Proposed Amendment of Section 89 of Civil Procedure Code, 1908


 

Backdrop to section 89

The objective of the 129^th report of the law commission is to make Alternative Dispute Resolution effective and obligatory in courts.  When the parties fail to settle their disputes by means of an alternate dispute resolution settlement then they may proceed with the section under which the suit was originally filed.

Clause 7 seeks to insert a new section 89 in the Code in order to provide for alternate dispute resolution which facilitates for the settlement of disputes outside the court. The provisions of clause 7 are based on the recommendations made by Law Commission of India and Malimath Committee. It was recommended by the Law Commission of India that the court may require attendance of any party to the suit or proceedings to appear in person with a view to arriving at a feasible settlement of dispute between the parties. It was further suggested by the Malimath Committee to make it obligatory for the court to refer the dispute, for settlement after issues are framed, either by way of arbitration, conciliation, mediation, judicial settlement or through Lok Adalat. When the parties fail to get their disputes settled through any of the alternative dispute resolution methods then the suit could proceed further.   

129^th report of the law commission of India referred to Order XXVII of the CPC rule 5B which provides that in a suit to which it applies, it should be the duty of the court to make every endeavour where it is possible to do so with the nature and circumstances of the case to assist the parties in arriving at a settlement of the dispute. Where the court is of the opinion that there is a reasonable possibility of a settlement between the parties to the suit, the proceedings may be adjourned for such period as it thinks fit to enable attempts to be made to effect such settlement. In fact the rule 5B turns out to be a limitation which expects the court before which the suit is pending to itself attempt to conciliate the dispute.

 

Section 89 in Afcons case

Section 89 enacted with a lofty objective, has revealed manifest drafting errors, which in turn gave rise to complexities in understanding its true scope and purpose. The Supreme Court observed in Afcons Infrastructure Case that the correct interpretation and understanding of the provision has become difficult for the judges to interpret.

The court observed that the sub-section requires formulating the terms of settlement and placing them before the parties and then reformulating the terms after observation by the parties of a possible settlement. It further shows that on such reformulation, the court shall have to refer the dispute for one of the five ADR methods, which is absurd.

This report briefly explains the errors in Section 89 of Civil Procedure Code which was also observed by the Supreme Court in Afcons Infrastructure case that there are many drafting errors in Section 89 and suggested amendments to the Section which may be considered by Law Commission of India. To facilitate the removal of the deficiencies in Section 89 which is a significant provision for facilitating dispute resolution in civil matters and to make it more simple and straightforward, the Law Commission has earlier proposed amendments to Section 89 CPC as well as Order X Rules 1-A to 1-C. 

 

Refund of the court fee

With regard to the amendment of Section 21 of the Legal service Authorities act, wherein the court fee shall be considered for refund to the plaintiff, only when the ADR has derived at an award for the dispute, otherwise the plaintiff’s case will be adjudged for cost by the court when the ADR does not grant an award or the parties to the dispute. 

 

Conclusion

The foremost reason for the misinterpretation of the Section 89 of the CPC is primarily due to the drafting errors in that section which is abstractly understood by its readers. Secondly, the incorporation of the two sub-sections (i.e. Section 89 (c) (d)) has been erroneous which has in fact made it difficult even for the layman to interpret. Since sub-sections a and b of section 89 are governed by the Arbitration and conciliation Act of 1996, its understanding has become rather effortless, but the other two sub-sections do not have any specific acts which govern them, not to forget that there are general laws and acts which aid them, so the court should persuade parties to resolve their disputes by ADR where the proceedings in the courts have not been commenced and the issues have been framed.  

The complete proposal is available for reading from this webpage.

http://www.scribd.com/fullscreen/79323880?access_key=key-jaih12ykexptx9zefnf