ADR mechanism in ipr conflicts - an emerging trend abstract-

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AN EMERGING TREND - ADR MECHANISM IN IPR
CONFLICTS ”
to be submitted to
MEWAR UNIVERSITY, NH-76,
GANGRAR, CHITTORGARH,
RAJASTHAN) INDIA
in partial fulfillment of the requirements
for the degree of LL.M. (Master of Laws)
Compiled by:
Sanjeev Kumar Chaswal
LL.M 2nd
year, Roll No.
Enrollement No…………………

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Declaration
I, Sanjeev Kumar Chaswal a student of LL.M final year of Mewar University of
with roll no ………………….. and enrollment no. ………………………… do
hereby declare that this dissertation paper is an original work of mine and is
result of my own intellectual efforts. I have quoted titles of all original sources
i.e. original documents as this is a LLM resrach research and name of the
authors whose work has helped me in writing this research paper have been
placed at appropriate places and I have not infringed copy rights of any other
author.
Date ------------- ( ………………………… )
Place -

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CERTIFICATE
This is to certify that the dissertation entitled “ADR MECHANISM IN IPR
CONFLICTS - AN EMERGING TREND” which is being submitted by Mr. Sanjeev
Kumar Chaswal for the award of the degree of Master of Laws is independent
and original research work carried out by him.
The dissertation is worthy of consideration for the award of LL.M. Degree of
MEWAR UNIVERSITY, NH-76, GANGRAR, CHITTORGARH, RAJASTHAN
INDIA.
Mr. Sanjeev Kumar Chaswal has worked under my guidance and supervision to
fulfill all requirements for the submission of this dissertation.
The conduct of research scholar remained excellent during the period of
research.
Signature

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ACKNOWLEDGEMENT
I feel proud to acknowledge the able guidance of our esteemed.. I acknowledge
with pleasure unparallel infrastructural support that I have received from
Law Department, Mewar University. In fact this work is the outcome of
outstanding support that I have received from the faculty members of the
college, in particular Vice Principle Mr. Karun kaushik who has guided me to
finish my research.
I find this opportunity to thank the library staff of the Law Department, Mewar
University. This research work bears testimony to the active encouragement and
guidance of a host of friends and well- wishers. In particular mention must be
made of Hon’ble Mr. Bharat Bhushan
It would never have been possible to complete this study without an untiring
support from my family.
I am greatly indebted to the various writers, jurists and all others from whose
writings and work I have taken help to complete this dissertation “ADR
MECHANISM IN IPR CONFLICTS - AN EMERGING TREND”
Date…………. ………………………………….
Place: (Sanjeev Kumar Chaswal)

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PREFACE
Thus, like any other emerging field of law, IP conflict resolution also has a plenty
of debatable issues before it. In this research paper, It will be my endeavor to
delve deep into these issues like ADR: arbitration and mediation can be real
alternative to IP disputes litigation, and further IP right disputes like any other
commercial disputes can be brought under ADR procedure and alternative
dispute resolution procedures can play effective role in resolving IP conflicts.
The subject research work has been divided in six major chapters and further
divided into various sub topics and sub to sub topics. The first topic which is
named as Introduction and this dissertation further consists of eight chapters.
The first and second chapter of this work attempts to defined Alternative Dispute
Resolution and history of ADR- in Indian perspective. The third chapter and
Four Chapter deals with overview of ADR mechanisms and after independence
The fifths and Sixth chapter of this research work is an endeavour to put more
stress on Intellectual Property Enforcement and scope of ADR in IPR disputes
Chapter seventh and eighth Chapter deals in respect to IP disputes for ADR
mechanisms attempts to international disputes. The Ninth chapter of this
dissertation gives final view on The WIPO Arbitration and Mediation Center and
lastly conclusion of the research work and certain valuable suggestions to
manage disputes under ADR mechanism.
Date…………. ………………………………….
Place: (Sanjeev Kumar Chaswal)

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ABBREVIATIONS
AIR All India Reports
AGICOA Association of International Collective Management of
Audiovisual Works
ADR alternative dispute Resolution
Cr LJ Criminal Law Journal
C.P.C Civil Procedure Code
CILAS Committee for Implementing Legal Aid Schemes
GATT General Agreement on Tariffs and Trade
ICA International Centre for Arbitration
ICADR International Centre for Alternative Dispute Resolution.
ICANN Internet Corporation for Assigned Names And Numbers
IPR Intellectual Property Rights
LL.M. Master of Laws
NALSA National Legal Services Authority
PWC Price Water house Coopers
SCC Supreme Court Cases
TRIPS Trade Related Aspects of Intellectual Property Rights
UNCITRAL The United Nation Commission on International trade laws
UDRP Uniform Domain Name Dispute Resolution Policy and Rules
Vs. Versus
WLR Weekly Law Reports
WIPO The World Intellectual Propoerty Organistion
WIPO Arbitration and Mediation Center:

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TABLE OF CONTENTS
Chapter Page no.
Declaration i
Certificate ii
Acknowledgement iii
Preface iv
Abbreviations v
THE ABSTRACT 1 - 3
CHAPTER – 1. INTRODUCTION 4 - 8
1.1. What is Alternative Dispute Resolution 4
CHAPTER – 2 HISTORY OF ADR- IN INDIAN PERSPECTIVE 9 - 15
2.1 Prevalance of justice in ancient india 9 - 13
2.2 The system of ADR under
British Company Raj 13-15
CHAPTER – 3 OVERVIEW OF ADR MECHANISMS 16 - 36
3.1. What is ADR Mechanism 16-17
3.2. ADR Mechanisms and IP Disputes. 17-20
3.2.1. Arbitration 20-21
3.2.2. Mediation 21-22
3.2.3. Conciliation 22
3.2.4. Negotiation 23
3.2.5. Mini-trial 23- 24
3.3. Early Neutral Evaluation (ENE) 24- 27
3.3.1. What an ENE Covers 27- 28
3.3.2. The Timing and Scope of an ENE 28 -29
3.3.3. The Distinctive Benefits of an ENE 29- 30
3.4. Lok Adalat 30- 32
3.5. How to make ADR system more viable 32- 33
3.6. How to make Arbitration Mechanism truly effective: 33- 36
CHAPTER – 4 ADR SYSTEM AFTER INDEPENDENCE 37 - 71
4.1. The Emergence of ADR system in independent India 42- 46
4.2. Court approach towards ADR mechanism 46- 55
4.3. Legislative efforts in India 55- 57

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4.4. Court approach towards legal reform 57- 60
4.5. Need and the purpose of ADR in india 60 -63
4.6. Implementation of ADR in India 63 -71
CHAPTER – 5 OVERVIEW OF IPR AND LITIGATION IN INDIA 72 – 90
5.0. Introduction 72- 74
5.1. Intellectual Property Enforcement 75 -76
CHAPTER – 6 SCOPE OF ADR IN IPR DISPUTES 77 -110
6.1. Mechanism in the intellectual Property regime 77
6.1.1. Commercial Copyright and Software Disputes 77-78
6.1.2. Commercial Patent Disputes 79 -80
6.1.3. Commercial Trade mark and Trade Dress Disputes. 80- 82
6.1.4. Commercial Trade Secret and Unfair Competition Disputes 82-83
6.1.5. Commercial Intellectual Property Licensing Disputes 83-85
6.1.6. A copyright infringement 85
6.1.7. Economic rights 85-86
6.1.8. Moral rights 86
6.1.9. Copyright dispute resolution 87
6.1.10. Copyright litigation 87-88
6.1.11. The current approach: patent litigation 88-90
6.1.12. Domain Name 90-94
6.1.13. International Intellectual Property Disputes 94
6.1.14. Fundamental Problems of International IP Disputes 94-95
CHAPTER – 7 IP DISPUTES FOR ADR MECHANISMS 96 - 118
7.0. The IPR disputes and ADR: 96-101
7.1. Reasons to Consider ADR for IPR Disputes 101-102
7. Certainty as to Forum. 102
7.3. The Relative Speed of ADR. 103
7.4. Arbitration and mediation of IP disputes as alternatives
to litigation. 103 -104
7.5. Initial considerations in selecting Litigation Alternatives: 104-106
7.6. What form of ADR should be pursued 106-107
7.7. The advantages of ADR have been recognized 107-108
7.8. Mediation and Arbitration are different forms of ADR 108
7.9. Other approaches to ADR 108-109
7.10. The value of IPR disputes in ADR mechanisms 109-110
7.10.1. Professional 110-111
7.10.2 Low cost 111-112
7.10.5. Flexibility 112-113

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7.11. Confidentiality 113-114
7.12. To maintain beneficial relationships 114-115
7.13. The adequacy of the results 115-116
7.10.6 The specific modalities of intellectual property disputes ADR 117
7.10.7. The specific modalities of IPR comparison of ADR 117
7.10.8. That size and importance of the dispute 117-118
CHAPTER 8 INTERNATIONAL DISPUTES 119-125
8.1. Dispute Scenarios 121
8.2. Research collaboration: ownership dispute 121-122
8.3. Patenting of research outputs from genetic material 122
8.4. Claims based on traditional rights 122-123
8.5. Agricultural products and patents 123
8.6. Rat v. elephant 124
8.7. The Arbitration Option 124
8.8. Arbitration procedure 124- 125
CHAPTER 9 THE WIPO ARBITRATION AND MEDIATION CENTER 126-134
9.1. History of WIPO 126
9.2. Strategic Direction and Activities 126-127
9.3. WIPO Arbitration and Mediation Center (WIPO Center). 127-128
9.4. Tailored ADR services 128-129
9.5. Services of the wipo arbitration and mediation center 129-130
9.6. Trends in WIPO mediation and arbitration 130-131
9.7. A wipo expedited arbitration relating to a banking 131-132
software dispute
9.8. Settlement trends 132-134
10. CONCLUSION 135-136
11. Table of Cases 137
12. Bibliography 138
13. Appendixes 139

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TABLE OF CASES
Sitanna Vs Viranna, the Privy Council
Rajasthan State Road Transport Corporation v. Krishna Kant , 54
The Privy Council Sitanna v. Viranna, AIR 1934 SC 105, 58
Sundaram Finance Ltd. v. NEPC India Ltd. (reported in AIR 1999 SC 565)
Salem Advocate Bar Association v. U.O.I AIR 2003 SC 189, 2002
E.Venkatakrishna Vs Indian Oil Corporation Ltd AIR 1989 Kant 35
In PT Thomas vs. Thomas Job 2005 AIR 3575, 2005(2)
In Oil and Natural Gas Commission vs. CCE 104 CTR (SC)
Bhasheer vs. Kerala State Housing Board AIR 2005 Ker 64, 2005
In Deco Mica Ltd Vs UOI 2000 (68) ECC 554
Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 837 (Fed. Cir. 1992); see also
Jessica Litman, Copyright As Myth, 53 U. Pitt. L. Rev. 235 (1991).
Atari Games, 975 F.2d at 837-38; See, e.g., Ty, Inc. v. GMA Accessories, Inc., 132 F.3d
1167, 1169 (7th Cir. 1997); Repp and K & R Music, Inc. v. Webber, 132 F.3d 882, 891
(2d Cir. 1997); Grubb v. KMS Patriots, L.P., 88 F.3d 1, 6 (1st Cir. 1996).
Atari Games, 975 F.2d at 844.
Shaw v. Lindheim, 919 F.2d 1353, 1361 (9th Cir. 1990).
Hupp v. Siroflex of Am., Inc., 122 F.3d 1456, 1464 (Fed. Cir. 1997).
Jay E. Grenig, Alternative Dispute Resolution § 1.2 (2d ed. 1997 & Supp. 1998).

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BIBLIOGRAPHY 125-140
Books
John R. Kahn, Negotiation, Mediation and Arbitration in the Computer Program Industry:
Why play hardball with software, pt. III.B (1989).128
Resolving Intellectual Property Disputes Outside of Court: Using ADR to Take Control of
Your Case By Alan W. Kowalchyk 128
Reports
The Indian Judicial System A Historical Survey By Mr. Justice S. S. Dhavan High Court,
Allahabad 98
News Week, Dec. 19. 1959, Challenge of Communism 55
Articles, Papers and Transcripts
The justice dispensation system in India1
ICADR88 58
Mr. H. D. Shourie, Founder Director of COMMON CAUSE, continued his exertions to
this end till his last breath. In his letter to Mr. Justice S. M. Raza, Lokayukta, Uttaranchal,
dated June 22, 2005, 58
News papers
Supreme Court chides itself, govt for judicial backlog Dhananjay Mahapatra, TNN Jan
12, 2012, 05.57AM

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APPENDIXES
The regulation of 1781 22
Regulation of Act 1787 22
Regulation of Act 1793 23
The Madras Presidency Regulation VII of 1816 23
Bombay Presidency Regulation VII of 1827 23
Under the Charter Act of 1833 23
Act IX of 1840. 23
The Act VIII of 1857 24
The Act XIV of 1882 24
The Indian Arbitration Act IX of 1899: 25, 53,
Information Technology Act, 2000 27
Arbitration and Conciliation Act, 1996 15,16,46
The Arbitration Act of 1940 61, 63
Industrial Disputes Act, 1947 53,
Section 23(2) of the Hindu Marriage Act, 1955 53
The Family Court Act, 1984 54
The Legal Services Authority Act,1987
The Code of Civil Procedure, 1908 47
The Geneva Protocol on Arbitration Clauses, 1923, 75
The Geneva Convention on the Execution of Foreign Award, 1927 75
Legal Services Authorities (Amendment) Act, 2002

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ABSTRACT
India is country habitants having many religion and cultures, since
centuries habitants of India has evolved with several forms of
dispute resolution mechanisms and over period of time, they have
customized, varied according to needs. Even though Britisher’s
rulers had left Indian shores almost half a century ago, still several
of these laws exist till date without any major changes.
Wide Internet usage has rendered boundaries of the states
meaningless. The people across the globe have realized its
potentiality as an effective tool for communication, dissemination of
information and e-commerce and enjoying to unrestricted access to
multifarious interactions, transactions inevitably thereby raising
many new issues in the nature of e-disputes to virtual sale /
purchase of products through e-auctions or otherwise, domain
disputes, trademark infringement, patents, software infringement,
copyright, defamatory writings, fraud, privacy, etc
In this scenario the Intellectual Property Rights are becoming
fundamentally exigent to get in to research collaborations and
thereby making Intellectual property rights tool as valuable business
assets for technological entities. The people across world over
frequently involve in cross-border transactions having different
backgrounds and different national laws or within different states of
India. Some time disputable transactions create multi-jurisdictional
disputes between the nationalities of different countries having
different social backgrounds, mindsets. Usually those business

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entities having familiarity with alternative dispute resolution (ADR)
are able to resolve such conflicts efficiently.
As the determination of commercial or non commercial disputes
before different national courts can result in to high legal and other
costs as well as conflicting awards. Therefore, the ADR has a
potential to provide business entities belonging to distinct
nationalities a single unified forum of arbitration thereby having a
final and enforceable award binding across multiple jurisdictions.
Hence, increasingly, IP owners and users are approaching to many
of known alternative dispute resolution (ADR) procedures like
arbitration and mediation to resolve their IP disputes
In this scenario the World Intellectual Property Organization (WIPO)
has been playing pivotal role since its inception in strengthening
ADR procedures for IP conflicts and forefront in resolving IP
conflicts through their specialized ADR procedures. The Intellectual
Property conflicts are not that conflicts which cannot be adjudicated
or resolved through ADR. As Intellectual Property conflicts being a
specialised in its nature and it require specialised services of ADR
experts in resolving IP conflicts, mainly due to non availability of IP
experts in India is the main obstacle in resolving IP conflict through
arbitration or through ADR.
Thus, like any other emerging field of law, IP conflict resolution also
has a plenty of debatable issues before it. In this research paper, It
will be my endeavor to delve deep into these issues like amongst
mainly i) Whether ADR: arbitration and mediation can be real
alternative to IP disputes litigation, ii) whether IP right disputes like

15
any other commercial disputes can be brought under ADR procedure
or not If so, to what extent?. Iii) When is ADR to be preferred, when
is it to be avoided; and, if ADR is preferred, what form of ADR
should be pursued? iv) Whether, an alternative dispute resolution
procedure can play effective role in resolving IP conflicts if so to
what extent? v) Whether the parties to IP conflicts can reap overall
benefits by invoking ADR procedures in comparison to traditional
litigation, if so, to what extent? vi) Whether the use of a private
consensual mechanism like arbitration or mediation procedures
pose any threat to the resolution of such specialised disputes, if so,
to what extent?

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CHAPTER – 1 INTRODUCTION
A large part of my time during the twenty years of my practice
as a lawyer was occupied in bringing about private
compromises of hundreds of cases. I lost nothing thereby not
even money, certainly not my soul - MAHATMA GANDHI
It is an attorney’s responsibility to “persuade his neighbors to
compromise whenever he can. Point out to them how the
nominal winner is often, a real loser -- in fees, expenses and
waste of time.” - ABRAHAM LINCOLN
1.1 What is Alternative Dispute Resolution:
Every society, every community, every culture has some or the
other form/s of resolving the disputes faced by their
constituents. Often, the longer and more prosperous the
lineage, the more refined and varied the mechanisms. India is
a country of many cultures and hence several dispute
resolution mechanisms had evolved and been customized over
time.
One of the several benefits of the British rule over India was
that we got some very robust laws. Several of these exist till
date (after over 60 years of Independence) without any major
amendments. However, the flip side was that at the altar of
‘Uniformity’ were sacrificed all the then existing dispute
resolution mechanisms, which were by and large enabling
satisfactory outcomes. What was worse was that the system

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that replaced them soon started showing its colors - the formal
procedures of the Courts of Law not only took their own time
but also provided umpteen loop-holes to the ingenious lawyers
to stretch that time even further if that suited their clients’
interests. This had a telling effect on the backlogs in court
registries across the nation. To give an extreme example, the
Bombay High Court is currently taking up Final Hearing of
Plaints filed in the ‘80s and 90’s. An Appeal from an
Order/Judgment in these cases will take roughly another 5 to 7
years from date of filing and a further Appeal to the Supreme
Court could take an additional 2 years.
Arbitration too has seen its name sullied thanks to the Ad Hoc
version adopted by the lawyers drafting their clients’ contracts.
With no institution to keep a check on their schedule, the
Arbitrators become masters unto themselves. Arbitral
hearings, when held, are often as prolix as the court hearings
and one can’t blame the Arbitrators for that, as they are
usually retired judges and that’s the only way they know how
to conduct hearings.
By and large, in the initial period, the scheduled hearings are
held only to give fresh dates of hearings on some or the other
ground ranging from non-completion of records to the ill-health
of someone connected to the proceedings or related to that
someone – and this continues till the parties’ patience is found
to be wearing thin. Thereafter, substantive work is done at the
arbitral hearings, but they go on for only half a day i.e. 2 to 3
hours, with considerable time going in recaps and agenda

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settings for future hearings. There are of course exceptions to
this trend; especially amongst arbitrators who are either newly
retired judges, practicing lawyers or those coming from a non-
legal back-ground.
The parties and their lawyers, due to fear of antagonizing their
Arbitrators, refrain from attempting to rein them in. Some
lawyers see this as a ‘win-win’ situation between themselves
and the Arbitrators as they get to charge for the whole day
(plus for the earlier days’ preparation) for the hour or so of
arbitral hearing on a given day. And if the hearing is at an out-
of-town location, it’s a paid holiday.
Going further down the line, when an Award is published, one
must expect it to be challenged in Court and it could take
years for it to pass through that channel. Introduction of the
new Arbitration and Conciliation Act, 1996 has not helped
much as the Supreme Court has rolled back the benefit of
limited grounds of Appeal by suggesting a broader
interpretation of the term ‘Public Policy’, which is one of the
few grounds on which an Award can be sought to be
challenged under this new Act.
Alternative dispute resolution has greatly expanded over the
last several years to include many areas in addition to the
traditional commercial dispute in the form of arbitration;
mediation has become an important first step in the dispute
resolution process. Arbitrators and mediators have an
important role in resolving disputes. Mediators act as neutrals

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to reconcile the parties’ differences before proceeding to
arbitration or litigation. Arbitrators act as neutral third parties
to hear the evidence and decide the case. Arbitration can be
binding or non-binding.
What is ADR? In simple terms it is Alternate Dispute
Resolution the conventional Courts use formal system of
redressal applying various rules of law, as we have erstwhile
mentioned that our system is adversial. The concept of
Conflict Management through Alternative Dispute Resolution
(ADR) has introduced a new mechanism of dispute resolution
that is non adversarial. A dispute is basically ‘lis inter parties’
and the justice dispensation system in India has found an
alternative to Adversarial litigation in the form of ADR
Mechanism in which two parties contest their case and one
party wins and the other party looses, but in case of alternate
dispute resolution (Section 89 – Code of Civil Procedure),
which can be categorized in four broad heads which are-
1. Arbitration;
2. Mediation;
3. Conciliation;
4. Lok Adalat.
It is win – win situation and no party wins no party looses,
today the need of time is that we resort to non conventional
systems as well, we should not forget that its not something
new to us, we had for ages, like panchayats etc, it was self
sufficient, every village has panchayat and it was a powerful
authority for redressing the disputes. The best part of ADR is
that since both parties come face to face and they work out

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the modalities and reach to an amicable solution, there is no
likelihood of winning or losing the case, i.e. it’s a win – win
situation and thereafter no appeal, and thus it reduces the
burden of appellant courts as well, the arbitration and
conciliation Act, 1996 provides for Arbitration and the award
given by the arbitrator is deemed to be a decree. It was step
towards the ADR.
The purpose of this special provision seems to help the litigant
to settle his dispute outside the Court instead of going through
elaborate process in the court trial. This is a special procedure
for settling the dispute outside the courts by a simpler and
quicker method. The litigants on the institution of the suit or
proceedings may request the Court to refer the disputes and if
the court feels that there exist any element of settlement
which may be acceptable to the parties; it may refer them to
any of the forums abovementioned at any stage of the
proceedings. In fact new rules in Order X were inserted in
consequence to the insertion of the sub section (1) of section
89. These new rules namely 1A, 1B and 1C have been inserted
by the Amending Act.
The settlement can be made by adopting any of the modes
specified in the section 89 of the CPC inserted by the
Amendment Act. As per the Rule 1A the parties to the suit are
given an option for settlement of the dispute outside court.
When the parties have exercised their option it shall fix the
date of appearance before such person as may be opted by
the parties. As per the Rule 1-B the parties are required to

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appear before such forum opted by them. Rule 1c provides for
the Presiding Officer of the Forum to refer the matter again to
the Court in case he feels that in the interest of justice he
should not proceed with the matter.

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CHAPTER – 2 HISTORY OF ADR - IN INDIAN PERSPECTIVE
2.1 Prevalence of justice in ancient India:
Though the term of ‘ADR’ Alternate Dispute Resolution system
is basically originated and derived from developed countries
and is a recent phenomena but has gained impetus in its
workability, solely in the recent years that to specifically said
to be the resultant of globalisation and liberalisation, though
oldest form of the ADR was very much present and well
organized in the Ancient Indian Legal System more particularly
the Hindu society. The conflict / disputes as well as its
settlement have been going around for many thousands of
years rather since the evolution of humans being on earth
adding its new workability solution in accordance to
development of the society.
The techniques of negotiation best option in resolving the
conflict / disputes and the negotiation have been a basic
technique being around for many centuries. It is a fact of life
whether the dispute / conflict between individuals or in entities
is right or wrong but it is most important and relevant how we
are able to manage or handle it with in parameters of
aspirations of both litigant parties.
India is known for having one of the oldest legal systems in
the world and the present modern legal system prevalent in
India can be traced back to the centuries, the roots of the
present day human institutions lie deeply buried in its past as
Indus civilization flourished around 2500 BC known as

23
Harappan culture in the Indus river valley in Indian sub
continent and remained in existence for 1000 years. Another
thousands of years, India’s social and religious society
structures withstood and countered many invasions, famines,
religious persecutions and many other political upheavals,
despite of tyranny of many invasions of other countries our
ancient society have able to maintained respective regional
identities with such a long, vibrant history.
The definition of law in ancient India was meant in broader
term “Dharma”. The ancient society regarded vedas as source
of divine light and was the ultimate source of authority for all
codes, which contained dharma as law, the law and Justice
was administered according to the rules provided in the
Manusmriti. Its law and jurisprudence stretches back to many
centuries, forming a living tradition, which has grown and
evolved with the lives of its diverse people, in the later years,
the Justice was use to be administered by Kings courts and
also through grass root system called Panchayats and which is
still continuing, prevalent even today in our villages, where
village elders of the village or community sit together and
resolve disputes involving of villagers and issue diktats on
many social issues to their community. However, as far as the
legal system in ancient India is concerned, a liberal outlook is
evident in the Indian Puranas and Manu Smiriti.

24
1
According to Brihaspati Smiriti, there was a hierarchy of
courts in Ancient India beginning with the family Courts and
ending with the King. The lowest was the family arbitrator. The
next higher court was that of the judge; the next of the Chief
Justice who was called Praadivivaka, or adhyaksha; and at the
top was the King’s court. The jurisdiction of each was
determined by the importance of the dispute, the minor
disputes being decided by the lowest court and the most
important by the king. The decision of each higher Court
superseded that of the court below.
According to Vachaspati Misra, "The binding effect of the
decisions of these tribunals, ending with that of the king, is in
the ascending order, and each following decision shall prevail
against the preceding one because of the higher degree of
learning and knowledge". It is noteworthy that the Indian
judiciary today also consists of a hierarchy of courts organized
on a similar principle-the village courts, the Munsif, the Civil
Judge, the District Judge, the High Court, and finally the
Supreme Court which takes the place of the King’s Court. We
are following an ancient tradition without being conscious of it.
The institution of family judges is noteworthy. The unit of
society was the joint family which might consist of four
generations. Consequently, the number of the member of a
joint family at any given time could be very large and it was
necessary to settle their disputes with firmness combined with
sympathy and tact. It was also desirable that disputes should
1
The Indian Judicial System A Historical Survey By Mr. Justice S. S. Dhavan High Court, Allahabad 98 News
Week, Dec. 19. 1959, Challenge of Communism

25
be decided in the first instance by an arbitrator within the
family. Modern Japan has a somewhat similar system of family
Courts. The significance of the family courts is that the judicial
system had its roots in the social system which explains its
success.
The ancient concept of settlement of dispute through
mediation, negotiation or through arbitral process known as
"Peoples' Court verdict" or decision of "Nyaya-Panch"
philosophy is conceptualized and institutionalized in the
present form of Lok Adalat. Some people equate Lok Adalat to
conciliation or mediation; some treat it with negotiations and
arbitration. Those who find it different from all these, call it
"Peoples' Court". It involves people who are directly or
indirectly affected by dispute resolution.
In ancient times the village elders, other influential individuals
used to sit together and use to hold panchayat calling
interested or disputing parties of that particular village to
come in to conclusion of settling their disputes or with the help
of village elders, other influential individuals, hence it is ADR
in its early form was very much prevalent, well-known tool to
settle disputes to ancient Indian societies. In Ancient India the
disputes were peacefully decided by the intervention of Kulas
(family assemblies), Srenis (guild so men of similar
occupation), Parishad, etc., the primary object of ADR
movement is avoidance of vexation, expense and delay and
promotion of the ideal of “access of justice” for all.

26
That particularly during the British rule, actual formation of
certain rules for arbitration were incorporated and brought in
the form of the Regulation of Act 1787, empowering the court
to refer suits to arbitration with the consent of parties and
further more the Regulation Act of 1793 authorised the court to
promote references of cases not exceeding Rs. 200 in value to
arbitration and disputes relating to partnership account, debts,
disputed bargain and breach of contract. The procedure for
conducting the arbitration proceedings was also stipulated. So
the law and jurisprudence represents the cumulative effect of
generations. It cannot be said that Arbitration as a concept or
Alternate Dispute Resolution is a foreign import on the Indian
legal system.
2.2 The system of ADR under British Company Raj
The system of Alternate dispute redressal was found not only
as a convenient procedure but was also seen as a politically
safe and significant in the days of British Company Raj.
Hence, there were several regulations and legislations that
were brought by British Company in resulting considerable
changes from 1772. Few among them are:
The regulation of 1781: the year 1781 regulation had
contained a provision that “the judge do recommend, and so
far as he can without compulsion, prevail upon the parties to
submit to the arbitration of one person to be mutually agreed
upon by the parties.” And that “no award of any arbitrator of
arbitrators, can be set aside, except upon full proof made by
oath of the credible witness that arbitrators have been guilty of

27
gross corruption or partiality to the cause in which they had
made their awards.”
The Regulation of 1787: It empowered the court to refer suits
to arbitration with the consent of parties.
The Regulation of 1793 : It authorised the court to promote
references of cases not exceeding Rs. 200 in value to
arbitration and disputes relating to partnership account, debts,
disputed bargain and breach of contract. The procedure for
conducting the arbitration proceedings was also stipulated.
In the year 1795: the regulation of 1793 was extended to
Benaras and the regulation of 1802, 1814, 1822 and 1883
extended the limits and jurisdiction of arbitration proceedings
in various manner.
The Madras Presidency Regulation VII of 1816 : It
authorised the Districts Munsiffs to convene districts
panchayats for the determination of Civil Suits relating to real
and personal property. The Regulation was repealed by Act VII
of 1870.
Bombay Presidency Regulation VII of 1827: It provided for
arbitration of civil disputes. The arbitration had to be in writing
to a named arbitrator, wherein the time for making the award
had to be mentioned.
Under the Charter Act of 1833: The Legislative Council for
India was established in 1834.
Act IX of 1840. But the aforesaid Regulations of Bengal,
Madras and Bombay continued to operate till 1859.
The Act VIII of 1857: It codified the procedure of Civil Courts
except those established by the Royal Charter. The sections

28
312 to 325 dealt with arbitration in suits. The sections 326 and
327 provided for arbitration without the intervention of the
court. The Act VIII of 1857 was replaced by Act X of 1877.
The Act XIV of 1882: the Code of Civil Procedure was
revised in the year 1882 by the Act XIV of 1882 the provisions
relating to arbitration were reproduced verbatim in sections
506 to 526. No change in the law of arbitration was effected by
the said acts of 1877 and 1882.
The Indian Arbitration Act IX of 1899: It was based on the
English Arbitration Act of 1889. Act IX of 1899. It was the first
substantive law on the subject of arbitration but its application
was limited to the Presidency – towns of Calcutta, Bombay and
Madras. Act, however suffered from many defects and was
subjected to severe judicial criticisms.

29
CHAPTER – 3 OVERVIEW OF ADR MECHANISMS
3.1. What is ADR Mechanism
A dispute is basically ‘lis inter parties’ and the justice
dispensation system in India has found an alternative to
Adversarial litigation in the form of ADR Mechanism in which
two parties contest their case and one party wins and the
other party looses, but in case of alternate dispute resolution
(Section 89 – Code of Civil Procedure), which can be
categorized in four broad heads which are
1. Arbitration;
2. Mediation;
3. Conciliation;
4. Negotiation
5. Lok Adalat.
6. Early Neutral Evaluation (ENE)
That through ADR means the entering party is win – win
situation and no party wins no party looses, today the need of
time is that we resort to non conventional systems as well, we
should not forget that its not something new to us, we had for
ages, like panchayats etc, it was self sufficient, every village
has panchayat and it was a powerful authority for redressing
the disputes. The best part of ADR is that since both parties
come face to face and they work out the modalities and reach
to an amicable solution, there is no likelihood of winning or
losing the case, i.e. it’s a win – win situation and thereafter no
appeal, and thus it reduces the burden of appellant courts as
well, the arbitration and conciliation Act, 1996 provides for

30
Arbitration and the award given by the arbitrator is deemed to
be a decree. It was step towards the ADR. The labor
legislation has already incorporated conciliation and mediation
system in their enactments, to have an amicable solution in
case of tussle between the labor and the management.
3.2. ADR Mechanisms and IP Disputes.
As part of the process of specialization, since it is difficult to
get judges experienced in Intellectual Property (IP) rights or
matters relating thereto, arbitration has to be a preferred
course for dispute resolution because the parties can choose
an arbitrator knowledgeable and experienced in the field.
However, development in this direction is at an early stage,
which does not provide adequate data for any realistic
assessment of arbitration in intellectual property related
matters. It must be borne in mind that several intellectual
property related matters arise between parties who do not
have an agreement inter se. In all such matters, only Courts
can push the matters to Arbitration.
Management of integrated securitization of IP assets on ADR
/ODR While on the subject of use of information & technology
in arbitration and other ADR methods, it would be worthwhile
to note that arbitration and ADR can play a meaningful role in
several new avenues, including integrated securitization of all
types of assets (including but not restricted to intellectual
property assets) and the management of such integrated
securitization. However, this being a specialized subject, it

31
could be well dealt with independently.ADR in the new
millennium –Indian Context The most effective initiatives for
implementing ADR have probably been found to be in the
State of California, USA.
There, several modes of ADR have been implemented, some
of which are nonbinding and some being of binding nature,
judicial arbitration, private arbitration, settlement conference
(before the Judge assigned to the case), early neutral
evaluation, mediation and conciliation. Though some of these
concepts are today alien in the Indian context, one will very
soon find several of them being implemented in varying forms
and degrees in the courts in India.
Those who have implemented them in several other countries
have already realized the benefits of these available
alternatives and India too shall realize their potentials and
benefit from making these available to the litigating masses.
Along with popularization of ADR, which has gained statutory
recognition by the introduction of the new Section 89 of the
CPC and the introduction of the new Information Technology
Act, 2000,the passage for implementation of ODR too has
been smoothened.
The latter statute extends recognition to generation and
storage of electronic data as also gives recognition to
electronic communication. This is a real shot in the arm for
implementation of ODR. In the days of “time being money”,
even in games like cricket, we have drifted towards one day,
limited overs matches instead of the five days, two inning
matches. India’s business community is becoming more and

32
more conscious of minimizing use of time, money and energy
in dispute resolution processes and therefore, while arbitration
is being preferred to court litigation, there is also a growing
realization that in the long run it is advisable to perhaps suffer
an adverse award rather than render the entire system of
arbitration and ADR un remunerative. Law Colleges and
several other Institutions have, recognizing the importance of
arbitration and other ADR methods, introduced courses and
training programmes and one can clearly see the writing on
the wall that in the near future in India ADR methods will bring
about amicable settlement between the disputants thereby
saving a lot of time, money and energy for the business
community as also for the professionals from legal, accounting
and other disciplines so that they can concentrate more on
constructive work. In this background, conciliation and
mediation has a very bright prospect in India and it will be
advisable for all professionals, including members of
professions like law and accountancy, to get formal training as
conciliators/mediators.
firstly, necessary to re-position the provisions contained in
Order X, Rules 1A, 1B and 1C in a manner that the courts are
empowered to refer the matters to mediation as soon as the
same are filed; Another aspect that requires attention is that
although the ADR provisions have been introduced in Section
89 of CPC, one finds practical difficulty in implementing these
provisions. One should understanding to keep in mind the
dynamics of potent modes of ADR like mediation and
conciliation. Although there is subtle difference between the

33
two, there is no difference in the process undertaken/deployed
for implementation.
There is a growing awareness among the masses as well
regarding ADR and people are increasingly using the same for
getting their disputes settled outside the court. This will also
reduce the “backlog problem’ that India is facing. It is now
universally accredited that ‘Justice delayed is Justice denied’.
The existing justice system is not able to cope up with the
ever-increasing burden of civil and criminal litigation. There is
growing awareness that in the majority of cases court action is
not an appropriate remedy for seeking justice. We have to
formulate effective ADR Mechanisms to ease the burden of
judicial functioning. The backlog of cases is incre8asing day
by day but criticizing judiciary for the same is a wrong
practice. It must be noted that the backlog is a product of
“inadequate judge population ratio” and the lack of basic
infrastructure. The government has to play a pro-active role in
this direction.
3.2.1. Arbitration:
This is a procedure in which the dispute is submitted to an
arbitral tribunal which makes a decision (an award) on the
dispute that is binding upon the parties. Arbitration generally
grows when the parties through the contract agrees to resort
to arbitration process, in case of disputes that may arise in
future regarding contract terms and conditions. The process of
arbitration can start only if there exist a valid Arbitration
Agreement between the parties prior to the emergence of the
dispute. As per Section 7, such an agreement must be in

34
writing. The contract, regarding which the dispute exists, must
either contain an arbitration clause or must refer to a separate
document signed by the parties containing the arbitration
agreement.
The existence of an arbitration agreement can also be inferred
by written correspondence such as letters, telex, or telegrams
which provide a record of the agreement. Any party to the
dispute can start the process of appointing arbitrator and if the
other party does not cooperate, the party can approach the
office of Chief Justice for appointment of an arbitrator. A sole
arbitrator or panels of arbitrators so appointed constitute the
Arbitration Tribunal. The arbitration tribunal has jurisdiction
over its own jurisdiction. Thus, if a party wants to challenge
the jurisdiction of the arbitration tribunal, it can do so only
before the tribunal itself. If the tribunal rejects the request,
there is little the party can do accept to approach a court after
the tribunal makes an award. Section 34 provides certain
grounds upon which a party can appeal to the principal civil
court of original jurisdiction for setting aside the award. Once
the period for filing an appeal for setting aside an award is
over, or if such an appeal is rejected, the award is binding on
the parties and is considered as a decree of the court.
3.2.2. Mediation:
Mediation, aims to assist two (or more) disputants in reaching
an agreement. The parties themselves determine the
conditions of any settlements reached— rather than accepting
something imposed by a third party. The disputes may involve
(as parties) states, organizations, communities, individuals or

35
other representatives with a vested interest in the outcome.
Mediators use appropriate techniques and/or skills to open
and / or improve dialogue between disputants, aiming to help
the parties reach an agreement (with concrete effects) on the
disputed matter. Normally, all parties must view the mediator
as impartial. Disputants may use mediation in a variety of
disputes, such as commercial, legal, diplomatic, workplace,
community and family matters. A third-party representative
may contract and mediate between (say) unions and
corporations. When a workers’ union goes on strike, a dispute
takes place, and the corporation hires a third party to
intervene in attempt to settle a contract or agreement between
the union and the corporation.
3.2.3. Conciliation:
A non-binding procedure, in which an impartial third party i.e.
the conciliator or the mediator, assists the parties to a dispute
in reaching a mutually satisfactory and agreed settlement of
disputes. Conciliation is a less formal form of arbitration. This
process does not require an existence of any prior agreement.
Any party can request the other party to appoint a conciliator.
One conciliator is preferred but two or three are also allowed.
Parties may submit statements to the conciliator describing the
general nature of the dispute and the points at issue. Each
party sends a copy of the statement to the other. The
conciliator may request further details, may ask to meet the
parties, or communicate with the parties orally or in writing.
Parties may even submit suggestions for the settlement of the
dispute to the conciliator.

36
When it appears to the conciliator that elements of settlement
exist, he may draw up the terms of settlement and send it to
the parties for their acceptance. If both the parties sign the
settlement document, it shall be final and binding on both.
3.2.4. Negotiation:
Negotiation is a dialogue intended to resolve disputes, to
produce an agreement upon courses of action, to bargain for
individual or collective advantage, or to craft outcomes to
satisfy various interests. It is the primary method of alternative
dispute resolution. Negotiation occurs in business, non-profit
organizations, and government branches, legal proceedings,
among nations and in personal situations such as marriage,
divorce, parenting, and everyday life. Those who work in
negotiation professionally are called negotiators. Professional
negotiators are often specialized, such as union negotiators,
leverage buyout negotiators, peace negotiators, hostage
negotiators, or may work under other titles, such as diplomats,
legislators or brokers.
3.2.5. Mini-trial
The mini-trial, a development in ADR, is finding its greatest
use in resolving large-scale disputes involving complex
questions of mixed law and fact, such as Product Liability,
massive construction, and antitrust cases. In a mini-trial, each
party presents its case as in a regular trial, but with the
notable difference that the case is "tried" by the parties
themselves, and the presentations are dramatically
abbreviated.
In a mini-trial, lawyers and experts present a condensed

37
version of the case to top management of both parties. Often,
a neutral adviser sometimes an expert in the subject area sits
with management and conducts the hearing. After these
presentations, top management representatives by now more
aware of the strengths and weaknesses of each side, try to
negotiate a resolution of the problem. If they are unable to do
so, they often ask for the neutral adviser's best guess as to
the probable outcome of the case. They then resume
negotiations.
The key to the success of this approach is the presence of
both sides' top officials and the exchange of information that
takes place during the mini-trial. Too often, pre-litigation work
has insulated top management from the true strengths and
weaknesses of their cases. Mini-trial presentations allow them
to see the dispute as it would appear to an outsider and set
the stage for a cooperative settlement.
3.3. EARLY NEUTRAL EVALUATION:
An early neutral evaluation (ENE) is used when one or both
parties to a dispute seek the advice of an experienced
individual, usually an attorney, concerning the strength of their
cases. An objective evaluation by a knowledgeable outsider
can sometimes move parties away from unrealistic positions,
or at least provide them with more insight into their cases'
strengths and weaknesses. Of course, the success of this
technique depends upon the parties' faith in the fairness and
objectivity of the neutral third-party, and their willingness to
compromise.

38
Early neutral evaluation is a process, both in court and out of
court, in which an experienced lawyer gives an indication, as
strong and as detailed as the disclosure and representation at
that stage allows, of what would be the outcome if the matter
were to be finally adjudicated in court.
Early neutral evaluation in court includes the FDR hearing at
which the judge is required by the rules to predict what would
happen if the matter were to go to a final hearing. It has its
limitations for example because of time. Nevertheless there is
a very high success rate. It is acknowledged as one of the
primary achievements of the ancillary relief procedure. To a
lesser extent, the process at the First Appointment is an early
neutral evaluation as the judge is required to consider the
points in dispute with a view to narrowing the issues.
Early neutral evaluation out of court is much less frequent and
prevalent. Indeed, there is almost only apocryphal knowledge
of what is going on. In this regard, it is also, perhaps
confusingly, described sometimes as private judging.
The working party felt that it was now time to encourage early
neutral evaluation yet to have better definition, boundaries and
safeguards including within the professional context.
Moreover the working party found a delightful coincidence of
the collaborative law group of the ADR committee
independently considering the same issue at the same time.
Our recommendations do not conflict with any
recommendations they make but it is hoped that the use of

39
early neutral evaluation can build together, solicitors both as
client representatives and as collaborative lawyers.
The anecdotal evidence is that over the past 15 years or more,
from time to time opposing solicitors in a case have jointly
consulted senior members of the profession, often senior
barristers but also senior solicitors in other firms, on a
complex issue causing a stumbling block towards a settlement.
Sometimes this has been the whole of the case, for instance
on quantum. Sometimes it has been discreet, perhaps
interlocutory, issues or one single issue separating the
parties. It is believed that often the opinion has been given in
conference but sometimes in writing. It is believed that on
occasions it has been given on a privileged basis so that
issues do not arise about the status of the evaluation, the
weight to be given in the court process and similar. It is not
believed that any of these early neutral evaluations or private
judgings have come before the courts for consideration of their
status.
Specifically it is believed that when there was an incredible
backlog of work due to the wardships being terminated under
the Children Act by a specific date and many financial cases
were taken out of the list and relisted for at least six months
later, many cases in fact settled including a number through
the assistance of early neutral evaluation.Private judging is
sometimes used as an informal expression of early neutral
evaluation. In some instances, it is identical. However early
neutral evaluation is technically evaluation at an early stage in
the case. Private judging has often occurred on a joint

40
instruction to a senior professional towards the later stages of
the case and as an alternative to a court adjudication. In this
document we are referring to early neutral evaluation although
private judging could also be incorporated in our
recommendations.
3.3.2. What an ENE Covers
Favorable and unfavorable facts Favorable and unfavorable
law, as well as important but unsettled legal issues Strengths
and weaknesses of each party’s case Likely successful or
meritless claims and defenses Considerations of the client’s
business needs, and the impact of an outcome on that
Possible litigation strategies (such as the feasibility of
dispositive motions) Possible end-game strategies, including
mediation, settlement, and attendant demands or offers
Possible legal costs and expenses, including which costs or
initiatives are most worthwhile.
It is quite possible that an ENE will show that the dispute is
best resolved through full litigation or arbitration. The ENE
may then be used as a road map for case strategy. The client
can emphasize the most effective claims or defenses, thereby
avoiding expenditures of valuable resources on less justified
positions. The ENE thus leads to a more sharply focused case
one that will have maximum impact on the judge, jury, or
arbitrator.
To perform the ENE, the neutral could review relevant
contracts; review internal and party communications; interview
the client’s personnel involved in the transaction; discuss with

41
management the transaction’s place in the client’s overall
business operations and strategies (both long-term and short-
term); review applicable legal authority; talk with in-house or
outside legal counsel about the dispute; and research or
investigate the opponent’s business. The quality of the ENE
will be proportional to the value and volume of the information
received and analyzed by the neutral.
An ENE can be done for virtually any type of case, and
especially for commercial disputes. For most contractual and
business disputes, a neutral with general but broad decision-
making experience is fine. After all, the actual judge will likely
be a generalist too. Where the subject matter of the dispute is
technical – such as patents – the neutral should have
experience in that area.
3.3.2. The Timing and Scope of an ENE
An ENE is, by definition, done “early” in the case, before all of
the facts are known. But, even then, it is widely believed (by
this author too) that the parties already know or can readily
access 80 percent of all of the information that exists for the
case or will be offered at the hearing. Because the cost to
obtain increments of evidence sometimes outweighs the value
of those increments, there is good reason to perform an ENE
at the outset, even if the information is incomplete. Indeed,
judges frequently make very important interim decisions –
such as injunctive relief – at the case’s beginning based on
less than full information.

42
“Early” can be even before the complaint or arbitration is filed.
Once a party knows of a potential dispute, such as by receipt
of a demand letter from the opponent, ENE is fairly triggered.
Indeed, it is often best to assess a dispute before the parties
are entrenched in pleadings. Also, as a private process, ENE
can be done even while the client, with the aid of counsel,
engages in pre-litigation or early-litigation posturing with the
other side.
Nonetheless, if the client prefers, the neutral evaluation can
instead be done later, and it can also be done more than once
during the case. A neutral reassessment can also be used to
prepare submissions for mediation and even pre-trial briefs.
ENE therefore can be, but need not be, one and done.
The scope and breadth of the ENE can be determined together
by the client and neutral. Obviously, a small-budget ENE may
be less helpful than a more expansive one. The chosen scope
can be based upon the complexity of the dispute, the volume
of evidence, and the timing for the project. Given the purpose
of ENE – an important guide for making critical risk analyses
early in a dispute – clients should be willing to give the neutral
wide latitude in order to make the best evaluation. A more
truncated ENE can, however, contain a list of unexplored or
undeveloped issues or points that the client can later
authorize for analysis.
3.2.3 The Distinctive Benefits of an ENE
For very important reasons, this “neutral” assessment is
qualitatively different from the analysis of the dispute by the

43
client’s lawyer. First, the neutral has no ongoing
representation in that dispute (e.g., continuing fees). Rather,
the neutral completes the discrete task quickly without any
prospects for long-term work. That absence of any economic
conflict ensures complete candor in the analysis. Second, the
neutral also will not likely have any ongoing relationship with
the client generally, and therefore the neutral is not concerned
about rendering “bad news” about the case and possible
outcomes. In this way also, candor is ensured. Thus, the
neutral is able to provide a totally independent and unbiased
evaluation – exactly the approach that should be taken by the
actual judge.
An ENE can also complement or supplement an independent
expert’s financial analysis. Thus, the client can learn even
more when the ENE is coupled with a financial consultant’s
damage analysis that separately gauges risk. This combined
evaluation provides case projections with even more rigor. The
ENE adds the factual and legal assessments, too, thereby
making the overall analysis much more complete.
An ENE can be treated as an attorney/client communication or
attorney work product. Thus, the ENE can remain confidential,
even though the neutral may not be the client’s counsel in the
dispute
3.3.4. Lok-Adalat :
The Lok-Adalat system contributed under National Legal
Service Authority Act, 1987 is a uniquely Indian approach. The
Constitutional duty of the State to provide legal aid, prompted

44
by the decisions of the apex court, led to the formation of a
Committee for Implementing Legal Aid Schemes (CILAS). The
legal legitimacy of Lok Adalat flows from the Legal Services
Authorities Act, 1987. It roughly means “People’s court”. This
is a non-adversarial system, where by mock courts (called Lok
Adalats) are held by the State Authority, District Authority,
Supreme Court Legal Services Committee, High Court Legal
Services Committee, or Taluk Legal Services Committee,
periodically for exercising such jurisdiction as they thinks fit.
These are usually presided by retired judge, social activists, or
members of legal profession. It does not have jurisdiction on
matters related to non-compoundable offences. There is no
court fee and no rigid procedural requirement (i.e. no need to
follow process given by Civil Procedure Code or Evi22dence
Act), which makes the process very fast. Parties can directly
interact with the judge, which is not possible in regular courts.
A case can be transferred to a Lok Adalat if one party applies
to the court and the court sees some chance of settlement
after giving an opportunity of being heard to the other party.
The focus in Lok Adalats is on compromise. When no
compromise is reached, the matter goes back to the court.
However, if a compromise is reached, an award is made and is
binding on the parties. It is enforced as a decree of a civil
court. An important aspect is that the award is final and cannot
be appealed, not even under Article 226 because it is a
judgment by consent. All proceedings of a Lok Adalat are
deemed to be judicial proceedings and every Lok Adalat is
deemed to be a Civil Court. Main condition of the Lok Adalat is
that both parties in dispute should agree for settlement. The

45
decision of the Lok Adalat is binding on the parties to the
dispute and its order is capable of execution through legal
process. Lok Adalat is very effective in settlement of money
claims. Disputes like partition suits, damages and matrimonial
cases can also be easily settled before Lok Adalat. Lok Adalat
is a boon to the litigant public, where they can get their
disputes settled fast and free of cost.
3.4. How to make ADR system more viable
We cannot stop the inflow of cases because the doors of
justice cannot be closed, but we can increase the outflow of
cases either by strengthening (both qualitatively and
quantitatively) the capacity of the existing system or by way of
finding some additional outlets.
In this situation ADR mechanism implementation can be such
a drastic step for which three things are required most:
• Mandatory reference to ADRs
• Case management by Judges
• Committed teams of Judges and Lawyers
Equal justice for all is a cardinal principle on which entire
system of administration of justice is based. We cannot
conceive justice which is not fair and equal. We should aim to
achieve earlier and more proportionate resolution of legal
problems and disputes by increasing advice and assistance to
help people resolve their disputes earlier and more effectively;
increasing the opportunities for people involved in court cases
to settle their disputes out of court; and reducing delays in
resolving those disputes that need to be decided by the courts.

46
To implement the noble ideas and to ensure the benefits of
ADR to common people, the four essential players
(government, bench, bar litigants) are required to coordinate
and work as a whole system. Case management includes
identifying the issues in the case; summarily disposing of
some issues and deciding in which order other issues to be
resolved; fixing time tables for the parties to take particular
steps in the case; and limiting disclosure and expert evidence.
3.5. How to make Arbitration Mechanism truly effective:
With a very laudable objective of speedy disposal of cases,
Alternative Dispute Resolution Mechanism (ADR) is mooted.
Among the modes of Alternative Dispute Resolution
Mechanism, Arbitration is most discussed issue always as
many agreements or contracts contain an Arbitration Clause
now-a-days. The difference between Arbitration Mechanism
and the adjudication through Civil Court etc. issues can be
summed up as follows:
There is no need of paying court fee when a dispute is
adjudicated by an Arbitrator. Arbitrator is less burdened
compared to Civil Court and the parties have the liberty of
choosing their own judge. Arbitrator need not follow the
procedure prescribed under Civil Procedure Code, 1908
though he will follow the principles of natural justice.
The procedure, the fees, the place of Arbitration etc. can be
mutually agreed by the Parties and in the absence of any
consensus, the Court or the Arbitrator will take a decision on
the issues. Despite so much relaxation in the established civil
procedure, the adjudication before the Arbitrator or the issue

47
of getting an Arbitrator appointed is delayed very often. The
general issues or challenges to the adjudication through
Arbitrator are as follows:
Even when there is no real lis between the parties, one party
to an agreement containing Arbitration clause, may initiate
Arbitration proceedings with untenable claim. The issue is
settled to some extent now in view of the recent development
that the Court entertaining an application under section 11 of
Arbitration and Conciliation Act, 1996 discharges judicial
function and can look into the issues as to whether there is
any existing agreement prima facie, whether there is any lis
between the parties and whether the subject matter is capable
of being arbitrated.
When there exist a special mechanism dealing with certain
issues, the adjudication before the Arbitrator may not appear
to be effective. For example, Rent Control Laws provide many
reliefs to the tenants and also the landlords. There is a
provision for deposit of rent by the tenant when the landlord
refuses to receive the rent under the Rent Control Laws. When
it comes to depositing rent, the Arbitrator may not be
effectively deal with the issue.
When there is no specific provision under the Arbitration and
Conciliation Act, 1996, litigants who wants to drag the case
may file many interim applications. When an interim
application is filed, the same can be rejected by the Arbitrator
when it is found that the interim application is unnecessary
and motivated to drag the case. But, in many cases, the
Arbitrator entertains the interim applications and disposes the

48
same in accordance with law and it consumes time as is the
case before the Civil Court. Against the order in the Interim
Application, an aggrieved party tends to approach the High
Court under section 34 as we see practically.
When hearing fees is fixed or agreed to the Arbitrator, then, at
times, the Arbitrator may feel it convenient to grant so many
adjournments and it is happening as we wee.
Even, when a fixed fee is ordered to pay to the Arbitrator or
agreed upon, the parties usually not pay the entire fee in the
beginning. Till the fee is paid the Arbitration proceedings will
go on at times, though the Arbitrator can exercise his right of
lien over the award until his agreed remuneration or fee is
paid.
Looking at the pendency of cases before various courts in
India, if we think about the time to be taken for disposing all
the pending cases, it is recently reported that it will take some
320 years to dispose of the pending cases or to clear the
backlog.
Arbitration mechanism is always Alternative, but, still we
depend on the Civil Courts and the procedure lay down under
the Code of Civil Procedure, 1908 for getting the civil disputes
adjudicated. We need many reforms in our judicial system in
India to ensure speedy disposal of cases and it will certainly
take years to bring the proper reforms.
Simultaneous to bringing the proper reforms or initiating
measures to bring the reforms in our Indian Judiciary aiming at
speedy and effective disposal of cases, we also need to

49
concentrate as to how make the Arbitration Mechanism truly
effective.
The measures to make the Arbitration Mechanism truly
effective, as I think, are as follows: Rather practicing to
appoint retired judges as Arbitrators, it is better to have panel
of Arbitrators who are talented and with very good legal
knowledge. There is nothing wrong if a practicing legal
advocate is appointed as an Arbitrator when he is willing to act
as such.
When it comes to the fee or the remuneration to be paid to the
Arbitrator, it is better to fix lump sum remuneration for
deciding an issue and having mechanism that the entire fee is
paid to the Arbitrator at once. It is better to avoid the practice
of paying sitting fees to the Arbitrators if one needs to make
the adjudication through arbitration really speedy. Applications
under section 34 of Arbitration and Conciliation Act, 1996 to
be carefully gone into and the implications of entertaining an
application under section 34 on the main Arbitration claim
before the Arbitrator to be carefully considered.
Present legal position with regard to appointment of
Arbitrators to be continued and the process of appointment of
arbitrators to be judicial always. I am of the strong opinion that
with few reforms, Arbitration Mechanism can be made truly
effective and I don’t think that the mechanism is truly effective
as of now for the few among many reasons referred to above.

50
CHAPTER – 4 ADR- AN INDIAN PERSPECTIVE
Alternative Dispute Resolution was conceived of as a dispute
resolution mechanism outside the courts of law established by
the Sovereign or the State. In this sense, it included
arbitration, as also conciliation, mediation and all other forms
of dispute resolution outside the courts of law, which would all
fall within the ambit of ADR. However, with passage of time,
the phrase “Arbitration and ADR” came in vogue, which implied
that arbitration was distinct from other ADR forms. In
arbitration, there is a final and binding award, whether the
parties consent to it or not, but in other forms of ADR (which
came to be more commonly associated with phrase “ADR”)
there would be no finality except with the consent of the
parties. The protagonists of ADR in this sense claimed that,
whereas in arbitration one party may win and the other(s) may
lose – may be both may lose-as in a court case, in ADR it is a
“win-win” situation because the parties would agree to a
disposal of the matter on terms comfortable to each of them;
In ADR, in this sense, it is not the “dispute” or “difference”
between the parties that is addressed, but the mindset of the
parties, so that with gradual change in the mindset eventually
both sides come to a meeting point. The most practiced forms
of ADR, in this sense, are “conciliation” and “mediation”. In
western countries, neutral evaluation is also frequently
resorted to but in India this or other forms of ADR have not yet
come in vogue.
Conciliation and mediation are often used as interchangeable
terms although there is a subtle difference between the two. In

51
both the forms, the conciliator or mediator (often known as
“neutral”) endeavors to bring both sides closer to each other,
but in one he plays a more proactive role whereas in the other
his role is only to enable the parties to come closer to each
other and for that purpose, at times, the word “facilitator” is
used instead of the word “neutral”; In India, ADR has an
important place because of historical reasons.
If one bears in mind our heritage, tradition and culture, one
fails to understand as to why arbitration and other ADR
methods should not succeed admirably in India. To think of
challenging the Panchas’ decision was considered a sacrilege
and to suspect or to even think of the Panchas being partial
was like blasphemy. With this background, it should not be
difficult to identify the areas, which are obstacles in our goal
to once again reach the ideals of ADR.
ADR in global perspective The international business
community realized that court cases were not only time
consuming but also very expensive businessmen always want to
make best use of their time, money and energy, with the result
that arbitration was preferred to court litigation. Besides, in
arbitration, the parties to the dispute usually got a person of
their choice to decide the matter and thereby the parties
avoided decision-making at the hands of a judge, who may not
be conversant with the subject matter of the dispute. However,
in course of time, even arbitration proceedings became
protracted, with the result that the man of commerce
internationally resorted to other forms of ADR, viz.
conciliation, mediation or neutral evaluation. Throughout the

52
world, efforts are being made to bring about dispute resolution
in as informal a manner as possible speedily and with least
expense. In certain areas even such ADR was avoided. For
example, in insurance, a good part of the risk is passed on to
the reinsurer. In some cases, whether the insurer of one
insured had to bear the loss or the insurer of the other insured
made little difference because both risks were largely covered
the same reinsurer. This brought about the concept of knock-
for-knock, which one finds in vogue even in India – at least in
car insurance where it is not the insurer of the insured whose
driver is negligent who bears the loss but the loss is borne
where it falls.
Emerging trends in preventing court litigation at the beginning
of the British regime, when the courts were established, there
were few cases and the concepts like “courts delays” were
unknown but by the time the British left us there were arrears
in courts which resulted in elongation of the lifespan of any
matter in court. Further, with our achieving independence, our
legislators kept on passing laws, at times, in a language that
was neither simple nor clear, which brought about a spate of
litigation contributing to congestion of courts. In 2-3 decades,
a stage was reached when everyone started apprehending that
our judicial system would collapse because of the arrears and
unduly long time taken for disposal of any matter. With high
rates of interest, the non-claimant always had a vested
interest in delaying the disposal of court cases because the
rate of interest to be awarded by the courts in normal
circumstances was only 6% simple interest per annum

53
whereas trade and industry had to borrow at two to three times
that rate of interest and that too on quarterly compounded
basis. Recent amendments in the Code of Civil Procedure,
1908 (“CPC” for short) and provisions for pushing commercial
matters to arbitration or other forms of ADR coupled with
formation of tribunals for handling specific types of cases has
resulted in arresting further elongation of time for disposal of
court cases but it will take a few years before the full impact of
these changes is known.
As of date, trends in online, ADR/ODR there have been
several Internet service providers who have provided platforms
for Online resolution of disputes by parties, which they can
pursue irrespective of their geographical locations. Quite a few
of these have closed down, may be due to their’s being a bad
business model or probably due to their system/platform not
living up to the expectations of the end user. But this certainly
does not reflect on the popularity or utility of the concept of
ODR (On line Dispute Resolution), in some places also
referred to as “e ADR”(electronic Alternative Dispute
Resolution). This is evident from the fact that the number of
service providers has increased this year to over a hundred.
The benefits of ODR are manifold. Being accessible online,
the dispute resolution platform can be availed of sitting in
one’s own office or residence or even while being on the
move.
In addition, the process, being conducted online, affords the
parties an opportunity to appoint neutrals from anywhere in the
world. This widens their CHOICE rather than restricts it;

54
Though not widely heard today, even in most metropolitan
cities in India, ODR is an idea whose time has come. But we
must understand that it cannot be implemented unless we first
popularize the different modes of ADR, as also remove the
stigmas that arbitration (especially ‘ad hoc’ arbitration) is
gathering. But the night is not too long.
Already the Bombay High Court has taken initiatives in that
direction. It has not only initiated training programmes for
lawyers and judges It is too early to assess Courts behavioral
pattern on this count because amendments in the CPC are
recent. in several parts of Maharashtra and has even started
an ADR course jointly with the Mumbai University(the first
batch of which is nearing completion but it is also chalking out
plans for implementing mediation, conciliation and arbitration
at several courts in Maharashtra. The Bombay High Court
itself has separate Panels of Arbitrators and Mediators whose
fees are stipulated at very nominal rates;
With India having its own unique place in information &
technology and the younger generation being computer-savvy,
ODR has already started. Several Arbitration Institutions have
framed Rules in this behalf and video-conferencing has been
accepted as a workable solution for minimizing the cost. Here
again, it is somewhat premature to make any realistic
assessment. One can only say with confidence that the use of
technology in arbitration and ADR has already made a good
start and the trend is that in the near future, it would be
utilized to expedite arbitration and other ADR methods as also
to minimize the cost.

55
4.1 The emergence of ADR system in independent India:
That are bound to happen in group of people and human are
adaptable to such situations in finding out and devising novel
ways and means for amicable resolution of conflicts. The
human have been embodied with rationality to solve adverse
situations with ease and the human nature has been
constantly evolving in establishment of a congenial
atmosphere as such the dispute resolution is one of the major
tool, which is being always used by a stable society.
In India, intricacies of the formal legal system has
continuously emanated dissatisfaction for citizens of India,
wherein the disputes were got involved in the legal wrangling
resulting to dissatisfaction and criticism of the Courts firstly,
due to the unsavory conduct of legal professionals , secondly,
sometimes due to inordinate delay of delivery of justice by the
courts has lead to a sense of alienation of litigants from the
whole judicial system, thus a need was felt for initiation of
ADR system to resolve many trivial pending disputes, some of
trivial disputes or on the pending cases, which can be resolved
through intervention of ADR techniques, thereby lessening the
crumbling judicial system as well as over burdened Courts with
cases.
That the Arbitration Act of 1940 was enacted replacing the
Indian Arbitration Act of 1899 and section 89 and clauses (a)
to (f) of section 104(1) and the Second Schedule of the Code
of Civil procedure 1908. It amended and consolidated the law
relating to arbitration in British India and remained a

56
comprehensive law on Arbitration even in the Republican India
until 1996.
Though, in early years the industrial Disputes Act, 1947
provided the provision both for conciliation and arbitration for
the purpose of settlement of disputes. That in Rajasthan State
Road Transport Corporation v. Krishna Kant, the Supreme
Court had observed: “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
upon appeals and revisions applicable to civil courts. Indeed,
the powers of the courts and tribunals under the Industrial
Disputes Act are far more extensive in the sense that they can
grant such relief as they think appropriate in the
circumstances for putting an end to an industrial dispute.”
The section 23(2) of the Hindu Marriage Act, 1955 also
mandated or casted the duty on the courts that the Court shall
in the first instance must make an endeavor to bring about
reconciliation between the parties of the case, where it is
possible according to nature and circumstances before
granting relief under this Act. For the purpose of reconciliation
the Court may adjourn the proceeding for a reasonable period
and refer the matter to person nominated by court or parties
with the direction to report to the court as to the result of the
reconciliation, section 23(3) of the Act.
The Family Court Act, 1984 was also enacted to provide
avenues for the establishment of family Courts with a view to

57
promote conciliation and secure speedy settlement of disputes
relating to marriage, family affairs and for matter connected
therewith by adopting an approach radically different from the
ordinary civil proceedings. The section 9 of the Family Courts
Act, 1984 has further 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 a dispute. The family Court has also
been conferred with the power to adjourn the proceedings for
any reasonable period to enable attempts to be made to effect
settlement if there is any reasonable possibility of settlement.
Shri M.C.Setalvad, former Attorney General of India has
observed: “….equality is the basis of all modern systems of
jurisprudence and administration of justice… in so far as a
person is unable to obtain access to a court of law for having
his wrongs redressed or for defending himself against a
criminal charge, justice becomes unequal …Unless some
provision is made for assisting the poor men for the payment
of Court fees and lawyer’s fees and other incidental costs of
litigation, he is denied equality in the opportunity to seek
justice.”
To check and to cope up with its enormous load of growing
cases, the Constitutional duty of the State to provide legal aid,
prompted by the decisions of the apex court, led to the
formation of a Committee for Implementing Legal Aid Schemes
(CILAS) and the National Legal Service Authority Act, 1987
was adopted as a uniquely Indian approach for creation of
Lok-Adalat system. The legal legitimacy of Lok Adalat flows
from the Legal Services Authorities Act, 1987. It roughly

58
means “People’s court”. This is a non-adversarial system,
where by mock courts (called Lok Adalats) are held by the
State Authority, District Authority, Supreme Court Legal88
Services Committee, High Court Legal Services Committee, or
Taluk Legal Services Committee, periodically for exercising
such jurisdiction as they thinks fit.
These are usually presided by retired judge, social activists, or
members of legal profession. It does not have jurisdiction on
matters related to non-compoundable offences. There is no
court fee and no rigid procedural requirement (i.e. no need to
follow process given by Civil Procedure Code or Evidence
Act), which makes the process very fast. Parties can directly
interact with the judge, which is not possible in regular courts.
A case can be transferred to a Lok Adalat if one party applies
to the court and the court sees some chance of settlement
after giving an opportunity of being heard to the other party.
The focus in Lok Adalats is on compromise.
Usually when no compromise is reached, the matter goes back
to the court. However, if a compromise is reached, an award is
made and is binding on the parties. It is enforced as a decree
of a civil court. An important aspect is that the award is final
and cannot be appealed, not even under Article 226 because it
is a judgment by consent. All proceedings of a Lok Adalat are
deemed to be judicial proceedings and every Lok Adalat is
deemed to be a Civil Court. Main condition of the Lok Adalat is
that both parties in dispute should agree for settlement. The
decision of the Lok Adalat is binding on the parties to the
dispute and its order is capable of execution through legal

59
process. Lok Adalat is very effective in settlement of money
claims. Disputes like partition suits, damages and matrimonial
cases can also be easily settled before Lok Adalat. Lok Adalat
is a boon to the litigant public, where they can get their
disputes settled fast and free of cost.
4.2. The court approach towards ADR mechanism:
That for last two decades not only in India but remote in other
corner of the world rather everywhere rapid development in
the societies as whole is creating an multiplying human urges
as well as expectations, as a result this, the conflict of
interests bound to increase day by day all over the world over,
no exception to India, in India due to slackness of judicial
discipline in courts and litigating parties having litigation in
Indian courts has over burdened the judicial mechanism and
the said judicial mechanism finding extremely difficult to
manage to cope up with its enormous load of pending cases,
which has further compounded and eroded judicial
creditability.
In current scenario the Alternative Dispute Resolution (ADR)
refers to a variety of streamlined resolution techniques
designed specifically to resolve issues in controversy more
efficiently and in better manner, wherein the normal bilateral
negotiation process fails. In view of the fact, presently, the
third party alternative dispute resolution (ADR) is being touted
and being thought as effective alternative for the contesting
parties to the litigation, who are hotly involved to the formal
legal intricacies.

60
With wide spread implementation of ADR techniques in the
developed and developing world. The usage and penetration of
ADR systems techniques are proving to much viable option in
reducing cost factor in Litigation and delays. The success of
ADR systems in bringing resolution of their conflicts in
amicable manner, thus due to success of it, The ADR system
has entered in to many untouched subjects or issues of laws,
as of now, ADR penetration is being increases in legal battle
and many new cases are added day by day under ADR system
for its resolution. Hence due to successful resolution of legal
conflicts / disputes through ADR systems, due to successful
resolution of legal conflicts / disputes through ADR systems
has improved the lives of as such individuals and their
business entities thus ADR systems have been able to achieve
broad social / societal goals to the large extent.
That the Privy Council2
affirmed the decision of the Panchayat
and Sir John Wallis observed that the reference to a village
panchayat is the time-honoured method of deciding disputes.
It avoids protracted litigation and is based on the ground
realities verified in person by the adjudicators and the award
is fair and honest settlement of doubtful claims based on legal
and moral grounds.
3
The justice dispensation system in India has come under
great stress for several reasons; chief reason of them being
the huge pendency of cases in Courts. The denial of justice
through delay is the biggest mockery of law, but in India it is
2
The Privy Council Sitanna v. Viranna, AIR 1934 SC 105,
3
ICADR88

61
not limited to mere mockery; the delay in fact kills the entire
justice dispensation system of the country. In India, the
number of cases filed in Courts has shown tremendous
increase in recent years for a variety of reasons resulting in
pendency and delays underlining the need for alternative
dispute resolution methods. The justice dispensation system in
India has hit rock bottom. The system crawls in its rotten rut of
ineptitude and corruption. This has led to people settling
scores on their own, resulting in a growing number of criminal
syndicates in the country and reflecting the loss of people's
confidence in the rule of law.
That Late H.D Shourie wrote in Letter Mr. Justice S. M. Raza4
,
he wrote, "We believe that there is need of bringing about the
judicial reforms which would deal with huge pendency of cases
in the courts of the country. The figures presently being
mentioned are that there are 2.27 crore ca2ses in the District
and Subordinate Courts; 35 lakhs in High Cou5rts and 25000
in the Supreme Court. There are about 2 crores cases pending
in the courts of India. If there are 4/5 members of the family on
one side and 4/5 members on the other side, almost about 12
to 15 crores persons are involved in pending cases. At the last
count the backlog of cases in the courts of India had gone up
t88o nearly 3 crore cases, including more than 37 lakh cases
pending in the High Courts and over 46,000 cases awaiting
disposal by the Supreme Court.
4
Mr. H. D. Shourie, Founder Director of COMMON CAUSE, continued his exertions to this end till his last breath.
In his letter to Mr. Justice S. M. Raza, Lokayukta, Uttaranchal, dated June 22, 2005,

62
Drawbacks and suggested amendments in Arbitration and
Conciliation Act, 1996 (i) Arbitration, as practiced in India,
instead of shortening the lifespan of the dispute resolution,
became one more “inning” in the game. Not only that, the
arbitrator and the parties’ lawyers treated arbitration as “extra
time” or overtime work to be done after attending to court
matters. The result was that the normal session of an
arbitration hearing was always for a short duration and a part
of the time, at the beginning, was taken for recapitulating what
had happened till that point of time and at the end for fixing
the next date of hearing. Absence of a full-fledged Arbitration
Bar effectively prevented arbitrations being heard continuously
on day-to-day basis over the normal working hours, mviz. 4-5
hours every day. This resulted in elongation of the period for
disposal. Besides, most of the arbitrations were ad hoc as
there were no Arbitration Institutions.
With the establishment of such Institutions (for example the
Indian Council of Arbitration which was established in 1965),
institutional arbitrations made a beginning but it was difficult
to bring about any effective change in the culture and mindset
of the arbitrators or the lawyers appearing before them.
Besides, with long delays in court matters, and consequent
vested interest in the non-claimant to delay matters for as long
as possible, pending the arbitration, the matter was often
taken to the court for taking arbitration off the track on
technical grounds.
In many cases, the court gave an interim injunction restraining
the arbitrators from continuing with the arbitration and took a

63
long time to dispose of the matter finally. Even when
applications objecting to the continuation of arbitration on the
ground of there being no jurisdiction were dismissed, appeals
from such orders of dismissal resulted in further delay.
Several technical objections were being taken by the lawyers,
which eventually led the Supreme Court of India to observe in
Guru Nanak’s case on 29th September, 1981, as under (ii)
With the apprehension of courts collapsing under pressure of
work, and India’s decision to liberalise, it became absolutely
necessary to amend or replace its Arbitration Law so as to
qualify India to sit in the global village. This led to a meeting
of the Prime Minister of India and the Chief Ministers of all the
States, on 8th December, 1993, where a Working Group was
constituted to suggest a new Arbitration Law for India. The
result of that Working Group’s efforts was the Bill which
eventually became The Arbitration and Conciliation Act, 1996,
which was on the UNCITRAL (United Nations Commission on
International Trade Law) Model and was widely acclaimed the
world over as being an ideal piece of legislation. However, due
to absence of Arbitral Institutions and the bulk of arbitrations
being ad hoc, even the provisions of the new Act did not show
any immediate results because the mindset of the arbitrators
and lawyers continued as before; (iii) In the Indian Arbitration
Act, 1940, there was a provision for time period, viz. four
months, for giving the award. Experience showed that this
period of four months was illusory because in almost every
case extension was given and the very act of getting such
extension became time-consuming and expensive. The
Working Group therefore suggested the deletion of time-frame

64
for giving award but considered it to be a matter of culture and
suggested effective steps to be taken in that direction.
However, since most of the arbitration matters were ad hoc
there was little possibility of any substantial change in
handling arbitrations, particularly because the arbitrators,
many of whom were retired judges, continued to oblige the
parties and their lawyers by giving adjournments under an
erroneous apprehension that if they did not do so they would
not get new arbitration cases. For this purpose, it is suggested
that institutional arbitrations should be encouraged and a full-
fledged Arbitration Bar should come into existence so that
arbitration proceedings can be heard on day-to-day basis with
at least 4-5 hours working on every day.
(iv) Apart from this, the judiciary’s approach to the 1996 Act
is not consistent. To illustrate, in Sundaram Finance Ltd. v.
NEPC India Ltd. (reported in AIR 1999 SC 565) the Supreme
Court said: “The 1996 Act is very different from the Arbitration
Act, 1940. The provisions of this Act have, therefore, to be
interpreted and construed independently and in fact reference
to 1940 Act may actually lead to misconstruction. In other
words the provisions of 1996 Act have to be interpreted being
uninfluenced by the principles underlying the 1940 Act. In
order to get help in construing these provisions it is more
relevant to refer to the UNCITRAL Model Law rather than the
1940 Act.”
Unfortunately, later on, even the Apex Court forgot this
replacement of statute and its avowed objects, with the result
that the judicial mindset continued to remain as it was under

65
the Arbitration Act, 1940; (v) It is trite to say that once the
parties have removed the lis (dispute) from the courts of law
and agreed that the same would be decided by arbitration and
that such decision would be final and binding, it was for the
courts to compel the parties to adhere to their agreement and
to interfere with the award not to “do justice” between the
parties but only for the purpose of ensuring that such private
administration of justice did not contravene the basic ethos of
the society, viz. “public policy” so that transactions like money
laundering, drug trafficking, flesh trading and the like are not
able to get the support of such private disposal of justice.
Instead, the courts (or at least some of them in some cases)
forgot this aspect of the matter and, obsessed by the mindset
which was prevalent under the Arbitration Act, 1940, looked at
the matter as if it was the courts’ bounden duty to ensure that
“justice is done” according to the courts assessment and
inclination. This is an entirely erroneous approach. The matter
would be clear if one looks at it as a game of cricket. Earlier,
we were playing five days’ cricket match with two innings but
then we evolved a single day, limited (normally 50) over
match. Supposing in such a match, on a given occasion, a
batsman is wrongly given out by the umpire, then neither the
batsman nor, for that matter, the entire cricket community can
bring about a reversal of the decision on the ground that
injustice was done to the batsman and that he will not get
another chance to bat because it is only a single day, single
inning match.

66
Consider what would be the chaotic effect if reversal on such a
ground were permitted. The only course is that while even a
wrong decision is acquiesced into, such umpire is not again
appointed as an umpire. Applying the same analogy, an
arbitrator’s (apparently) wrong decision should be accepted
and the injustice between the parties should be tolerated and
acquiesced into but such person may not be appointed as an
arbitrator thereafter and since this is the function of the
parties, the parties would obviously, in their own interest,
follow the course of avoiding such an arbitrator. This approach
is not only logically concomitant with accepting arbitration as
an effective justice delivery system as an alternative to the
judicial process by the courts but is the very essence of
arbitration and if this essential principle is overlooked,
arbitration, as also the other ADR methods, can never be
successful.
Even modern international commercial trend not only
recognizes this but also practices it in the long-term interest of
the international business community. The choice is between
having protracted delays and heavy expenses for resolving
each and every dispute and difference on the one hand or
some members of the commercial community having (perhaps)
to suffer wrong decisions on the other. It is in the long term
interest of the business community as a whole that in such
individual cases the decisions appearing to be wrong are
suffered instead of making the entire system of effective
alternative dispute resolution method lose its very purpose and
reaching a level requiring its rejection. Prudence demands that

67
one should not throw away the baby with the bath water; (vi) It
is in the interest of the society, community and business that
counter-productive dispute resolution process, or for that
matter, any process, which does not ensure “value for money”
in terms of time, money and energy, is to be avoided, even at
the possible cost of suffering some wrong decisions in
individual cases. Once this aspect is clearly perceived and
understood, it will not be difficult to put arbitration and other
ADR methods on the ideal pedestal to which they belong; (vii)
The Supreme Court, despite having recognized this sea
change in the law, in ONGC v. Saw Pipes (reported in (2003) 5
SCC 705) read the phrase “public policy of India” in a manner
which upset the apple cart.
There has been serious criticism of this judgment as it is
putting the clock back. However, the Supreme Court itself is
reconsidering this view and in the meantime an amendment
has been proposed whereby the rigorous impact of this
judgment would stand largely undone.
Commercial arbitration in India Before the advent of the
British, while at the village level “Panchas” would dispose of a
matter as soon as any difference or dispute arose, at the level
of towns and cities, the trade bodies effectively dealt with the
disputes and differences arising between men of commerce.
However, with the growth of trade and commerce, and there
being many occasions when all the parties were not from the
same locality, disposal of differences and disputes in an
informal way became impossible and formal commercial
arbitration came into vogue in India. Even today, in Commodity

68
Exchanges, disputes are resolved almost within hours an22d
in some Exchanges, like for example the Cotton Exchange of
Mumbai, even appeals are disposed of in 2-3 days.
This is so because the matters are decided by men of
commerce having rich experience in the trade and its different
aspects and enjoying a reputation for their long standing in the
business. It is often said that arbitration is as successful as
the arbitrator. Since the arbitrators in Commodity Exchanges
are men having a quick grip on the subject, the disposal of
arbitrations in such exchanges is quick and inexpensive - with
almost no likelihood of challenge in court. In matters not so
simple as disputes and differences between the members of a
Commodity Exchange, well-experienced arbitrators, even
today, bring about a quick result in an inexpensive manner but
it is the need of the day to have trained arbitrators because
with the court matters being pushed to arbitration there is
bound to be a greater demand for good arbitrators available at
reasonable fees.
4.3 Legislative efforts in India
Article 215
of the Constitution of India 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 words “life and liberty” are not to be read narrowly in
the sense drearily dictated by dictionaries; they are organic
terms to be construed meaningfully. Further, the procedure
mentioned in the Article is not some semblance of a procedure
but it should be “reasonable, fair and just”. Thus, the Right to
5
Constitution of India88

69
Speedy Trial has been rightly held to be a part of Right to Life
or Personal Liberty by the Supreme Court of India. The
Supreme Court has allowed Article 21 to stretch its arms as
wide as it legitimately can. The reason is very simple. This
liberal interpretation of Article 21 is to redress that mental
agony, expense and strain which a person proceeded against
in criminal law has to undergo and which, coupled with delay,
may result in impairing the capability or ability of the accused
to defend himself effectively. Thus, the Supreme Court has
held the Right to Speedy Trial a manifestation of fair, just
a8nd reasonable procedure enshrined in Article 21.
This is obviously a matter which needs a very serious
consideration for determining as to what judicial reforms can
be made effective for meeting the requirements of reducing
pendency of cases in the court of India.6
Anguished over the
state of affairs of the justice delivery system, the Supreme
Court has said people's faith in judiciary was dwindling at an
alarming rate, posing a grave threat to constitutional and
democratic governance of the country.
The Constitutional philosophy propounded as Right to Speedy
Trial has though grown in age by almost two and a half
decades; the goal sought to be achieved is yet a far-off peak.
The failures of prosecuting agencies and executive to act and
to secure expeditious and speedy trial have persuaded the
Supreme Court in devising solutions which go to the extent of
almost enacting by judicial verdict bars of limitation beyond
which the trial shall not proceed and the arm of law shall lose
6
Supreme Court chides itself, govt for judicial backlog Dhananjay Mahapatra, TNN Jan 12, 2012, 05.57AM IST

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