Section 89 CPC – Scope of Alternative Dispute Resolution

This article is written by Saswoti Rath, a recent law graduate from SOA NATIONAL INSTITUTE OF LAW.

Keywords: Section 89 CPC, Alternative Dispute Resolution, Mediation, Arbitration, Conciliation, Lok Adalat

Abstract:
Section 89 of the Civil Procedure Code (CPC), 1908, plays a vital role in institutionalizing the process of Alternative Dispute Resolution (ADR) in India. It mandates courts to explore ADR mechanisms such as mediation, arbitration, conciliation, and Lok Adalats when the circumstances of the dispute permit. With mounting judicial backlog and litigation delays, ADR emerges as a timely, cost-effective, and amicable alternative to the formal court system. Section 89 CPC, Alternative Dispute Resolution, and mechanisms like mediation and arbitration aim to simplify justice delivery and enhance access to justice. This article explores the statutory framework, judicial interpretation, practical illustrations, recent case laws, and evolving scope of Section 89 CPC.

1. Introduction

The Indian legal system has long been burdened with excessive pendency and delays. Traditional litigation is often adversarial, time-consuming, and financially draining. Section 89 CPC was inserted by the Code of Civil Procedure (Amendment) Act, 1999 to address these challenges by institutionalizing ADR within civil court procedures. The goal is to promote dispute resolution in a more participative, cooperative, and harmonious manner.

The insertion of Section 89 CPC was the result of growing concern over the inaccessibility of the justice system to the common man. As the population and economy grew, so did civil disputes across various domains like commercial transactions, family settlements, land disputes, and labour issues. Courts became overburdened, and cases were often pending for decades. In such a scenario, ADR mechanisms emerged as the logical and strategic alternative. The concept of ADR was not new to India—it was present in the form of Panchayats and informal negotiations in villages—but codifying it under Section 89 brought formal recognition.

The implementation of ADR mechanisms under Section 89 CPC is not merely optional; courts are required to consider ADR avenues seriously when a case is deemed fit. In this article, we delve deep into the mechanics, implications, judicial interpretations, and relevance of Section 89 in the contemporary justice landscape.

Furthermore, ADR mechanisms promote the constitutional mandate of ensuring justice—social, economic, and political—as enshrined in the Preamble. ADR also empowers parties to maintain confidentiality, protect their commercial interests, and preserve long-standing personal or business relationships. The rise in public trust toward non-litigious mechanisms like mediation further reinforces the value of a non-adversarial legal culture.
The Indian legal system has long been burdened with excessive pendency and delays. Traditional litigation is often adversarial, time-consuming, and financially draining. Section 89 CPC was inserted by the Code of Civil Procedure (Amendment) Act, 1999 to address these challenges by institutionalizing ADR within civil court procedures. The goal is to promote dispute resolution in a more participative, cooperative, and harmonious manner.

The implementation of ADR mechanisms under Section 89 CPC is not merely optional; courts are required to consider ADR avenues seriously when a case is deemed fit. In this article, we delve deep into the mechanics, implications, judicial interpretations, and relevance of Section 89 in the contemporary justice landscape.

Furthermore, ADR mechanisms promote the constitutional mandate of ensuring justice—social, economic, and political—as enshrined in the Preamble. ADR also empowers parties to maintain confidentiality, protect their commercial interests, and preserve long-standing personal or business relationships. The rise in public trust toward non-litigious mechanisms like mediation further reinforces the value of a non-adversarial legal culture.

2. Text and Interpretation of Section 89 CPC

Section 89 CPC states:

“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.”

The intent of this provision is to ensure that parties are given an opportunity to resolve their disputes amicably through ADR processes before proceeding with lengthy trials. The court acts as a facilitator in this referral process, attempting to reduce unnecessary litigation.

3. ADR Mechanisms under Section 89 CPC

3.1 Arbitration

Arbitration is a quasi-judicial process governed by the Arbitration and Conciliation Act, 1996. In this method, the dispute is referred to a neutral arbitrator who delivers a binding decision. It is mostly suited for commercial disputes.

3.2 Conciliation

Conciliation, also governed by the Arbitration and Conciliation Act, is more informal and flexible. A conciliator assists parties in reaching a mutual agreement. The process is voluntary, and once agreed, the settlement has binding effect.

3.3 Mediation

Mediation is a voluntary process facilitated by a neutral third party who encourages communication between the disputants. It’s especially useful in cases involving relationships, such as matrimonial disputes or employment disagreements.

3.4 Judicial Settlement and Lok Adalat

Judicial settlement includes settlements facilitated by courts, especially through Lok Adalats, under the Legal Services Authorities Act, 1987. They provide a platform where disputes are resolved through compromise under judicial guidance. Awards have legal force and are final.

4. Landmark Judgements

Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24
Held that courts must explore ADR in suitable cases. The judgment provided a list of cases fit for ADR and emphasized judicial responsibility to refer them.

Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344
The Supreme Court upheld the constitutional validity of Section 89 and directed the formation of model mediation rules to strengthen court-annexed ADR.

M.R. Krishna Murthi v. New India Assurance Co. Ltd., (2019) 4 SCC 177
The Supreme Court recommended a comprehensive legislation on mediation, emphasizing the importance of institutionalizing ADR processes in India.

5. Illustrations

Illustration 1: A tenant disputes eviction over rent default. The court identifies potential for compromise and refers the matter to mediation, resulting in an agreed payment plan.

Illustration 2: A family inheritance dispute involves three siblings. The judge refers them to conciliation, where they reach a mutually acceptable division of assets.

Illustration 3: A breach of contract matter between two firms is referred to arbitration, where a subject-matter expert arbitrator resolves the dispute quickly and efficiently.

Illustration 4: A couple involved in a divorce case is directed to the Lok Adalat, where they agree to terms on alimony and child custody through guided negotiation.

6. Benefits of ADR under Section 89

Alternative Dispute Resolution mechanisms bring with them a host of advantages, particularly when reinforced through Section 89 CPC:

• Time-efficient: Cases referred to ADR are resolved quicker than traditional trials. For instance, a contractual dispute referred to arbitration may be resolved in a few months compared to a court process that takes years.
• Cost-effective: It reduces expenses like court fees, travel, and lawyer fees. In rural areas where courts are located far from villages, ADR mechanisms such as Lok Adalats save both time and money.
• Confidentiality: ADR ensures privacy, protecting the reputation and sensitive information of parties. This is especially useful in high-profile commercial disputes where public litigation may harm a company’s brand.
• Relationship preservation: Especially useful in disputes where ongoing relationships matter, such as between business partners, family members, or employer-employee.
• Judicial efficiency: Lessens the court’s burden by resolving issues out of court. This helps judges focus on more serious or complex litigation that truly requires judicial adjudication.
• Customizable processes: ADR allows flexibility in procedure, unlike rigid court rules. Parties can choose mediators, set their own schedules, and even select the venue.
• Higher compliance: Settlements are more likely to be honored as they are voluntarily reached. The success rate of mediation cases in the Delhi Mediation Centre, for example, has been consistently above 60%.

When evaluated collectively, these benefits suggest that ADR under Section 89 CPC is not merely a procedural nicety, but a cornerstone of modern justice delivery. The increasing popularity of online ADR platforms also reflects a shift in how people perceive dispute resolution in the 21st century.

• Time-efficient: Cases referred to ADR are resolved quicker than traditional trials.
• Cost-effective: It reduces expenses like court fees, travel, and lawyer fees.
• Confidentiality: ADR ensures privacy, protecting the reputation and sensitive information of parties.
• Relationship preservation: Especially useful in disputes where ongoing relationships matter.
• Judicial efficiency: Lessens the court’s burden by resolving issues out of court.
• Customizable processes: ADR allows flexibility in procedure, unlike rigid court rules.
• Higher compliance: Settlements are more likely to be honoured as they are voluntarily reached.

7. Challenges in Implementation

Despite the robust intent behind Section 89 CPC, several practical and systemic issues have hindered its implementation:

• Lack of awareness: Many litigants and even some legal practitioners remain unaware of the availability and scope of ADR. Legal literacy remains low in many parts of India, and even educated clients are often uninformed about alternatives to court litigation.
• Inadequate infrastructure: ADR centers are unevenly distributed across the country. Many districts lack properly staffed mediation centers or trained professionals. Furthermore, facilities such as rooms for private discussions or video conferencing are scarce.
• Non-uniform training: Mediators and conciliators are not always well-trained or certified. Without a central regulatory framework, the quality of ADR services varies widely. While metropolitan cities have professional mediators, smaller towns often lack even basic resources.
• Judicial reluctance: Some judges hesitate to refer cases to ADR due to the perceived risk of reversal or fear of losing control over the judicial process. There is also limited incentive or evaluation for judges to encourage ADR.
• Unclear procedural framework: Section 89 CPC does not provide detailed guidelines on how and when to refer a case to ADR. This results in inconsistent practices across different courts.
• Delay in enforcement: Even when settlements are reached, enforcement mechanisms are weak. Some parties agree under pressure and later renege, causing additional delay and frustration.
• Public perception: ADR is sometimes viewed as informal or lacking legal sanctity. Many litigants associate justice solely with a formal court judgment, undermining faith in compromise-based solutions.

Addressing these challenges requires a holistic approach that involves judicial training, infrastructural investment, public awareness campaigns, and perhaps most importantly, legislative clarity through supporting rules and guidelines.

• Lack of awareness among parties and practitioners.
• Inadequate infrastructure and lack of ADR centers across India.
• Non-uniform training for mediators and conciliators.
• Judicial reluctance to refer cases to ADR.
• Unclear procedural framework in some courts.
• Delay in enforcement of ADR outcomes.
• Public perception that ADR is informal or secondary to formal litigation.

8. Recent Developments

8.1 Mediation Bill, 2021

Aims to establish pre-litigation mediation as mandatory in civil and commercial matters. The bill proposes a Mediation Council of India to oversee training and institutionalization. It recognizes online mediation and allows community mediation for smaller local disputes. Once enacted, the bill is expected to significantly enhance the legal framework around ADR.

8.2 Digital ADR Platforms

COVID-19 accelerated the growth of digital dispute resolution. Courts and private players began adopting virtual mediation and arbitration platforms like Sama, Presolv360, and Centre for Online Resolution of Disputes (CORD). These platforms allow parties to settle disputes without geographical barriers, increasing accessibility and reducing costs.

8.3 Recent Judicial Trends

Shiv Kumar Sharma v. Santosh Kumari, 2022 SCC Online Del 3742
The Delhi High Court emphasized the importance of mediation in matrimonial disputes and reiterated that courts must actively assess suitability for ADR under Section 89 CPC.
View Case

M/S Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1
In this landmark judgment, the Supreme Court held that pre-institution mediation is mandatory for cases covered under the Commercial Courts Act, reinforcing the necessity of exhausting ADR avenues before litigation.

8.4 Training and Certification Initiatives

Organizations like the Indian Institute of Arbitration and Mediation (IIAM) and the Indian Mediation Council have increased efforts to offer certification programs, workshops, and webinars for lawyers, judges, and law students. The aim is to produce a pool of skilled ADR professionals across India.

Mediation Bill, 2021

Aims to establish pre-litigation mediation as mandatory in civil and commercial matters. Proposes a Mediation Council of India to oversee training and institutionalization.

Digital ADR Platforms

COVID-19 accelerated the growth of digital dispute resolution through virtual mediation and arbitration platforms, increasing accessibility for remote parties.

Conclusion

Section 89 CPC represents a progressive shift towards encouraging amicable, less adversarial forms of dispute resolution. Alternative Dispute Resolution mechanisms like arbitration, mediation, conciliation, and Lok Adalat’s have revolutionized the legal landscape by providing quicker, affordable, and efficient justice. These mechanisms not only preserve relationships and maintain confidentiality but also promote judicial economy.

In a country like India with over four crore pending cases, mainstreaming ADR is not just a procedural preference—it is a necessity. For Section 89 CPC to fulfill its promise, there must be consistent application, judicial will, and infrastructural backing. Legislations like the Mediation Bill, 2021, show promise, but they must be implemented effectively.

Alternative Dispute Resolution under Section 89 CPC offers a bridge between the formal legal system and community-based justice models. Its success will depend on widespread awareness, institutional integrity, and sustained policy support. If implemented effectively, ADR will not just relieve courts but also restore public faith in the justice system.

Therefore, stakeholders—including litigants, lawyers, judges, and policymakers—must collectively ensure that ADR is not treated as a secondary or symbolic route, but rather as a parallel, dignified, and effective mode of delivering justice.
Section 89 CPC represents a progressive shift towards encouraging amicable, less adversarial forms of dispute resolution. Alternative Dispute Resolution mechanisms like arbitration, mediation, conciliation, and Lok Adalats have revolutionized the legal landscape by providing quicker, affordable, and efficient justice. These mechanisms not only preserve relationships and maintain confidentiality but also promote judicial economy. The future of India’s legal system lies in a robust implementation of ADR under Section 89 CPC, supported by adequate awareness, infrastructure, and legislation. With the Mediation Bill and other reforms on the horizon, ADR stands as a pillar for accessible and participative justice delivery.

References

1. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24
2. Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344
3. M.R. Krishna Murthi v. New India Assurance Co. Ltd., (2019) 4 SCC 177
4. Legal Services Authorities Act, 1987 –https://prsindia.org/billtrack/the-mediation-bill-2021
5. Arbitration and Conciliation Act, 1996 – https://indiankanoon.org/doc/1250287/
6. Mediation Bill, 2021 – https://prsindia.org/billtrack/the-mediation-bill-2021