SPECIAL ASSIGNMENT OF CRITICAL ESSAYS :

ALTERNATIVE DISPUTE RESOLUTION

SUBMITTED BY :

Simran Toppo
ID No. 016/2016/1454
Semester VI, B.A. L.L.B (Hons.)

HIDAYATULLAH NATIONAL LAW UNIVERSITY

ATAL NAGAR, CHHATTISGARH
 2

SACE – I

QUESTION: Critically analyse the Afcons vs Cherian Varkey Construction in relation to

Section 89 of CPC, 1908?

“Discourage litigation. Persuade your clients to compromise, whenever you can. Point out to
them the nominal winner is often a real loser; in fees, expenses and waste of time. As a peace-
maker, the lawyer has a superior opportunity of being a good person”

- Abraham Lincoln

This iconic statement was said by the 16th President of the U.S., Abraham Lincoln. This shows
the paradigm shift towards Alternative Dispute Resolution mechanisms.

Just like Kesavananda Bharti1, Maneka Gandhi2 were the landmark watershed moments in the
field of Constitutional law; MC Mehta Judgments in the field of Environmental law; similarly
Afcons V. Cherian Varkey Construction3was the watershed movement in the field of
arbitration.

A revolution came when the Arbitration and Conciliation Act, 1996 was enacted and Section
89 was incorporated in the Civil Procedure Code, 1908. However, before Afcons judgment,
Section 89 particularly was like a nightmare. However after the judgment, scenario changed
completely.

 SECTION 89 OF CPC, 1908 : A BROAD OVERVIEW

 Significance of ADR

ADR has a lot of advantages over the conventional system of justice delivery. These are as
follows –

1
AIR 1973 SC 1461
2
AIR 1978 SC 597
3
2010(8)SCC 24
 3

In Trustees of the Port of Madras V. Engg. Construction Corporation Ltd. 4, the coyrt observed
– “Interminable, time consuming, complex and expensive court procedures impelled jurists to
search for an alternative forum, less formal, more effective and speedy resolution of disputes
avoiding procedural claptrap…”

This statement by the Apex Court highlights both the disadvantages of the conventional system
and advantages of the ADR mechanisms.

Also, it provides for an amicable dispute resolution as opposed to the adversial one.

 Section 89, CPC

A revolution came up in 1999 when the CPC (Amendment) Act, 1999 was enacted with effect
from 1/7/2002. At the beginning of the Code, Alternate Dispute Resolution was included.
However, it talked only about Arbitration. However, when Section 89 was revived by the 1999
Amendment, it incorporated new forms of Dispute Resolutions like – Conciliation, Mediation,
Judicial Settlement through Lok Adalat etc.

All thanks to Law Commission of India and Malimath Committee.

Section 89 was added via the Civil Procedure Code (Amendment) Act, 1999. It provided for 4
methods of ADR –

a) Arbitration
b) Conciliation
c) Judicial Settlement including settlement through Lok Adalat or
d) Mediation

In the Statements and Objectives of the Bill, it was stated that it was brought to implement 129th
Law Commission Report.

Also, Order I, Rule 1 of the Second Schedule says that – “where in any suit, all the parties
agree that any matter in difference between them shall be referred to arbitration, they may, at
any time before judgment is pronounced; apply to the court for an order of reference”.

4
(1995) 5 SCC 531
 4

 SITUATION PRIOR TO AFCONS INFRASTRUCTURE LTD. V. CHERIAN

VARKEY CONSTRUCTION CO. (P) LTD.

Before this judgment, the situation was very confusing about the procedure laid down under
Section 89.

Only Salem Advocate Bar Association, Tamil Nadu V. Union of India5 was one such case
which had tried to venture into various dimensions of ADR such as – the meaning of variius
ADR processes etc.

In this case, the Court had even hinted towards the issues with the language of Section 89 by
stating that – “If the reference is to be made to arbitration, the terms of settlement formulated
by the court will be of no use, as what is referred to arbitration is the dispute and not the terms
of settlement; and the Arbitrator will adjudicate upon the dispute and give his decision by way of
award”.

Though Salem Advocates Case6 was landmark for its own reasons. However, it still did not
answer the other complicated questions which related to S. 89, which was ultimately paid
attention to by the Supreme Court in Afcons Judgment.

It situation was nothing but a nightmare for the Trial Judge.

 AFCONS INFRASTRUCTURE LTD. V. CHERIAN VARKEY CONSTRUCTION CO.

(P) LTD.

The discussion of the case can be done under following headings –

 Facts

The 2nd respondent (Cochin Port Trust) allotted the construction work of certain roads and
bridges to Afcons Infrastructure Ltd. For this, an agreement was effected.

Subsequently, Afcons sub-contracted a part of that work to Cherian Varkey Construction Co.
(the respondent).

5
W.P. (Civil) 496 of 2002
6
Supra
 5

The Respondent filed a suit against then Appellant for recovery of around 2 Crore Rs.
(including the amount due from the employer to the appellate).

It was along with the suit for an order of attachment.

For all these, the Respondent, by taking help of Section 89CPC, filed an application praying for
formulation of terms of settlement by the Court and referral by them to arbitration.

The Appellant filed a counter application to submit that they are agreeing to the referral to
arbitration or any other ADR process for that matter.

Thereafter, the Kerala High Court allowed the appeal of the Appellant against the order of
attachment, which was filed by the Respondent. Not only that, it also directed to dispose off the
application under Section 89, CPC.

Then, the trial court after hearing the parties, allowed application under S. 89, CPC.

Therefore, the Appellant filed a review petition against this order. The High Court dismissed
this petition by saying that – “the apparent tenor of section 89 of the Code permitted the court,
in appropriate cases, to refer even unwilling parties to arbitration”.

Against this, the matter came to the Supreme Court.

 Issues

The Supreme Court divided the issues under 2 brad categories –

1. What is the procedure to be followed in implementing Section 89 and Order X, Rule 1A?
2. Whether consent of all the Parties necessary for referring a case to arbitration under S.
89?
 Ratio Decidendi

The Ratio Decidendi of the Court were as follows –

1. The Trial did not adopt the proper procedure. Section 89 is to be invoked suo moto, once
pleadings are completed. The act of considering Section 89 only after filing of application by
the respondent was erroneous in the eyes of law.
 6

2. For referring the suit to any ADR process under Section 89, consent of all parties is
necessary.

 Obiter Dicta

The judgment is landmark because of the obiter dicta of the case. In that, while explaining the
reasons for reaching to the judgment, the Court enlightened us on various aspects of ADR. These
are as follows –

- Which cases can be referred to ADR

Section 89 uses the phrase – “where it appears to the court that there exists elements of
settlement”. This clearly implies that cases which are not suited to ADR should not be referred.

In this case, the Supreme Court laid down the kinds of cases which should be referred to ADR. It
–said that “all civil cases whether pending in civil courts or any tribunals can be referred to
ADR processes”.

It also gave examples such as –

All Cases relating to

contracts, commerce and
trade

All cases arising out of

strained relationship, such
as matrimonial cases
Cases which can be
referred to ADR (As per
Afcons Judgment) All cases which requires
continuation of pre-
existing relationship. For
e.g. Members of societies,
neighbors etc.

All cases of tortious

liability which also
includes motor accident
claims and consumer
disputes
 7

As already been mentioned, the court said that except for excluded categories, reference to all
other categories is mandatory. However, that reference can be made only after the consent
of all parties to the suit.

- Which cases cannot be referred to ADR

Apart from specifying which cases can be referred to ADR, this judgment also laid the cases
which cannot be referred to ADR. These are as follows –

Representative suits (under Order I

Rule 8) involving public interest or
those kinds of interest which involve
various persons and are not party to
the suit

Those relating to election to public

offices

Cases which cannot be Those involving serious allegations of

referrd to ADR (As per fraud, document fabrication, coercion,
Afcons judgment) forgery etc.

Those involving prosecution of

criminal offences

Those requiring protection of sections

of society such as - minors, deities etc.

- Whether it is mandatory to formulate the possible settlement before reference?

The Court answered it in negative by saying that – “it is not necessary for the court to formulate
and reformulate the terms of possible settlement before referring the dispute to arbitration. It’s
 8

sufficient even if court merely describes the nature of dispute or its summary and makes the
reference”.

- The Supreme Court pointed out various drafting errors in Section 89

In this case, the Apex Court pointed out various drafting errors in Section 89, CPC, which create
confusion. These are as follows –

a) Definition of ‘Mediation’ and ‘Judicial Settlement’ have been mixed under Section
89(2)(c) and S.89(2)(d)

The court pointed out that under S. 89(2)(c), Judicial Settlement refers to a situation where
the court refers to a suitable institution or person, who shall be deemed to be Lok Adalat.
The definition of Mediation under S. 2(89)(d) provides for the role of court to give effect to
the terms of mediation settlement.

The Court said – “It makes no sense to call a compromise effected by the court, as
mediation, as is done in clause(d). Nor does it make any sense to describe a reference made
by a court to a suitable institution or person for arriving at a settlement as judicial
settlement, as is done in clause(c)”.

In common parlance, Mediation is more similar to Conciliation not Judicial Settlement.

So, the court said that Section 89 tries to confuse people by giving different meaning to the
terms than the common parlance.

b) Section 89 provides for the final process laid down under Section 73(1) of the
Arbitration and Conciliation Act, 1996, as the Pre-ADR reference stage under
Section 89

The Court pointed out that, if the court will formulate the terms of settlement at pre-ADR
stage, then what is the point of going for ADR process.

Basically, what is required to be done at the final stage has been stated for the pre-ADR
stage under Section 89.
 9

Also, it is not easy to formulate terms of settlement even though it is tentative. It will require
going through the pleadings of the parties etc. It is extremely time taking, thus diluting the
main objective of ADR.

As already stated, in Afcons Case, the Court said that – “it is not necessary for the court to
formulate and reformulate the terms of possible settlement before referring the dispute to
arbitration. It’s sufficient even if court merely describes the nature of dispute or its summary and
makes the reference”.

- What will happen if parties do not give consent to reference?

The Court, in this judgment gave answer to this question also. It said – “the court should,
keeping in view the preferences/options of parties, refer the matter to any one of the other three
other ADR processes - Lok Adalat; Mediation by a neutral third party facilitator or mediator or
Judicial settlement, where a Judge assists the parties to arrive at a settlement”.

And, if that is also not feasible and appropriate, then the Court said – “If the reference to the
ADR process fails, on receipt of the Report of the ADR Forum, the court shall proceed with
hearing of the suit”.

 CONCLUSION

Hence, we can see how important this judgment was for Section 89. This judgment gave answers
to so many complicated questions which used to create unnecessary confusion in the past. This
judgment finally put an end to all those complications. As it has been rightly pointed out-
before Afcons judgment, Section 89 used to be a ‘Trial Nightmare’.
 10

SACE – II

Question: Describe the concept of mediation and try to differentiate from concept of
Conciliation?

“My advice, after being in the legal profession for over 40 years in different capacities, is that
you must keep the option of going to courts as last resort. Use this last resort only after
exploring the option of ADR – Arbitration, Mediation and Conciliation”

- CJI N.V. Ramana

This statement was said by CJI NV Ramana at the curtain raiser and stakeholders’ conclave of
the International Arbitration and Mediation Centre, Hyderabad. This shows the importance of
ADR mechanisms in our country.

As per the recent answer given by the Minister of Law and Justice, Shri Ravi Shankar
Prasad on September 20, 2020, these many cases are pending in the Supreme Court, High
Courts and District& Subordinate Courts 7 -

It totals up to 3.9 crore cases. It was because of overburdened courts only that the then Chief
Justice of India, CJI T.S.Thakur had cried at a public event.

The statistics are horrifying and that is why, there is an urgent need to adopt ADR mechanisms.

Incorporation of Section 89 in the CPC was a game changer in the field of ADR. And, out of all
ADR mechanisms, mediation and conciliation have become very popular these days.

7
Parliamentary Questions, https://pqars.nic.in/annex/252/AU1381.pdf , (last visited December 5,2021)
 11

 ADR VIS-À-VIS INDIAN LAW

Before proceeding further, it is very important to have a broad overview of the position of ADR
in the Indian legal system.

 ADR under the Constitution of India

There are various provisions of the Constitution which relate to the aims and objectives of ADR.
These are as follows –

Equality before law

(Right to equal access to
Justice)
Article 14 The ordinary process of
dispte resolution in courts
is very costly for many
people
Right to Speedy Trial
(ADR mechanisms ensure
expedient delivery of justice
unlike the normal courts where
cases remain pending for
CONSTITUTIONAL years)
PROVISIONS WHICH
RELATE TO THE Article 21 Right to access to Justice
AIMS AND
OBJECTIVES OF ADR (Non-technical; Non-costly
nature of ADR mechanisms make
this possible)

Right to Free
Legal Aid

Right to Free
Legal Aid
Article 39A
Right to Equal
Justice
 12

Based on this Constitutional backing, the Parliament came up with initiatives such as – The
Arbitration and Conciliation Act, 1996; Section 89 CPC, Legal Services Authorities Act,
1987etc.

The Government also took initiatives such as – Legal Aid camps; Mediation Centers etc.

 ADR under Statutes

Talking about ADR, we have mainly 3 Statutes –

1. Civil Procedure Code

Section 89 was added via the Civil Procedure Code (Amendment) Act, 1999. It provided for 4
methods of ADR –

e) Arbitration
f) Conciliation
g) Judicial Settlement including settlement through Lok Adalat or
h) Mediation

In the Statements and Objectives of the Bill, it was stated that it was brought to implement 129th
Law Commission Report.

Also, Order I, Rule 1 of the Second Schedule says that – “where in any suit, all the parties
agree that any matter in difference between them shall be referred to arbitration, they may, at
any time before judgment is pronounced; apply to the court for an order of reference”.

2. Arbitration and Conciliation Act, 1996

This was enacted to give effect to recommendations of Justice Malimath Committee Report,
which recommended that – “If a law is enacted giving legal sanction to such machinery for
resolution of disputes and resort thereto is made compulsory, much of the inflow of commercial
litigation in regular civil courts gradually moving up hierarchically would be controlled and
reduced”.

Agreeing with the Law Commission Report, this also recommended for the establishment of
Conciliation Courts.
 13

This Act was also based upon UNCITRAL Model Law.

3. Legal Services Authorities Act, 1987

This Act complements the ADR processes by providing for free legal services to weaker sections
of the society who cannot afford justice because of economic disabilities. It talks about
establishment of National Legal Services Authority (Chapter II); State Legal Services
Authority (Chapter III) etc.

It also provides for establishment of Lok Adalast, which has become one of the most important
mechanisms of ADR.

Apart from these, we have specific statutes which itself talk about ADR mechanisms such as
–

One of the recently repealed farm laws talked about it. For e.g. In the Farmers
(Empowerment and Protection) Agreement of Price Assurance, Farm Services Act,
2020[Also known as Contract Farming Law] talked about dispute resolution through –
‘Conciliation Board’.

 MEDIATION

Having discussed the basics of ADR, we are now in a position to discuss the concepts of
Mediation and Conciliation. The first is Mediation.

 Meaning of Mediation

In Afcons Infrastructure Ltd. V. M/S Cherian Varkey Contruction Co. Ltd.8, the court defined
Mediation as – “Mediation means the process by which a mediator appointed by parties or by
the Court, as the case may be, mediates the dispute between the parties to the suit by the
application of the provisions of the Mediation Rules, 2003 in Part II.”

Talking about the procedure, the court in Afcon Case9 further said – “..by facilitating discussion
between the parties directly or by communicating with each other through the mediator, by

8
SLP (C) No. 760 of 2007
9
Supra
 14

assisting parties in identifying issues, reducing misunderstandings, clarifying priorities,

exploring areas of compromise, generating options in an attempt to solve the dispute and
emphasizing that it is the parties own responsibility for making decisions which affect them”

The court provided a very comprehensive explanation of Mediation in this case.

Basically, it is a method of alternative dispute resolution which involves negotiated

settlement by taking help of the neutral third party.

 Legal Backing

Mediation is recognized under Section 89(1)(d) of the Civil Procedure Code.

In Salem Advocate Bar Association, Tamil Nadu V. Union of India10, the Court said that –
“Section 89(2)(d) only means that when mediation succeeds and parties agree to the terms of
settlement, the mediator will report to the court and the court, after giving notice and hearing to
the parties effect the compromise and pass a decree in accordance with the terms of settlement
accepted by the parties.”

Therefore, we can say that in Mediation process, the court only plays a symbolic role of giving
effect to the terms agreed in the Mediation process. The main role is played by the Mediator and
the parties.

Also, in Afcons Case11, the court clearly said that – “In complex cases, mediation is better
option than Lok Adalat or Judicial Settlement”.

 Difference between Court Annexed Mediation and Private Mediation12

There are broadly two kinds of Mediation and the difference between them are as follows –

Court Annexed Mediation Private Mediation

Court provides the Mediation services Services are provided by a private person

10
W.P. (Civil) 496 of 2002
11
Supra
12
Dr. Masiport A., Resolving Pending Cases Through Alternative Dispute Resolution Under Section 89 Of Civil
Procedure Code: A Case Study, DEPARTMENT OF JUSTICE (December 12, 2021, 7:15am)
https://doj.gov.in/sites/default/files/GNLU.pdf
 15

Considered a part of the Judicial System Not considered

In this, the mediators may be advocates or Any person
judicial officers
In this the Mediation and Conciliation Project Not really required
Committee Training is mandatory

 Who can be a Mediators (Court Annexed Mediation)?

Rule 3 of the Mediation and Conciliation Rules, 2004 empowers the High Court and District
and Sessions Judge to form a panel for the appointment of mediator.

Rule 4 of the said Rule lays down criteria to be appointed as mediator. These are as follows –

Retired Supreme
Court Judges

Retired High
Court Judges

Retired
District/Sessions
Judges
Qualifications of
Mediators (Rule 4 of Retired Officers of Delhi
the Mediation and Judicial Services
Conciliation Rules,
2004)
Legal Practitioners with 10
years experience at Bar (at
Supreme Court, High Court or
District Court level)

Experts/Other Legal
Professionals with at least
15 years of experience

Experts in
Conciliation/Mediation
 16

Also, Mediation Training Manual13 issued by the Mediation and Conciliation Project
Committee of the Supreme Court of India lays down comprehensive criteria and guidelines as
to how a Mediator. It lays down things such as – A mediator must maintain confidentiality of the
matter of case; assisting the parties to generate options; supervising the process etc.

Talking about maintaining confidentiality, the Supreme Court in Perry Kansagra V. Smriti
Madan Kansagra14 gave utmost importance to this requirement and held that this requirement is
mandatorily to be followed.

Also, former Supreme Court Judge Justice Madan B. Lokur had said that – “Advocate
Mediators should not consider mediation as a source of income but practice it in the spirit of
service to the society.” That is why, the criteria of minimum 10 years of practice has been
added.

 Process of Mediation

As per the Mediation Training Manual issued by the Supreme Court of India 15, the
Mediation involves the following stages –

13
SUPREME COURT OF INDIA,
https://main.sci.gov.in/pdf/mediation/MT%20MANUAL%20OF%20INDIA.pdf (Last Visited
December 8, 2021)
14
Civil Appeal No. 1694 of 2019
15
Supra
 17

This module in its Chapter XII16, lays down the role of Referral Judges also. For e.g. as per
this module, if settlement fails through Mediation, it is the duty of the referral judge to still look
for possibilities of settlement.

 Benefits of Mediation

The process of Mediation has various benefits. These are as follows –

16
Supra
 18

1. Informality : The element of informality can be seen from the following characteristic
features of Mediation such as –
a) No Court Rules/ Legal precedents
b) Mediator does not impose any decision upon the parties
c) Solution lies with the parties themselves
2. Privacy and Confidentiality : It happens in a private set up. The mediator is also obligated
to maintain confidentiality.
3. Control : Parties have all the control. They can even decide to terminate their participation
from the process.
 Challenges

Despite all the good things, somehow, the benefits of Mediation gets diluted because of the
following drawbacks –

1. Lack of Training : Though the Supreme Court has formulated a Training Manual17, its
implementation and application does not show on the ground.
2. Ignorance of Principles laid down in Afcons judgment18 : For e.g. in that, the Supreme
Court has clearly laid down that matters involving general public interest should not be sent
for Mediation. But still, the Babri-Masjid dispute, which involved very sensitive public
interest of the general public was sent for mediation. Even various Constitutional experts
such as – Indira Jaising19, AG Noorani20 wrote columns as to why it should have been done
through the Court not Mediation.

17
Supra
18
Supra
19
Indira Jaising, Babri Masjid Case Must Be Decided in Court, Not Through Mediation, THE WIRE (December 11,
2021, 4:50pm)
https://thewire.in/law/babri-masjid-case-mediation
20
AG Noorani, OPINION | The idea of mediation in the Babri masjid case is inherently flawed, HINDUSTAN TIMES
(December 11, 2021, 3:11pm)
https://www.hindustantimes.com/analysis/the-idea-of-mediation-in-the-babri-masjid-case-is-inherently-
flawed/story-TWaKUOZue0tvwAal5JXsHM.html
 19

 CONCILIATION
 Brief History of the Concept

In 1920, for the first time, the concept of Conciliation got legal recognition in India through the
Trade Disputes Act, 1920. It provided for the constitution of a Board of Inquiry to conciliate
employment disputes. However, the British decided not to implement this Act and they came up
with another Act.

The Trade Disputes Act, 1929 : It provided for Voluntary Conciliation.

The Industrial Disputes Act, 1947 : Two different Bodies for providing conciliation –
Conciliation Board and Conciliation Officer

77th Law Commission Report (1978) : It recommended the model of ‘Conciliation Courts’
which was being adopted by countries such as – Japan, France, Norway etc.

In the International Front, independent to the developments happening in India, UNCITRAL

Model Law (1980) was framed which also consisted Conciliation Rules for solving
International Commercial Disputes.

Himachal Pradesh’s Pilot Initiative on Conciliation Courts

129th Law Commission Report (1988) : Recommended that Himachal Pradesh’s Model should
be adopted in the entire country.
 20

Arbitration and Conciliation Act, 1996 and Section 89 added in CPC (1999) : Both these
were remarkable achievements in the field of ADR. It laid down the modern institutional
mechanism for Conciliation.

 Legal Backing

Conciliation is one of the recognized methods under Section 89 CPC. It states that – “if the
dispute has been referred to Conciliation then, the provision relating to Conciliation shall be
governed by the Arbitration and Conciliation Act”.

In Afcons Infra. Ltd. V. M/S Cherian Varkey21, it was held by the Supreme Court that – “If the
Court decides to refer the dispute to conciliation then, consent of all parties is necessary”.

Conciliation is governed by the Part III of the Arbitration and Conciliation Act, 1996.

 Meaning of Conciliation

In Salem Advocate Bar Association, Tamil Nadu V. Union of India22, the Supreme Court
explained the meaning of Conciliation as – “Settlement by Conciliation means the process by
which a conciliator who is appointed by parties or by the Court, as the case may be, adjudicates
the disputes between the parties to the suit and passes an award by the application of the
provisions of the Arbitration and Conciliation Act, 1996.”

This was a very comprehensive explanation given by the Supreme Court and is the best possible
definition of the process.

 Principles governing Conciliation Proceedings –

21
Supra
22
Supra
 21

Independence and
Impartiality
[Section 67(1)]

Fairness and
Justice [Section
67(2)]

Principles
Governing Confidentiality
Conciliation [Section 75, 70]
Proceedings
Disclosure of
Information
[Section 70]
Co-operation of
Parties with
Conciliator
[Section 71]

 Characteristic Features of Conciliation

1. No Technical Rules (Section 66)

It provides that the conciliation process is not bound by the rules of CPC, 1908; Indian
Evidence Act, 1872 etc.

However, the Conciliator must adhere to the principles of Natural Justice.

2. Negligible Evidentiary Value (Section 81)

In Arbitral or Judicial Proceedings, the parties cannot bring the following things as evidence –

a) admission by other party in the conciliation proceedings

b) proposals made by the conciliator
c) views expressed, suggestions made by other party to settle dispute in the conciliation
proceedings
d) the fact of willingness expressed by the other party to accept settlement proposal made by
the conciliator.
 22

Hence, this proves that whatever transpired during conciliation proceedings has very negligible
evidentiary value.

3. Freedom to choose the place of meeting [Section 69(2)]

4. Communication between Conciliator and Parties [Section 69(2)]

The conciliator can communicate with the parties either separately or jointly; either orally or in
writing.

 Procedure of Conciliation

PROCEDURE OF
CONCILIATION

Commencement of
Conciliation Proceedings
[Section 62]

Submission of
Statements to
Conciliator [Section 65]

Conduct of Conciliation
Proceedings
[Section 69(1), 67(3)]

Administrative
Assistance [Section 68]

 Settlement

It is the role of the Conciliator to assist the parties to reach an amicable settlement. He can
make proposals for settlements at any point of time.

As per Section 67(4), it is not mandatory for it to be in writing or be accompanied by statement

of reasons.
 23

Section 72 provides that even the parties may, either in their own initiative or upon the invitation
of the conciliator submit the suggestions for settlement to the Conciliator.

According to Section 73(1), when it appears to the Conciliator that there exists an element of
Settlement, he shall formulate the terms of possible settlement and submit them to the parties.

 Benefits of Conciliation

It has following benefits such as –

a) More flexible procedure

b) Autonomy of parties ensures
c) Confidentiality
d) Cost-effective
e) Amicable settlement of dispute

 DIFFERENCE BETWEEN MEDIATION AND CONCILIATION

Though both the concepts appear similar, they both are two different concepts in the eyes of law.
There are various differences between the two. We have already discussed the following points
and here, it has only been presented as a summary. These are as follows –

1. Mediation may be Private or Court Annexed. But, Conciliation can never be private

By the words of Section 89, it is clear that the Court has to refer the case to Conciliation, the
parties cannot, by themselves go for private conciliation.

2. The Settlement Award formulated by the Conciliator, if agreed by the parties becomes
binding on them. This is not the case with Mediation

In Mediation, it becomes binding only when the Court effects it.

As Justice M. Jagannadha Rao23, in his publication at Law Commission had said – “the
conciliator can make proposals for settlement, formulate or reformulate the terms of a possible

23
Justice M. Jagannadha Rao, Concepts Of Conciliation And Mediation And Their Differences, LAW COMMISSION
OF INDIA, (December 12, 2021, 6:29pm)
https://lawcommissionofindia.nic.in/adr_conf/concepts%20med%20rao%201.pdf
 24

settlement while a mediator would not do so but would merely facilitate a settlement between the
parties”.

3. Conciliation is governed by the Arbitration and Conciliation Act, 1996. Mediation is

generally governed by Legal Services Authorities Act, 1987 etc.

This was held in Afcons Judgment24.

4. In Mediation, Mediator acts as facilitator. On the other hand, under Arbitration and
Conciliation Act, 1996, the Conciliator plays a proactive role

This was highlighted by the Supreme Court in Salem Bar Association V. Union of India25. The
Court said this while analyzing Rule 16 and 17 of the Mediation and Conciliation Rules, 2004.

Talking about the role of the conciliator, the Court said – “..in exercise of powers under Section
67 and 73 of that Act, by making proposals for a settlement of the dispute and by formulating or
reformulating the terms of a possible settlement; and has a greater role than a mediator”.

Nonetheless both are similar in the fact that the nature of both the proceedings is amicable
rather than adversarial. This was highlighted in Perry Kansagra V. Smriti Madan Kansagra26.

 CONCLUSION

Hence, we can see that there are significant differences between the two processes. These two
terms are often confused by the people. They think that these are one and the same thing.

In India, we still have a long way to go. The ADR mechanisms have still not been popularized to
the extent to which it should have been. The efforts of the Judiciary and the Government to
organize workshops, awareness programs etc. are a positive step in this direction.

24
Supra
25
AIR 2005 SC 3353
26
Civil Appeal No. 1694 of 2019
 25

REFERENCES

 Textbook
1. DR. AVTAR SINGH, LAW OF ARBITRATION AND CONCILIATION (EBC 2013)
2. C.K. TAKWANI, CIVIL PROCEDURE, (EBC 2020)
 Research Papers

1. Dr. Masiport A., Resolving Pending Cases Through Alternative Dispute Resolution Under
Section 89 Of Civil Procedure Code: A Case Study, DEPARTMENT OF JUSTICE
(December 12, 2021, 7:15am)
https://doj.gov.in/sites/default/files/GNLU.pdf
2. Ojaswi Chitranshi & Daksha Bairwa, Effectiveness of Section 89 of Code of Civil Procedure,
INTERNATIONAL JOURNAL OF LAW MANAGEMENT AND HUMANITIES, Vol. 4,
Issue 2, pp. 2370-2380 (2021)
https://www.ijlmh.com/paper/effectiveness-of-section-89-of-code-of-civil-procedure/

 Articles

1. Indira Jaising, Babri Masjid Case Must Be Decided in Court, Not Through Mediation, THE
WIRE (December 11, 2021, 4:50pm)
https://thewire.in/law/babri-masjid-case-mediation
2. AG Noorani, OPINION | The idea of mediation in the Babri masjid case is inherently flawed,
HINDUSTAN TIMES (December 11, 2021, 3:11pm)
https://www.hindustantimes.com/analysis/the-idea-of-mediation-in-the-babri-masjid-case-is-
inherently-flawed/story-TWaKUOZue0tvwAal5JXsHM.html
3. Justice M. Jagannadha Rao, Concepts Of Conciliation And Mediation And Their Differences,
LAW COMMISSION OF INDIA, (December 12, 2021, 6:29pm)
https://lawcommissionofindia.nic.in/adr_conf/concepts%20med%20rao%201.pdf
4. Feroz Pathan, The anomaly in Afcons Infrastructure case, The Daily Guardian, (December
14, 2021, 3:11pm)
 26

https://thedailyguardian.com/the-anomaly-in-afcons-infrastructure-case/
5. K.S. Ravichandran, Parties Must Agree To Have Their Disputes Resolved Through
Arbitration – Even Under Section 89 Of CPC!, MONDAQ, (December 11, 2021, 8:21am)
https://www.mondaq.com/india/arbitration-dispute-resolution/137680/parties-must-agree-to-
have-their-disputes-resolved-through-arbitration-even-under-section-89-of-cpc
6. Law Times Journal, An analysis of alternative dispute resolution under section 89 of civil
procedure code, LAW TIMES JOURNAL, (December 14, 2021, 7:34pm)
https://lawtimesjournal.in/an-analysis-of-alternative-dispute-resolution-under-section-89-of-
civil-procedure-code/
 Websites

1. Parliamentary Questions, https://pqars.nic.in/annex/252/AU1381.pdf , (last visited December

12,2021)
2. SUPREME COURT OF INDIA,
https://main.sci.gov.in/pdf/mediation/MT%20MANUAL%20OF%20INDIA.pdf
(Last Visited December 8, 2021)