Afcons Infrastructure Ltd. V. Cherian Varkey Construction Co. (P)Ltd.

Team members:
Misbah Shan
Meenakshi
Shreya Ann Mathew
Anakha Hari
Chaitanya Kumar

Misbah Shan - Pg 24-28 (A)

The instant case is the landmark judgement in the field of ADR that predominantly dealt with
Section 89 of CPC on the question that whether the court can refer the parties to a suit to
arbitration without their consent. The trial court ordered to refer the case to arbitration against
the appellant’s desires after the latter’s property was attached in a money recovery suit; which
was later upheld by the High Court. The Supreme Court held that in order to refer a matter to
arbitration all the parties’ consent is required and since the lower courts did not follow the
procedure the order was set aside. Further, if the arbitration process fails the Court shall
resume hearing the case from the stage where it was referred and if it doesn’t the court will
examine the settlement to check for any irregularities. The cases that are not suitable for the
ADR process as per Section 89 are suits that involve numerous persons who aren’t parties,
cases relating to election to public offices, grant of authority by the court after enquiry,
serious offences, where protection from courts is necessary. Further, cases that can be
referred to the ADR process are all cases relating to trade, commerce and contracts, strained
relationships, where there is a continuance of relationship, tortious liability, and consumer
disputes.
Meenakshi Pg 29-33 (B)

After analysing the facts of the case where the trial court directed the dispute to settle through
Arbitration that was held the same in the High Court holding that tenor of section 89 of CPC
permitted the Court, in appropriate cases to refer the dispute to Arbitration even if parties are
unwilling. Also, it further stated the inapplicability of the pre-existing Arbitration Agreement
as per section 89 of CPC.

There are two contentions raised before the apex court by the Appellant i.e.

What is the procedure to be followed by a court in implementing Section 89 of CPC,1908 and

Order 10 Rule 1A of the Code ?
Whether Consent of all the parties to the dispute/suit is mandatory for reference to arbitration
under Section 89 of the Code?

In order to find the answers, the object, purpose, scope and tenor of section 89 of CPC was
analysed in detail. Apex Court has thus aptly observed that Section 89 of CPC,1908 is like
“putting a cart before the horse and is wholly impracticable, if not impossible, yet the object
behind it was laudable.” Furthermore, the apex court pointed out various drafting errors in
Section 89 of the Code of Civil Procedure,1908. The first anomaly is the mixing up of the
definitions of ‘mediation’ and ‘judicial settlement’ under clauses (c) and (d) of the Sub-
section (1) of Section 89 of the Code. Clause (d) provides that where reference is to
mediation, the court shall affect a compromise between the parties by following such
procedure as may be prescribed. The mix-up of terms ‘Judicial Settlement’ and ‘Mediation’
in Section 89 has indeed created a jumble and confusion and appear as typographical or
clerical errors in drafting. So, the court differentiated section 73 of the Arbitration and
Conciliation Act,1996 and section 89(1)s of the CPC.
Pg 24-33 (A+B)

The instant case is the landmark judgement in the field of ADR which predominantly deals
with Section 89 of CPC on the questions

1) Whether the court can refer the parties to a suit to arbitration without their consent?

2) What is the procedure to be followed by a court while implementing Section 89 and

Order 10 Rule 1A of CPC,1908?

Moreover, if the arbitration process fails the court shall resume hearing the case from the
stage where it was referred and if it doesn’t the court will examine the settlement to check for
any irregularities. Furthermore, in order to answer the above questions, the object, purpose,
scope and tenor of section 89 of CPC was analysed in detail wherein it was observed that the
terms ‘Judicial Settlement’ and ‘Mediation’ has created confusion. Therefore, appearing as
typographical or clerical errors in drafting thus, the court then differentiated section 73 of the
Arbitration and Conciliation Act,1996 and section 89(1) of the CPC.
Shreya Ann Mathew -Pg 34-38 (C)

The principles of statutory interpretation are well established. The legislative wisdom cannot
be replaced by any judge’s view, the literal rule of interpretation is what ought to be taken
where the words of a provision are clear and unambiguous. However, an exception to this
general rule would apply when the words are vague, absurd or repugnant. The purposive
interpretation would be taken where anomalies make the literal compliance impossible. In the
particular case referring to Section 89 of the CPC and Order 10 Rule 1-A there is a need for
shifting from the literal reading of the provision by making the following changes. Firstly, it
is not necessary for the court, before referring the parties to the ADR process to formulate the
terms of settlement, the nature of the dispute is sufficient to be referred. Secondly, the terms
‘judicial settlement’ and ‘mediation’ have to be interchanged in order to correct the
draftsman’s error. ‘Mediation’ will be used where the court shall refer to a suitable person.
For ‘judicial settlement’ the court will effectuate a compromise between the parties.
Pg 24-38 (A+B+C)
The instant case is the landmark judgement in the field of ADR which predominantly deals
with Section 89 of CPC on the questions

1) Whether the court can refer the parties to a suit to arbitration without their consent?

2) What is the procedure to be followed by a court while implementing Section 89 and

Order 10 Rule 1A of CPC, 1908?
Moreover, if the arbitration process fails the court shall resume hearing the case from the
stage where it was referred and if it doesn’t the court will examine the settlement to check for
any irregularities. Furthermore, in order to answer the above questions, the object, purpose,
scope and tenor of section 89 of CPC was analysed wherein it was observed that the terms
‘Judicial Settlement’ and ‘Mediation’ has created confusion and thus, there is a need for
shifting from the literal reading of the provision. The terms ‘judicial settlement’ and
‘mediation’ have to be interchanged in order to correct the draftsman’s error. The ‘Mediation’
process will be used when the court refers a matter to a suitable person or institution, and
‘judicial settlement’ is when the court effectuates a compromise between the parties.
Anakha Hari- Pg. 39-42 (D)
The cases that are not suitable for mediation are representative suits under order 1 rule 8 or
public interest or the suits which involve the interest of many, disputes to election to public
offices, cases involving grant of authority and etc. Any case that can be arrived at a
settlement and civil litigation is suitable for ADR. This category is not exhaustive and can be
expanded to any cases or suits which has a chance of settlement and the categories are
illustrative. Rule 1-A of Order 10 requires the court to give the option to the parties to choose
any of the ADR process through consensus, even if there is no preexisting agreement but
section 89 does not supersede or modify the Arbitration and Conciliation Act 1996 or the
Legal Services authority Act 1987. If the parties agree to arbitration, then the provisions of
the Arbitration and Conciliation Act 1996 will apply and that case will be out of the stream of
the court but restoring to conciliation or judicial settlement or mediation with a view to settle
the dispute would not ipso facto take the case outside the judicial system. (Held in Salem bar
case). Section 89 uses both the words “shall” and “may” whereas order 10 rule 1-A uses the
word shall but on harmonious reading of these provisions it becomes clear the use of the
“may” in section 89 only governs the aspect of reformulation of the terms of a possible
settlement and its reference to one of the ADR methods.
Pg 24-42 (A+B+C+ D)
The instant case is the landmark judgement in the field of ADR which predominantly deals
with Section 89 of CPC on the questions

1) Whether the court can refer the parties to a suit to arbitration without their consent?

2) What is the procedure to be followed by a court while implementing Section 89 and

Order 10 Rule 1A of CPC, 1908?
All cases and suits of civil nature, suits arising from strained or soured relationship, cases
involving a need for continuation of preexisting relationship and etc are suitable for ADR.
where there is no preexisting arbitration agreement between the parties the consent of all
the parties to the suit will be necessary for referring the subject matter of the suit for
arbitration under section 89 of the code. Moreover, if the arbitration process fails the
court shall resume hearing the case from the stage where it was referred and if it doesn’t
the court will examine the settlement to check for any irregularities. Furthermore, in order
to answer the above questions, the object, purpose, scope and tenor of section 89 of CPC
was analysed wherein it was observed that the terms ‘Judicial Settlement’ and
‘Mediation’ has created confusion and thus, there is a need for shifting from the literal
reading of the provision. The terms ‘judicial settlement’ and ‘mediation’ have to be
interchanged in order to correct the draftsman’s error. The ‘Mediation’ process will be
used when the court refers a matter to a suitable person or institution, and ‘judicial
settlement’ is when the court effectuates a compromise between the parties.
CHAITANYA KUMAR R -Pg40 – 50 (E)

 Provisions of section 89 and rule 1-A of order 10.

 If judge fails to make negotiations, that cases refer to another judge.
 If court refer to ADR process ,it should keep track by fixing the hearing date for ADR
report.
 The court should refer a cases to ADR report on a purpose.
 The sec-89 has been a non starter with many courts.
 Consent for arbitration or conciliation(if there is unfit or dispute cases).
 Sukanya case for reference.
 Sec -89 of CPC cannot be resorted for interpreting sec -8 of the act (on different
footing).
 The trail court did not adopt the proper procedure while enforcing 89 of the CPC.
 A civil court cannot refer a suit to arbitration unless all the parties agreed to such
reference (under sec – 89 of CPC).
Pg 24-50 (A+B+C+ D+E)
 The instant case is the landmark judgement in the field of ADR which predominantly
deals with Section 89 of CPC on the questions
1) Whether the court can refer the parties to a suit to arbitration without their consent?

2) What is the procedure to be followed by a court while implementing Section 89 and

Order 10 Rule 1A of CPC,1908?
 All cases and suits of civil nature, suits arising from strained or soured relationship,
cases involving a need for continuation of preexisting relationship and etcare suitable
for ADR.
 where there is no pre-existing arbitration agreement between the parties, the consent
of all the parties to the suit will be necessary for referring the subject matter of the suit
for arbitration under section 89 of the code.
 the court will examine the settlement to check for any irregularities. Furthermore, in
order to answer the above questions, the object, purpose, scope and tenor of section
89 of CPC was analysed wherein it was observed that the terms ‘Judicial Settlement’
and ‘Mediation’ has created confusion and thus, there is a need for shifting from the
literal reading of the provision.
 The terms ‘judicial settlement’ and ‘mediation’ have to be interchanged in order to
correct the draftsman’s error. The ‘Mediation’ process will be used when the court
refers a matter to a suitable person or institution, and ‘judicial settlement’ is when the
court effectuates a compromise between the parties.
 A civil court exercising power under sec-89 of CPC cannot refer a suit to arbitration
unless all the parties to the suit agree for such reference.