FACULTY OF LAW, UNIVERSITY OF ALLAHABAD

TOPIC- ADR-Need & Relevancy In The Present Legal System

SUBMITTED BY:

ROLL NO.: 67

SECTION: B

ENROLLMENT NO. : U1601067

SUBJECT: Alternative Dispute Resolution

B.A.LL.B. (HONS.) SEMESTER -IX (2020-2021)

 ACKNOWLEDGEMENT

No work can be carried out without any help of the fellow beings. There are numerous tangible
& intangible inspirations which enable a person to indulge in the creation of new things. In this
regard, although I am not creating something new, but I have tried to deliberate on the topic, in
order to be of some assistance towards the intellectual simulation of the process of development.
In this journey, therefore, I have been helped by various factors. I would firstly like to
acknowledge the help and guidance of Mr.Tushar Srivastava Sir, who was always there in time
of need. I am also very thankful to sir, who were benign enough to grant me the authorization
and approvals which were essential for the creation of this project.

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 INDEX

S.NO. TOPICS PAGE NO.

1 INTROCDUCTION 4

2 HISTORICAL BACKGROUND 5

3 MEANING AND IMPORTANCE OF ADR IN INDIA 6

4 LEGAL RECOGNITION OF ADR 7
5 NEED AND RELEVANCY OF ALTERNATIVE 8-9
DISPUTE RESOLUTION
6 CONCEPT OF ADR IN PRESENT LEGAL SYSTEM 10-11

7 ADVANTAGES OF ALTERNATIVE DISPUTE 12

RESOLUTION
8 SOME CASES RELATNG TO ADR 13

9 CONCLUSION 14-15

10 BIBLIOGRAPHY 16

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 INTRODUCTION
“Discourage litigation. Persuade your neighbours to compromise wherever
you can. Point out to them how the nominal winner is often a looser – in fee,
expenses and waste of time.”

-Abraham Lincoln

It is impossible to eliminate contradictions, conflicts and disputes in any society, and the human
society develops in contradictions. It is these contradictions and conflicts which tell us the
importance of peace. Peace is, therefore, a sine qua non for development and one of the most
important facts which help maintain peace in any society is people‟s faith in the justice delivery
system. Trust of the people in the system that they will get justice, if and when required, keeps
the system peaceful, smooth and comfortable. There are many stake-holders of justice delivery
system. The most important is the consumer of justice who is a litigant. The seekers of justice
come to the courts with pain and anguish in their hearts because they have faced legal problems
and suffered physically and psychologically. They have a trust in the courts and believe that they
would get justice from the courts, so they do not take the law into their own hands.

The truth is that an effective judicial system requires not only that just results be reached but they
be reached swiftly. However, the reality is that it takes a very long time to get justice through the
established court system. In spite of the continuous efforts, sometimes the litigation continues for
the life time of the litigant and sometimes it carries on even to the next generation. In this state of
uncertainty and unending long process, the disputant or litigant may exhaust his resources
besides physical and mental sufferings. Thus, there is a chain reaction of litigation process and,
at times, civil cases may even give rise to criminal cases.

In our country the justice delivery system through courts has given rise to certain grave problems
like inordinate delays, huge pendency of cases and expensive litigation. Thus, it has become very
difficult for the poor and marginalized people to have access to justice. In these circumstances, it
becomes significantly necessary for Page 5 all the stake-holders of the judicial system to find out
some mechanism where such grey areas can be effectively and adequately taken care of.
Alternative Dispute Resolution (ADR) contains the effective mechanism to provide speedy and
cost effective justice, it also has the potential to trim the huge arrears of cases to size. Parliament
brought about a legislation and introduced section 89 and Rules 1-A, 1-B and 1-C to Order X in
the Code of Civil Procedure, 1908, so as to make effective use of ADR process.

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 HISTORICAL BACKGROUND
The history of ADR can be traced to our historical path. The concept of Lok Adalats (People‘s
Court) is an innovative contribution of India to the World Jurisprudence. India has a long
tradition and history of ADR process like Mediation and Lok Adalat being practiced in the
society at the grass root level, these are called Panchayats. The ancient concept of settlement of
dispute through Arbitration, Conciliation, Mediation or Negotiation known as the verdict or
decision of ‗Nyaya Panchayat‘ is conceptualized and institutionalized in the philosophy of Lok
Adalat. Concept of mediation has been practiced with great frequency in the last quarter of the
20th Century. After the emergence of 21st Century this practice has been developed with more
frequency in the Western countries. Its roots can be traced in USA, notably at the Pound
Conference in 1976. It was followed by two legislations – The Civil Justice Reforms Act, 1990
and The Administrative Dispute Resolution Act, 1996. Page 6 There are many Statutes in
America which make the mediation mandatory for dispute resolution. The State Bar Associations
have set up mediation centers and the American Bar Association has its intensive section for
dispute resolution. Other countries like United Kingdom has also introduced mediation system as
an alternate for dispute resolution mechanism. In United Kingdom, besides, Civil Procedures
Reforms of 1999, Lord Chancellor‘s Department announced in 2001 that all government disputes
should be resolved through settlement procedures. Likewise, ADR mechanism was encouraged
and implemented in Australia, South Africa and Sri Lanka.

Justice Warren Burger the former Chief Justice of the American Supreme Court
while discussing the importance of ADR, had observed:

“The harsh truth is that we may be on our way to a society over run by hordes of lawyers,
hungry as locusts, and bridges of judges in numbers never before contemplated. The notion
that ordinary people want black robed judges, well-dressed lawyers, fine panelled court rooms
as the setting to resolve their disputes, is not correct. People with legal problems like people
with pain, want relief and they want it as quickly and inexpensively as possible.”

“The obligation of the legal profession is to serve as healers of human conflict and we
should provide mechanism that can produce an acceptable result in shortest possible time,
with the least possible expense and with a minimum of stress on the participants. That is what
justice is all about.”

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 MEANING & IMPORTANCE OFADR IN INDIA
Meaning-The concept of Alternative Dispute Resolution (ADR) mechanism is capable of
providing a substitute to the conventional methods of resolving disputes. ADR offers to resolve
all type of matters including civil, commercial, industrial and family etc., where people are not
being able to start any type of negotiation and reach the settlement. Generally, ADR uses neutral
third party who helps the parties to communicate, discuss the differences and resolve the dispute.
It is a method which enables individuals and group to maintain co-operation, social order and
provides opportunity to reduce hostility.

Importance of ADR:
To deal with the situation of pendency of cases in courts of India, ADR plays a significant role in
India by its diverse techniques. Alternative Dispute Resolution mechanism provides
scientifically developed techniques to Indian judiciary which helps in reducing the burden on the
courts. ADR provides various modes of settlement including, arbitration, conciliation,
mediation, negotiation and lok Adalat. Here, negotiation means self-counseling between the
parties to resolve their dispute but it doesn‘t have any statutory recognition in India.

ADR is also founded on such fundamental rights, article 14 and 21 which deals with equality
before law and right to life and personal liberty respectively. ADR‘s motive is to provide social-
economic and political justice and maintain integrity in the society enshrined in the preamble.
ADR also strive to achieve equal justice and free legal aid provided under article 39-A relating to
Directive Principle of State Policy (DPSP).

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 LEGAL RECOGNITION OF ADR
The Indian parliament enacted the Arbitration and Conciliation Act in 1996, making elaborate
provisions for conciliation of disputes arising out of a legal relationship, whether contractual or
not. The Act provided for the commencement of conciliation proceedings, appointment of
conciliators and assistance of suitable institution for the purpose of recommending the names of
the conciliators or even appointment of the conciliators by such institution, submission of
statements to the conciliator and the role of conciliator in assisting the parties in negotiating
settlement of disputes between the parties. In 1999, the Indian Parliament passed the CPC
Amendment Act of 1999 inserting Sec.89 in the Code of Civil Procedure 1908, providing for
reference of cases pending in the Courts to ADR which included mediation. The Amendment
was brought into force with effect from 1st July 2002.

With the global acceptance of the Alternative Dispute Resolution Methods, the Code of Civil
Procedure, 1908 in India, introduced the ADR procedures which include arbitration, conciliation,
mediation, judicial settlement and settlement through Lok Adalat. The arbitration is more or less
adversarial and the arbitrator is required to give an award which is like a court giving a
judgment. The judicial settlement has not been aggressively pursued because the judges are not
left with enough time from the routine work. The Lok Adalat has proved to be successful in a
few types of cases such as motor accident cases. Now that law has made ADR methods a part of
our legal system it is necessary that while exercising judicial control a judge at the earliest stage
decides if a case is having an element of settlement which can be further explored by referring
the case, inter alia, to mediation. Therefore before referring a case to mediation, a judicial mind
must decide whether it is capable of being resolved through any of the ADR mechanisms.

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 NEED & RELEVANCY OF ALTERNATIVE DISPUTE RESOLUTION
The main reason for the origin or need of the ADR is the tiresome processes of litigation, costs
and inadequacy of the court system17. It has ability to provide quick and cheap relief. The
present mode of adversarial system fails in providing the real justice between the parties. The
party, who approaches the Court of justice with pain and anguish in their heart, faces various
problems and suffers physically, economically and mentally. The present system fails to deliver
quick and inexpensive relief to the party. The procedure is also very complex. This leads to a
search for an alternative mechanism which should be inexpensive, quick and with supplementary
to the process of the traditional civil court. However, at the same time the elements of
judiciousness, fairness, equality and compassion cannot be discarded for expeditious disposal. It
is well said that ―justice delayed is justice denied‖ and at same time, it is also said that ―justice
hurried is justice buried‖. In Fuerst Day Lawson Ltd v JindalExports Ltd 1 the Honorable
Supreme Court held observed that the object of Alternative Dispute Resolution Act 1996 is to
provide speedy and alternative solution to the dispute and avoid protraction of litigation. The
provisions of the Act have to be interpreted accordingly.

Alternative Dispute Resolution promotes amicable settlement and help in the preservation of the
relations. Since there is direct involvement of parties in the settlement process there is no need of
the involvement of technical and formal procedures. However, amicable settlement does not
mean compromise at any cost rather it is reasonable compromise factor.

In Salem Advocate Bar Association v. Union of India2 the Honorable Supreme Court of India
directed the constitution of an expert committee to formulate the manner in which the provision
relating to ADR incorporated in Section 899 of Civil Procedure Code – 1908 has to be brought
into operation 10 . For the effective implementation of ADR mechanism, several organizations
and institutions like ICA, ICADR, Consumer Redressal Forum and Lok Adalat were revived.
The Old Arbitration Act, 1940 was repealed and new Arbitration and Conciliation Act, 1996 was
enacted. The new Act of 1996 is based on International Trade Law (UNCITRAL) model law on
International Commercial Arbitration.11

Why ADR is needed could be summarized as follows:-

1. Amicable settlement of disputes. — It has been settled now that ADR provides a friendly
settlement of disputes. In business it is a prudent approach to have a competitor not a rival. In
business; wisdom does not have scope for enmity. It is clear that a healthy competition brings
improvement and it also affects cost of service or commodities in every sphere. In present
scenario even criminal matters are settled amicably. It would be relevant to mention the concept
of plea bargaining in the Code of Criminal Procedure, 1973 has been incorporated. Meaning

1
(2001) 6 SCC 356: AIR 2001 SC 2293
2
Writ Petition No.496 of 2002 decided on 25.10.2002

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thereby that in term of compromise the compensation can be offered by accused to the
complainant and the Court of Law may put its seal of approval and pass the order accordingly.

(2) Speedy disposal of dispute. — Alternative Dispute Resolution provides speedy disposal of
dispute. Under this system there is no much scope of adjournment, stay or lengthy session of
arguments etc.

(3) Economical settlement of dispute. — It delivers economical solution/settlement of dispute.

In other words litigation expenses and exorbitant counsel‘s fees could be avoided by invoking
settlement of dispute by means of conciliation and mediation.

(4) A time saving management.—Alternative Dispute Resolution is also known as dispute

management. This is a time saving device, wherein dispute is being settled without following the
cumbersome procedure of ordinary litigation.

(5) Legal recognition.— This system has been recognised in the Indian Statutes. For instance—
now the Civil Procedure Code, 1908, Order XXXII-A, Rule 3 contains scope for compromise
and the decree evolved from that compromise is not appealable. Notably, Section 12 of the
Industrial Disputes Act, 1947 contemplated provision for conciliation as pre-requisite for any
pressure tactics/collective bargaining. In the same manner Section 23 of the Hindu Marriage Act,
1955 provided the need for Alternative Dispute Resolution.

(6) Globalisation of commercial activities.—At present time the globalization of commercial

activities is being campaigned not only in India but also in other countries like U.S.A., U.K.,
Germany and France etc. Practically it is quiet difficult to get acquainted with the foreign law.
Therefore, dispute arising out of international commercial transactions needed to be settled by
negotiation, conciliation and meditation etc.

(7) Advent of multinational corporations.—A number of multinational corporations are

coming to invest and establish their business and also setting up their infrastructure. These
corporations have dynamic approach toward business activities. Therefore in case of dispute
arising, they should be provided with machinery which deals and resolve dispute amicably and
speedily. Hence, ADR is the only tool to settle dispute in question quickly and economically,

(8) Industrialisation.—No doubt that in recent past we have witnessed a great magnitude of
industrialisation across the globe and India is not an exception to it. Thus, the reasons for
adoption of ADR cannot be postponed indefinitely. It is submitted that on account of aforesaid
reasons the need of ADR cannot be simply overlooked at threshold. Once commercial
transactions carried out it is natural to develop some conflict and differences and approaching
ordinary court of law will be a herculean task specifically in Indian Judicial System. However, in
a broad perspective ADR is not only confined to settlement of commercial dispute, even civil
and criminal matter are settled by instrument of Lok Adalat, Nyaya Panchayats and Panchayats
in India.

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 CONCEPT OF ADR IN PRESENT LEGAL SYSTEM
One of the main drawbacks of India‘s legal system and law enforcement agencies are a lack of
effective delivery of legal remedies to the people in need. Pending cases are comparatively much
more than the cases settled. The main reason behind such a phenomenon is that increase in the
number of offences as well as time taking to solve the cases from the part of the judiciary. In
such a situation, Alternative Disputes Resolution mechanism plays an important role in resolving
disputes among people which is less important when compared to serious offences so that court
can save its valuable time as well as parties affected will be delivered with an effective solution
for their disputes. Looking to its legal aspects, we have Arbitration and conciliation Act, 1996 to
deal with various provisions relating to the alternative disputes resolution mechanism in India.
Along with that, section 89(1) of the Code of Civil Procedure, 1908 deals with an option of the
parties to make a settlement of their dispute outside the court. This states the importance of such
machinery wherein parties can arrive at a solution for their problems by themselves.

Arbitration And Conciliation Act, 1996 provides certain powers to the judiciary as well as
concerned authorities to make a settlement of the case at the option of the parties involved.
Section 30 of the Act deals with provisions wherein the arbitrator, with the consent of the parties,
undergo mediation, conciliation or other such proceedings at any time of arbitration to encourage
settlement of the dispute. But the Act also states that for enforcement of any such provisions of
the Act, there must be an ‗arbitration agreement‘ between both the parties in writing. In fact, the
process of arbitration is being done mainly for civil cases which involve monetary settlement
among the parties. While referring the term conciliation, it will be clear that this system of
resolving disputes is much informal than arbitration. There is no need for agreements between
the parties of a dispute. During any time of judicial proceedings, a party can request for
conciliation to the other party and then a conciliator may be appointed. After going through the
facts of the case, the conciliator calls up for a meeting between two parties jointly or
individually. Then if the dispute is resolved, a settlement document is prepared by enclosing the
details regarding the settlement. Apart from these two machineries, there are certain other
prominent systems under the head of ADR, which involves Lok adalat as well as Mediation. Lok
adalat is generally known as ‗people‘s court‘. This is a non-adversarial system wherein mock
courts are held by State authority, District Legal Services authority, Taluk legal service
committee as well as Supreme Court and High Court legal services committees. It has no
jurisdiction over any non-compoundable offences. One of the merits of this system is that the
parties can directly contact with the judges which is not possible in regular courts. The focus of
adalat is on compromise and if not, the case will be returned to the courts and if compromised, it
will be a decree equal to the civil court and no appeal is applicable even under Article 226 as the
decree made is upon the consent of both the parties. On the other hand, mediation plays yet
another role in the field of ADR wherein a negotiation is done between the parties with the help
of a mediator who is a third party to them. The main object of undergoing mediation proceeding
is to protect the best interest of the parties. It does not cover any legal provisions so that the

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parties will be not held inside certain limitations of such legal matters. It provides a friendly talk
between the parties and a means of counselling so that the real issue faced by them will be found
out and the dispute among them will be resolved easily. There are certain types of mediation
which are termed as court referred mediation and private mediation. Same theory which is
applicable to Lok adalat is applied here also, i.e., if the parties arrive at a settlement, no person
can file an appeal to a higher court in any manner.

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 ADVANTAGES OF ALTERNATIVE DISPUTES RESOLUTION
 Less time consuming: people resolve their dispute in short period as compared to courts.
 Cost effective method: it saves lot of money if one undergoes in litigation process.
 It is free from technicalities of courts; here informal ways are applied in resolving
dispute.
 People are free to express themselves without any fear of court of law. They can reveal
the true facts without disclosing it to any court.
 Efficient way: there are always chances of restoring relationship back as parties discuss
their issues together on the same platform.
 It prevents further conflict and maintains good relationship between the parties.
 It preserves the best interest of the parties.

As mentioned before, there are certain provisions in connection with ADR even in the Code of
Civil Procedure, 1908. Section 89(1) of the code deals with the power of the court to refer the
dispute for settlement for a purpose of an amicable, peaceful and mutual settlement between the
parties without the intervention of the court. This section states that if there are favourable
elements in the case which a court can prefer it for settlement, court may formulate various terms
of settlement to the parties and if it‘s agreed by them, then the court can proceed for an out of
court settlement which includes:

 Arbitration
 Conciliation
 Judicial settlements through Lok Adalat
 Mediation

There are various important judgements for the cases which involve section 89 of CPC. In the
case of Afcons infrastructure and Anr v. Cherian Varkey construction Page | 10 co, Supreme
Court held that ―all suits of civil nature, in particular, the following categories of cases are
normally suitable for ADR process‖:

1. Cases relating to trade, commerce and contract.

2. Cases arising from strained or sourced relationships
3. In cases wherein there is a need for continuation of pre –existing relationship in spite of
disputes
4. Cases relating to tortious liability
5. All consumer disputes

Supreme Court also held that enumeration of the above said cases are only indicative and not
intended to be exhaustive or rigid.

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 SOME CASES RELATING TO ADR
 Oil and Natural Gas Commission v/s Collector of Central Excise and Customs 3
In the above case, Supreme Court clearly directed that in the public interest of saving
public mney and time, the dispute between Public Sector Undertaking and Government
Department must be settled by the process of arbitration.

 Chief Conservator of Forests v. Collector and Others4

The judgment of the court was delivered by Syed Mohammed Qadri.In this cae the court
directed the central government to set up the committee from Ministry of Industry,
bureau of Public Enterprises and Ministry of Law to monitor disputes themselves
mutually and to ensure that the dispute does not come to the court or the tribunal.

 In State of J. & K. v. Dev Dutt Pandit, the Supreme Court observed that arbitration is an
important ADR process, which is to be developed and encouraged. It is well settled that
the proceedings of all tribunals would fall within the description of ADR.

 Sheela Barse case5

"Legal assistance to poor or indigent accused is the necessary sine qua non of justice and
where it is not provided injustice is likely to result and undeniably every act of injustice
corrodes the foundation of democracy and rules of law, because nothing rankles more in
the human heart than the feeling of injustice and those who suffer and cannot get justice
because they are priced out of the legal system, lack faith in the legal process and a
feeling begins to overtake them that democracy and rule of law are merely slogans or
myths intended to perpetuate the domination of rich and the powerful and to protect the
establishment and the vested interest."

3
1992
4
2003
5
(1995) 5 SCC 654

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 CONCLUSION
Belief in alternative dispute resolution takes on the character of a moral value. For believers it
represents a ―best practice‖ not only in producing technically superior outcomes but of being ―
the right thing to do‖. To conclude, it is suggested that ADR system should be institutionalised.
But at the same time a caveat is also suggested, that one must be careful to avoid the
dysfunctions that frequently accompany successful institutionalisations. Because the ADR
movement is still in the formative stage, there is much to learn about the feasibility of
alternatives to litigation. ADR is, as yet, a highly speculative endeavor. We do not know whether
ADR programs can be adequately staffed and funded over the long-term; whether private
litigants will use ADR in lieu of or merely in addition to litigation; what effect ADR may have
on our judicial caseload; whether we can avoid problems of "second class" justice for the poor;
and whether we can avoid the improper resolution of public law questions in wholly private fora.
In light of these and other uncertainties about ADR, we should continue to view alternative
dispute resolution as a conditional venture, subject to further study and adjustment. Every new
ADR system should include a formal program for self-appraisal and some type of "sunset"
arrangement to ensure that the system is evaluated after a reasonable time before becoming
permanently established.

ADR can thus play a vital role in constructing a judicial system that is both more
manageable and more responsive to the needs of our citizens. It is essential, as the aforesaid
discussions illustrate, that this role of ADR be enhanced in the resolution of important
constitutional and public law issues by ADR mechanisms, that are independent of our courts.
Fortunately, few ADR programs have attempted to remove public law issues from the courts.
Although this 16 may merely reflect the relative youth of the ADR movement, it may also
manifest an awareness of the danger of public law resolution in non-judicial fora.

The main object of Alternative Dispute Resolution is to give quick, cheaper and
efficient dispute resolution. I suggest following methods to promote ADR in India:

i) There is need to spread awareness of ADR through seminars, workshops and other means
to not only uneducated people but also well educated people. Because in most of the
cases it has been seen that even well educated people are much aware about its structure
and functioning.
ii) At the same time, there is need to extend or create facilities, services and infrastructure
for the effective implementation of ADR practice.
iii) There is need of effective coordination both at operational and structural level for the
success of ADR mechanism.
iv) There is need of promoting pre-trial conciliation.
v) There is need of establishing institutions to provide proper training to mediators,
negotiators, and conciliators.

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 vi) There is need to establish more organisations like ICA, ICADR , Indian Chamber of
Commerce to promote and strengthen the ADR mechanism.
vii) Organising legal aid camps in rural areas: In rural areas people are not even aware about
their basic fundamental rights. They must be made aware about it and also about the
available forum for the redressal of their grievances.
viii) No compromise on Quality: Free legal aid should not mean providing poor or
inferior legal services. The lawyer to provide the free legal aid service should be
experienced. As Justice Blackmun has rightly said in Jackson v. Bishop that; "The
concept of seeking justice cannot be equated with the value of dollars. Money plays no
role in seeking justice."

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 BIBLIOGRAPHY

Websites:-
1. http://www.lady4justice.com/2-2-8_litigation.cfm visited on 27-04-11.

2. http://www.hg.org/articles/article_1530.html visited on 27-04-11.

3. http://cyberlawsinindia.blogspot.com/2010/03/perry4law-launched-onlinedispute.html visited on 28-

04-11

4. https://www.lawctopus.com/academike/arbitration-adr-in-india/

BOOKS:

 Justice S.B. Malik – New Arbitration and Conciliation Law

 N.D. Basu – Law of Arbitration and Conciliation
 Avtar Singh – Law of Arbitration and Conciliation

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