Chapter-3

Legal and Constitutional provisions

………The jurisprudence of Access to justice as an integral part of social

justice and examine the constitutionalism …….. as a facet of human
rights highlighted in our Nation’s Constitution. If the state itself should
travesty this basic Principle, in the teeth of Articles 14 and 39-A, where
an indigent widow is involved, a second took at its policy is overdue.99

……Krishna Iyer J.

The Constitution of India based on the concept of welfare state. It

is the duty of the state to secure access to justice to its citizens by
ensuring judicial and non-judicial forums of dispute resolution that
provides timely and effective justice and enforcement of their legal and
fundamental rights. Ignorance, poverty and other social infirmities should
not become barriers to securing justice.

It is settled now that free legal aid must be provided to the indigent
person, who cannot defend themselves in a court of law due to the reason
of money and other and now it also mandatory under Article 39-A and
Article 21 of the Indian Constitution.100

The law has to help the poor who do not have means to fight their
causes. The Constitutional Mandate rescue operation began with justice
V.R. Krishna Iyer and Justice P.N. Bhagwati’s Committee Report, weaks
section thus become enable to approach law court’s right from Munsif
courts to the Supreme Court. CILAS (Committee for the implementation

99
State of Haryana Vs. Darshan Devi, AIR 1979 SC 855
100
Avtar Singh –―Law of Arbitration and Conciliation‖ PP 397-398, 7 Edition, Eastern book Company,
Lucknow

88
of Legal Aid Services) also come on the scene. Based on this states
adopted (through state legal Aid and advice Boards) Lok adalat.101

3.1 Constitutional Provision –

3.1.1- Preamble

Our Constitution reflects this aspiration in the Preamble itself,

which speaks about justice in all its forms: social, economic and political.
The Preamble secures to all the citizens of India – Justice- Social,
economic, and political. The expression Justice briefly speaking its ―the
and Legal Aid Camps, Family Courts, Village Courts, Mediation Centres,
Commercial arbitration, Women Centres Consumer Protection Forums,
etc which are but various facets of effective Alternative Dispute
Resolution system.102 Constitution of India103 is the grund-norm of this
country; it contains provisions which indicate promotion of justice
harmonious reconcilement of individual conduct with the general welfare
of society. An act or conduct of a person is said to be just if it promotes
the general well-being of the community.

Therefore, the attainment of the common good as distinguished

from the good of individuals is the essence of justice. Legal justice is a
part of social justice. As whenever the legal justice is denied the society
gets disturbed. A legal system is part of state which maintains social
harmony through dispute resolution. In a country, which aims to protect
the socio-economic and cultural rights of citizens, it is extremely
important to quickly dispose the cases in India, as the Courts alone cannot

101
Dr. Anupam Kurlwal, An Introduction of Alternative Dispute Resolution System.
102
See P.N. Bhagawati on the need to create adequate and effective delivery system of justice in
Chapter VI of ―Social Justice – Equal Justice‖ P.33
103
Narendra Kumar – ―Constitution of India‖ PP.28, 250

89
handle the huge backlog of cases. This can be effectively achieved by
applying the mechanisms of Alternative Dispute Resolution.

3.1.2 Article 21 of the Constitution of India

Article 21 declares in a mandatory tone that no person shall be deprived

of his life or his personal liberty except according to procedure
established by law.

The word ―life and liberty‖ are not to be read narrowly it is very wide in
its sense.

In Hussainara Khatoon I Vs. Home Secretary, Bihar104 it has been

interpreted that right to speedy trial is also a part of the right to life and
personal liberty. The Supreme court has allowed Article 21 to stretch
aims as wide as legitimately can.105

The reason of this liberal interpretation was very simple that Article-21 is
to redress that mental agony, expenses and strain which a person
proceeded against in litigation has to undergo and which, coupled with
delay, may result in impairing the capacity or ability of the accused to
defend himself.

The same has received recognition from the legislature as well as in the
form of introduction of Alternative Dispute Resolution and Alternative
Dispute Resolution Mechanism through various statutes.

104
Hussainara Khatoon (No.) V. Home Secretary, Bihar, AIR 1979 SC 1360; Kadra Pahadiya V. State
of Bihar, AIR 1982 SC 1167; Raghubir Sing V. State of Bihar, (1986) 4 SCC 481. See also Raj Deo
Sharma V. State of Bihar, AIR 1998 SC 3281; Common Cause, Registered Society V. Union of India,
AIR 1997 SC 1539; Kartar Sing V. State of Punjab, (1994) 3 SCC 569; Akhtari Bai V. State of M.P.,
AIR 2001 SC 1528 : In this case it is ruled that where matters are not disposed of within a period of say
5 years for no fault of the convict, they should be released on bail.
105
Article 21 is Fundamental right that can be directly enforced in the Supreme Court under Article 32
of the Constitution of India.

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3.1.3 Article 39-A Free Legal Aid

Article 39-A obligates the State of secure that ―the operation of the legal
system which promotes justice, on a basis of equal opportunity, and shall,
in particular, provide free legal aid, by suitable legislation or schemes or
in any other way, to ensure that opportunities for securing justice are not
denied to any citizen by reason of economic or other disabilities.‖106
Thus promotion of justice is most important function of a state and ADR
mechanisms helps in it. Hence much legislation like Arbitration and
Conciliation Act 1996 ; Section 89 of CPC ; Legal Services Authority Act
1987 have been passed to promote justice.107

3.2 Legal Provisions related to ADR -

―The first Commandment to our legislative freedom fighters ought to be

to bury these codes and the Evidence Act but re-create a simple, spacious,
modern, and business management oriented code with scope for judicial
initiative in doing justice to the people.‖

…….Justice Krishna Iyer

In India Arbitration since end of nineteenth century was a

statutorily recognized form of dispute resolution. The arbitration was
originally governed by the provisions contained in different enactments,
including those in the Code of Civil Procedure; the first India Arbitration
Act was enacted in 1899, which was replaced by the Arbitration Act
1940. So Arbitration as an alternative to litigation was a recognized
concept. But arbitration under this Act suffered the same maladies like
courts as it allowed parties in every trivial matter resort to courts and
ultimately frustrate the objective of arbitration as an alternative to

106
This Directive Principle was inserted by the Constitution 42 nd Amendment Act, 1976
107
Dr. Anupam Kurlwal, An Introduction of Alternative Dispute Resolution System page 114

91
litigation. In Guru Nank Foundation V. Rattan Singh108 the Supreme
Court of India while referring to the 1940 Act, observed that “the way in
which the proceedings under the Act are conducted and without an
exception challenged in courts has made lawyers laugh and legal
philosophers weep” in view of “ unending prolixity at every stage
providing a legal trap to the unwary.” The Supreme Court made further
observation in Food Corporation of India. V. Joginderpal109 that the
law of arbitration must be simple less technical and more responsible to
the actual reality of situations, responsive to the canons of justice and fair
play.

There are several statutes recognized Alternative Dispute Resolution

Mechanism such are –

3.2.1 Civil Procedure code 1908

(i) Section 89. Settlement of disputes outside the Court. –

(1) Where it appears to the court that there exist elements of a

settlement which may be acceptable to the parties, the court shall
formulate the terms of settlement and give them to the parties for
their observations and after receiving the observations of the
parties, the court may reformulate the terms of a possible settlement
and refer the same for –

(a) arbitration ;
(b) conciliation ;
(c) Judicial settlement including settlement through Lok Adalat
; or
(d) mediation.

108
AIR 1981 SC 2075
109
AIR 1989 SC 1263

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(2) Where a dispute has been referred –

(a) for arbitration or conciliation, the provision of the

Arbitration and Conciliation Act, 1996 (26 of 1996) shall
apply as if the proceedings for arbitration of conciliation
were referred for settlement under the provision of that Act;

(b) to Lok Adalat, the court shall refer the same to the Lok
Adalat in accordance with the provisions of sub section (1)
of section 20 of the legal Services Authority Act, 1987 (39 of
1987) and all other provisions of that Act shall apply in
respect of the dispute to referred to the Lok Adalat;

(c) For judicial settlement, the court shall refer the same to a
suitable institution or person and such institution or person
shall be deemed to be a Lok Adalat and all the provisions of
the Legal Services Authority Act, 1987 (39 of 1987) shall
apply as if the dispute were referred to a Lok Adalat under
the provision of the Act;

(d) for mediation, the court shall effect a compromise between

the parties and shall follow such procedure as may be
prescribed.

Section 89 lays down that whereby it appears to the court that

there exists element of settlement, which may be acceptable to the parties,
the Court shall formulate the terms of the settlement and give them to the
parties for their comments. On receiving the response from the parties,
the Court may formulate the possible settlement and refer it to either:-
Arbitration, Conciliation ; judicial Settlement including settlement

93
through Lok Adalats : or Mediation.110 In Salem Advocates Bar
Association V. U.O.I,111 the Supreme Court directed the constitution of an
expert committee to formulate the manner in which section 89 and other
provisions introduced in CPC have to be brought into operation. The
Court also directed to devise a model case management formula as well
as rules and regulations, which should be followed while taking recourse
to ADR referred to in section 89 of CPC.

(ii) Order X Examination of party by the Court

Rule 1. Ascertainment whether allegations in pleadings are admitted or

denied. At first hearing of the suit the Court shall ascertain from each
party or his pleader whether he admits or denies such allegations of fact
as are made in plaint or written statement (if any) of the opposite party,
and as are not expressly or by the necessary implication admitted or
denied by the party against whom they are made. The Court shall record
such admissions and denials.

1A. Direction of the Court to opt for any one mode of alternative dispute
resolution. – After recording the admissions and denials, the Court shall
direct the parties to the suit to opt either mode of the settlement outside
the Court as specified in sub-section (1) of section 89. On the option of
the parties, the Court shall fix the date of appearance before such forum
or authority as may be opted by the parties.112

110
Law & Practice of Alteration Dispute Resolution in India, a Detailed Analysis by Anirban
Chakraborty Published by Lexis Nexis
111
AIR 2003 SC 189
112
Inserted by Act 46 of 1999, sec. 20(w.e.f. 01-07-2002)

94
1B. Appearance before the conciliatory forum or authority. Where a suit
is referred under rule IA, the parties shall appear before such forum or
authority for conciliation of the suit.113

1C. Appearance before the Court consequent to the failure of efforts of

conciliation Where a suit is referred under rule IA and the presiding
officer of conciliation forum or authority is satisfied that it would not be
proper in the interest of justice to proceed with the matter further, then it
shall refer the matter again to the Court and direct the parties to appear
before the Court on the date fixed by it.114

(iii) Order XXXII 32(A)

Order 32(A) Lays down the provision relating to ―suits

relating to matter concerning the family‖. It is generally the
commonly accepted view that regular court procedure may not be
ideally suited to deal with the sensitive area of personal
relationships. Litigations involving affairs of the family seem to
require special approach in view of the serious emotional aspects
involved. With this objective in mind family counseling as a
method of achieving the object of preservation of family is
necessarily required to be encouraged in family and matrimonial
disputes. Therefore, Order 32A seeks to highlight the need for
adopting a different approach where matters concerning the family
are at issue, including the need for effort to bring about amicable
settlement. The provisions of this Order applies to all proceedings
relating to family, like guardianship, custody of minor,
maintenance, wills succession, etc., Rule 3 imposes a duty on the
Court to make an effort of settlement by way of providing

113
Ibid.
114
Ibid.

95
 assistance where it is possible to do so. The Court may also
adjourns the proceedings if it thinks fir to enable attempt to be
made to effect a settlement where there is a reasonable possibility
of settlement. In discharge of this duty Court may take assistance
of welfare expert who is engaged in promoting the welfare of the
family.

(iv) Order 23 Rule 3 Compromise of suit

Here it is proved to the satisfaction of the Court that a suit has been
adjusted wholly or in part by any lawful agreement or compromise [in
writing and signed by the parties], or where the defendant satisfies the
plaintiff in respect of the whole or any part of the subject matter of the
suit, the Court shall order such agreement, compromise or satisfaction to
the recorded, and shall pass a decree in accordance therewith [so far as it
relates to the parties to the suit, whether or not the subject matter of the
agreement, compromise or satisfaction is the same as the subject matter
of the suit.

[Provide that where it is alleged by one party and denied by the other that
an adjustment or satisfaction has been arrived at the Court shall decide
the question but no adjournment shall be granted for the purpose of
deciding the question, unless the Court, for reason to be recorded, thinks
fit to grant such adjournment.]

[Explanation. – An agreement or compromise which is void or voidable

under the Indian Contract Act, 1872, shall not be deemed to be lawful
within the meaning of this rule.

Order 23 Rule 3 also make a provision for making a decree on any

lawful agreement or compromise between the parties during the pendency
of the suit by which claim is satisfied or adjusted. The scheme of Rule 3

96
of Order 23 proves that if the court is satisfied that a suit has been
adjusted wholly or partly by and lawful agreement or compromise, the
court shall pass a decree in accordance to that. Order 23, Rule 3 gives
mandate to the Court to record a lawful adjustment or compromise and
pass a decree in term of such compromise or adjustment.

3.2.2 Family Courts Act 1984

The family courts act, (Act No. 66 of 1984) is in act to provide for
the establishment of family courts with a view to promote
conciliation in, and secure speedy settlement of dispute relating to
marriage and family affairs and for matters connected therein.

(i) Establishment of Family Courts

2.1.1 Section 3 Establishment of Family Courts.-

(1) For the purpose of exercising the jurisdiction and powers conferred
on a Family Court by this Act, the State Government after
consultation with the High Court, and by notification,-

a. shall, as soon as may be after the commencement of this Act,

establish for every area in the State comprising a city or
town whose population exceeds one million, a Family Court;

b. may establish Family Courts for such other areas in the State
as it may deem necessary.

(2) The State Government shall, after consultation with the High Court
specify, by notification, the local limits of the area to which the
jurisdiction of a Family Court shall extend and may, at any time,
increase, reduce or alter such limits.

97
 Section 4 Appointment of Judges.

(1) The State Government may, with the concurrence of the High
Court appoint one or more persons to be the Judge or Judges, of a
Family Court.

(2) When a Family Court consists of more than one Judge

a. each of the Judges may exercise all or any of the powers

conferred on the Court by this Act or any other law for the
time being in force;

b. the State Government may, with the concurrence of the High

Court, appoint any of the Judges to be the Principal Judge
and any other Judge to be the Additional Principal Judge;

c. the Principal Judge may, from time to time, make such

arrangements as he may deem fit for the distribution of the
business of the Court among the various Judges thereof;

d. the Additional Principal Judge may exercise the powers of

the Principal Judge in the event of any vacancy in the office
of the Principal Judge or when the Principal Judge is unable
to discharge his functions owing to absence, illness or any
other cause.

(3) A person shall not be qualified for appointment as a Judge unless

he

a. has for at least seven years held a Judicial office in India or

the office of a member of a tribunal or any post under the
Union or a State requiring special knowledge of law; or

98
 b. has for at least seven years been an advocate of a High Court
or of two or more such Courts in succession; or

c. Possesses such other qualification as the Central

Government may. with the concurrence of the Chief Justice
of India, prescribe.

(4) In selecting persons for appointment as Judges

a. every endeavour shall be made to ensure that persons

committed to the need to protect and preserve that institution
of marriage and to promote the welfare of children and
qualified by reason of their experience and expertise to
promote the settlement of disputes by conciliation and
counseling are selected; and

b. preference shall be given to women.

(5) No person shall be appointed as or hold the office of, a Judge of a

Family Court after he has attained the age of sixty-two years.

(6) No salary or honorarium and other allowances payable to, and the
other terms and conditions of service of, a Judge shall be such as
the State Government may, in consultation with the High Court,
prescribe.

Section 5 Association of social welfare agencies, etc.-

The State Government may, in consultation with the High Court,

provide. by rules, for the association, in such manner and for such
purposes and subject to such conditions as may be specified in the
rules, with a Family Court of

99
 a. institutions or organisations engaged in social welfare or the
representatives thereof;

b. persons professionally engaged in promoting the welfare of

the family;

c. persons working in the field of social welfare; and

d. any other person whose association with a Family Court

would enable it to exercise its jurisdiction more effectively
in accordance with the purposes of this Act.

Section 6 Counsellors, officers and other employees of Family

Courts.

(1) The State Government shall, in consultation with the High Court,
determine the number and categories of counsellors, officers and
other employees required to assist a Family Court in the discharge
of its functions and provide the Family Court with such
counsellors, officers and other employees as it may think fit.

(2) The terms and conditions of association of the counsellors and the
terms and conditions of service of the officers and other
employees. referred to in sub-section (1), shall be such as may be
specified by rules made by the State Government.

(ii) Jurisdiction of Family Courts -

2.2.1 Section 7

(1) Subject to the other provisions of this Act, a Family Court shall :-

a. have and exercise all the jurisdiction exercisable by any

district Court or any subordinate Civil Court under any law

100
 for the time being in force in respect of suits and proceedings
of the nature referred to in the Explanation; and

b. be deemed, for the purposes of exercising such jurisdiction

under such law, to be a district Court or, as the case may be.
such subordinate Civil Court for the area to which the
jurisdiction of the Family Court extends.

Explanation – The suits and proceedings referred to in this subsection are

suits and proceedings of the following nature, namely :-

a. a suit or proceeding between the parties to a marriage for

decree of a nullity marriage (declaring the marriage to be
null and void or, as the case may be, annulling the marriage)
or restitution of conjugal rights or judicial separation or
dissolution of marriage;

b. a suit or proceeding for a declaration as to the validity of a

marriage or as to the matrimonial status of any person;

c. a suit or proceeding between the parties to a marriage with

respect to the property of the parties or of either of them;

d. a suit or proceeding for an order or injunction in

circumstances arising out of a marital relationship;

e. a suit or proceeding for a declaration as to the legitimacy of

any person;

f. a suit or proceeding for maintenance;

g. a suit or proceeding in relation to the guardianship of the

person or the custody of, or access to, any minor.

101
(2) Subject to the other provisions of this Act a Family Court shall also
have and exercise;

a. the jurisdiction exercisable by a Magistrate of the first class

under Chapter IX (relating to order for maintenance of wife,
children and parents) of the Code of Criminal Procedure,
1973 (2 of 1974); and

b. such other jurisdiction as may be conferred on it by any

other enactment

Section 8 Exclusion of jurisdiction and pending proceedings.

Where a Family Court has been established for any area:-

a. no district Court or any subordinate Civil Court referred to in

sub-section (1) of Sec. 7 shall, in relation to such area, have
or exercise any jurisdiction in respect of any suit or

proceeding of the nature referred to in the Explanation to

that sub-section;

b. no Magistrate shall, in relation to such area, have or exercise

any jurisdiction or powers under Chapter IX of the C9de of
Criminal Procedure, 1973 (2 of 1974);

c. every suit or proceeding of the nature referred to in the

Explanation to sub-section (1) of Sec. 7 and every
proceeding under Chapter IX of the Code of Criminal
Procedure, 1973(2 of 1974)-

(i) which is pending immediately before the

establishment or such Family Court before District

102
 Court or subordinate Court referred to in that sub-
section or, as the case may be, before any Magistrate
under the said Code; and

(ii) which would have been required to be instituted or

taken before or by such Family Court if, before the
date on which such suit or proceeding was instituted
or taken, this Act has come into force and such Family
Court had been established, shall stand transferred to
such Family Court on the date on which it is
established;

(iii) Section 9 Duty of Family Court to make efforts for settlement.

–

(1) In every suit or proceeding, endeavour shall be made by Family

Court in the first instance, where it is possible to do so consistent
with the nature and circumstances of the case, to assist and
persuade the parties in arriving at a settlement in respect of the
subject-matter of the suit or proceeding and for this purpose a
Family Court may, subject to any rules made by the High Court,
follow such procedure as it may deem fit.

(2) If, in any suit or proceeding, at any stage, it appears to the Family
Court that there is a reasonable possibility of a settlement between
the parties. the Family Court may adjourn the proceedings for such
period, as it thinks fit to enable attempts to be made to effect such a
settlement.

(3) The power conferred by sub-section (2) shall be in addition to, and
not in derogation of, any other power of the Family Court. to
adjourn the proceedings.

103
 It is, the bounded duty of the family court for making an
attempt for conciliation before proceedings with trial of the case.
Section 9 of the act lays down the duty of the Family Court to
assist and persuade the parties, at first instance, in arriving at a
settlement in respect of subject matter. The Family Court has also
been conferred with the power to adjourn the proceedings for any
treasonable period enable attempts to be made to effect settlement
if there is a reasonable possibility.

3.2.3 Hindu Marriage Act, 1955

Hindu Marriage Act 1955 Casts Duty on the court that before
granting relief under this Act, the court shall in the first instance
make and endeavour to bring about reconciliation between the
parties, where it is possible court should preferably attempt to
encourage the parties to conciliate their differences and disputes.115
For this purpose the statute empowers the court of suitable
situation to adjourn the proceedings for the reasonable period and
referred the matter to person nominated by court or party with the
direction to report to the court as to the result of the reconciliation.

Section 23 Decree in proceedings.-

(1) In any proceeding under this Act, whether defended or not, if the
Court is satisfied that-

(a) any of the grounds for granting relief exists and the
petitioner except in cases where the relief is sought by him
on the grounds specified in sub-clause (a), subclause

115
Chhotelal Vs. Kamla 1967 pat. 269

104
(b) and sub-clause (c) of clause (ii) of Section 5 is not any way
taking advantage of his or her own wrong or disability for
the purpose of such relief, and

(b) where the ground of the petition is the ground specified in

clause (i) of subsection-

(1) of Section 13, the petitioner has not in any manner

been accessory to or connived at or condoned the act
or acts complained of, or where the ground or the
petition is cruelty the petitioner has not in any manner
condoned the cruelty, and

(bb) when a divorce is sought on the ground of mutual

consent, such consent has not been obtained by force,
fraud or undue influence, and

(c) the petition not being a petition presented under

section 11 is not presented or prosecuted in collusion
with the respondent, and

(d) there has not been any unnecessary or improper delay

in instituting the proceeding, and

(e) there is no other legal ground why relief should not be

granted, then, and in such a case, but not otherwise,
the court shall decree such relief accordingly.

(2) Before proceeding to grant any relief under this Act, it shall
be the duty of the Court in the first instance, in every case
where it is possible so to do consistently with the nature and
circumstances of the case, to make every endeavour to bring
about a reconciliation between the parties:

105
 Provided that nothing contained in this sub-section shall
apply to any proceeding wherein relief is sought on any of
the grounds specified in clause (ii), clause (iii), clause (iv),
clause (v), clause (vi) or clause (vii), of sub-section (1) of
Section 13.

(3) For the purpose of aiding the Court in bringing about such
reconciliation, the court may, if the parties so desire or if the
Court thinks it just and proper so to do adjourn the
proceedings for a reasonable period not exceeding fifteen
days and refer the matter to any person named by the parties
in this behalf or to any person nominated by the Court if the
parties fail to name any person, with directions to report to
the Court as to whether reconciliation can be and has been
effected and the court shall in disposing of the proceeding
have due regard to the report.

(4) In every case where a marriage is dissolved by a decree of

divorce, the court passing the decree shall give a copy
thereof free of cost to each of the parties.

3.2.4 Industrial Dispute Act, 1947

Conciliation has been statutorily recognized as an effective method

of dispute resolution in relation to dispute between workers and the
management. Industrial Dispute Act, 1947 provides both for
conciliation and arbitration for the purpose of settlement of dispute.

Section 12 of Industrial Dispute Act, 1947

106
 In Rajasthan State Road Transport Corporation V. Krishna
Kant,116 Supreme Court observed that ―the policy of law emerging
from Industrial Disputes Act, and its sister enactments is to provide
an alternative dispute – resolution mechanism to the workmen, a
mechanism, which is speedy, inexpensive, informal and
unencumbered by the plethora of procedural Laws and appeals and
revisions applicable to civil courts.‖

The key object of the Industrial Dispute Act, is investigation

and settlement of industrial disputes with that thing in vision
diverse authorities have been created by the Act the works
committee, conciliation Officer, Board of Conciliation and Courts
of Inquiry attempt to resolve the difference before it may be
adjudicated upon by the Labour Court or the Industrial Tribunal.
The all aspire at friendly settlement of the industrial dispute.117

3.2.5 The Arbitration and Conciliation Act 1996

In order to give recognition to several practice of arbitration

prevailing in India prior to the arrival of British. Lots of
Regulations was introduce time to time by East India Company.
But the regulation Act, 1787 empowered the court to promote
arbitration.

In 1857 arbitration became the part of civil procedure code

Act of 1857 which was amended in 1882.

An Independent Act, governing arbitration was passed in

1889. In subsequent stage of development of the law on arbitration
the civil procedure 1908 (which replaced the Civil Procedure Act

116
1955 SCC(5) 75
117
Dr. Anupam Kurlwal, An Introduction of Alternative Dispute Resolution System.

107
 of 1857 and 1882), brought back all the provisions of the Indian
Arbitration Act, 1899 and incorporated them in the schedule
appended to the court. The Arbitration provisions contained in the
schedule of Civil Procedure Code 1908 were re-enacted into a
separate act in 1940.

The Arbitration Act of 1940, suffered from serious defects of

too much interference by court with the arbitration proceedings at
every stage of their progress. So there was a need of arbitration
which was free from Judicial Interference and to make the award
final and instantly executable. Accordingly, taking into
consideration of the law commission recommendations on the
subject and the UNCITRAL model law and rules, the new
Arbitration and conciliation Act of 1996 was enacted repealing the
prior act 1940.

(i) EVOLUTION OF THE ACT

Arbitration as an institution for settlement of disputes has been

known and practiced in all civilised societies from time
immemorial. ―Of all mankind’s adventures in search of peace and
justice, arbitration is amongst the earliest. Long before law was
established or courts were organised, or judges has formulated
principles of law, man had resorted to arbitration for resolving
disputes.‖ Traces of the practice of settling disputes through the
method of arbitration was found in the institutions of Panchas and
Panchayat which were practiced in many village communities and
tribal areas in India. But with the advent of the British rule and the
introduction of their legal system in India starting from the Bengal
Regulation of 1772, the traditional system of dispute resolution

108
 methods in India gradually declined. The successive Civil
Procedure Codes enacted in 1859, 1877 and 1882, which codified
the procedure of civil courts, dealt with both arbitration between
parties to a suit and arbitration without the intervention of a
court.118

The first Indian Arbitration Act was enacted in 1899. This Act was
largely based on the English Arbitration Act of 1889 and applied only to
cases where, if the subject matter of a suit, the suit could, whether with
leave or otherwise, be instituted in what was then known as a Presidency
town. The scope of this Act was confined to arbitration by agreement
without the intervention of a court.119

The Code of Civil Procedure, 1908 originally omitted the

arbitration proceedings in the hope that they would be transferred to the
comprehensive Arbitration Act.

The year 1940 is an important year in the history of law of arbitration in

British India, as in that year the Arbitration Act, 1940 was enacted. It
consolidated and amended the law relating to arbitration as contained in
the Indian Arbitration Act, 1899 and the Second Schedule to the Code of
Civil Procedure, 1908. It was largely based on the English Arbitration
Act, 1934. But it was noticed or rather observed that certain cases were
still pending and there were some drawbacks on the enactment of this
Act. Thus then led to the enactment of the Arbitration and Conciliation
Act, 1996.120

118
Rao P.C & Sheffield William ―Alternative Dispute Resolution- What it is and how it works?‖,
Universal Law Publishing Co. Pvt. Ltd. New Delhi- India, 1997 Edition, Reprint 2011, Unni A.C.C.
―The New Law of Arbitration and Conciliation in India‖, pp. 68-69
119
Ibid.
120
Rao P.C & Sheffield William ―Alternative Dispute Resolution- What it is and how it works?‖,
Universal Law Publishing Co. Pvt. Ltd. New Delhi- India, 1997 Edition, Reprint 2011, Rao P.C ―The
Arbitration and Conciliation Act, 1996: The Context‖, pp. 33-44

109
(ii) OBJECT OF THE ACT

The main object of the Act are :-

(i) to comprehensively cover international commercial arbitration

and conciliation as also domestic arbitration and conciliation ;
(ii) to make provision for an arbitration procedure which is fair,
efficient and capable of meeting the needs of the specific
arbitration;
(iii) to provide that the Arbitral Tribunal gives reasons for its
arbitral award;
(iv) To ensure that the Arbitral Tribunal remains within the limits of
its jurisdiction;
(v) To minimize the supervisory role of Courts in the arbitral
process;
(vi) To permit an arbitral Tribunal to use mediation, conciliation or
other procedure during the arbitral proceedings to encourages
settlement of disputes;
(vii) To provide that every final arbitral award is enforced in the
same manner as if it were a decree of the Court ;
(viii) To provide that a settlement agreement reached by the parties as
a result of conciliation proceedings will have the same status
and effect as an arbitral award on agreed terms on the substance
of the dispute rendered by the Arbitral Tribunal ;and
(ix) To provide that, for purposes of enforcement of foreign awards,
every arbitral award made in a country to which one of the two,
International Conventions relating to foreign arbitral awards to
which India is a party applies, will be treated as a foreign
award.

110
 The objects and reasons aid in finding out what really persuades the
legislature to enact a particular provision thought they cannot be the
ultimate guide in interpretation of statutes. The objects and reasons of
an Act should be taken into consideration in interpreting the
provisions of the Statute in case of doubt and the language of a
provision is not clear.

(iii)- THE FORM AND CONTENT

This Act contains 85 Sections, besides the Preamble and three

Schedules. The Act is divided into four Parts. Part-I contains general
provisions on arbitration. Part-II deals with enforcement of certain
foreign awards. Part-III deals with conciliation. Part-IV contains
certain supplementary provisions. The Preamble to the Act explains
the biases of the proposed legislation. The three Schedules reproduce
the texts of the Geneva Convention on the Execution of Foreign
Awards, 1927; The Geneva Protocol on Arbitration Clauses, 1923;
and the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, 1958 respectively.121

Part-I closely deals with the provisions of the UNCITRAL Model Law
but some of them differs from that of the Model Law. Some of the
Sections are mentioned below:122

a) Section-10(1) deals with the number of arbitrators in an arbitral

tribunal and provides that that the number of arbitrators shall
not be of even number. Section-10(2) provides that the arbitral
tribunal shall consist of a sole arbitrator.
b) Section-11(10) empowers the Chief Justice of India or the Chief
Justice of the High Court, as the case may be, to make such
121
Supra note (197)
122
Supra note (200)

111
 scheme as he deem appropriate for dealing with the
appointment of arbitrators.
c) Section-13 does not permit the challenging party to approach
the Court when the challenge made to the arbitral tribunal is not
successful. However after the award is made, the party could
challenge the award on the ground that the arbitrator has
wrongly rejected the challenge.
d) Section-16 states that if the arbitral tribunal turns down the plea
that it has no jurisdiction then the Act does not make the
provision for approaching the Court at that stage.
e) Section-31(7) contains detailed provisions on award of interest
by the arbitral tribunal. It deals with the costs of arbitration.
f) Section-36 provides that under two situations, namely- a) where
an award is not challenged within the prescribed period, or b)
where an award has been challenged but the challenge is turned
down, the award shall be enforced in the same manner as if it
were a decree of the court.
g) Section-37 makes provision for appeals in respect of certain
matters
h) Section-38 enables the arbitral tribunal to fix the amount of
deposit or supplementary deposit, as the case may be, as an
advance for the cost of arbitration.
i) Sections 39 to 43 are largely based on the corresponding
provision in 1940 Act.

Part-II contains sections 44-60. It incorporates provisions of the

Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards
(Recognition and Enforcement) Act, 1961. It states that any award given

112
outside India, whether or not made in an arbitration agreement covered by
the law of India, will henceforth be treated as a foreign award.123

Part-III deals with conciliation. It does not define what conciliation

is. Conciliation is one of the non-litigative dispute resolution processes.
Conciliation process aims at securing a compromise solution rather than
solution according to the law. It is a voluntary, non-judicial, speedy and
confidential process. The cost of conciliation is much less than the costs
of litigation. Above all, conciliation process allows the parties to be more
directly involved in the resolution of the dispute; consequently in this
process, the parties retain freedom of action with regard to initiating,
conciliation, adapting the proceedings to their particular case, and
discontinuing it if there is any such violation.124

Thus to make arbitration and conciliation a success story in India, three

things are needed :-

1) A good law that is responsive to both domestic and international

requirements.
2) Honest and competent arbitrators and conciliators without whom
any law or arbitration or conciliation can succeed.
3) Availability of modern facilities and services such as meeting
rooms, communication facilities, administrative and secretariat
services.

Lastly, the establishment of the International Centre for Alternative

Dispute Resolution (ICADR), an independent non-profit making body, in

123
Supra note (200)
124
Rao P.C & Sheffield William ―Alternative Dispute Resolution- What it is and how it works?‖,
Universal Law Publishing Co. Pvt. Ltd. New Delhi- India, 1997 Edition, Reprint 2011, Nariman F.S.
―Arbitration and ADR In India‖, pp. 45-56

113
New Delhi on May 1995 is a significant event in the matter of promotion
of ADR movement in India. 125

3.2.6 Legal Service Authority Act 1987

Lok Adalats are intended to provide quick justice at less

expenditure. The Legal Services Authorities Act, 1987 makes provisions
in relation to the establishment, power and functions etc., of Lok Adalats.
Lok Adalats are organized to promote justice on a basis of equal
opportunity and not to deny the justice to any citizen by reason of
economic or other disabilities.

The Awards passed by the Lok Adalats are deemed to be the

decrees of the Civil Courts or the Order of any other Court and are
binding on all the parties to the dispute. No appeal lies against an Award.
All categories of cases can be settled through Lok Adalats except
criminal cases which are not compoundable. Disputes at pre-litigative
stage also can be taken cognizance of by the Lok Adalat. Lok Adalats had
so far resolved some 1,36,00,000/- cases.

Chapter VI of the Legal Services Authorities Act, 1987 deals with

the Lok Adalats.

Section 19 Organization of Lok Adalats —

(1) Every State Authority or District Authority or the Supreme Court

Legal Services Committee or every High Court Legal Services
Committee or, as the case may be, 12

Taluk Legal Services Committee may organise Lok Adalats at such

intervals and places and for exercising such jurisdiction and for
such areas as it thinks fit.
125
Ibid

114
(2) Every Lok Adalat organised for an area shall consist of such
number of—

(a) serving or retired judicial officers; and

(b) other persons, of the area as may be specified by the State

Authority or the District Authority or the Supreme Court
Legal Services Committee or the High Court Legal Services
Committee, or as the case may be, the Taluk Legal Services
Committee, organising such Lok Adalat.

(3) The experience and qualifications of other persons referred to in

clause (b) of sub-section (2) for Lok Adalats organised by the
Supreme Court Legal Services Committee shall be such as may be
prescribed by the Central Government in consultation with the
Chief Justice of India.

(4) The experience and qualifications of other persons referred to in

clause (b) of sub-section (2) for Lok Adalats other than referred to
in sub-section (3) shall be such as may be prescribed by the State
Government in consultation with the Chief Justice of the High
Court.

(5) A Lok Adalat shall have jurisdiction to determine and to arrive at a

compromise or settlement between the parties to a dispute in
respect of—

(i) any case pending before; or

(ii) any matter which is falling within the jurisdiction of, and is
not brought before, any Court for which the Lok Adalat is
organised:

115
 Provided that the Lok Adalat shall have no jurisdiction in respect
of any case or matter relating to an offence not compoundable
under any law.

Section 20 Cognizance of cases by Lok Adalats.—

(1) Where in any case referred to in clause (i) of sub-section (5) of

section 19,—

(i) (a) the parties thereof agree; or

(b) one of the parties thereof makes an application to the

Court, for referring the case to the Lok Adalat for
settlement and if such court is prima facie satisfied
that there are chances of such settlement; or

(ii) the court is satisfied that the matter is an appropriate one to

be taken cognizance of by the Lok Adalat, the Court shall
refer the case to the Lok Adalat:

Provided that no case shall be referred to the Lok Adalat

under sub-clause (b) of clause (i) or clause (ii) by such court except
after giving a reasonable opportunity of being heard to the parties.

(2) Notwithstanding anything contained in any cither law for the time
being in force, the Authority or Committee organising the Lok
Adalat under sub-section (1) of section 19 may, on receipt of an
application from any one of the parties to any matter referred to in
clause (ii) of sub-section (5) of section 19 that such matter needs to
be determined by a Lok Adalat, refer such matter to the Lok
Adalat, for determination:

116
 Provided that no matter shall be referred to the Lok Adalat except
after giving a reasonable opportunity of being heard to the other
party.

(3) Where any case is referred to a Lok Adalat under sub-section (1) or
where a reference has been made to it under sub-section (2), the
Lok Adalat shall proceed to dispose of the case or matter and arrive
at a compromise or settlement between the parties.

(4) Every Lok Adalat shall, while determining any reference before it
under this Act, act with utmost expedition to arrive at a
compromise or settlement between the parties and shall be guided
by the principles of justice, equity, fair play and other legal
principles.

(5) Where no award is made by the Lok Adalat on the ground that no
compromise or settlement could be arrived at between the parties,
the record of the case shall be returned by it to the court, from
which the reference has been received under sub-section (1) for
disposal in accordance with law.

(6) Where no award is made by the Lok Adalat on the ground that no
compromise or settlement could be arrived at between the parties,
in a matter referred to in sub-section (2), that Lok Adalat shall
advice the parties to seek remedy in a court.

(7) Where the record of the case if returned under sub-section (5) to
the court, such court shall proceed to deal with such case from the
stage which was reached before such reference under sub-section
(1).

117
Section 21 Award of Lok Adalat.—

(1) Every award of the Lok Adalat shall be deemed to be a decree of a

civil court or, as the case may be, an order of any other court and
where a compromise or settlement has been arrived at, by a Lok
Adalat in a case referred to it under sub-section (1) of section 20,
the court-fee paid in such case shall be refunded in the manner
provided under the Court-fees Act, 1870 (7 of 1870).

(2) Every award made by a Lok Adalat shall be final and binding on
all the parties to the dispute, and no appeal shall lie to any court against
the award.

Section 22 Powers of 2[Lok Adalat or Permanent Lok Adalat.—

(1) The Lok Adalat or Permanent Lok Adalat] shall, for the purposes
of holding any determination under this Act, have the same powers
as are vested in a Civil Court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit in respect of the following
matters, namely:—

(a) the summoning and enforcing the attendance of any witness

and examining him on oath;

(b) the discovery and production of any document;

(c) the reception of evidence on affidavits;

(d) the requisitioning of any public record or document or copy

of such record or document from any court or office; and

(e) such other matters as may be prescribed.

(2) Without prejudice to the generality of the powers contained in sub-

section (1), every Lok Adalat or Permanent Lok Adalat shall have

118
 the requisite powers to specify its own procedure for the
determination of any dispute coming before it.

(3) All proceedings before a Lok Adalat or Permanent Lok Adalat

shall be deemed to be judicial proceedings within the meaning of
sections 193, 219 and 228 of the Indian Penal Code (45 of 1860)
and every Lok Adalat or Permanent Lok Adalat shall be deemed to
be a Civil Court for the purpose of section195 and Chapter XXVI
of the Code of Criminal Procedure, 1973 (2 of 1974).

Section 22 Definitions.—

In this Chapter and for the purposes of sections 22 and 23, unless the
context otherwise requires,—

(a) ―Permanent Lok Adalat‖ means a Permanent Lok Adalat

established under sub-section (1) of section 22B;

(b) ―public utility service‖ means any—

(i) transport service for the carriage of passengers or goods by

air, road or water; or

(ii) postal, telegraph or telephone service; or

(iii) supply of power, light or water to the public by any

establishment; or

(iv) system of public conservancy or sanitation; or

(v) service in hospital or dispensary; or

(vi) insurance service, and includes any service which the

Central Government or the State Government, as the case

119
 may be, in the public interest, by notification, declare to be a
public utility service for the purposes of this Chapter.

Section 22-B Establishment of Permanent Lok Adalats.—

(1) Notwithstanding anything contained in section 19, the Central

Authority or, as the case may be, every State Authority shall, by
notification, establish Permanent Lok Adalats at such places and
for exercising such jurisdiction in respect of one or more public
utility services and for such areas as may be specified in the
notification.

(2) Every Permanent Lok Adalat established for an area notified under
sub-section (1) shall consist of—

(a) a person who is, or has been, a district judge or additional

district judge or has held judicial office higher in rank than
that of a district judge, shall be the Chairman of the
Permanent Lok Adalat; and

(b) two other persons having adequate experience in public

utility service to be nominated by the Central Government
or, as the case may be, the State Government on the
recommendation of the Central Authority or, as the case may
be, the State Authority, appointed by the Central Authority
or, as the case may be, the State Authority, establishing such
Permanent Lok Adalat and the other terms and conditions of
the appointment of the Chairman and other persons referred
to in clause (b) shall be such as may be prescribed by the
Central Government.

120
Section 22C Cognizance of cases by Permanent Lok Adalat.—

(1) Any party to a dispute may, before the dispute is brought before
any court, make an application to the Permanent Lok Adalat for the
settlement of dispute :-

Provided that the Permanent Lok Adalat shall not have jurisdiction
in respect of any matter relating to an offence not compoundable
under any law:

Provided further that the Permanent Lok Adalat shall also not have
jurisdiction in the matter where the value of the property in dispute
exceeds ten lakh rupees:

Provided also that the Central Government, may by notification,

increase the limit of ten lakh rupees specified in the second proviso
in consultation with the Central Authority.

(2) After an application is made under sub-section (1) to the

Permanent Lok Adalat, no party to that application shall invoke
jurisdiction of any court in the same dispute.

(3) Where an application is made to a Permanent Lok Adalat under

sub-section (1), it—

(a) shall direct each party to the application to file before it a

written statement, stating therein the facts and nature of
dispute under the application, points or issues in such dispute
and grounds relied in support of, or in opposition to, such
points or issues, as the case may be, and such party may
supplement such statement with any document and other
evidence which such party deems appropriate in proof of
such facts and grounds and shall send a copy of such

121
 statement together with a copy of such document and other
evidence, if any, to each of the parties to the application.

(b) may require any party to the application to file additional

statement before it at any stage of the conciliation
proceedings.

(c) shall communicate any document or statement received by it

from any party to the application to the other party, to enable
such other party to present reply thereto.

(4) When statement, additional statement and reply, if any, have

been filed under sub-section (3), to the satisfaction of the
Permanent Lok Adalat, it shall conduct conciliation
proceedings between the parties to the application in such
manner as it thinks appropriate taking into account the
circumstances of the dispute.

(5) The Permanent Lok Adalat shall, during conduct of

conciliation proceedings under sub-section (4), assist the
parties in their attempt to reach an amicable settlement of the
dispute in an independent and impartial manner.

(6) It shall be the duty of the every party to the application to

cooperate in good faith with the Permanent Lok Adalat in
conciliation of the dispute relating to the application and to
comply with the direction of the Permanent Lok Adalat to
produce evidence and other related documents before it.

(7) When a Permanent Lok Adalat, in the aforesaid conciliation

proceedings, is of opinion that there exist elements of
settlement in such proceedings which may be acceptable to

122
 the parties, it may formulate the terms of a possible
settlement of the dispute and give to the parties concerned
for their observations and in case the parties reach at an
agreement on the settlement of the dispute, they shall sign
the settlement agreement and the Permanent Lok Adalat
shall pass an award in terms thereof and furnish a copy of
the same to each of the parties concerned.

(8) Where the parties fail to reach at an agreement under sub-

section (7), the Permanent Lok Adalat shall, if the dispute
does not relate to any offence, decide the dispute.

Section 22-D Procedure of Permanent Lok Adalat.—

The Permanent Lok Adalat shall, while conducting conciliation

proceedings or deciding a dispute on merit under this Act, be guided by
the principles of natural justice, objectivity, fair play, equity and other
principles of justice, and shall not be bound by the Code of Civil
Procedure, 1908 (5 of 1908) and the Indian Evidence Act, 1872 (1 of
1872).

Section 22-E Award of Permanent Lok Adalat to be final.—

(1) Every award of the Permanent Lok Adalat under this Act made
either on merit or in terms of a settlement agreement shall be final
and binding on all the parties thereto and on persons claiming
under them.

(2) Every award of the Permanent Lok Adalat under this Act shall be
deemed to be a decree of a civil court.

123
(3) The award made by the Permanent Lok Adalat under this Act shall
be by a majority of the persons constituting the Permanent Lok
Adalat.

(4) Every award made by the Permanent Lok Adalat under this Act
shall be final and shall not be called in question in any original suit,
application or execution proceeding.

(5) The Permanent Lok Adalat may transmit any award made by it to a
civil court having local jurisdiction and such civil court shall
execute the order as if it were a decree made by that court.

3.2.7 Indian Contract Act, 1872

Section 28 has been amended by the Indian Contract (Amendment)

Act 1997) and it states that an agreement absolutely restraining a
party from enforcing his rights through a court of law, or an
agreement which places a limit as to the time within which a right
can be is void. The section reads as under :

Section 28 Agreement in restraint of legal proceedings void. –

Every agreement,-

(a) By which any party thereto is restricted absolutely from

enforcing his rights under or in respect of any contract, by the
usual legal proceedings in the ordinary tribunals, or which
limits the time within which he may thus enforce his rights : or

(b) Which extinguishes the rights or any party thereto, or

discharges any party thereto from any liability, under or in
respect of any contract on the expiry of a specified period so as

124
 to restrict any party from enforcing his rights, is void to that
extent

Exception 1- Savings of contract to refer to arbitration dispute that may

arise. – This section shall not render illegal a contract by which two or
more persons agree that any dispute which may arise between them in
respect of any subject or class of subjects shall be referred to arbitration,
and that only the amount awarded in such arbitration shall be recoverable
in respect of the dispute so referred.

Exception 2. Saving of contract to refer questions that have already

arisen. Nor shall this section render illegal any contract in writing, by
which two or more persons agree to refer to arbitration any question
between them which has already arisen, or affect any provision of any
law in force for the time being as to references to arbitration.

3.2.8 Code of Criminal Procedure

Traditionally the ADR Mechanism was not available to the cases

of criminal nature but the law commission of India in its 142 nd
report stated that it is desirable to infuse life into reformative
provisions embodied in section 360 of Cr.P.C. and the probation of
offenders act which according to law commission remained
unutilized.

Today code of criminal Procedure and some other

enactments allow compromise and settlement in criminal case by
use of plea bargaining, Lok Adalat and Mediation.

The Justice Malimath Committee has observed with reference to

use of ADR in Criminal Justice.

125
 ―By no stretch of imagination can the taint of legalising a
crime will attach to it. It should not be forgotten that already the
Probation of Offenders Act gives the court the power to pass a
probation order. Further the power of executive pardon, power of
re-mission of sentences have already an element of not condoning
the crime but lessening the rigour of length of imprisonment. In
imposing a sentence for a lesser offence or a lesser period the
community interest is served and it will facilitate an earlier
resolution of a criminal case, thus reducing the burden of the court,
Perhaps it would even reduce the number of acquittals for after
prolonged trial it is quite possible that the case may end in
acquittal.‖

Compounding Of Offences

Section 320 of Code of Criminal Procedure 1973 - Lays down the

offences under Indian Penal Code which are compoundable. There are
certain offences which can be compromised between victim and the
offender. This process of reaching of compromise without wasting court’s
time is called compounding. Section 320 specifies two types of
compoundable offences. One where permission of the court is not
required and other where the permission of the court is required before
compounding can be done. This section has been amended time and again
to include more offences in the list of compoundable offences. Offences
that were earlier compoundable with the permission of the court are now
compoundable without the court’s permission. At present there are 56
compoundable offences : 43 without the permission of the court and 13
with the permission of the court. Under this section, only the victim has
the right to compound the offence and an offender cannot claim
compounding as a matter of right.

126
Plea Bargaining – In 2006 the code of criminal procedure 1973 was
amended and a new chapter XXIA on plea bargaining was added
according to which an accused can make an application for plea
bargaining in certain types of criminal cases.

Plea bargaining refers to pre-trial negotiations between the

defendant usually conducted by the counsel and prosecution during which
the accused agrees to plead guilty in exchange for certain concession by
prosecutors.

An accused in a criminal case can request to the court for a plea-

bargaining by making an application. The application shall consist of a
brief description of the case, consent of the accused and an express
statement that he understands the nature and extent of punishment. A
person who has been previously convicted in a case in which he has been
charged with the same offence, he is ineligible under the plea-bargaining
provision under CrPC to make an application. Also the application must
be supported by affidavit of the accused.

It is the responsibility of the court to satisfy itself that the plea

bargaining application has been made voluntarily by the accused. Upon
doing so, the court will give the accused and the prosecution/complainant
the opportunity to arrive at a mutually satisfactory disposition, which will
then be recorded by the presiding officer of the court. Once the court
delivers a judgment following the plea bargain process, no appeals are
permitted from the same.

3.2.9 Motor Vehicle Act, 1988

Motor Vehicles Act, 1988 (MV Act) is known to generate

excessive litigation contributing to large pendency of cases in courts.

127
India has the largest number of road accidents in the world resulting in a
very large numbers of accident claim case being filed in courts. As per
Sections 146 and 149 of the MV Act, victim compensation in Motor
Accident Claims is based on third party insurance. Section 169 of the Act
lays down that the Tribunal shall follow such summary procedure as it
thinks fit in sedtting claims compensation. But in reality the Tribunals
constituted for this purpose are conducting regular trials instead of
summary inquiries which consume lot of time. Insurance companies
delay settlement of claims.

There is no adherence to the mandatory third party insurance

provisions. The insurance companies have not been settling claims on the
ground that they have no intimation of the road accident until the receipt
of the notice from the Claims Tribunals. Considering the above it is clear
that it is necessary to make the process of accident claims smooth and
stress free for the victims of road accidents. The alternative approach to
regular trials that has emerged which is considered to be more victim
friendly is settling compensation claims through Lok- Adalats where
victim need not take recourse to litigation for realizing his/her claim. Lok
Adalats are indigenous model of alternative dispute resolution in India
and has jurisdiction over both pre and post litigation disputes. It use
primarily reconciliatory approach and provides settlement which are not
appealable.

3.2.10 Negotiable Instrument Act

The existing provision under Sections 138-142 in Chapter XVIII of

the Negotiable Instruments Act, 1981 (NI Act) have given rise to a large
number of dishonor of cheque cases thereby compounding the problem of
pendency in our criminal justice system. Necessary legislative change to

128
deal with the problem of excessive litigation under the NI Act is a matter
of discussion currently. One of the proposals that has gained consensus is
introduction of ADR in dealing with dishonor of cheque case which
includes :-

(a) Introducing provision for the compulsory referenced of

dishonor of cheque cases to any of the ADR mechanisms : That
for any dispute arising under Section 138 of the NI Act would
in the first instance have to be referred to a Permanent Lok
Adalat. The matter could be taken up before a court only if the
parties failed to sign a settlement agreement before the
Permanent Lok Adalat.

(b) Disputes which are already pending before the courts may be
referred to ADR mechanisms of (a) Arbitration, (b) Conciliation
(c) Mediation or (d) Permanent Lok Adalat by Courts with
consent of the parties.

129