ALTERNATE DISPUTE

RESOLUTION
(ADR)

HARDIK KOSAMBI
22BSP0571
 "It is a good and fair settlement, when neither party
likes the outcome, but agree to it".

ARBITRATION There is a trend world over, in particular among

companies and corporate not to drag disputes into long
drawn courtroom battles. There comes the significance
of arbitration, mediation, conciliation and such ADR
mechanism. Hence is the added advantages of saving in
time as well as the cost of proceedings. Moreover, the
parties settle the matter in a win-win spirit.
 KEY TERMS
Arbitration is not the same as filing an investor complaint.

Arbitration could be preferable than a lawsuit due to the lower costs and
time commitments for all parties involved.
Disputes involving less than $50,000 do not require in-person hearings.

For disputes ranging from $50,000 to $100,000, require an in-person

hearing with a single arbitrator.
CASE STUDY
CASE: K.K Modi
vs. K.N Modi

Date: 4 February 1998

Number of Judges: Two

Bench: Sujata V.
Manohar, D.P. Wadhwa
Act: The arbitration act,
1940
Citation: AIR 1998 SC
1297
 FACTS OF THE CASE

Both the groups were

dissatisfied with the
A memorandum of report that was
The Modi family
agreement was signed submitted to them
divided into GROUP A Disputes arose between
specifying that the which mentioned
(KN Modi, Younger the two groups and to
consultation of all details of splitting of
brother of Mai Modi resolve these conflicts,
matters will be done by all the assets for which
and his sons) and many financial
the Chairman of IFCI the groups sought the
GROUP B (Mai Modi’s institutions were
(Industrial Finance help of chairman and
sons, including KK called, including the
Corporation of India) managing director of
Modi), owned a one who invested in the
Or his nominees, IFCI. The latter formed
number of public companies.
whose decision will be a committee and
limited companies.
final and binding. discussed all the
problems arising Out of
the report.
 FACTS OF THE CASE
The Chairman of IFCI gave out its final report,
claiming it as its final decision in the matter. He
also gave out some directions to both the groups
in the same report. While this report was not filed
in the court, a series of directions were given for
the implementation of the same by the nominated
chairman.
On 18th May, 1996 Group B filed an arbitration
petition in the Delhi High Court Under section 33
of the arbitration act, 1940. They challenged the
legality and validity of the directions issued by
the chairman and managing director of IFCI.
They also filed a civil suit in the Delhi High
Court with similar arguments, except for one
paragraph Where they stated That they sought
relief because the directions of the chairman and
managing director of IFCI were a decision and
not an arbitration award.
 THE JUDGEMENT
DAY

THE JUDGEMENT DAY

04TH FEBRUARY ’1998
 JUDGEMENT
 The court declared that the clause did not constitute an arbitration clause.
 The court mentioned a set of guidelines which would help ascertain whether the parties
involved agreed for arbitration or not. Following those guidelines, it was concluded that
this decision did not constitute an arbitral award.
 It was also declared that the civil suit was an abuse of process since the same issue was
being addressed through two different proceedings.
 However, the council of the Appellants mentioned that since the memorandum of
understanding did not have an arbitration clause, and the decision did not constitute an
arbitration award, they were allowed to file a suit challenging the decision of IFCI.
 The court partly accepted these arguments and declared the civil suit as not being abusive
of the court process, Except for the reliefs which were sought similar to the arbitration
petition.