Author: Disha Thakur

Indian judicial institutions are overwhelmed with an enormous number of cases, with over five crore cases pending before various courts, thereby defeating the fundamental right of quick and speedy trials enshrined in Article 21 of the Indian Constitution. Alternative Dispute Resolution (ADR) techniques have been instrumental in mitigating this problem by channelizing appropriate disputes away from ordinary courts to alternative forums such as arbitration, mediation, conciliation, negotiation, and Lok Adalats. This paper aims to determine the importance of ADR in minimizing the pendency of cases in India through a critical examination of relevant legislation, case laws and trends and then critically assesses whether ADR leads to mere disposal or decongestion of disputes.

Legal Framework of ADR in India

Constitutional and policy bases

Article 39A of the Constitution stipulates that the State must ensure that the legal system facilitates justice according to equal opportunities and ensures free legal aid, which has been considered to imply support to low-cost and easily accessible forms of ADR such as Lok Adalats and mediation. The Legal Services Authorities Act, 1987 provides for the creation of various authorities for the purpose of dispensation of legal services and grants statutory authority to Lok Adalats to serve as dispute-resolution forums through compromise and settlement. In addition, the relevant policy frameworks from Law Commission and NITI Aayog emphasize ADR and ODR as essential tools for addressing pendency and ease of doing business.

Code of Civil Procedure, 1908- Section 89 and court-annexed ADR

The inclusion of Section 89 and Order X Rules 1A to 1C in the Code of Civil Procedure, 1908 by the CPC (Amendment) Acts, 1999 and 2002 marked a significant development. Under Section 89, if there is any indication of elements of settlement, the courts may direct the parties for arbitration, conciliation, judicial settlement, mediation, or Lok Adalat proceedings, thus putting in place a statutory screening process prior to litigation. This section seeks to minimize disputes that end up in litigation and promote their resolution by way of ADR methods.

The Arbitration and Conciliation Act, 1996

The Arbitration and Conciliation Act, 1996, formulated according to the Model Law of UNCITRAL, forms the bedrock of arbitration and conciliation in India. The amendments made in 2015, 2019, and 2021 were intended to overcome issues of delay and overreach by the judiciary through:

1. Creating deadlines for arbitral awards in domestic arbitration cases (generally 12 months from the end of the pleading process).
2. Limiting the extent of judicial review under Sections 34 (annulment of arbitral awards) and 37 (appeals), taking into account precedents from cases such as Ssangyong Eng’g & Constr. Co. Ltd. v. NHAI, which have restricted the grounds of “public policy”.
3. Fostering institutional arbitration and establishing an Arbitration Council of India that would recognize arbitral institutions and individual arbitrators (but is yet to come to fruition).

Such measures seek to facilitate arbitration being a truly speedy and conclusive remedy, thus minimizing drawn-out judicial processes in commercial disputes.

Legal Services Authorities Act, 1987 and Lok Adalats

Sections 19-22 of the Legal Services Authorities Act, 1987 have provisions relating to Lok Adalats, and confer finality and enforceability to their awards, making them decrees of civil courts. Most importantly, awards by Lok Adalats cannot be appealed against, and help to avoid any further appeals and litigation, thus making them very useful tools for disposing of large number of pending, as well as pre-institution cases in one sweep. National Lok Adalats now routinely clear lakhs of cases in one single sitting, and include cases related to motor accidents, cheque bounce, and small civil and criminal cases.

Commercial Courts Act, 2015 – Section 12A and pre-institution mediation

Section 12A of the Commercial Courts Act, 2015, inserted by the 2018 amendment, requires that there should be pre-institution mediation of all commercial disputes not requiring urgent interim reliefs before filing a suit. This pre-institution mediation will be carried out by officers authorized under the Legal Services Authorities Act. The mediation process is supposed to be over in a specified period of time (normally 3 months). The objective is to ensure that commercial disputes do not get dragged into the judicial system without first trying.

Mediation Act, 2023

The Mediation Act, 2023 is India’s first piece of legislation that deals exclusively with mediation. It includes types of mediation such as court-annexed mediation, private mediation, community mediation, and online mediation. The Act also incorporates principles like voluntary mediation, confidentiality, and neutrality and provides legal recognition to settlement agreements arrived at through mediation by endowing them with the status of decree. Moreover, the Mediation Act, 2023 contemplates the Mediation Council of India that would be the regulating authority of mediators and service providers of mediation services, and provides a timeline for mediation.

Case law relating to ADR and pendency 

Section 89 CPC and nature of cases suitable for ADR

Salem Advocate Bar Ass’n (II) vs. Union of India is a case where the Supreme Court upheld the constitutionality of Section 89 CPC and suggested framing rules for mediation and mediator training. It pointed out that ADR is an essential tool in dealing with pendency in civil courts. Thereafter, in the case of Afcons Infrastructure Ltd. vs. Cherian Varkey Constr. Co. (P) Ltd., the Supreme Court elucidated which kinds of cases fall within the ambit of those which are suitable and those which are not suitable for being referred to ADR under Section 89 CPC.

Mandatoriness of pre-institution mediation: Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.

In the case of Patil Automation Pvt. Ltd. & Ors. v. Rakheja Engineers Pvt. Ltd. (2022), the Supreme Court has decided that the mandatoriness of pre-institution mediation under Section 12A of the Commercial Courts Act is an absolute obligation and that a lawsuit that violates the said provision shall be liable to be rejected on the ground of Order VII Rule 11 CPC. However, the Court has decided to make the said ruling prospective as from 20 August 2022 so that the decision does not lead to prejudice to pending proceedings. Since then, Section 12A has been enforced by judicial pronouncement and has resulted in a significant rise in the number of commercial suits subject to pre-institution mediation.

Mediation in family and matrimonial disputes

The issue of mediation in family and matrimonial disputes came up before the Supreme Court in K. Srinivas Rao v. D.A. Deepa. It underscored the significance of mediation in matrimonial disputes in Section 9 of the Family Courts Act. The court further instructed the family courts and High Courts to establish mediation centers and refer appropriate cases to them in order to avoid bitterness and backlog of cases. In subsequent judgments, the High Courts have consistently adopted a similar stance by referring divorce and child custody cases to mediation cells before taking them up for trial.

Judicial intervention and arbitral finality

The Supreme Court’s judicial decisions have been crucial in defining the extent to which arbitration can truly help in reducing pendency. The landmark case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO) restricted the scope of Part I of the Arbitration Act to arbitrations taking place in India, thus restricting the jurisdiction of Indian courts in interfering with foreign-seated arbitrations. In another recent case of Ssangyong Eng’g, the interpretation of the “public policy” basis for annulment of arbitral awards has been significantly narrowed down by limiting judicial review to an assessment of legality without re-appreciation of evidence.

Analysis:

Diversion & Disposal of disputes

There are two primary ways in which ADR processes reduce pendency: diversion of disputes from courts and faster disposal of pending disputes. The first mechanism is through diversion of disputes from courts through the use of Section 89 of CPC, Section 12A of the Commercial Courts Act, and Lok Adalats under statute. Statistics from the Legal Services Authorities indicate that there have been numerous instances where a National Lok Adalat has disposed of well over one crore disputes (both pending and pre-litigation disputes) within a day’s time. Apart from that, mediation centers have reported settlement rates between 60–65% with average disposal of disputes being a matter of a few weeks, compared to civil suits which may take up to years for resolution.

Settlement durability and “invisible” pendency

On the other hand, mere numerical clearing of pendency will not necessarily imply any actual decrease in pendency when the settlements do not have any durability or when they are arrived at through undue compulsion. Researchers have pointed out that statistics reported by Lok Adalats could actually be misleading because the disputes may be “recycled,” that is, the disputing parties might choose to litigate again either due to non-compliance, misunderstanding or an unfair settlement agreement. Thus, empirical researches have suggested the need for further analysis of post-settlement compliance and recidivism.

Quality of justice and willingness

In order for ADR to become a legally legitimate means of minimizing the problem of pendency, there should not be a compromise made to the quality of justice and the principle of voluntariness in the process. This is evidenced by the judgment of the Supreme Court in State of Punjab v. Jalour Singh, where it was stated that while Lok Adalats could not hear cases and make judgments on merits, they can record lawful compromises, making it clear that all compromises were made out of willingness and knowledge. The same idea is embodied in the Mediation Act of 2023, where the principle of confidentiality, neutrality, and voluntary agreement have been enshrined.

Constraints relating to structure and culture

Although ADR has made considerable headway, there still exist certain constraints that prevent ADR from fully developing into its optimal state. One of these is the varying level of awareness of ADR, especially beyond the urban regions, which affects the willingness of parties to use mediation and arbitration. Another constraint is the lack of consistency in the quality of the mediators and arbitrators, which influences user satisfaction regarding the process. There is also skepticism amongst members of the Bar and Bench regarding the relevance of ADR in legal practice, which results in the use of ADR being more of a formality. If these constraints remain unresolved, ADR may not be able to contribute effectively to docket management.

Conclusion

ADR in India has grown into not just an alternative but a key aspect of its legal system, being bolstered by constitutional directions, legislative measures, and significant judicial backing. It is the cumulative effect of Section 89 CPC, Arbitration and Conciliation Act, Legal Services Authorities Act, Commercial Courts Act (Section 12A specifically), and Mediation Act, 2023 that has ensured more than one channel for diversion and early resolution of cases, as also attested to by statistical evidence emerging from Lok Adalats and mediation centers. This trend has been aided significantly by the supportive legal precedents set forth by the Supreme Court in its pro-ADR rulings on pre-institution mediation and limited intervention in arbitration matters.

Nevertheless, the real measure of success for ADR is not only in how many cases are settled, but also whether the processes result in durable, just, and rights-based outcomes that are acceptable to the parties and complied with, thus avoiding further litigation. In order to achieve such success, future reforms need to concentrate on developing institutional capacity in jurisdictions outside metropolitan centers, establishing standards for training and certification, gathering reliable information about compliance after settlement, and changing the culture of legal professionals and disputing parties from the adversarial approach to problem solving. With such efforts, ADR will be able to transform from a mere case disposition mechanism into a crucial element of an effective justice system that truly alleviates pendency.