities, Section 89 would become inoperational and would be rendered the position of a paper tigress as discussed in the previous sections. However, the Supreme Court upheld the constitutional validity of the amendments made to the Civil Procedure Code (CPC) which came into force on July 1, 2002.
SC also appointed a five-member committee known as the Rao Committee. The Committee was to be headed by a sitting Judge of the Supreme Court. The prime purpose of the Committee so formed was to ensure that “the amendments were made effective resulting in the quicker dispensation of justice.” Supreme Court gave Rao committee four months to seek comments and to report back. The Rao Committee drafted consultation papers including rules on mediation and case management and circulated them to High Courts for comments. However, these papers reached High Courts in late January. Thus there was no time left for adequate study and commentary. Chairman Rao thus asked for an extension till July to organize a National Conference on Mediation. The National Conference was a huge success which involved Chief Justices of each of the High Courts and two lower Court Judges, as well as prominent lawyers from the Bar.
In the end, it can be concluded that:
- India needs to pursue ADRs seriously, Section 89 of the CPC, while a step in the right direction is not enough. Comprehensive guidelines are required to push forward the ADR program.
- While it is necessary to take ADRs seriously, efforts must be taken to ensure that the quality of justice does not go down. As critical as one can be of traditional justice mechanisms, they have their merits. India must tread with caution the path of novelty.
- Access to justice is one of the issues which must be deliberated with greater vigour. The ADRs are an attempt to improve access to justice. They cannot be allowed to suffer from the same problems that traditional justice mechanisms (i.e. the Courts) suffer from. Efforts must be continuously taken to ensure that ADRs are not caught in legal quagmires.
The Authors of this article, Sanjeev Kumar is a Partner and Anshul Sehgal is a Managing Associate in the Litigation & Dispute Resolution Team at L&L Partners Law Offices, New Delhi. They can be reached out at [email protected] and [email protected] The views expressed are personal.
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