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Judicial precedents of ADR in India

With the uprising development of nation the burden falls over the judiciary. Even at this 21st century there is a lack of required law for establishing social norms and peace. Our judiciary system should give scope to such alternative methods. To fasten the process of resolution ADR plays an evolutionary role.

After the implication of Arbitration and conciliation Act, 1996 occurred encourage the settlement of dispute though such alternative methods. Followed by the establishment of Lok-Adalats Scope of ADR got enhanced. Our legislative guidelines imposed obligation on the Indian Courts to encourage the settlement of disputes through ADR. Various judicial pronouncements referred the case to arbitration as commence by the parties to the case.

In this article we are going to discuss the evolution of ADR in India alongside the judicial recognitions towards such alternate dispute settlements.

What is judicial precedent?
Article 141 of Indian Constitution[1] provided Supreme Court the power to bind all the courts by its decision except itself. Unless a judgement by Supreme Court is overruled, it is binding on all the courts except Supreme Court. The principles need interpretation by a judiciary to clarify the ambiguity. And there should be a suppressing interpretation to guide the meaning of legislative approaches created. Supreme Court being such supreme interpreter has provided certain judgements on ADR to make it a more definite process in India.

Definition of ADR

ADR is a dispute resolution process occurs mostly in commercial disputes ensuring better confidentiality. It is an alternative method to judiciary proceedings Arbitration has been prevailed over centuries as an alternative for dispute resolution in municipal courts. Dispute resolution by a third party outside the court ensures many positive impacts besides a faster settlement in a more justified way.

The first Arbitration Act, 1940[2] in India was not fully implemented due to inadequacy. Later Arbitration and conciliation act, 1996[3] was passed followed by the UNCITRAL Model[4] in order to encourage the establishment of arbitration, conciliation and other alternative dispute resolution.

As the over burdened courts started going towards slow adjudication midst rapid development of business sector, alternative dispute resolution started digging its way. In Indian business operations in national and international prospectus, ADR brought its popularity. Being an alternative to all existing dispute resolution methods with positive impact arbitration became one of the most popular methods of ADR.

ADR in India: - Arbitration has undergone a massive replacement in India, i.e. coming from settlements in villages under trees to enacting a progressive legislation body. Derived from the Model law and the UNCITRAL Arbitration Rules[5], India implemented the Arbitration and conciliation Act of, 1996. Arbitration and conciliation Act aims at more effective and use full arbitration process and reducing the technicality by incorporating modern concept of Arbitration in India.

Large number of disputes pending before various judicial premises requires ADR for an effective resolution in India. ADR provides frameworks such as arbitration, mediation, conciliation, lok Adalat etc for dispute resolution in India.

222nd report of Law Commission of India

The report[6] explained the crowded litigation before Indian judiciary. The time consuming procedure becomes difficult with the lengthy pending cases. There is this urge of faster dispute resolution. Accordingly court reforms were required.

The said report passed in 2009 stated that:
With the advent of the ADR, there is a new avenue for the people to settle their disputes. More and more ADR centers should be created for settling disputes out-of-court as is being done in many other countries. ADR methods will really achieve the goal of rendering social justice to the people, which really is the goal of the successful judicial system.

The recommendation stated there is a need of ADR mechanism to be carried forward faster as justice dispension.

Judicial Precedents in India

Legislative bodies regulating ADR

Indian Constitution embedded ADR under Article 14 and Article 21 where it explains equality and right to life and liberty. ADR is a mechanism works for achieving constitutional goal. Other legislative body such as Arbitration and conciliation Act, CPC[7], Legal service Authority Act[8] works as regulatory body for Indian ADR mechanism.

Indian judicial interpretations roam around the validity of court jurisdiction and appointment of arbitrators and validity of award passed by such ADR procedures. Following are some landmark judgement providing direction to ADR method and the extent of acceptance.

Section 89 of CPC states that, courts should provide a fair opportunity for parties to decide the settlement after observing the circumstances, and after all those observation a term of settlement must be framed by such court. With possible settlement methods such as Arbitration, conciliation, mediation and lok adalat parties will have the power to choose through implementing clauses in their agreement. Questions were raised for this said section which and duly amended citing the requirement of ADR for Indian dispute settlement including international aspects.[9]
  • In the case of Emkay Global Financial Service Limited v. Giridhar Sondhi[10] it was held that Arbitration Act aims at a speedy resolution of disputes.
  • Supreme Court in the case of Kinnari Mallick and anr vs. Ghansyam Das Damani[11] held that a court has no jurisdiction for petition under section 34, and the power of court is limited. Such power can be invoked before setting aside a award with the consent of one party.
  • Again in another landmark judgment of Supreme Court the place of proceeding was questioned. In the case of Brahmani River Pellets Limited v. Kamachi Industries Limited[12], it was held that when parties decide a place of jurisdiction that excludes all other court. Exactly when parties decide a place for Arbitration in the contract itself, it excludes the jurisdiction of all other courts.
  • In case of In Konkan Railway Corporation v. Rani Construction Pvt. Ltd[13] it was decided that court must help the parties in selecting a arbitrator rather than deciding the validity of arbitration clause.
  • S.B.P. & Co. v. Patel Engineering Ltd.[14] It was held that it is the judiciary power of chief justice while appointing arbitrator.
  • Supreme Court invalidates the discretionary power of High court appointing sole arbitrator by stating that appointment must be made according to arbitration Agreement.[15]
  • Supreme court in the case of Vinod Bhaiyalal Jain v. Wadhwani Parmeshwari Cold Storage Pvt. Co ., Ltd.[16] Held that there should be no biasness in part of arbitrators in order to deliver proper justice to the parties.

Future of ADR in India

Constitution of India itself expresses the object of alternative dispute redressal as to secure all citizens of India social Justice, economic and political-liberty, equality, and fraternity. ADR is the best scheme for a developing Country like India where pending disputes are rising burden for Indian judiciary.

The pressure of burden often makes it difficult to offer the justified decision. A swifter resolution process is all required under reforming laws of India. According to recent reports ADR is the best chosen method for business disputes. It clearly establishes the impact of ADR in near future as India is going through industrial revolution. A more smooth process which provides a solution in a shorter period of time under the established rule of law clears out path for Indian Judiciary.

  4. SCC Online
  1. Constitution of India
  2. Arbitration Act,1940
  3. Arbitration and Conciliation Act,1996
  4. UNCITRAL Model Law on International Commercial Arbitration (1985)
  5. UNCITRAL Arbitration rules,1976(amended 2013)
  7. Code of Civil Procedure, 1908
  8. Legal service Authority Act, 1987
  9. Section 89 ,Code of Civil procedure,1908
  10. Emkay Global Financial Service Limited v. Giridhar Sondhi
  11. Kinnari Mallick and anr vs. Ghansyam Das Damani (2018) 11 SCC 328
  12. Brahmani River Pellets Limited v. Kamachi Industries Limited
  13. Konkan Railway Corporation v. Rani Construction Pvt. Ltd(2002)2 SCC 388
  14. 8 (2005) 8 SCC 618
  16. Vinod Bhaiyalal Jain v. Wadhwani Parmeshwari Cold Storage Pvt. Co ., Ltd.

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