Whether the reference to ADR Process is mandatory Under Section 89 of Code [CPC]

Section 89 starts with the words “where it appears to the court that there exist elements of a settlement”. This clearly shows that cases which are not suited for ADR process should not be referred under section 89 of the Code. The court has to form an opinion that a case is one that is capable of being referred to and settled through ADR process. Having regard to the tenor of the provisions of Rule 1A of Order 10 of the Code, the civil court should invariably refer cases to ADR process. Only in certain recognized excluded categories of cases, it may choose not to refer to an ADR process. Where the case is unsuited for reference to any of the ADR process, the court will have to briefly record the reasons for not resorting to any of the settlement procedures prescribed under section 89 of the Code. Therefore, having a hearing after completion of pleadings, to consider recourse to ADR process under section 89 of the Code, is mandatory. But actual reference to an ADR process in all cases is not mandatory. Where the case falls under an excluded category there need not be reference to ADR process. In all other case reference to ADR process is a must.

The following categories of cases are normally considered to be not suitable for ADR process having regard to their nature :

(i) Representative suits under Order 1 Rule 8 CPC which involve public interest or interest of numerous persons who are not parties before the court. (In fact, even a compromise in such a suit is a difficult process requiring notice to the persons interested in the suit, before its acceptance).

(ii) Disputes relating to election to public offices (as contrasted from disputes between two groups trying to get control over the management of societies, clubs, association etc.).

(iii) Cases involving grant of authority by the court after enquiry, as for example, suits for
grant of probate or letters of administration.

(iv) Cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion etc.

(v) Cases requiring protection of courts, as for example, claims against minors, deities and mentally challenged and suits for declaration of title against government.

(vi) Cases involving prosecution for criminal offences.

All other suits and cases of civil nature in particular the following categories of cases (whether pending in civil courts or other special Tribunals/Forums) are normally suitable for ADR processes :

(i) All cases relating to trade, commerce and contracts, including
• disputes arising out of contracts (including all money claims);
• disputes relating to specific performance;
• disputes between suppliers and customers;
• disputes between bankers and customers;
• disputes between developers/builders and customers;
• disputes between landlords and tenants/licensor and licensees;(2008) 2 SCC 660
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• disputes between insurer and insured;

(ii) All cases arising from strained or soured relationships, including
• disputes relating to matrimonial causes, maintenance, custody of children;
• disputes relating to partition/division among family members/co- parceners/
co-owners; and
• disputes relating to partnership among partners.

(iii) All cases where there is a need for continuation of the pre-existing relationship in
spite of the disputes, including
• disputes between neighbours (relating to easementary rights, encroachments,
nuisance etc.);
• disputes between employers and employees;
• disputes among members of societies/associations/Apartment owners
Associations;

(iv) All cases relating to tortious liability including
• claims for compensation in motor accidents/other accidents; and

(v) All consumer disputes including
• disputes where a trader/supplier/manufacturer/service provider is keen to
maintain his business/professional reputation and credibility or `product
popularity.

The above enumeration of `suitable’ and `unsuitable’ categorization of cases is not intended to be exhaustive or rigid. They are illustrative, which can be subjected to just exceptions or additions by the court/Tribunal exercising its jurisdiction/discretion in referring a dispute/ case to an ADR process. [ AFCONs Infrastructure Ltd. and AnOTHER Vs Cherian Varkey Construction Co. (P) Ltd. and OTHERS [ALL SC 2010 JULY ]