2020-2021

ALTERNATIVE
DISPUTE
RESOLUTION
 ROLE OF JUDICIARY IN
PROMOTING ADR

SUBMITTED BY- SUBMITTED TO-

HARSH BHAI PATEL DR. NITIN KUMAR
SECTION-A ASSISTANT PROFESSOR
ROLL NO.- 180010450033 FACULTY OF LAW
B.A. LL.B. HONS. UNIVERSITY OF LUCKNOW
FACULTY OF LAW
UNIVERSITY OF LUCKNOW
TABLE OF CONTENTS

Contents

INDEX OF AUTHORITIES......................................................................................................2

Cases......................................................................................................................................2

Statutes...................................................................................................................................2

INTRODUCTION.....................................................................................................................3

POLICY CONSIDERATIONS FACTORED INTO JUDICIAL DECISION MAKING | A

PRO ADR TREND....................................................................................................................4

INFORMATION DISSEMINATION THROUGH JUDGES | CREATING AWARENESS &

INSTILLING CONFIDENCE...................................................................................................6

CASE MANAGEMENT & REFERENCE TO ADR................................................................8

CONCLUSION........................................................................................................................10

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 INDEX OF AUTHORITIES

Cases

1. Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No.
6000 of 2010.

2. BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005.

3. Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105.

4. Chhotelal v. Kamala Devi, AIR 1967 Pat 269.

5. Sakri v. Chhanwarlal, AIR 1975 Raj 134.

6. Sangeetha v. Suresh Kumar, JT 2000(8) SC 521.

7. TDM Infrastructure Private Limited v. UE Development India Private Limited, (2008) 14

SCC 271.

Statutes

1. The Arbitration and Conciliation Act, 1996.

2. Code of Civil Procedure, 1908.

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 INTRODUCTION

Alternative Dispute Resolution (ADR) refers to a set of mechanisms which enable effective,
efficient dispute resolution outside of courtroom litigation. ADR is aimed at reducing
backlog, delay, conserving judicial resource and providing effective, accessible justice for
litigants. There are a considerable set of advantages of adopting ADR methods, as against a
negligible set of disadvantages, and the subsisting circumstances reveal that ADR methods
are the need of the hour in the Indian context. The reasons behind the need for the adoption
and proliferation of ADR methods in the Indian context are briefly explored in the beginning
sections of this paper.

This paper aims to analyse and examine the role of the judiciary in promoting these ADR
methods. The exercise will attempt to look at the various methods which the judiciary
espouses to further the cause of ADR mechanisms. The judiciary’s support towards the
promotion of ADR methods extends to beyond the mere referring of cases and disputes of a
certain character to these channels for resolution. The researcher has attempted to briefly
outline in addition to this primary method, the other methods adopted by the judiciary to lend
support to the cause.

Whether such promotion is normatively desirable is an issue and a question that is beyond the
scope of this paper, and concomitantly therefore debate and analyses over the nature of such
promotion is also beyond the scope of this paper. Some have argued that excessive and
mechanical promotion of such methods in matters of jurisprudential importance must be
avoided as it may adversely impact the interests of the nation and often causes undesirable
ramifications on the social and democratic fabric.1

The plurality of methods adopted by the judiciary towards promoting ADR is only reflective
and indicative of the favourable judicial temperament in this regard. Often the judiciary, in
addition to legislative wisdom, evaluates several policy considerations while grappling with
issues pertaining to ADR. Supplanting legislative prescriptions on occasion, the judiciary has
played a key role in the development of ADR in the Indian context.

1
See, M. Shridhar, The Initiative of the Supreme Court of India in Alternative Dispute Resolution: A Study of
Two Cases, 3(2), THE ICFAI JOURNAL OF ALTERNATIVE DISPUTE RESOLUTION, (2004).
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 POLICY CONSIDERATIONS FACTORED INTO
JUDICIAL DECISION MAKING | A PRO ADR TREND
The judiciary, on various occasions has helped bolster the ADR cause through indirect
methods. An example of these methods is the policy considerations which the judiciary uses
as a guiding tool in decision making. On certain crucial issues, it can be reasonably inferred,
that the judiciary renders decisions which encourage and promote ADR methods at a policy
level itself. Certain examples would help illustrate and substantiate the claim.

In Bhatia International v. Bulk Trading SA (“Bhatia International”),2 among other things, the
Supreme Court laid down that the Indian judiciary was empowered to order interim measures
even in arbitrations which were seated in foreign countries. Quite obviously, the decision was
met with substantial criticism, primarily because it vehemently went against the freedom of
international arbitration from domestic Indian judicial involvement. In response to this set of
circumstances, with a view to rectify the reputation of being an “arbitration-unfriendly”
jurisdiction, the Supreme Court later adopted a pro-arbitration policy and overruled Bhatia
International by the landmark decision rendered in BALCO v. Kaiser Aluminium
(“BALCO”).3

By overruling Bhatia International in BALCO, the Supreme Court clarified and explained
that territoriality was the primary premise underlying the operation of the Arbitration and
Conciliation Act and that therefore Indian courts would be precluded from asserting
jurisdiction, even in the form of interim relief orders, in offshore and international
arbitrations. Further, the Supreme Court held the Indian courts would not possess jurisdiction
to intervene in or modify, or set aside awards of arbitration tribunals in respect of arbitrations
seated outside India. By doing so the Supreme Court has unequivocally indicated the pro-
arbitration approach that is going to characterise judicial temperament in this regard.

It is amply evident that the decision in BALCO was aimed at remedying the inconveniences
that were caused by preceding decisions like Bhatia International. A decision guided by
policy considerations, the Supreme Court’s verdict in BALCO was aimed at promoting ADR
methods and simultaneously alleviating the concerns of the international business and legal
communities alike in respect of Indian judicial interference in international arbitration
proceedings. No doubt BALCO does not address all the challenges seen with reference to
2
Bhatia International v. Bulk Trading SA, (2002) 4 SCC 105.
3
BALCO v. Kaiser Aluminium, Civil Appeal No. 7019 of 2005. See, P. Nair, On the road to becoming
arbitration friendly: The decision of the Indian Supreme Court in BALCO v. Kaiser Aluminium, 1(1), LCIA
INDIA NEWS, (2012).
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arbitration - for example, BALCO does not address the rule laid down that in the Indian
context that Indian parties cannot contract out of Indian substantive law even if the contract
provides for a foreign arbitration seat.4 But that notwithstanding, BALCO5 certainly has been
a great start in the pro-arbitration direction.6

The landmark decision in Afcons Infrastructure v. Cherian Varkey Construction

Company7(“Afcons”) serves as yet another example of the judiciary rendering decisions
aimed at promoting the ADR movement. The 2010 Supreme Court decision considered
certain rigorously contested issues revolving around the requirement of consent among
parties as a pre-requisite for reference to arbitration under Section 89 of the Code of Civil
Procedure. While addressing this issue and ruling that prior consent is necessary in the
context of reference to arbitration but not in cases of reference to other ADR mechanisms, the
Supreme Court simultaneously observed that Section 89 of the Code, a significant provision
in the context of ADR, was inconveniently drafted. The drafting of the provision, in the
opinion of the apex court required substantial correction.

Section 89, clumsily drafted, mixes up definitions of various ADR mechanisms, and
expressly imposes an obligation upon the courts that not only tremendously overburdens the
courts, but also defeats the very purpose of the provision in question. Section 89 requires
judges of trial courts, in cases wherein the judge believes that there may be a chance that the
parties could arrive at a settlement, to formulate terms of such settlement and forward these
terms to the parties for consideration and observation. After such consideration and making of
observations, the parties are to return the formulated settlement terms to the judge for further
reconsideration, and then the judge is to reframe these settlement terms before referring the
dispute to ADR methods mentioned in the provision.

Clearly, the provision imposes an unnecessary, redundant and cyclic obligation on the courts
which defeats the very purpose of the provision. Invoking doctrines of purposive
interpretation and other canons of statutory interpretation, the Supreme Court observed that
the only practicable way to correct the deficiencies and absurdities of Section 89 was to
comprehensively reformulate the provision. The Court did away with the inconvenient and
redundant requirement of framing and reframing possible terms of settlement. The Supreme

4
TDM Infrastructure Private Limited v. UE Development India Private Limited, (2008) 14 SCC 271.
5
A. Chugh, The Bharat Aluminium Case: The Indian Supreme Court Ushers in New Era, KLUWER
ARBITRATION BLOG, available at http://kluwerarbitrationblog.com/blog/2012/09/26/the-bharat-aluminium-
case-the-indian-supreme-court-ushers-in-a-new-era/
6
Afcons Infrastructure Limited v. Cherian Varkey Construction Company, Civil Appeal No. 6000 of 2010.
7
Sec. 89, Code of Civil Procedure, 1908
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Court redefined the various ADR methods, outlined the procedure to be adopted in cases
which fell under Section 89 and provided numerous exhaustive guidelines in this regard.

As was the case in the BALCO judgement, the Afcons decision is another such decision which
paves the way for a more ADR friendly legal environment and statutory framework. The
judiciary has systematically, with policy-based objectives in mind, rendered decisions which
clear several hurdles and statutory impediments which have and may come in the way of the
growth of the ADR movement, and as such thereby has been bolstering and promoting the
cause through rendering such decisions and creating a favourable legal climate.

INFORMATION DISSEMINATION
THROUGH JUDGES | CREATING
AWARENESS & INSTILLING CONFIDENCE

Judges have used alternate channels to promote the cause of ADR methods. While
emphasizing the issues plaguing the judiciary in the form of enormous backlog and pendency,
judges have, through formal and informal channels promoted ADR mechanisms. Justice
Sinha of the Supreme Court in his paper on ADR methods encouraged the use of such
methods citing the various advantages that such methods offer, including that of delivering
speedy and effective justice to litigants and simultaneously reducing court case burden. In his
paper, the Judge also explained that ADR methods can be best implemented if there was an
active and mandatory reference of cases to such methods by the judiciary, and effective case
management by judges.

Justice Khanwilkar of the Bombay High Court in his paper on ADR methods outlines the
importance and benefits of ADR methods and proposes that in order to further the benefits
provided by such methods of dispute resolution it is imperative that in addition to providing
speedy justice through these channels, efforts are taken to ensure that the quality of justice is
also remains uncompromised. Further, to promote ADR methods, the Bombay High Court
has affected a unique form of case management. So not only does the High Court insist and
promote ADR methods by referencing cases to such mechanisms, but it also assures the

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parties that in the event settlement by these ADR methods fails for any reason the case will
immediately be taken up for hearing by the court.8

Justice Chandrachud of the Bombay High Court has formulated certain strategies aimed and
developing the efficacy of mediation as an ADR tool and presented these strategies publicly
at conferences9 with a view to have such information percolate through various channels and
consequently enhance the quality, efficacy, and efficiency of mediation practice. Other
informal channels have also been utilised by senior members of the judiciary to promote the
cause of ADR.

The consequence of such information dissemination is that ADR mechanisms now enjoy the
endorsement of the judiciary and the judiciary regularly refers matters for resolution to such
channels. It is imperative that such ADR methods enjoy judicial backing in order to promote
confidence in such a system. Further, courts must take efforts to see to it that recourse is
taken to these ADR methods before litigation is invoked, specifically, negotiation and
conciliation before arbitration.10 A strenuous challenge that ADR methods face is the lack of
awareness and confidence in such systems. This lack of awareness and confidence can be
remedied by the judiciary’s consistent endorsement and encouragement.

8
A. M. Khanwilkar, Need to Revitalise ADR Mechanism, 4(3), NYAYADEEP, (2005).
9
D. Y. Chandrachud, Mediation – Realizing the Potential and Designing Implementation Strategies, presented
at, Law Commission of India International Conference on ADR and Case Management, (New Delhi, May 3 to
May 4, 2003).
10
F. S. Nariman, Arbitration and ADR in India, in P. C. Rao and W. Sheffield,
ALTERNATIVE DISPUTE RESOLUTION: WHAT IT IS AND HOW IT WORKS, (1st edn., 1997).

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CASE MANAGEMENT & REFERENCE TO ADR

A long list of statutory provisions incorporated by the legislature direct the courts, and
imposes a duty on the courts to take an effort towards resolving a dispute before them by
reference to ADR mechanism. Notwithstanding such legislative efforts, the judiciary has suo
moto gone ahead and laid down several guidelines promoting the use of such ADR methods
for dispute resolution.

The Supreme Court in the Afcons decision laid down certain guidelines which would help
courts determine broad categories of disputes which could be referred to ADR methods for
resolution before trial. These include disputes which are related to trade and commerce,
money disputes, disputes of specific performance, disputes between builders and customers,
bankers and customers, cases pertaining to tortious liability, disputes between partners,
disputes relating to family law and so on.

The judiciary in consonance with legislative provisions and intent makes a significant and
sincere effort to refer matters that come before it to ADR mechanisms for resolution. As has
been seen in the Bombay High Court, the court actively promotes these methods by assuring
parties that in the event of failure of such ADR methods to resolve the dispute, the matter will
immediately be taken up for hearing by the court.11

Several statutory provisions urge to courts to endeavour to have the dispute before it resolved
through ADR mechanisms. In several cases, especially in matters pertaining to family law,
the judiciary has actively promoted the ADR mechanisms by referring these matters to be
resolved through such channels. In Sangeetha v. Suresh Kumar12 in a divorce and
maintenance dispute between a man and wife, the Supreme Court was of the opinion that
there was a possibility that the dispute could be resolved through means of reconciliation, and
accordingly referred the matter to conciliation and adjourned the proceedings.

In Sakri v. Chhanwarlal13 the Rajasthan High Court remarked that the courts should
endeavour to bring about conciliation at the beginning of the proceedings, but in the event
that such efforts are not made at the beginning of proceedings, such efforts should be made
before granting relief. The efforts must be a reasonable human effort and should be made in

11
Khanwilkar, supra note 8

Sangeetha v. Suresh Kumar, JT 2000(8) SC 521.

12

Sakri v. Chhanwarlal, AIR 1975 Raj 134.

13

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every case. Similarly, the Patna High Court in Chhotelal v. Kamala Devi14 observed that
before usual proceedings, the courts should endeavour to bring about conciliation and that
such effort must be made even if the advocates for the parties submit that such reconciliation
is not possible.15

The judiciary’s endorsement of such ADR methods is of tremendous significance and has
serious implications on the success of such methods. A significant impetus given to the ADR
movement by the judiciary was the 1984 experiment conducted by the Himachal Pradesh
High Court. Facing rising arrears in subordinate courts, the High Court implemented a
project which aimed at disposal of pending cases by mandating compulsory pre-trial
conciliation in new cases being brought before the courts. The experiment was on the lines of
a similar experiment conducted in Canada and was tremendously successful and commended,
and it was recommended that other states follow the Himachal Project in their courts as well.

CONCLUSION

14
Chhotelal v. Kamala Devi, AIR 1967 Pat 269.
15
The experiment was commended in the Law Commission of India 77 th and 13th Reports; the Conference of
Chief Ministers and the Chief Justices in their resolution in December, 1993; and the Calcutta Resolution of the
Law Ministers and Law Secretaries Meeting in 1994.
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The role of the judiciary as far as promoting ADR is concerned is multidimensional. Through
the course of this paper, the different approaches to promoting ADR that the judiciary has
adopted have been examined and analysed. The need for the proliferation of ADR methods is
evident given the massive pendency and backlog of cases. In order to help reduce the burden
on the court system and to provide speedy, effective and efficient justice it is essential that
sustainable and robust ADR mechanisms are put into place.

On several occasions certain decisions rendered by the judiciary in the context of ADR seem
to be guided by policy considerations and seem to aimed at promoting ADR at a policy level.
The judiciary has repeatedly ironed out any impediments that may come in the way of ADR
movement. Whether in the international context, or domestic, the judiciary seems to be
handing out decisions which overcome legal hurdles, statutory in character or otherwise.
Some of these decisions even have larger implications in the context of international
commerce and business.

Judicial promotion of ADR has also been extended to other channels, somewhat epistemic in
nature. Senior members of the judiciary have authored several papers and articles delineating
the advantages of such methods of dispute resolution. These papers also often revolve around
strategies to help further the usage of these methods of dispute resolution more effectively.
Not only does such judicial endorsement create awareness of such methods, but it also
simultaneously instils the confidence of people in such methods of dispute resolution.

The judiciary has through a number of decisions laid down that cases must be referred to
ADR methods on a regular basis and to this end the courts shall endeavour to promote the
resolution of disputes that come before them through these methods. In fact, in certain cases
the courts have assured litigants that in the event of failure of such mechanisms, the matter
will be taken up immediately by the courts. It is amply evident that the judiciary has a
predominantly favourable attitude towards ADR methods, and through numerous channels
attempts to promote the cause of ADR.

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