Judicial sanction in ADR

Judicial sanction in ADR

Author: Santoshi Karasi

Alternative dispute resolution was at one point of time considered to be a voluntary act on the apart of the parties which have obtained statutory recognition in terms of Code of Civil Procedure Amendment Act, 1999, Arbitration and Conciliation Act, 1996, Legal Services Authorities Act, 1987 and Legal Services Authorities (Amendment) Act, 2002. The Parliament apart from litigants and the general public as also the statutory authorities Like Legal Services Authority have now thrown the ball into the court of the judiciary. What, therefore, now is required would be the implementation of the Parliamentary object. 

Access to justice is a human right and a fair trial is also a human right. In some countries trial within a reasonable time is a part of the human right legislation. But, in our country, it is a Constitutional obligation in terms of Article 14 and 21.

Civil Procedure (Amendment) Act 199

  • The Code of Civil Procedure (Amendment) Act 1999 has introduced a new provision in the Code in order to provide for court-annexed ADR mechanisms.
  • Under Section 89, the court is empowered to direct the parties to choose among different ADR modes provided therein for the resolution of their dispute outside the court.
  • This provision is based on the recommendations made by the Law Commission of India and the Malimath Committee.
  • The reason for the incorporation of Section 89 is to see that those cases, which do not require the court intervention, may be settled by alternative means, thereby reducing the burden of the courts.

Further Section 89 has to be read with Rule 1-A of Order 10, which runs as follows: –

  • Order 10 Rule 1-A direction of the Court to opt for any one mode of alternative dispute resolution.
  •  Order 10 Rule 1-B appearances before the conciliatory forum or authority.
  •  Order 10 Rule 1-C appearances before the Court consequent to the failure of efforts of conciliation.

The Arbitration Act of 1940:

  •  The Arbitration Act, 1940, dealt with only domestic arbitration. Under the 1940 Act, the intervention of the court was required in all the three stages of arbitration in the tribunal, i.e. prior to the reference of the dispute, in the duration of the proceedings, and after the award was passed.
  • This Act made provision for- a) arbitration without court intervention;

 b) Arbitration in suits i.e. arbitration with court intervention in pending suits and

 c) Arbitration with court intervention, in cases where no suit was pending before the court.

  • This Act did not fulfill the essential functions of ADR. The extent of Judicial Interference under the Act defeated its very purpose. It did not provide a speedy, effective, and transparent mechanism to address disputes arising out of foreign trade and investment transactions.

Arbitration and Conciliation Act, 1996:

  • The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize the 1940 Act. And this Act repealed the previous statute.
  •  In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee (AALCC), the International Council for Commercial Arbitration (ICCA) and the International Chamber of Commerce (ICC) met for a consultative meeting, where the participants were of the unanimous view that it would be in the interest of International Commercial Arbitration if UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral procedure.
  • The preparation of a Model Law on arbitration was considered the most appropriate way to achieve the desired uniformity and its primary purpose was to encourage arbitration as a cost-effective and quick mechanism for the settlement of commercial disputes.
  • It covers both domestic arbitration and international commercial arbitration.

  Legal Services Authorities Act, 1987:    

  • The concept has been gathered from system of Panchayats which are maily adopted in villages.
  • The Legal Services Authorities Act, 1987 was brought into force on 19 November 1995. The object of the Act was to provide free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen.
  • The concept of legal services which includes Lok Adalat is a revolutionary evolution of resolution of disputes and Sections 19, 20, 21 and 22 of the Act deal with Lok Adalat. Section 20 provides for different situations where cases can be referred for consideration of Lok Adalat.
  • In the case of Abdul Hasan and National Legal Services Authority v. Delhi Vidyut Board and Others, the court passed the order giving directions for setting up of Permanent Lok Adalats.

Abdul Hasan and National Legal Services Authority v.Delhi Vidyut Board and Others.

The petitioner filed a writ petition before Delhi High Court for restoration of electricity at his premises, which was disconnected by the Delhi Vidyut Board (DVB) on account of non-payment of Bill. Interalia, the grievances of the citizens were not only confined to the DVB but also directed against the State agencies like DDA, Municipal Corporation, MTNL, GIC and other bodies, Court notices were directed to be issued to NALSA and Delhi State Legal Service Authority.

Judgment Held- Hon’ble Mr. Justice Anil Dev Singh passed the order giving directions for setting up of Permanent Lok Adalats. The scholarly observations of  Mr. Justice Anil Dev Singh deserve special commendations and are worthy of note. It will be profitable to reproduce the important text and abstract from this judgment, which should be an eye-opener for all of us. It should also steer the conscience of all, as there is an increasing need to make the Lok Adalat movement a permanent feature.

  • U/S 19 of the Legal Services Authorities Act, 1987 Lok Adalats can be organized. Matters, such as Matrimonial/Family Disputes, Criminal (Compoundable Offences) cases, Land Acquisition Cases, Labour Disputes, Workmen’s Compensation cases, Bank Recovery cases, Pension cases, Housing Board and slum clearance cases.
  • These Lok Adalat courts decide the various matters right from petty cases to civil, criminal, and commercial cases & Housing Finance cases. Consumer Grievance cases, Electricity matters, disputes relating to Telephone Bills, Disputes with Cellular Companies. etc

Case laws on Scope of ADR

In ONGC v. Collector of Central Excise 1995 SCC 541,  the dispute was between the government department and PSU. The report was submitted by the cabinet secretary pursuant to the Supreme Court order indicating that an instruction has been issued to all departments. It was held that public undertakings to resolve the disputes amicably by mutual consultation in or through or good offices empowered agencies of govt. or arbitration avoiding litigation.

In Chief Conservator of Forests v. Collector(2003) 3 SCC 472,  it was said that state/union govt. must evolve a mechanism for resolving interdepartmental controversies- disputes between the department of Government cannot be contested in court.

In the judgment of the Supreme Court of India in Salem Bar Association vs. Union of India( 2005) 6 SCC 344 the Supreme Court has requested to prepare model rules for Alternative Dispute Resolution and also draft rules of mediation under section 89(2)(d) of Code of Civil Procedure, 1908.

In Sundaram Finance Ltd. v. NEPC India Ltd.  (AIR 1999 SC 565; 1999 (1) Arb. LR 305 (SC)), the Supreme Court explicitly made it clear that the 1996 Act is very much different from that of Act, 1940. The provisions made in Act of 1940 lead to some misconstruction and so the Act of 1996 was enacted or rather repealed. In order to get help in construing these provisions made in Act of 1996, it is more relevant to refer to the UNCITRAL Model Law besides the Act of 1996 rather than following the provisions of the Act of 1940.