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ALTERNATIVE DISPUTE RESOLUTIONSYSTEM :NEED OF MODERN INDIA

Author: Vandana, I year of B.A.,LL.B. from SRM Institute of Technology, Sonipat

Co-author: Ruhani, I year of B.A.,LL.B. from SRM Institute of Technology, Sonipat


“Conflictis inevitable

But fighting is choice”


INTRODUCTION

Do you know that, about 47 million of cases are still pending in Indian courts with the strength of 25,628 judges and this scenario is indeed horrifying as the spirit of delivering justice to victims is put in danger. Therefore, to cope up with the challenges,India needs some alternatives to resolve conflicts out of the court room. The traditional approach of conflict resolution through litigation is indeed tiresome as a result modern India shifts towards new mechanism of disputesolving, which serves the best interest of parties, widely known as alternative dispute resolution or appropriate dispute resolution or approximate dispute resolution. This system came in existence with enactment of arbitration and conciliation act, 1966 and the legal services authority act 1987. This sudden shift is influenced by the heavy cost of litigation, time consuming court mechanism andabout 47 millions of undecided cases left on the desk in the courts.Undoubtedly, poverty and illiteracy in India, were the major factors for this shift as people has developed a mentality that justice will be delayed if they opt for court procedure. Our society is based on the concept of high spirit of tolerance, the process of litigation can bring enmity among the parties which basically disturbs the social stratification. Although, India has not reached the stage where litigation be completely replaced by ADR, but the process is in its progressive and pre-mature stage. Moreover, this system serves the free legal aid services under provision given in article 39-A of constitution introduced as per 222nd report of law commission of India and person can opt for this, at any stage during court proceedings. In addition to it, fundamentals rights as mentioned in article 14 and 21 also mandates introduction of ADR SYSTEM.


So, what does this alternative disputeresolution reallymean?well, it is the mechanism where the disputes between the parties are resolved without intervention of judicial institution and without any trial. In this mechanism, usually civil cases are dealt which may includes marriage dispute , family conflicts, land dispute and any a kind of civil suit etc. Interesting,isn’t it? As an alternative to litigation ADR imply arbitration, mediation, conciliation, negotiation, Lok Adalat and accommodation by any supplementary procedure of dispute resolution that does not require court and is controlled by definite regulations. [i]


DEVELOPMENT OF ADR MECHANISM IN INDIA

The existence roots of ADR system were installed in the Indian society since the time immemorial. The system appeared to be part of Indian society since ages and it is not a rocket science phenomenon as it can be understood by everyone.

In ancient India, there was system of kulas, where the head or mukhiya of the clan was supposed to resolved the conflicts.[1] The family conflict was considered as private and personal matter ,thus, resolved within four walls of house.


Though, ADR prevailed in India even before Britishers came.It existed in form of panchayats which are currently constitutionally identified. For instance, the enactment of Bengal Resolution Act ,1772 bestowed the parties in conflict to appoint the arbitrator who was supposed to deliver the verdict for the same.


Moreover after 73rd and 74th constitutional amendment a third tier legally recognized body was introduced, namely panchayats and municipalities. These bodies also contributed towards the development of ADR system since any kind of conflict especially in village is resolved by the panchayats.


In India arbitration and conciliation are mass frequent. Arbitration origin can be traced in 1923 when League of Nation concur to Geneva Convention and here lies root of arbitration, the first provision committed to it exists in Civil Procedure Court 1908 which contain Section 89 for arbitration that was restored by arbitration act 1940 , however in 1958 world advance up with New York Convention which is unmoving by arbitration act 1960 and replaced 1940 arbitration act but it's inadequacy was spotlighted by Supreme Court in 1981 in Guru Nayak Foundation v/s Ratan Singh the Court[ii] is of point of view that even if an arbitrator pass arbitral award the party's challenge it through 1961 act therefore replaced by 1996 act and amended in 2015 and 16 based on UNICTRAL model.


It was held in Salim Advocate Bar Association Vs. Union of India[iii] that if reference to arbitration is made with section -89 of CPC then the Act will apply from stage after reference made and not before. The decision is made with reference to P Anand Ganapati Raju Vs PVG Raju.[iv]


Conciliation in India is governed by arbitration and conciliation act 1996. In 2018 the Court ruled that the arrangement can be questioned on limited grounds of fraud through writ jurisdiction under article 226 or 227 of the Indian constitution.


Section 89 of CPC hold scope for ADR Supreme Court in Salem advocate bar association v/s Union of India[v] held constitution validity of section 89 and order courts to formulate rules with regards to ADR as per committee's recommendation. The Court also ordered all High Courts to formulate their own rules on ADR.


ARBITRATION

Alternative dispute resolution or ADR refers to multiple ways of settlement outside the court.These methods differ from one country to another as per population size and traits of the population . In India the mechanism has its legality in section 89 of CPC. The section was amended by parliament of India on the recommendation of Law commission of India and Malimath committee. The recommendation by law commission was related to amicable settlement but it was only Mali math committee who has recommended to make it obligatory for courts to refer the dispute for settlement outside the court.

Sec. 89. Settlement of disputes outside the court. –

(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) where 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 forarbitration 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 ServicesAuthority 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 ServicesAuthority 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."


Therefore, with reference to section 89 the five different methods of ADR can be summarized as

  • Arbitration

  • Conciliation

  • Mediation

  • Judicial Settlement and

  • Lok Adalat


Arbitration is a sort of alternative dispute resolution , it is a technique in which the dispute are settled outside the court where the parties to the dispute refer it to one or more individual called Arbitrators.In arbitration the dispute is proffer to an arbitral tribunal which makes an decision (an award) that is irrevocable on the parties . For mentioning a matter to arbitration it needs to fulfill 4 requirements that are

  • An award

  • A dispute

  • A reference to third party for its determination.

  • An award by the third party.

In India arbitration is governed by arbitration and conciliation act 1996.


Types of Arbitration

Arbitration itself is of different types like Ad hoc,arbitration , Institutional arbitration , Statutory arbitration and Fast track arbitration.


Ad hoc arbitration

In this type of arbitration the matter is not administered by the institution and therefore the parties are required to dictate all facets of arbitration like number of arbitrators , manner of their appointment etc. This type of arbitration seems to be more cooperative flexible and cheaper but in today’s reality it has become quite more expensive and needs to be checked out.


Institutional arbitration

In this type an esoteric institution with permanent character intervenes and assumes the function of aiding and administering arbitrary process according to rules of the institution.


Statutory Arbitration

When a law specifies that if a dispute arises in a particular case it has to be referred to arbitration, the arbitration proceedings are called “statutory arbitration”. Section 2(4) of the Arbitration and Conciliation Act 1996 provides, with the exception of section 40(1), section 41 and section 43, that the provisions of Part I shall apply to every arbitration under any other act for the time being in force in India.


Fast track arbitration is a time-bound arbitration, with stricter rules of procedure, which do not allow any laxity for extensions of time, and the resultant delays, and the reduced span of time makes it more cost effective. Sections 11(2) and 13(2) of the 1996 Act provides that the parties are free to agree on a procedure for appointing an arbitrator and choose the fastest way to challenge an arbitral award respectively. As every coin has two faces so how can Arbitration will not have so it some advantages and some shortcomings.


Advantages of Arbitration are:-

a) It is often faster than litigation in Court.

b) It can be cheaper and more flexible for businesses.

c) Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential.

d) In arbitral proceedings the language of arbitration may be chosen,

whereas in judicial proceedings the official language of the

competent Court will be automatically applied.

e) There are very limited avenues for appeal of an arbitral award.

f) When the subject matter of the dispute is highly technical,

arbitrators with an appropriate degree of expertise can be appointed

as one cannot choose judge in litigation


Drawbacks of Arbitration are:-

a) Arbitrator may be subject to pressures from the powerful parties.

b) If the Arbitration is mandatory and binding, the parties waive their

rights to access the Courts.

c) In some arbitration agreements, the parties are required to pay for

the arbitrators, which add an additional cost, especially in small

consumer disputes.

d) There are very limited avenues for appeal, which means that an

erroneous decision cannot be easily overturned.

e) Although usually thought to be speedier, when there are multiple

arbitrators on the penal, juggling their schedules for hearing dates

in long cases can lead to delays.

f) Arbitration awards themselves are not directly enforceable. A party

seeking to enforce arbitration award must resort to judicial

remedies.


To avoid the conflict on the matter of appointment of Arbitrator the honorable supreme court held in Tulsi Narayan Garg Vs. The M.P. Road Development Authority, Bhopal and Ors that the three (3) member bench of Hon'ble Mr. Justice N.V. Ramana, Hon'ble Ms. Justice Indira Banerjee and Hon'ble Mr. Justice Ajay Rastogi (Bench) has reaffirmed the position of law laid down in State of Karnataka v. Shree Rameshwara Rice Mills Thirthahalli which stated that a party to an agreement cannot be an arbiter in his own cause.[2]


MEDIATION

Mediation is a simple, voluntary, party centered and structured negotiation process, where a neutral third party assists the parties in amicably resolving their disputes by using specified communication and negotiation techniques. This process is completely controlled by the parties. Mediator’s work is just to facilitate the parties to reach settlement of their dispute. Mediator doesn’t impose his views and make no decision about what a fair settlement should be. The process of mediation works in stages called opening statement, joint session, separate session and closing. In the opening statement the mediator declares he has no personal interest in dispute and furnish information about his appointment. In the second stage the mediator gather all the facts and information about the dispute and he tries to make both the parties cooperate because of its nature it is called joint session. In the separate session he gather much deeper aspects of the dispute by “Caucus Meeting"


In the final stage he works with issues which needs to be resolved and in case of failure he use reality check techniques like Best Alternative to Negotiated Agreement (BATNA), Most Likely Alternative to Negotiated Agreement (MLATNA) and Worst Alternative to Negotiated Agreement (WATNA).


The process has advantages like

1. The agreement which is that of the parties themselves;

2. The dispute is quickly resolved without great stress and

expenditure;

3. The relationship between the parties are preserved; and

4. The confidentiality is maintained.

But the biggest drawback of this system is that the decision in this process is not binding which makes it less popular in practical application.


CONCILIATION

Conciliation is an alternative dispute resolution process whereby the parties to a dispute use a conciliator, who meets with the parties separately in order to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bring about anegotiated settlement. It differs from Arbitration in that. Conciliation involves discussions among the parties and the conciliator with an aim to explore sustainable and equitable resolutions by targeting the existent issues involved in the dispute and creating options for a settlement that are acceptable to all parties. The conciliator does not decide for the parties, but strives to support them in generating options in order to find a solution that is compatible to both parties. The process is risk free and not binding on the parties till they arrive at and sign the agreement. Once a solution is reached between the disputing parties before a conciliator, the agreement had the effect of an arbitration award and is legally tenable in any court in the country.


The following types of disputes are usually conducive for conciliation:

  • commercial,

  • financial,

  • family,

  • real estate,

  • employment, intellectual property,

  • insolvency,

  • insurance,

  • service,

  • partnerships,

  • environmental and product liability.

  • Apart from commercial transactions, the mechanism of Conciliation is also adopted for settling various types of disputes such as labour disputes, service matters, anti-trust matters, consumer protection, taxation, excise etc


A conciliator is not expected to act, after the conciliation proceedings are over, as an arbitrator unless the parties expressly agree that the conciliator can act as arbitrator. Similarly, the conciliation proceedings are confidential in nature.


According to “Section 67(4)

The conciliator may, at any stage of the conciliation proceeding, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the reasons therefore.” With the technique of conciliation an issue is concerned related to when do the conciliation proceedings begin when ambiguity is there?,


The issue was solved in Gujrat Ambuja Cement Pvt. Ltd. v. U.B. Gadh[3].In this case the court held that there are two separate procedures for conciliation proceedings. The first instance, where a notice of strike is given by the workers. Rule 76 and 77 provide for the same. Under Rule 76 the conciliation officer attempts tointerview both the employer and employeeaim to settle the dispute

Rule 11 covers conciliation proceedings in situations not covered by Rule 76 and 77.


JUDICIAL SETTLEMENT

Section 89 of the Civil Procedure Code also refers to the Judicial Settlement as one of the mode of alternative dispute resolution. Of course, there are no specified rules framed so far for such settlement. However, the term Judicial Settlement is defined in Section 89 of the Code. Of course, it has been provided therein that when there is a Judicial Settlement the provisions of the Legal Services Authorities Act, 1987 will apply. It means that in a Judicial Settlement the concerned Judge tries to settle the dispute between the parties amicably. If at the instance of judiciary any amicable settlement is resorted to and arrived at in the given case then such settlement will be deemed to be decree within the meaning of the Legal Services Authorities Act, 1987.


LOK ADALAT

It is a judicial institution and adispute settlement agency developed by the people themselves for social justice based on settlement or compromise reached through systematic negotiations. The first Lok Adalat was held in Una aim the Junagadh district of Gujarat State as far back as 1982. Lok Adalat accept even cases pending in the regular courts within their jurisdiction.


Section 19 of the Legal Services Authorities Act, 1987 provides as under: -

(1) Every State Authority or District Authority or the Supreme Court Legal Services Committee or every High Court Legal Services Committee or, as the case may be, Taluka Legal Services Committee may organize Lok Adalat at such intervals and places and for exercising such jurisdiction and for such areas as it thinks fit. Lok Adalat are not essentially alternatives to the existing courts but on the other hand only supplementary to them. They are essentially win-win systems, an alternative to ‘Judicial Justice’, where all the parties to the dispute have something to gain. The Lok Adalat cannot decide the case on merits of the case. In Estate Office versus Colonel H .V. Makhotia, [4]the court held that the lok Adalat can dispose of the matter on ground of settlement between the parties and it has no jurisdiction to decide case on merits of the circumstances.


CONCLUSION

Although, with advent of technology and digitalization, people are shifting more towards the ADR. India is standing at the podium where ADR can nurture and grow as this system is still in its pre- mature stage in a developing country like India. Since, it can easily overcome the loopholes of traditional court mechanism as it lightens the burden of cases from shoulders of judiciary, so it can be seen as sprouting in future. This can be well observed the hindrance of time, high cost and the long pending cases ,are well settled through this mechanism . As there is old saying, Justice Delayed Is Justice Denied., efficient and quick justice is delivered in ADR System which is based on Consensus Ad Idem of both the parties .To sprout this mechanism in India, poverty and illiteracy are one of the major hindrance which can be dealt with the active participation of both government and responsible citizen of country. The government should begin new scheme and program which aims at educating the general public.

[1]ADR system in India ,legalserviceindia.com [2] Order dated 30 August 2019 in Civil Appeal Nos. 6726 – 6729 of 2019. [3]Gujrat Ambuja Cement Pvt. Ltd. v. U.B. Gadh, (2006) 1 GLR 269. [4]Civil Appeal No. 6223 of 2021

[i]2022 SCC online, blog exp36, Tariq Khant and Shriya Lukett [ii] 1981 AIR 2075,1982SCR (1)842 [iii]Bhargavi construction v. Kothakapur muthyam Reddy ,7 sept 2017 [iv]P Anand Ganapati Raju Vs PVG Raju (2000) 4 SCC (539) [v]Salem advocate bar association v/s Union of India, (2005)6SCC 344