Alternative Dispute Resolution

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Chapter:-I
INTRODUCTION
India is a Sovereign, Socialist, Secular, Democratic, Republic. The constitutional goal is to
set up an egalitarian society and to secure to all the citizens-Justice, social, economic and
political. The creation of new forum for determination of dispute and differences in an easy,
uncomplicated manner with peoples participation in the dispensation of Justice is a
constitutional mandate.
The modern slogan is: Justice must be effective, speedy, less costly and non-cumbersome. It
is true that justice should not be done in a manner which would have the effect of doing
aways with of justice. Our justice delivery system suffers from the following ailments:
Procedural delay in disposal of cases; complicated procedure; High cost of litigation; Limited
number of judges.
To overcome the delay and to provide effective justice to the consumer of justice, it has
become imperative that resort should be had to Alternative Dispute Resolution Mechanism
with a view to bringing an end to litigation between the parties at an early date. The Supreme
Court in Salem Advocate Bar Association, Tamil Nadu v. Union of India 1 observed: In
certain countries of the world where ADR has been successful to the extent that over 90 per
cent of the cases are settled out of court, there is a requirement that the parties to the suit must
indicate the form of ADR which they would like to resort to during the pendency of the trial
of the suit.
In the words of John Rawls,2 Justice is the first virtue of social institution, as truth is of
systems of through. It is one of the basic principles of justice system is that everyone knows
and accepts the same principles of justice-social or natural. In order to establish a bond of
friendships and to fulfil the fundamental character of a well-ordered human association easy
justice and less costly justice is the need and cry of the day.
Alternative Dispute Resolution ("ADR") refers to any means of settling disputes outside of
the courtroom. ADR typically includes early neutral evaluation, negotiation, conciliation,
1 AIR 2003 SC 189.
2 A Theory of Justice, 3rd Indian Reprint 2008, p.3.
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mediation, and arbitration. As burgeoning court queues, rising costs of litigation, and time
delays continue to plague litigants, more states have begun experimenting with ADR
programs. Some of these programs are voluntary; others are mandatory.
Arbitration is a process of judging and settling of disputes by a person not acting as a an
judge appointed by law, but by a person or a group of person jointly accepted by the parties in
disputes as having the authority to examine the dispute and give judgment. The arbitrator
appointed may have a legal background, but this is not an essential requirement for acting as
an arbitrator. Such arbitration judgment, generally called awards, are limited to decision
involving monetary matters and meeting of contractual, commercial and social obligations.
The concept of Lok Adalat is an innovative Indian contribution to the world jurisprudence.
Lok Adalat means peoples court. India as a long tradition and history of such methods
practiced in the society at grass root level. These are called Panchayat and legally its called
arbitration. In Lok Adalat justice is dispensed.
Legal aid is essential to guaranteeing equal access to justice for all, as provided for by Article
6.3 of the European Convention on Human Rights regarding criminal law cases. Especially
for citizens who do not have sufficient financial means, the provision of legal aid to clients by
governments will increase the likelihood, within court proceedings, of being assisted by legal
professionals for free (or at a lower cost) or of receiving financial aid.3
Legal aid is required in many forms and at various stages, for obtaining guidance, for
resolving disputes in Courts, tribunals or other authorities. It has manifold facets. The
explosion in population, the vast changes brought about by scientific, technological and other
developments, and the all round enlarged field of human activity reflected in modern society,
and the consequent increase in litigation in Courts and other forums demand that the service
of competent persons with expertise in law is required in many stages and at different forums
or levels and should be made available.
3 en.wikipedia.org, on 17/11/14 at 12:58pm.
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Chapter: II
ALTERNATIVE DISPUTE RESOLUTION

INTRODUCTION
Alternative dispute resolution (ADR) (also known as external dispute resolution in some
countries, such as Australia[1]) includes dispute resolution processes and techniques that act as
a means for disagreeing parties to come to an agreement short of litigation. It is a collective
term for the ways that parties can settle disputes, with (or without) the help of a third party.
Despite historic resistance to ADR by many popular parties and their advocates, ADR has
gained widespread acceptance among both the general public and the legal profession in
recent years. In fact, some courts now require some parties to resort to ADR of some type,
usually mediation, before permitting the parties' cases to be tried (indeed the European
Mediation Directive (2008) expressly contemplates so-called "compulsory" mediation; this
means that attendance is compulsory, not that settlement must be reached through mediation).
The rising popularity of ADR can be explained by the increasing caseload of traditional
courts, the perception that ADR imposes fewer costs than litigation, a preference for
confidentiality, and the desire of some parties to have greater control over the selection of the
individual or individuals who will decide their dispute. Some of the senior judiciary in certain
jurisdictions (of which England and Wales is one) are strongly in favour of this (ADR) use of
mediation to settle disputes.4Alternative Dispute Resolutions ("ADR") are alternative
methods that; an independent, objective and impartial third party provides the parties of the
legal dispute to reach an agreement about the dispute by bringing them together and
communicating with each other.
Dispute resolution in Turkey is a fundamental duty of State. For any dispute arising from a
legal relationship between the concerned parties, application to the state courts is the initial
and essential judicial remedy.
ADR have come up as an option for providing cost and time efficiency as compared to the
judicial proceedings before state courts and for averting the disadvantages of the latter. ADR
are optional dispute resolution proceedings and methods as compared to proceedings before
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State Courts. ADR aims simpler and faster resolution of the disputes without impairing the
judicial sovereignty of the state.
Any method of resolving disputes other than by litigation. Abbreviated as ADR. Public
courts may be asked to review the validity of ADR methods, but they will rarely overturn
ADR decisions and awards if the disputing parties formed a valid contract to abide by them.
Arbitration and mediation are the two major forms of ADR.
programs. Some of these programs are voluntary; others are mandatory.5
WHAT IS ALTERNATIVE DISPUTE RESOLUTION (ADR)?

ADR is a term used to describe several different methods of resolving legal disputes without
going to court. The rising cost of litigation is making traditional lawsuits impractical for
many individuals and businesses. At the same time, civil courts face backlogged dockets,
resulting in delays of a year or more for private parties to have their cases heard by a jury.
New types of proceedings have been developed in response, and they are proving beneficial,
saving time and money for everyone involved. These include arbitration, mediation, and
additional kinds of ADR designed for specific cases and subject matters.
The basic goals of ADR include:
1. To create a speedier and more efficient forum in which to resolve civil disputes;
2. To lower the costs of the arbitration process, which continue to rise under the present
system;
3. To reduce overcrowding in the public courts;
4. To allow the parties involved in the dispute greater control over the resolution process;
5. To provide a more confidential forum of debate;
5 www.law.cornell.edu, on 27/9/14 at 09:33pm.
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6. And, to allow the mediator and the parties involved to work more closely together toward a
satisfactory resolution.
Obviously, this list is not allinclusive, but it provides a basic framework of what exactly
alternative dispute resolution seeks to accomplish.6
The term can refer to everything from facilitated settlement negotiations in which disputants
are encouraged to negotiate directly with each other prior to some other legal process, to
arbitration systems or minitrials that look and feel very much like a courtroom process.
Processes designed to manage community tension or facilitate community development
issues can also be included within the rubric of ADR. ADR systems may be generally
categorized as negotiation, conciliation/mediation, or arbitration systems. Negotiation
systems create a structure to encourage and facilitate direct negotiation between parties to a
dispute, without the intervention of a third party. Mediation and conciliation systems are very
similar in that they interject a third party between the disputants, either to mediate a specific
dispute or to reconcile their relationship. Mediators and conciliators may simply facilitate
communication, or may help direct and structure a settlement, but they do not have the
authority to decide or rule on a settlement. Arbitration systems authorize a third party to
decide how a dispute should be resolved. It is important to distinguish between binding and
non-binding forms of ADR. Negotiation, mediation, and conciliation programs are nonbinding, and depend on the willingness of the parties to reach a voluntary agreement.
Arbitration programs may be either binding or non-binding. Binding arbitration produces a
third party decision that the disputants must follow even if they disagree with the result, much
like a judicial decision. Non-binding arbitration produces a third party decision that the
parties may reject.7
6 www.adamsmith.org, on 27/9/14 at 10:48pm.

7 www.hg.org, on 27/9/14 at 09:35.
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KEY FEATURE OF ALTERNATIVE DISPUTE RESOLUTION

APPROCHES
Alternative Dispute Resolution comprises various approaches for resolving disputes in a nonconfrontational way, ranging from negotiation between the two parties, a multiparty
negotiation, through mediation, consensus building, to arbitration and adjudication The report
introduces the key skills required, with particular attention to their important role in the
process of negotiation and mediation, with examples of their application in national and
international water conflicts. Conflict is endemic to human society, among individuals and
groups, and it is important to manage it. We find stories in the Bible, in the Islamic culture,
among Native Americans, First Nations in Canada, and many other traditions that describe
processes that have been used from the earliest times to find peaceful solutions to various
disputes, and much can be learned from the past. In recent decades, the various conflict
resolution approaches have become a widely accepted field both of academic study and of
practice, with official and/or legislative functions in many countries. In international
relations, they play an increasing role in containing, managing and resolving potential sources
of conflict. The report reviews its complex development. While conflict can be dangerous, it
also carries the possibility of producing creative cooperation in a winwin solution. The key
to this is for participants to engage as joint problem solvers, seeking to resolve the dispute,
and to try and enlarge the pie rather than acting as adversaries and aggravating the
situation. Alternative Dispute Resolution is of two historic types. First, methods for resolving
disputes outside of the official judicial mechanisms. Second, informal methods attached to or
pendant to official judicial mechanisms. There are in addition free-standing and or
independent methods, such as mediation programs and ombuds offices within organizations.
The methods are similar, whether or not they are pendant, and generally use similar tool or
skill sets, which are basically sub-sets of the skills of negotiation.
ADR includes informal tribunals, informal mediative processes, formal tribunals and formal
mediative processes. The classic formal tribunal forms of ADR are arbitration (both binding
and advisory or non-binding) and private judges (either sitting alone, on panels or over
summary jury trials). The classic formal mediative process is referral for mediation before a
court appointed mediator or mediation panel. Structured transformative mediation as used by
the U.S. Postal Service is a formal process. Classic informal methods include social
processes, referrals to non-formal authorities (such as a respected member of a trade or social
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group) and intercession. The major differences between formal and informal processes are (a)
pendency to a court procedure and (b) the possession or lack of a formal structure for the
application of the procedure.
For example, freeform negotiation is merely the use of the tools without any process.
Negotiation within a labor arbitration setting is the use of the tools within a highly formalized
and controlled setting.8
A mediator can play a valuable role in this process, facilitate a negotiation process which has
come to a dead end, helping the parties concerned to focus on their essential interests rather
than defend (or attack) fixed positions. The principles and procedures of consensus building
are dealt with in some detail. The report outlines the principles of negotiation, based on
interests and needs of the parties, the use of proper communication, and maintenance of a
working relationship as an essential component for reaching a durable agreement. It lists and
considers the essential skills needed by negotiators and mediators, and points the different
cultural expectations (national, regional, religious, or professional) and the psychological
aspects that affect perceptions and communications. It outlines a range of strategies for and
approaches to mediation, and the ethical problems that may arise. ADR traditions vary
somewhat by country and culture. There are significant common elements which justify a
main topic, and each country or region's difference should be delegated to sub-pages.
HISTORICAL BACKGROUND
Dispute resolution outside of courts is not new; societies world-over have long used nonjudicial, indigenous methods to resolve conflicts. What is new is the extensive promotion and
proliferation of ADR models, wider use of court-connected ADR, and the increasing use of
ADR as a tool to realize goals broader than the settlement of specific disputes. The ADR
movement in the United States was launched in the 1970s, beginning as a social movement to
resolve community-wide civil rights disputes through mediation, and as a legal movement to
address increased delay and expense in litigation arising from an overcrowded court system.
Ever since, the legal ADR movement in the United States has grown rapidly, and has evolved
from experimentation to institutionalization with the support of the American Bar
Association, academics, courts, the U.S. Congress and state governments. For example, in
8 www.tpsgc-pwgc.gc.ca, on 27/9/2014 at 09:45pm.
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response to the 1990 Civil Justice Reform Act requiring all U.S. federal district courts to
develop a plan to reduce cost and delay in civil litigation, most district courts have authorized
or established some form of ADR. Innovations in ADR models, expansion of governmentmandated, court-based ADR in state and federal systems, and increased interest in ADR by
disputants has made the United States the richest source of experience in court connected
ADR. While the court-connected ADR movement flourished in the U.S. legal community,
other ADR advocates saw the use of ADR methods outside the court system as a means to
generate solutions to complex
problems that would better meet the needs of disputants and their communities, reduce
reliance on the legal system, strengthen local civic institutions, preserve disputants'
relationships, and teach alternatives to violence or litigation for dispute settlement. In 1976,
the San Francisco Community Boards program was established to further such goals. This
experiment has spawned a variety of community-based ADR projects, such as school based
peer mediation programs and
neighborhood justice centers. In the 1980s, demand for ADR in the commercial sector began
to grow as part of an effort to find more efficient and effective alternatives to litigation. Since
this time, the use of private arbitration, mediation and other forms of ADR in the business
setting has risen dramatically, accompanied by an explosion in the number of private firms
offering ADR
Services. The move from experimentation to institutionalization in the ADR field has also
affected U.S. administrative rule-making and federal litigation practice. Laws now in place
authorize and encourage agencies to use negotiation and other forms of ADR in rulemaking,
public consultation, and administrative dispute resolution. Internationally, the ADR
movement has also taken off in both developed and developing countries. ADR models may
be straight-forward imports of processes found in the United States or hybrid experiments
mixing ADR models with elements of traditional dispute resolution. ADR processes are being
implemented to meet a wide range of social, legal, commercial, and political goals. In the
developing world, a number of countries are engaging in the ADR experiment, including
Argentina, Bangladesh, Bolivia, Colombia, Ecuador, the Philippines, South Africa, Sri Lanka,
Ukraine, and Uruguay.9
9 Legal-dictionary.thefreedictionary.com, on 27/9/14 at 09:37pm.
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TYPES OF ALTERNATIVE DISPUTE RESOLUTION

The main types of ADR that deal with consumer disputes are conciliation, arbitration or
mediation and are usually provided by trade associations. If you wish to use one of these
schemes, you should ask the suppliers whether they are members of a trade association and, if
so, contact the trade association to find out whether it has a conciliation and/or arbitration
service. Some trade associations are part of the Trading Standards Institute Consumer Codes
Approval Scheme (CCAS). Any traders who are part of this scheme agree to provide good
standards of service and must provide ADR for disputes between consumers and traders.
CONCILITION
In consumer disputes, conciliation is the first stage in the arbitration process and the
conciliator is usually a member of the trade association. Both you and the supplier will be
asked to give written details of the complaint, including any evidence, and the conciliator will
give an opinion on the best solution. Any decision is not binding and won't prevent you from
taking court action. If you disagree with the opinion offered, you can then proceed to the
arbitration stage or consider suing in court. There is usually no charge for conciliation. In
conciliation, the resolution of the dispute by the parties themselves is the essential point.
In opposition to the mediation method, conciliation is based on right and rightfulness and the
history of the dispute is taken into consideration. At the same time, conciliation method is
less flexible than mediation method and is mostly based on provisions of law.
NEGOTIATION
Negotiation is a type of ADR which is generally referred to initially in case of a dispute and it
covers all methods of ADR. This type of ADR aims for the parties to settle the dispute
between the same by negotiating and deliberating with each other with the attendance of their
attorneys if needed, without intervention of any third party.
Negotiation is a kind of ADR method that each party tries to obtain a benefit for themselves
at the end of the process by persuading the other party to act in the way the former desires.
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ARBITRATION
While arbitrations are technically voluntary, many people agree to participate in arbitrations
before a dispute even arises. For example, many formal contracts require that any dispute
arising out of the contract be arbitrated. In an arbitration, the parties agree to have their case
heard by an impartial person, the arbitrator, who issues a final and binding
decision. Typically, an arbitration case is heard much faster than a court case would be heard
and is less expensive than a formal litigation. It is the process of refering a dispute to an
impartial intermediar y chosen by the parties who agree in advance to abide by the
arbitrators award that is issued after a hearing at which all parties have the opportunity to be
heard. Arbitration resembles traditional civil litigation in that a neutral intermediary hears the
disputants arguments and imposes a final and binding decision that is enforceable by the
courts. One difference is that in arbitration the disputants elect to settle any
future disputes by arbitration before a dispute actually arises, whereas with civil litigation the
judicial system is generally chosen by a disgruntled party after a dispute has materialized.
Another difference is that the disputants to an arbitration select the intermediary who will
serve as arbitrator, whereas parties to civil litigation have little to no control over who will
preside as the judge in judicial proceedings. Arbitration is a procedure for settling disputes in
which both you and the supplier usually agree to accept the decision of the arbitrator as
legally binding. This means you cannot take court action, except to enforce the award if the
supplier doesn't pay. The arbitrator will usually be a member of the Chartered Institute of
Arbitrators and often acts independently of the trade association. The arbitrator will make a
decision based on the written evidence presented by you and the supplier. The decision is
confidential and cannot be made public without the supplier's agreement. You will have to
pay a registration fee which may be refunded if you are successful. Some contracts for
services and delivery notes include an arbitration clause stating that you will refer any dispute
to arbitration. Although this is binding once you have signed the agreement, if the total cost is
below the small claims limit (10,000), you cannot be forced to arbitrate unless you gave
your agreement after the dispute arose.
MEDIATION
In mediation, an independent mediator works with the parties to come to a
resolution. Mediators are trained professionals who are able to help the parties communicate
and accept a fair resolution of their dispute. A mediator does not have the authority to impose
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a solution on the parties. If the mediation is successful then the parties will sign a legally
enforceable mediation agreement to which they each agree to abide. If the mediation is
ultimately unsuccessful then the parties will fail to reach an agreement and can take their
dispute to court.
Mediation is a rapidly growing ADR technique. It consists of assisted negotiations in which
the disputants agree to enlist the help of a neutral intermediary, whose job it is to facilitate a
voluntary, mutually acceptable settlement. A mediators primary function is to identify issues,
explore possible bases for agreement, discuss the consequences of reaching impasse, and
encourage each party to accommodate the interests of other parties through negotiation.
However, unlike arbitrators, mediators lack the power to impose a decision on the parties if
they fail to reach an agreement on their own.
Mediation is sometimes referred to as conciliation, or conciliated negotiation. However, the
terms are not necessarily interchangeable. Conciliation focuses more on the early stages of
negotiation, such as opening the channels of communication, bringing the disputants together,
and identifying points of mutual agreement. Mediation focuses more on the later stages of
negotiation, exploring weaknesses in each partys position, investigating areas where the
parties disagree but might be inclined to compromise, and suggesting possible mutually
agreeable outcomes. Conciliation and mediation typically work well when the disputants are
involved in a long-term relationship, such as husband and wife, wholesaler and retailer, and
manufacturer and distributor, to name a few. Mediation and conciliation also work well for
"polycentric" problems that are not easily solved by all-or-nothing solutions, as with certain
antitrust suits involving a myriad of complex issues.
Although some jurisdictions have enacted statutes that govern mediation, most mediation
proceedings are voluntary for both parties. Accordingly, a mediators influence is limited by
the autonomy of the parties and their willingness to negotiate in good faith. Thus, a mediator
can go no further than the parties themselves are willing to go. Since agreements reached by
mediation bear the parties own imprint, however, many observers feel that they are more
likely to be adhered to than decisions imposed by an arbitrator or court. Disputants who
participate in mediation without representation of legal counsel are also more likely to adhere
to settlements when the alternative is to pursue civil litigation, where attorneys fees consume
a significant portion of any monetary award granted to the parties.
If you use a mediation scheme, the mediator will help you and the supplier to negotiate an
acceptable agreement and will act as a go between if you don't want to meet. If the supplier
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agrees to mediation, you will both be asked to give details of the dispute, including copies of
any evidence and will be asked to sign a mediation agreement giving a framework for the
mediation. The mediator may arrange joint or separate meetings with you and the supplier
and will help you to identify the strengths and weaknesses in your case.
MINITRIALS
A minitrial is a process by which the attorneys for the parties present a brief version of the
case to a panel, often comprised of the clients themselves and a neutral intermediary who
chairs the process. Expert witnesses (and less frequently, lay witnesses) may be used in
presenting the case. After the presentation, the clients, normally top management
representatives who by now are more aware of the strengths and weaknesses of their
positions, attempt to negotiate a settlement of the dispute. If a negotiated settlement is not
reached, the parties may allow the intermediary to mediate the dispute or render a nonbinding advisory opinion regarding the likely outcome of the case were it to be tried in civil
court.
Minitrials are often effective because they usually result in bringing top management officials
together to negotiate the legal issues underlying a dispute. Early in the negotiation process,
upper management is sometimes pre-occupied by the business side of a dispute. Minitrials
tend to shift management's focus to the outstanding legal issues. Minitrials also allow
businesses to share information with each other and with their attorneys, providing a forum
for initial face-to-face negotiations. Management also generally prefers the time-saving,
abbreviated nature of minitrials over the more time-consuming and costly civil-litigation
alternative. Minitrials expedite negotiations as well, by making them more realistic. Once the
parties have seen their case play out in court, even in truncated fashion, the parties are less
likely to posture over less relevant or meaningless issues.
ADVANTAGES & DISADVANTAGES OF ALTERNATIVE

DISPUTE RESOLUTION
There are many advantages, and some disadvantages, to using Alternative Dispute
Resolution.
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Advantages include the fact that it usually takes far less time to reach a final resolution than if
the matter were to go to trial. Usually (but not always), it costs significantly less money, as
well. Furthermore, in the case of arbitration the parties have far more flexibility in choosing
what rules will be applied to their dispute (they can choose to apply relevant industry
standards, domestic law, the law of a foreign country, a unique set of rules used by the
arbitration service, or even religious law, in some cases.).
The parties can also have their dispute arbitrated or mediated by a person who is an expert in
the relevant field. In an ordinary trial involving complicated and technical issues that are not
understood by many people outside a relevant industry, a great deal of time has to be spent
educating the judge and jury, just so they can make an informed decision. This large time
investment often translates into a great deal of money being spent. Both sides might have to
call expert witnesses, who may charge very large fees for their time. If an arbitrator has a
background in the relevant field, however, far less time needs to be spent on this, and the
parties can get to the actual issues of the case much sooner.
There are some disadvantages, as well. Generally, arbitrators can only resolve disputes that
involve money. They cannot issue orders requiring one party to do something, or refrain from
doing something (also known as injunctions). They cannot change title to property, either.
Also, some of the safeguards designed to protect parties in court may not be present in ADR.
These might include the liberal discovery rules used in U.S. courts, which make it relatively
easy to get evidence from the other party in a lawsuit.
Also, there is very limited opportunity for judicial review of an arbitrator's decision. While a
large arbitration service could, if it so chose, have some kind of process for internal appeals,
the decision is usually final and binding, and can only be reviewed by a court in limited
cases. This generally happens when the original arbitration agreement is found to be invalid.
Because both parties must voluntarily agree to arbitration, if the consent of one party is
obtained by fraud or force, it will not be enforced. Also, if the decision of the arbitrator is
patently unfair, it will not be enforced. This is a difficult standard to meet. The fact that the
arbitrator made a decision that the court would not have made is not, by itself, a basis to
overturn the decision.
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A court might also overturn an arbitrator's decision if it decided issues that were not within
the scope of the arbitration agreement.10
DISTINGUISH BETWEEN ADVANTAGES AND

DISADVANTAGES OF ALTERNATIVE DISPUTE
RESOLUTION
Advantages
Disadvantages
Cheap, some schemes are completely
ADR is not always cheap, and can be
free.
as expensive as court action.
Quick, many cases can be resolved in a
Not all forms of ADR are quick, in fact
matter of weeks, or even days.
some forms of ADR require a client to

pass through many stages before
adjudication.
Informality is preferred by many
There can be too much informality, not
clients.
popular with sophisticated clients.
Efficient system for recovery of debts,
An unintended and some believe an
by individuals.
undesirable result is the constant use

by business of small claims procedure
as an efficient debt-collecting agency.
ADR
is
resolution,
"Alternative"
not
compulsory,
intended
but
dispute
ADR is seen as compulsory because of
to
Dunnett.
should
be
be
"appropriate".
Creates an imbalance by allowing an
Disadvantages the less powerful side
unprepared side to be assisted a
in a dispute, by assisting negotiation
mediator.
thereby produces a result that reflects

the imbalance of bargaining power.
10 www.lorman.com, on 27/9/14 at 10:04pm.
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Popular with claimants who do not
Not popular with lawyers because it is
need to use a lawyer, and in some
not in their financial interests. This has
cases are discouraged by the process
the effect of closing access to the legal
from using a lawyer.
system which should be open "to all".
CONCLUSION
programs. Some of these programs are voluntary; others are mandatory.
A wide variety of processes, practices, and techniques fall within the definition of "alternative
dispute resolution." Arbitration and mediation are the best known and most frequently used
types of ADR, but not the only ones. Minitrials, early neutral evaluations, and summary jury
trials are less well-known forms of ADR. Many of these ADR techniques have little in
common except that negotiation plays a prominent role in each. Parties to ADR procedures
generally agree that a negotiated settlement is worth pursuing before investing time and
money in full blown civil litigation.
The procedures and techniques discussed above are the most commonly employed methods
of ADR. Negotiation plays an important role in each method, either primarily or secondarily.
However, there are countless other ADR methods, many of which modify or combine the
above methods. For example, it is not uncommon for disputants to begin negotiations with
early neutral evaluation and then move to nonbinding mediation. If mediation fails, the
parties may proceed with binding arbitration. The goal with each type of ADR is for the
parties to find the most effective way of resolving their dispute without resorting to litigation.
The process has been criticized as a waste of time by some legal observers who believe that
the same time could be spent pursuing the claims in civil court, where negotiation also plays
a prominent role and litigants are protected by a panoply of formal rights, procedures, and
rules. But many participants in unsuccessful ADR proceedings believe it is useful to
determine that their disputes are not amenable to a negotiated settlement before commencing
a lawsuit.
Despite its success over the past three decades, ADR is not the appropriate choice for all
disputants or all legal disputes. Many individuals and entities still resist ADR because it lacks
the substantive, procedural, and evidentiary protections available in formal civil litigation.
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For example, parties to ADR typically waive their rights to object to evidence that might be
deemed inadmissible under the rules of court. Hearsay evidence is a common example of
evidence that is considered by the parties and intermediaries in ADR forums but that is
generally excluded from civil trials. If a disputant believes that he or she would be sacrificing
too many rights and protections by waiving the formalities of civil litigation, ADR will not be
the appropriate method of dispute resolution.
Chapter: III
ARBITRATION :- A CASE STUDY

INTRODUCTION
Indian legal system is known for its delays and disparities. It is a known fact that our courts
are over-burdened with the pending cases. Since justice delayed is justice denied, with a vast
number of pending cases, it is almost impossible to provide quick and efficient relief to the
aggrieved parties. Arbitration is a procedure in which a dispute is submitted, by agreement of
the parties, to one or more arbitrators who make a binding decision on the dispute. In
choosing arbitration, the parties opt for a private dispute resolution procedure instead of
going to court.
Arbitration, often called alternative dispute resolution is a means of settling a dispute between
parties instead of one of the parties filing a civil lawsuit. Several benefits of arbitration are
that it is often alot less expensive than filing suit and the matter is often resolved much sooner
than going to court. Civil suits must find a slot on the court's calendar, depending on the
jurisdiction this can be anywhere from six to eighteen months or longer.
Courts in different national systems vary with respect to how interventionist they are in the
arbitral process. In recent decades, as India has entered the ranks of the worlds major trading
nations, the role of its judiciary in the matter of arbitration has increasingly been the subject
of debate, as a result of a number of controversial decisions given by the courts. Arbitration
can only take place if both parties have agreed to it. In the case of future disputes arising
under a contract, the parties insert an arbitration clause in the relevant contract. An existing
dispute can be referred to arbitration by means of a submission agreement between the
parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration.
P a g e | 17
Under the WIPO Arbitration Rules, the parties can select a sole arbitrator together. If they
choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators;
those two persons then agree on the presiding arbitrator. Alternatively, the Center can suggest
potential arbitrators with relevant expertise or directly appoint members of the arbitral
tribunal. The Center maintains an extensive roster of arbitrators ranging from seasoned
dispute-resolution generalists to highly specialized practitioners and experts covering the
entire legal and technical spectrum of intellectual property.11
SCOPE & OBJECT OF THE ARBITRATION AND

CONCILATION ACT, 1996.
The Arbitration and Conciliation Act, 1996 enacted in 1996 is an Act to consolidate and
amend the law relating to domestic arbitration, international commercial arbitration and
enforcement of foreign arbitral awards. Copy of the Act is annexed as Annexure-I. The Act is
based on the Model Law adopted by the United Nations Commission on International Trade
Law (UNCITRAL) in 1985. The objects and basis of the said Act is to speedy disposal with
least court intervention. Some of the objects, as mentioned in the Statement of Objects and
Reasons for the Arbitration and Conciliation Bill, 1995 are as follows:
i) to comprehensively cover international and commercial arbitration and conciliation as also
domestic arbitration and conciliation;
ii) to make provision for an arbitral procedure which is fair, efficient and capable of meeting
the needs of the specific arbitration;
iii) to provide that the arbitral tribunal gives reasons for its arbitral award;
iv) to ensure that the arbitral tribunal remains within the limits of its jurisdiction;
v) to minimise the supervisory role of courts in the arbitral process;
vi) to permit an arbitral tribunal to use mediation, conciliation or other procedures during the
arbitral proceedings to encourage settlement of disputes;
vii) to provide that every final arbitral award is enforced in the same manner as if it were a
decree of the court;
viii) to provide that a settlement agreement reached by the parties as a result of conciliation
proceedings will have the same status and effect as an arbitral award on
11 www.wipo.in, on 16/11/14 at 10:00pm.
P a g e | 18
agreed terms on the substance of the dispute rendered by an arbitral tribunal; and ix) to
provide that, for purposes of enforcement of foreign awards, every arbitral award made in a
country to which one of the two International Conventions relating to foreign arbitral awards
to which India is a party applies, will be treated as a foreign award. The Supreme Court in
the case of ONGC v. Saw Pipes Ltd.,12 examined the scope and ambit of jurisdiction of the
Court under section 34 of the Act. It was held that if the award is (a) contrary to the
substantive provision of law, or (b) the provisions of the Act, or (c) against the terms of the
contract, it would be patently illegal which could be interfered u/s 34. Supreme Court further
held that phrase public policy of India use in Section 34 is required to be given a wider
meaning and stated that the concept of public policy connotes some matter which concerns
public good and the public interest. The award which is on face of it, patently in violation of
statutory provisions cannot be said to be in public interest.
Scheme of the Act:
The Act is a composite piece of legislation. It provides for domestic arbitration; international
commercial arbitration; enforcement of foreign award and conciliation (the latter being based
on the UNCITRAL Conciliation Rules of 1980). The more significant provisions of the Act
are to be found in Part I and Part II thereof. Part I contains the provisions for domestic and
international commercial arbitration in India. All arbitration conducted in India would be
governed by Part I, irrespective of the nationalities of the parties. Part II provides for
enforcement of foreign awards. Part I is more comprehensive and contains extensive
provisions based on the Model Law. It provides inter alia for arbitrability of disputes; nonintervention by courts; composition of the arbitral tribunal; jurisdiction of arbitral tribunal;
conduct of the arbitration proceedings; recourse against arbitral awards and enforcement. Part
II on the other hand, is largely restricted to enforcement of foreign awards governed by the
New York Convention or the Geneva Convention. Part II is thus, (by its very nature) not a
complete code. This led to judicial innovation by the Supreme Court in the case of Bhatia
International v. Bulk Trading,13 Indian courts jurisdiction was invoked by a party seeking
interim measures of protection. Hence the Court was faced with a situation that there was no
12 (2003) 5 SCC 705.
13 (2002) 4 SCC 105 (Bhatia).
P a g e | 19
proprio vigore legal provision under which it could grant interim measure of protection.
Creatively interpreting the Act, the Supreme Court held that the general provisions of Part I
would apply also to offshore arbitrations, unless the parties expressly or impliedly exclude
applicability of the same. Hence by judicial innovation, the Supreme Court extended
applicability of the general provisions of Part I to off-shore arbitrations as well.
It may be stated that this was premised on the assumption that the Indian Court would
otherwise have jurisdiction in relation to the matter (in the international sense). This became
clear in a subsequent decision of the Supreme Court in Shreejee Traco (I) Pvt. Ltd. v.
Paperline International Inc.14the Courts assistance was sought for appointing an arbitrator in
an offshore arbitration. The power of appointment by court exists under Section 11 of Part I
of the Act. The Court declined to exercise jurisdiction. It found that the arbitration was to be
conducted in New York and that the law governing the arbitration proceedings would be the
law of seat of the arbitration. Hence, the extension of Part I provisions to foreign arbitrations
sanctified by Bhatia.15
ARBITRATION
Arbitration, a form of alternative dispute resolution (ADR), is a technique for the resolution
of disputes outside the courts. The parties to a dispute refer it to arbitration by one or more
persons (the "arbitrators", "arbiters" or "arbitral tribunal"), and agree to be bound by the
arbitration decision (the "award"). A third party reviews the evidence in the case and imposes
a decision that is legally binding on both sides and enforceable in the courts.
Arbitration is a process of judging and settling of disputes by a person not acting as a an
judge appointed by law, but by a person or a group of person jointly accepted by the parties in
disputes as having the authority to examine the dispute and give judgment. The arbitrator
appointed may have a legal background, but this is not an essential requirement for acting as
an arbitrator. Such arbitration judgment, generally called awards, are limited to decision
involving monetary matters and meeting of contractual, commercial and social obligations.
Arbitrators are not expected to give punishments such as jail sentence.
14 (2003) 9 SCC 79.

15 https://ipba.org, on 16/11/14 at 05:32pm.
P a g e | 20
The arbitration process can be absolutely free of any legal formal legal binding, but there are
provisions in law of many countries that provide some legal backing to the process and
judgment of arbitration.
The process of arbitration is employed to facilitate settlement of disputes without incurring
the cost and time of formal legal process. Arbitration is now used by individuals, groups,
companies and nations.
Arbitration is adjudicatory, as opposed to advisory, because of the fact that the arbitrator
(usually a retired judge or attorney) renders a decision at the end of an arbitration hearing,
and that decision is final and binding, subject only to a very limited court review. Arbitration
is sometimes referred to as "non-binding" if the parties agree to make it so, but that is really a
misnomer. Think of arbitration as a binding, adjudicatory process.
Other forms of ADR include mediation (a form of settlement negotiation facilitated by a
neutral third party) and non-binding resolution by experts. Arbitration is often used for the
resolution of commercial disputes, particularly in the context of international commercial
transactions. In certain countries such as the United States, arbitration is also frequently
employed in consumer and employment matters, where arbitration may be mandated by the
terms of employment or commercial contracts.
Arbitration can be either voluntary or mandatory (although mandatory arbitration can only
come from a statute or from a contract that is voluntarily entered into, where the parties agree
to hold all existing or future disputes to arbitration, without necessarily knowing, specifically,
what disputes will ever occur) and can be either binding or non-binding. Non-binding
arbitration is similar to mediation in that a decision can not be imposed on the parties.
However, the principal distinction is that whereas a mediator will try to help the parties find a
middle ground on which to compromise, the (non-binding) arbitrator remains totally removed
from the settlement process and will only give a determination of liability and, if appropriate,
an indication of the quantum of damages payable. By one definition arbitration is binding and
so non-binding arbitration is technically not arbitration.16
ADVANTAGES AND DISADVANTAGES

P a g e | 21
Parties often seek to resolve disputes through arbitration because of a number of perceived
potential advantages over judicial proceedings:
In contrast to litigation, where one cannot "choose the judge",arbitration allows the
parties to choose their own tribunal. This is especially useful when the subject matter
of the dispute is highly technical: arbitrators with an appropriate degree of expertise
(for example, quantity surveying expertise, in the case of a construction dispute, or
expertise in commercial property law, in the case of a real estate dispute) can be
chosen.
Arbitration is often faster than litigation in court
Arbitration can be cheaper and more flexible for businesses Arbitral proceedings and
an arbitral award are generally non-public, and can be made confidential . In arbitral
proceedings the language of arbitration may be chosen, whereas in judicial
proceedings the official language of the country of the competent court will be
automatically applied
Because of the provisions of the New York Convention 1958, arbitration awards are
generally easier to enforce in other nations than court judgments
In most legal systems there are very limited avenues for appeal of an arbitral award,
which is sometimes an advantage because it limits the duration of the dispute and any
associated liability
Some of the disadvantages include:
Arbitration may be subject to pressures from powerful law firms representing the
stronger and wealthier party.
Arbitration agreements are sometimes contained in ancillary agreements, or in small

print in other agreements, and consumers and employees often do not know in
advance that they have agreed to mandatory binding pre-dispute arbitration by
purchasing a product or taking a job
P a g e | 22
If the arbitration is mandatory and binding, the parties waive their rights to access the
courts and to have a judge or jury decide the case
In some arbitration agreements, the parties are required to pay for the arbitrators,
which adds an additional layer of legal cost that can be prohibitive, especially in small
consumer disputes. In some arbitration agreements and systems, the recovery of
attorneys' fees is unavailable, making it difficult or impossible for consumers or
employees to get legal representation; however most arbitration codes and agreements
provide for the same relief that could be granted in court
If the arbitrator or the arbitration forum depends on the corporation for repeat
business, there may be an inherent incentive to rule against the consumer or employee
There are very limited avenues for appeal, which means that an erroneous decision
cannot be easily overturned
Although usually thought to be speedier, when there are multiple arbitrators on the
panel, juggling their schedules for hearing dates in long cases can lead to delays
In some legal systems, arbitral awards have fewer enforcement options than
judgments; although in the United States arbitration awards are enforced in the same
manner as court judgments and have the same effect
Arbitrators are generally unable to enforce interlocutory measures against a party,

making it easier for a party to take steps to avoid enforcement of member or a small
group of members in arbitration due to increasing legal fees, without explaining to the
members the adverse consequences of an unfavorable ruling
Rule of applicable law is not necessarily binding on the arbitrators, although they
cannot disregard the law. Discovery may be more limited in arbitration or entirely
nonexistent.,
The potential to generate billings by attorneys may be less than pursuing the dispute
through trial
P a g e | 23
Unlike court judgments, arbitration awards themselves are not directly enforceable. A
party seeking to enforce an arbitration award must resort to judicial remedies, called
an action to "confirm" an award
Although grounds for attacking an arbitration award in court are limited, efforts to
confirm the award can be fiercely fought, thus necessitating huge legal expenses that
negate the perceived economic incentive to arbitrate the dispute in the first place.
KIND OF ARBITRATION
(1) Ad-hoc Arbitration: When a dispute or difference arises between the parties in course of
commercial transaction and the same could not be settled friendly by negotiation inform to
conciliation or mediation, in such case ad-hoc arbitration may be sought by the conflicting
parties. This arbitration is agreed to get justice for the balance of the un-settled part of the
dispute only.
(2) Institutional Arbitration: This kind of arbitration there is prior agreement between
the parties that in case of future differences or disputes arising between the parties during
their commercial transactions, such differences or disputes will be settled by arbitration as per
clause provide in the agreement.
(3) Statutory Arbitration: It is mandatory arbitration which is imposed on the parties by
operation of law. In such a case the parties have no option as such but to abide by the law of
land. It is apparent that statutory arbitration differs from the above 2 types of arbitration
because (i) The consent of parties is not necessary; (ii) It is compulsory Arbitration; (iii) It is
binding on the Parties as the law of land; For Example: Section 31of the North Eastern Hill
University Act, 1973, Section 24,31 and 32 of the Defence of India Act, 1971 and Section
43(c) of The Indian Trusts Act, 1882 are the statutory provision, which deal with statutory
arbitration. Therefore, all disputes referred to "Disputes-Settlement-Trust", shall be decided
through "Arbitral Tribunals" under Statutory Arbitration.
(4) Domestic or International Arbitration: Arbitration which occurs in India and has all the
parties within India is termed as Domestic Arbitration. An Arbitration in which any party
belongs to other than India and the dispute is to be settled in India is termed as International
Arbitration.
(5) Foreign Arbitration: When arbitration proceedings are conducted in a place outside India
and the Award is required to be enforced in India, it is termed as Foreign Arbitration.
P a g e | 24
ARBITRATION AGREEMENT
The foundation of arbitration is the arbitration agreement between the parties to submit to
arbitration all disputes which have arisen or which may arise between them. Thus, the
provision of arbitration can be made at the time of entering the contract itself. It is also
possible to refer a dispute to arbitration after the dispute has arisen. An arbitration agreement
may be in the form of an arbitration clause in a contract or in the form of a separate
agreement. The agreement must be in writing and must be signed by both parties.
Arbitration agreement means an agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise between them in respect of a defined
legal relationship, whether contractual or not.17
An arbitration agreement is a written contract in which two or more parties agree to settle a
dispute outside of court. The arbitration agreement is ordinarily a clause in a larger contract.
The dispute may be about the performance of a specific contract, a claim of unfair or illegal
treatment in the workplace, a faulty product, among other various issues. People are free to
agree to use arbitration concerning anything that they could otherwise resolve through legal
proceedings.
An arbitration agreement can be as simple as a provision in a contract stating that by
signing that contract you are agreeing to arbitration in the case of any future disputes. For
example, a business owner can ensure that potential dispute costs remain low by requiring
anyone doing business with them to sign an agreement to arbitrate instead of litigate--to settle
the matter out of court. In the case of more complicated business matters, a mandatory
arbitration clause may be necessary. An arbitration provision in a contract might look like
this:
Upon written request of either Buyer or Seller, any controversy or claim between or among
the parties hereto including but not limited to those arising out of or relating to the Sale, any
of the sale documents, or any related agreements or instruments executed in connection with
17 Section 7(1), the Arbitration and Conciliation Act1996.
P a g e | 25
the Sale, including any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Commercial Arbitration Rules of the American Arbitration
Association, and the Special Rules set forth below unless both Lender and Borrower, in
their respective sole discretion, agree in writing to mediate the dispute prior to submitting to
binding arbitration. In the event of any inconsistency, the Special Rules shall control.
Judgment upon any arbitration award may be entered in any court having jurisdiction. Any
party to this Agreement may bring an action, including a summary or expedited proceeding,
to compel arbitration of any controversy or claim to which this agreement applies in any
court having jurisdiction over such action. The party that requests arbitration has the burden
to initiate the arbitration proceedings pursuant to and by complying with the Commercial
Arbitration Rules of the American Arbitration Association and shall pay all associated
administrative and filing fees.18
Arbitration agreements are generally divided into two types:
Agreements which provide that, if a dispute should arise, it will be resolved by

arbitration. These will generally be normal contracts, but they contain an arbitration
clause
Agreements which are signed after a dispute has arisen, agreeing that the dispute
should be resolved by arbitration (sometimes called a "submission agreement")
The former is the far more prevalent type of arbitration agreement. Sometimes, legal
significance attaches to the type of arbitration agreement. For example, in certain
Commonwealth countries, it is possible to provide that each party should bear their own costs
in a conventional arbitration clause, but not in a submission agreement. In Oil and Natural
Gas Corporation vs. Saw Pipes,19 the Court added an additional ground of patent illegality,
thereby considerably widening the scope of judicial review on the merits of the decision. In
Saw Pipes case the court accepted that the scheme of Section 34 which dealt with setting
aside the domestic arbitral award and Section 48 which dealt with enforcement of foreign
award were not identical. The court also accepted that in foreign arbitration, the award would
18 law.freeadvice.com, 2/10/14 at 09:58pm.
19 (2003) 5 SCC 705.
P a g e | 26
be subject to being set aside or suspended by the competent authority under the relevant law
of that country whereas in domestic arbitration MN the only recourse is to Section 34. The
Supreme Court observed:
But in a case where the judgment and decree is challenged before the Appellate Court or the
Court exercising revisional jurisdiction, the jurisdiction of such Court would be wider.
Therefore, in a case where the validity of award is challenged there is no necessity of giving a
narrower meaning to the term 'public policy of India'. On the contrary, wider meaning is
required to be given so that the 'patently illegal award' passed by the arbitral tribunal could
be set aside.
.. Similarly, if the award is patently against the statutory provisions of substantive law
which is in force in India or is passed without giving an opportunity of hearing to the parties
as provided under Section 24 or without giving any reason in a case where parties have not
agreed that no reasons are to be recorded, it would be against the statutory provisions. In all
such cases, the award is required to be set aside on the ground of 'patent illegality'.
ARBITRAL AWARD
An arbitration award (or arbitral award) is a determination on the merits by an arbitration
tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as
an 'award' even where the entire claimant's claims fail (and thus no money needs to be paid
by either party), or the award is of a non-monetary nature.
One of the most common forms of dispute resolution is arbitration. Through the arbitration
process, an arbitrator listens to the disputes between two or more parties. Depending on the
specific kind of arbitration, there may or may not be lawyers involved. There may be expert
witnesses and even a presentation of physical evidence in many arbitration disputes. After
hearing each party present their side of the dispute, the arbitrator then renders her decision,
called an arbitration award.
A contract, written and signed long before a dispute arose, will usually dictate the specifics of
the arbitration proceeding. For example, it will state whether lawyers can be present and,
most importantly, whether the final decision of the arbitrator will be binding. In most cases,
the award will hold firm, just like the decision of a courtroom judge. In the alternative, if the
P a g e | 27
contract specifies that the decision is not binding, then the parties do not have to comply with
the arbitrators decision.
In most cases, the arbitrator has about 30 days to reach her decision on the issues in dispute.
As mentioned before, the decision is called the arbitration award. The award can be financial
or it can be a matter of halting some form of labor practice, adding some form of employment
incentive, or another form of non-financial award.20
An arbitral award or arbitration award refers to a decision made by an arbitration tribunal in
an arbitration proceeding. An arbitral award is analogous to a judgment in a court of law. An
arbitral award can be of a non-monetary nature where the entire claimant's claims fail and no
money needs to be paid by either party.
An arbitration award can be made for payment of a sum of money, declaration upon any
matter to be determined in the arbitration proceedings, injunctive relief, specific performance
of a contract and for rectification, setting aside or cancellation of a deed or other document. 21
POWERS AND DUTIES OF ARBITRATORS

(1) Arbitrators shall have the duty to appoint a time and place of hearing at a convenient
location in the state of Montana and provide reasonable notice to the manufacturer and
consumer of such time and place, to conduct fair and impartial hearings, to take all necessary
actions to avoid delay in the disposition of proceedings, to maintain order and to render a
final decision no later than 60 days after the department has accepted a request for arbitration.
The decision must comply with Title 61, chapter 4, part 5 and Title 27, chapter 5, MCA. The
arbitrators shall have all powers necessary to meet these ends including, but not limited to,
the following:
(a) to consider any and all evidence offered by the parties which the panel deems necessary to
an understanding and determination of the dispute;
20 http://jamsadr.com, on 16/11/14 at 05:pm.

21 definitions.uslegal.com, on 16/11/2014 at 05:56pm.
P a g e | 28
(b) to request the department to issue subpoenas to compel the attendance of witnesses and
the production of documents, papers and records relevant to the dispute;
(c) to request the department to forward a copy of all written testimony and documentary
evidence to an independent technical expert certified by the national institute of automotive
excellence, to consult with the technical expert as necessary and to request the technical
expert to sit as a nonvoting member of the arbitration panel during presentation of oral
testimony;
(d) to regulate the course of the hearings and the conduct of the parties and their counsel
therein;
(e) to hold conferences for simplification of the issues or for other purposes;
(f) to schedule vehicle inspections, if deemed necessary, at such facility as the arbitrators
determine;
(g) to continue the arbitration hearing to a subsequent date if a party requests a continuance
before hearing, or at the initial hearing or if the panel determines that additional information
is necessary in order for the panel to render a fair and accurate decision. A continuance shall
be held within five days of the initial hearing;
(h) to reopen the hearing at will or upon motion of either party for good cause shown at any
time before the decision is rendered; and
(i) to permit a deposition to be taken of a witness who cannot be subpoenaed or is unable to
attend the hearing upon the application of a party and for use as evidence, in the manner and
upon the terms designated by the arbitrators.
(2) Arbitrators shall maintain their impartiality throughout the course of the arbitration
proceedings.
(3) An arbitrator shall not be assigned to an arbitration panel if he or she has any relationship
to either party to the dispute to be decided by that panel.
(4) There shall be no direct communication between the parties and the arbitrators other than
at the oral hearing. Any other oral or written communications between the parties and the
P a g e | 29
arbitrators shall be channeled through the department for transmittal to the appropriate
individual(s). Any such prohibited contact shall be reported by the arbitrators to the
department and noted in the case record.22 In State of Orissa v. B.N. Agarwalla,23 the Supreme
Court observed that a person deprived of the use of money to which he is legitimately entitled
has a right to be compensated for the deprivation, call it by any name. it may be called
interest, compensation or damages. This basic consideration is as valid for the period the
disputes is pending before the arbitrator as it is for the period prior to the arbitrator entering
upon the reference. This is the principle of section 34, Civil Procedure Code and there is no
reason or principle to hold otherwise in the case of arbitrator.24
CONCILIATION
Conciliation is an alternative out-of-court dispute resolution instrument. Conciliation is an
alternative dispute resolution (ADR) process whereby the parties to a dispute use a
conciliator, who meets with the parties separately in an attempt to resolve their differences.
They do this by lowering tensions, improving communications, interpreting issues, providing
technical assistance, exploring potential solutions and bringing about a negotiated settlement.
Like mediation, conciliation is a voluntary, flexible, confidential, and interest based process.
The parties seek to reach an amicable dispute settlement with the assistance of the conciliator,
who acts as a neutral third party.
The main difference between conciliation and mediation proceedings is that, at some point
during the conciliation, the conciliator will be asked by the parties to provide them with a
non-binding settlement proposal. A mediator, by contrast, will in most cases and as a matter
of principle, refrains from making such a proposal.
Conciliation is a voluntary proceeding, where the parties involved are free to agree and
attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to
define the time, structure and content of the conciliation proceedings. These proceedings are
22 www.mtrule.org, 16/11/14 at 06:02pm.
23 AIR 1997 SC 925.
24 Sukumar Ray, Alternative Dispute Resolution, Eastern Law House, ed.2012, at p. 46.
P a g e | 30
rarely public. They are interest-based, as the conciliator will when proposing a settlement, not
only take into account the parties' legal positions, but also their; commercial, financial and /
or personal interests.
Like in mediation proceedings, the ultimate decision to agree on the settlement remains with
the parties. Conciliation differs from arbitration in that the conciliation process, in and of
itself, has no legal standing, and the conciliator usually has no authority to seek evidence or
call witnesses, usually writes no decision, and makes no award.
Conciliation differs from mediation in that the main goal is to conciliate, most of the time by
seeking concessions. In mediation, the mediator tries to guide the discussion in a way that
optimizes parties' needs, takes feelings into account and reframes representations.
In conciliation the parties seldom, if ever, actually face each other across the table in the
presence of the conciliator.
WHAT IS CONCILIATION
The terms conciliation and mediation are interchangeable in the Indian context. Conciliation
is a voluntary process whereby the conciliator, a trained and qualified neutral, facilitates
negotiations between disputing parties and assists them in understanding their conflicts at
issue and their interests in order to arrive at a mutually acceptable agreement. Conciliation
involves discussions among the parties and the conciliator with an aim to explore sustainable
and equitable resolutions by targeting the existent issues involved in the dispute and creating
options for a settlement that are acceptable to all parties. The conciliator does not decide for
the parties, but strives to support them in generating options in order to find a solution that is
compatible to both parties. The process is risk free and not binding on the parties till they
arrive at and sign the agreement. Once a solution is reached between the disputing parties
before a conciliator, the agreement had the effect of an arbitration award and is legally
tenable in any court in the country.
Most commercial disputes, in which it is not essential that there should be a binding and
enforceable decision, are amenable to conciliation. Conciliation may be particularly suitable
where the parties in dispute wish to safeguard and maintain their commercial relationships.
P a g e | 31
The following types of disputes are usually conducive for mediation: commercial, financial,
family, real estate, employment, intellectual property, insolvency, insurance, service,
partnerships, environmental and product liability. Apart from commercial transactions, the
mechanism of Conciliation is also adopted for settling various types of disputes such as
labour disputes, service matters, antitrust matters, consumer protection, taxation, excise etc.25
HISTORICAL CONCILIATION
Historical conciliation is an applied conflict resolution approach that utilizes historical
narratives to positively transform relations between societies in conflicts. Historical
conciliation can utilize many different methodologies, including mediation, sustained
dialogue, apologies, acknowledgement, support of public commemoration activities, and
public diplomacy.
Historical conciliation is not an excavation of objective facts. The point of facilitating
historical questions is not to discover all the facts in regard to who was right or wrong.
Rather, the objective is to discover the complexity, ambiguity, and emotions surrounding both
dominant and non-dominant cultural and individual narratives of history. It is also not a
rewriting of history. The goal is not to create a combined narrative that everyone agrees upon.
Instead, the aim is to create room for critical thinking and more inclusive understanding of
the past and conceptions of the other.
CONCILIATION PROCEDURE
The first step is to choose a conciliator who is a neutral third party. This can be done by the
disputants themselves or with the help of an institution. At the initial session a decision is
taken as to who will attend the conciliation and what the cost will be. Usually the cost of this
session is shared between the parties. Parties are encouraged to bring their lawyers with them.
The process is explained to both parties and the conciliator is introduced. Ground rules of
courtesy and propriety are laid down and scrupulously followed. During the next stage the
25 www.dispute-resolution-hamburg.com, on 17/11/14 at 03:10pm.
P a g e | 32
parties are encouraged to explain their case and vent their feelings. The conciliator merely
listens, makes no judgment and identifies issues. One of the big advantages of mediation is
that the sessions are private and confidential. A brainstorming session follows and creative
solutions are explored. Focusing on interests and moving away from positions is the aim now.
If parties are reluctant to disclose certain information in joint sessions, the Conciliator may
request them to join him/her in a private session. In this, the Conciliator will skillfully draw
out relevant information. This can also be kept confidential, should the party wish so. The
final stage is when the parties reach consensus and a written agreement is drawn up.
Monitoring and reviewing the case is very important.
In countries that have adopted mediation/conciliation, the success rate is extremely high. In
India, with the enactment of the Arbitration and Conciliation Act, 1996, the Parliament has
given recognition to alternative forms of dispute resolution. A settlement reached through
mediation or "conciliation" as it is termed in the Act has the same status and effect as an
arbitration award, and thus is enforceable as if it were a decree of court. The Act also protects
the confidentiality of the proceedings.
ADVANTAGES OF CONCILIATION
Conciliation offers a more flexible alternative to arbitration as well as litigation, for

resolution of disputes in the widest range of contractual relationships, as it is an
entirely voluntary process.
In conciliation proceedings, the parties are free to withdraw from conciliation, without
prejudice to their legal position, at any stage of the proceedings.
The matter is settled at the threshold of the dispute, avoiding protracted litigation
efforts at the courts. As conciliation can be scheduled at an early stage in the dispute,
a settlement can be reached much more quickly than in litigation.
Parties are directly engaged in negotiating a settlement.
P a g e | 33
The conciliator, as a neutral third party, can view the dispute objectively and can assist
the parties in exploring alternatives which they might not have considered on their
own.
Parties generally save money by cutting back on unproductive costs such as traveling
to court, legal costs of retaining counsels and litigation and staff time.
Conciliators may be carefully chosen by the parties for their knowledge and
experience.
Conciliation enhances the likelihood of the parties continuing their amicable business
relationship during and after the proceedings.
Creative solutions to special needs of the parties can become a part of the settlement.
Confidentiality is maintained throughout the proceedings with respect to information

exchanged, the offers and counter offers of solutions made and the settlement arrived
at. Also, information disclosed at a conciliation meeting may not be divulged as
evidence in any arbitral, judicial or other proceeding
The conciliation prize is a reward gained by the conciliator on a successfully resolved

dispute. 26
CASE STUDY: Jagdish Chander vs Ramesh Chander & Ors on

26 April, 2007
CASE NO.: Appeal (civil) 4467 of 2002
PETITIONER: Jagdish Chander
v.
RESPONDENT: Ramesh Chander & Ors
DATE OF JUDGMENT: 26/04/2007
BENCH: H K Sema & R V Raveendran
26 www.ficci-arbitration.com, on 17/11/14 at 03:07pm.
P a g e | 34
FACT OF THIS CASE:

This appeal by special leave is against the order dated 10.7.2001 passed by the Designate of
Chief Justice of the High Court of Delhi, allowing Arbitration Application No.284 of 1997
filed under section 11 (5) and (6) of the Arbitration and Conciliation Act, 1996 ('the Act' for
short). The appellant and first respondent entered into a Partnership as per deed dated
9.1.1964 to carry on the business under the name and style of 'Empire Art Industries'. Clause
16 of the said Deed relates to settlement of disputes. The said clause is extracted below :
"16) If during the continuance of the partnership or at any time afterwards any dispute
touching the partnership arises between the partners, the same shall be mutually decided by
the partners or shall be referred for arbitration if the parties so determine."
The first respondent filed the application for appointment of an Arbitrator to decide the
disputes in regard to dissolution of the said partnership firm and for rendition of accounts. In
the said application, the first Respondent arrayed the appellant herein as the first respondent.
Respondents 2 to 6 herein were also impleaded as respondents alleging that the two partners
entered into an arrangement/agreement with Respondents 2 to 6 in the year 1974 under which
Respondents 2 to 6 were to supervise the business of the firm and pay to each of the two
partners, a fixed sum, which was increased periodically. According to first Respondent, the
arrangement worked satisfactorily for several years, but for some years, the entire amount
was being received by the appellant and he was not paying the first Respondent's half share.
The appellant resisted the petition, inter alia, on the ground that the partnership had come to
an end in the year 1979 and the accounts were all settled. He also contended that the
partnership deed did not contain any agreement to refer disputes to arbitration. It was
specifically contended that clause 16 of the Deed of Partnership was not an arbitration
agreement.
The appellant has challenged the said order appointing the Arbitrator. It is submitted that the
power under section 11 of the Act, to appoint an Arbitrator, can be exercised only if there is a
valid arbitration agreement between the parties, and that as there is no arbitration agreement
between the parties, the Arbitrator could not have been appointed.
P a g e | 35
ISSUES:
whether clause 16 of the Deed of Partnership dated 9.1.1964 is an 'arbitration agreement'
within the meaning of section 7 of the Act.
RATIO:
RATIO:
The existence of an arbitration agreement as defined under section 7 of the Act is a condition
precedent for exercise of power to appoint an Arbitrator/Arbitral Tribunal, under section 11 of
the Act by the Chief Justice or his Designate. It is not permissible to appoint an Arbitrator to
adjudicate the disputes between the parties, in the absence of an arbitration agreement or
mutual consent. The designate of the Chief Justice of Delhi could not have appointed the
Arbitrator in the absence of an arbitration agreement.
JUDGMENT:
The appeal is therefore allowed, the order appointing an Arbitrator is set aside and the
application by the first respondent under section 11 of the Act is rejected. Parties to bear their
respective costs.
CONCLUSION
India has in place a modern, an efficient Arbitration Act. There have been some decisions
which are not in tune with the letter or spirit of the Act. Hopefully, these would be addressed
by the judiciary in the near future and continuing popularity of arbitrations would be served
by a truly efficient ADR mechanism.
Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose
decision the parties to the dispute have agreed, or legislation has decreed, will be final and
binding. Arbitration is adjudicatory, as opposed to advisory, because of the fact that the
arbitrator (usually a retired judge or attorney) renders a decision at the end of an arbitration
hearing, and that decision is final and binding, subject only to a very limited court review.
Arbitration is sometimes referred to as "non-binding" if the parties agree to make it so, but
that is really a misnomer. Think of arbitration as a binding, adjudicatory process. Conciliation
P a g e | 36
differs from arbitration in that the conciliation process, in and of itself, has no legal standing,
and the conciliator usually has no authority to seek evidence or call witnesses, usually writes
no decision, and makes no award. Conciliation is a voluntary proceeding, where the parties
involved are free to agree and attempt to resolve their dispute by conciliation. The process is
flexible, allowing parties to define the time, structure and content of the conciliation
proceedings. These proceedings are rarely public. They are interest-based, as the conciliator
will when proposing a settlement, not only take into account the parties' legal positions, but
also their; commercial, financial and / or personal interests.
P a g e | 37
Chapter:-IV
LOK ADALAT AND ITS IMPORTANCE: A PRATICAL

CASE STUDY
INTRODUCTION
Lok Adalat is one of the components of ADR systems. It is an Indian contribution to the
world jurisprudence of ADR. Lok Adalat (peoples courts), established by the government
settles dispute by the principles of justice, equity and fair play, which are the guiding factors
for decisions based on compromises to be arrived at before such Adalats.
Lok Adalat, as the name suggest means Peoples Court. Lok stands for People and the word
Adalat means Court. Lok Adalat is a special kind of peoples court in which disputes solved
by direct talks between the litigants. The members of legal profession, college students, social
organisations, charitable and philanthropic institutions and other similar organizations may be
associated with Lok Adalat. Salient features of these dispute resolutions are participation,
accommodation, fairness, expectations, voluntariness, neighborliness, transparency and lack
of animosity. Lok Adalat after studying the case, try to solve the simple differences which
otherwise are likely to leave for reaching consequences through mutual understanding and
compromise. ADR has been an integral part of our historical past. Like the zero, the concept
of Lok Adalat (Peoples' Court) is an innovative Indian contribution to the world
jurisprudence. The institution of Lok Adalat in India, as the very name suggests, means,
People's Court. "Lok" stands for "people" and the vernacular meaning of the term "Adalat" is
the court. India has a long tradition and history of such methods being practiced in the society
at grass roots level. These are called panchayat and in the legal terminology, these are called
arbitration. These are widely used in India for resolution of disputes? Both commercial and
non-commercial. Other alternative methods being used are Lok Adalat (People's Court),
where justice is dispensed summarily without too much emphasis on legal technicalities. It
has been proved to be a very effective alternative to litigation.
The ancient concept of settlement of dispute through mediation, negotiation or through
arbitral process known as "Peoples' Court verdict" or decision of "Nyaya-Panch" is
P a g e | 38
conceptualized and institutionalized in the philosophy 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.
The salient features of this form of dispute resolution are participation, accommodation,
fairness, expectation, voluntariness, neighborliness, transparency, efficiency and lack of
animosity.
The concept of Lok Adalats was pushed back into oblivion in last few centuries before
independence and particularly during the British regime. Now, this concept has, once again,
been rejuvenated. It has, once again, become very popular and familiar amongst litigants.
This is the system which has deep roots in Indian legal history and its close allegiance to the
culture and perception of justice in Indian ethos. Experience has shown that it is one of the
very efficient and important ADRs and most suited to the Indian environment, culture and
societal interests.27
The camps of Lok Adalats were initially started in the state of Gujarat in 1982. The first Lok
Adalat was organized on 14th March 1982 at Junagarh. Maharashtra commenced the Lok
Nyayalaya in 1984. The movement has now subsequently spread to the entire country. The
reason to create such camps was only the pending cases and to give relief to the litigants who
were in a queue to get justice. Lok Adalat is the only institutionalized mechanism of dispute
resolution in which the parties do not have to bear any expenses. There is no court fee in Lok
Adalat. If the case is already filed in the regular court, the fee paid is refunded in the manner
provided under the Court Fees Act if the dispute is settled at the Lok Adalat. This kind of
refund is an incentive given to parties to negotiate for settlement. Lok Adalat is a boon to the
litigant public, where they can get their disputes settled fast and free of cost.
MEANING OF LOK ADALAT

Lok Adalat (peoples courts), established by the government settles dispute through
conciliation and compromise. The First Lok Adalat was held in Chennai in 1986. Lok Adalat
accepts the cases which could be settled by conciliation and compromise and pending in the
27 www.legalserviceindia.com, on 16/11/14 at 06:20pm.
P a g e | 39
regular courts within their jurisdiction. The Lok Adalat is presided over by a sitting or retired
judicial officer as the chairman, with two other members, usually a lawyer and a social
worker. There is no court fee. If the case is already filed in the regular court, the fee paid will
be refunded if the dispute is settled at the Lok Adalat. The procedural laws, and the Evidence
Act are not strictly followed while assessing the merits of the claim by the Lok Adalat. 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 process. No appeal lies against the order of the Lok Adalat. 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 as the scope for
compromise through an approach of give and take is high in these cases. Lok Adalat is a
boon to the litigant public, where they can get their disputes settled fast and free of cost.
The expression Lok Adalat refers to a summary procedure for disposal of cases pending in
various courts through the process of arbitration and settlement between the parties at the
instance of the institution called Lok Adalat. Thus the expression Lok Adalat can be used in
the following two senses:
1. The process by which the cases pending in various courts are settled with the consent of
the parties in a summary way.
2. The institution which take initiative for arriving at a settlement of the case.
By virtue of Sec.19 of the Legal Services Authorities Act, 1987, every state authority, district
authority, Supreme Court Legal Services Committee or High Court Legal Services
Committee or the Thaluk Legal Service Committee may organize Lok Adalats for settlement
of cases pending in courts.
The Lok Adalat is presided over by a sitting or retired judicial officer as a chairman, with two
other members, usually a lawyer and a social worker. There is no Court Fee. If the case is
already filed in the regular court the fee paid will be refunded if the dispute is settled at the
Lok Adalat. The procedural laws, and the Evidence Act are not strictly followed while
assessing the merits of the claim by the Lok Adalat. Main condition of the Lok Adalat is that
both parties in dispute should agree for settlement. The decision of Lok Adalat is binding on
the parties to the disputes and its order is capable of execution through legal process. No
appeal lies against the order of the Lok Adalat.
P a g e | 40
EVOLUTION
The evolution of this movement was a part of the strategy to relieve heavy burden on the
Courts with pending cases and to give relief to the litigants who were in a queue to get
justice. The first Lok Adalat was held on March 14, 1982 at Junagarh in Gujarat the land of
Mahatma Gandhi. Lok Adalats have been very successful in settlement of motor accident
claim cases, matrimonial/family disputes, labour disputes, and disputes relating to public
services such as telephone, electricity, bank recovery cases and so on.
Alternate Dispute Resolution (ADR), has been an integral part of our historical past.
The concept of Lok Adalat is an innovative Indian contribution to the world jurisprudence.
Lok Adalat means peoples court. India as a long tradition and history of such methods
practiced in the society at grass root level. These are called Panchayat and legally its called
arbitration. In Lok Adalat justice is dispensed.
Ancient concept of settlement of dispute through mediation, negotiation or through arbitral
process known as Peoples court verdict or decision of Nyaya-Panch is conceptualised
instutionalised in the philosophy of Lok Adalat. The concept of Lok Adalat was pushed back
into oblivion in last few centuries before independence and particularly during British
regime.
Now this concept has been rejuvenated and became more popular amongst litigants. Camps
of Lok Adalat were initially started in Gujarat in March 1982, and now it has been extended
throughout the country. The evolution of this movement was a part of the strategy to relieve
heavy burden on the Courts with pending cases and to give relief to the litigants who were in
the queue to get justice. And the Legal Services Authorities Act 1987 gave a statutory status
to Lok Adalats pursuant to the Constitutional mandate in Art. 39-A of the Constitution of
India, contains various provisions for settlements of dispute through Lok Adalat.28
ORGANISATION OF LOK ADALAT

(1) Every State Authority or District Authority or the Supreme Court Legal Services
Committee or every High Court Legal Services Committee or, as the case may be, Taluk
28 monthlyarticle.blogspot.in, on 16/11/14 at 06:29pm.
P a g e | 41
Legal Services Committee may organise Lok Adalats at such intervals and places and for
exercising such jurisdiction and for such areas as it thinks fit.
(2) Every Lok Adalat organised for an area shall consist of such number of (a) serving or
retired judicial officers; and (b) other persons, of the area as may be specified by the State
Authority or the District Authority or the Supreme Court Legal Services Committee or the
High Court Legal Services Committee, or as the case may be, the Taluk Legal Services
Committee, organising such Lok Adalats.
(3) The experience and qualifications of other persons referred to in clause (b) of sub-section
(2) for Lok Adalats organised by the Supreme Court Legal Services Committee shall be such
as may be prescribed by the Central Government in consultation with the Chief Justice of
India.
(4) The experience and qualifications of other persons referred to in clause (b) of sub-section
(2) for Lok Adalats other than referred to in sub-section (3) shall be such as may be
prescribed by the State Government in consultation with the Chief Justice of the High Court.
(5) A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or
settlement between the parties to a dispute in respect of - (i) any case pending before; or
(ii) any matter which is falling within the jurisdiction of, and is not brought before, any court
for which the Lok Adalat is organised:
Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter
relating to an offence not compoundable under any law.29
JURISDICTION OF LOK ADALAT

The Lok Adalat has no jurisdiction in respect of any case or matter regarding an offence not
compoundable under any law. It is impermissible for the Lok Adalat to enter into any
determination or to arrive at a compromise settlement in relation to a case or matter regarding
an offence which is a non compoundable one i.e. offence punishable. 30 The Lok Adalat is not
empowered to issue direction upon an investigating officer to do a particular ting in a
29 Section 19, the Legal Service Authorities Act 1987.

30 Section 326, 397, 302, 307, the Indian Penal Code.
P a g e | 42
particular manner to file report on the basis that the complaint was made on a
misunderstanding or mistake of fact.31
Lok Adalat has no adjudicatory function and they are not meant for pressuring the people and
bringing pressure on the public officials. The Lok Adalat has no jurisdiction to award less
than contractual rate of interest affecting the interest of the Bank as well as the interest of the
society by adopting the approach of flexible and pragmatism keeping their eyes revetted on
the disposal figures of the cases and on the encomiums to be received in print media and from
interest group.32 Lok Adalat has no adjudicatory or judicial function. Its function purely
related to conciliation.33
COGNIZANCE OF CASES BY LOK ADALAT

A Lok Adalat may take cognizance of cases, as per Section 20 of the Legal Services
Authority Act where: (I) (a) the parties thereof agree; or (b) one of the parties thereof makes
an application to the court for referring the case to the Lok Adalat for settlement and if such
court is prima facie satisfied that there are chances of such settlement; or
(II) the court is satisfied that the matter is an appropriate one to be taken cognizance of by
the Lok Adalat, the court shall refer the case to the Lok Adalat :
Provided that no case shall be referred to the Lok Adalat by such court except after giving a
reasonable opportunity of being heard to the parties.34
NEED FOR LOK ADALAT

Justice Ramaswamy says: Resolving disputes through Lok Adalat not only minimizes
litigation expenditure, it saves valuable time of the parties and their witnesses and also
facilitates inexpensive and prompt remedy appropriately to the satisfaction of both the
31 State of Kerala v. Eruakulam District Legal Sservice, AIR 2008 Ker 70.
32 Union Bank of India, Bhavnagar v. M/s. Narendra Plastics, Bhavnagar, AIR 1992 Guj 67.
34 Section 20, Legal Services Authorities Act 1987.
P a g e | 43
parties Law Courts in India face mainly four problems: The number of courts and judges in
all grades are alarmingly inadequate. Increase in flow of cases in recent years due to
multifarious Acts enacted by the Central and State Governments. The high cost involved in
prosecuting or defending a case in a court of law, due to heavy court fee, lawyer's fee and
incidental charges. Delay in disposal of cases resulting in huge pendency in all the courts.
Lok Adalat has a positive contributory role in the administration of justice. It supplements the
efforts and work of the courts. Area of contribution chosen for the purpose specially concerns
and helps the common man, the poor, backward and the needy-most sections of the society.
WHY LOK ADALAT?

The Constitution of India is the fundamental law of the land. Part IV of the Constitution deals
with Directive Principles of State Policy. By virtue of Art.39-A the State is under a positive
duty to secure that the operation of the legal system promotes justice on the basis of equal
opportunity. The State shall also provide free legal aid to ensure that opportunities for
securing justice are not denied to any citizen by reason of economic or other disabilities.
By virtue of Article: 21, no person shall be deprived of his life or personal liberty except
according to procedure established by law. In Hussainnara Khatoon v. Home Secratery,
State of Bihar,35 , the Supreme Court held that right to speedy trial is a fundamental right
guaranteed under Art: 21 of the Constitution. Justice delayed is justice denied. Speedy trial
was held to be the essence of criminal justice.
In Suk Das v. Union Territory of Arunachal pradesh36, the Supreme Court held that failure to
provide free legal aid to an accused at the cost of the State unless refused by the accused
would vitiate the trial. He need not apply for the same. Free legal aid is at the State cost is a
fundamental right of an accused person under Art.21 of the Constitution.
A combined reading of Art.21 as interpreted by the Supreme Court of India and Art.39-A of
the Constitution establish beyond doubt that speedy trial, free legal aid and equal
opportunities for securing justice are fundamental rights of citizen of India and a
Constitutional mandate which state has to follow in governance of this country. In order to
ensure these rights more effectively, the Parliament enacted the Legal Services Authorities
35 AIR 1979 SC 1360
36 1986 5 SCC 401.
P a g e | 44
Act, 1987 to organise Lok Adalat to secure that the operation of the legal system promotes
justice on a basis of equal opportunity.
COMPOSITION
The secretary of the high court legal services committee organising the Lok Adalat shall
constitute benches of the Lok Adalat. Each bench shall comprise of two or three of the
following:1. a sitting or retired judge of the high court.
2. a serving or retired judicial officer.
3. a member of the legal profession.
4. a social worker.
The secretary of the district authority organising the Lok Adalat shall constitute benches of
the Lok Adalat. Each bench shall comprise of two or three of the following:1. a sitting or retired judicial officer.
3. a social worker.
The chairman of the taluk legal services committee organising the Lok Adalat shall
constitute benches of the Lok Adalat. Each bench shall comprise of two or three of the
following:1. a sitting or retired judicial officer.
3. a social worker.
Jurisdiction both civil and criminal cases which are pending before the courts can be brought
before the Lok Adalat for settlement and award. However the Lok Adalat shall have no
jurisdiction in respect of any case or matter relating to an offence not compoundable under
any law. A case pending in a court may be referred to Lok Adalat on an agreement between
parties or on an application made by one of the parties to the court for referring the case to
Lok Adalat for settlement. So also the court can suo moto refer a pending case to Lok Adalat.
When cases are referred to a Lok Adalat, it shall make sincere efforts to bring about a
conciliatory settlement in every case put before it without bringing about any kind of
coercion, threat or undue influence, allurement of misrepresentation. Every Lok Adalat shall,
P a g e | 45
while determining any reference before it, act with at most expedition to arrive at a
compromise of settlement between the parties and shall be guided by the principles of justice,
equity, fair and other legal principles.
PROCEDURE OF LOK ADALAT

The procedure followed at a Lok Adalat is very simple and shorn of almost all legal
formalism and rituals. The Lok Adalat is presided over by a sitting or retired judicial officer
as the chairman, with two other members, usually a lawyer and a social worker. It is revealed
by experience that in Lok Adalat it is easier to settle money claims since in most such cases
the quantum alone may be in dispute. Thus the motor accident compensation claim cases are
brought before the Lok Adalat and a number of cases were disposed of in each Lok Adalat.
One important condition is that both parties in dispute should agree for settlement through
Lok Adalat and abide by its decision. A Lok Adalat has the jurisdiction to settle, by way of
effecting compromise between the parties, any matter which may be pending before any
court, as well as matters at pre-litigative stage i.e. disputes which have not yet been formally
instituted in any court of law. Such matters may be civil or criminal in nature, but any matter
relating to an offence not compoundable under any law cannot be decided by the Lok Adalat
even if the parties involved therein agree to settle the same. Lok Adalat can take cognizance
of matters involving not only those persons who are entitled to avail free legal services but of
all other persons also, be they women, men, or children and even institutions. Anyone, or
more of the parties to a dispute can move an application to the court where their matter may
be pending, or even at pre-litigative stage, for such matter being taken up in the Lok Adalat
bench constituted for the purpose shall attempt to resolve the dispute by helping the parties to
arrive at an amicable solution and once it is successful in doing so, the award passed by it
shall be final which has as much force as a decree of a civil court obtained after due contest.
Finality of Lok Adalat award:
One issue which raises head often is the finality of the award of the Lok Adalat. During the
Lok Adalat, the parties agree to abide by the decision of the judge at the Lok Adalat.
However, it is often seen that later, the same order is challenged on several grounds. In one of
the recent decisions, the supreme court of India has once again laid to rest all such doubts. In
unequivocal terms, the court has held that award of the Lok Adalat is as good as the decree of
a court. The award of the Lok Adalat is fictionally deemed to be decrees of court and
P a g e | 46
therefore the courts have all the powers in relation thereto as it has in relation to a decree
passed by itself. This includes the powers to extend time in appropriate cases. The award
passed by the Lok Adalat is the decision of the court itself though arrived at by the simpler
method of conciliation instead of the process of arguments in court. Consent of parties: The
most important factor to be considered while deciding the cases at the Lok Adalat is the
consent of both the parties. It cannot be forced on any party that the matter has to be decided
by the Lok Adalat. However, once the parties agree that the matter has to be decided by the
Lok Adalat, then any party cannot walk away from the decision of the Lok Adalat. In several
instances, the supreme court has held that if there was no consent the award of the Lok Adalat
is not executable and also if the parties fail to agree to get the dispute resolved through Lok
Adalat, the regular litigation process remains open for all contesting parties. The Supreme
Court has also held that compromise implies some element of accommodation on each side; it
is not apt to describe it as total surrender.
A compromise is always bilateral and means mutual adjustment. Settlement is termination of
legal proceedings by mutual consent. If no compromise or settlement is or could be arrived
at, no order can be passed by the Lok Adalat.
POWER OF LOK ADALAT

Lok Adalat has the same powers as those vested in a civil court under the code of civil
procedure, 1908 while trying a suit in respect of the following matters, namelya) the summoning and enforcing the attendance of any witness and examining him on oath,
b) the discovery and production of any document,
c) the reception of evidence on affidavits,
d) the requisitioning of any public record or document or copy of such record or document
from any court or office ande) Such other matters as may be prescribed.
Every Lok Adalat shall have the requisite powers to specify its own procedures for the
determination of any dispute coming before it. In Shashi Prateek v. Charan Singh Verma,37
the Allahabad High court observed:
The remedy to move for recalling the order/award obtained on the basis of playing fraud and
misrepresentation upon the petitioner and upon the Lok Adalat, cannot be foreclosed, for
simple reason that no court or tribunal can be regarded as powerless to recall its own order if
37 AIR 2009 All 109.
P a g e | 47
it is convinced that the order was obtained through fraud or misrepresentation of such a high
degree or dimension as would affect the very basis of claim.38
AWARD OF LOK ADALAT

The Legal Service Authorities Act does not contemplate nor require an adjuratory judicial
determination, but non-adjudicatory determination based on a compromise or settle, arrived
at by the parties, with guidance and assistance from Lok Adalat. The award of Lok Adalat
does not mean any independent verdict or opinion arrived at by any decision-making process.
The making of the award is merely an administrative act of incorporating the terms of
settlement or compromise agreed by parties in the presence of the Lok Adalat, in the form of
an executable order under the signature and seal of the Lok Adalat.39
Where no compromise or settlement is signed by the parties and the order of the Lok Adalat
does not refer to any settlement, but directs the respondent to either make payment if it agrees
to the order, or approach the High Court for disposal of appeal on merits, if it does not agree,
is not award of the Lok Adalat. Where an award is made by the Lok Adalat in terms of a
settlement arrived at between the parties, it becomes final and binding on the parties to the
settlement and becomes executable like a decree of a civil court. No appeal lies it to any
court.
If any party wants to challenge the award based on settlement, it can done only by filing a
petition under Article 226 and 227 of the constitution. But this can be done on very limited
grounds.40 In Dinesh Kumar v. Blbir Singh,41 the court can go into the legality of the
order/orders passed by the Lok Adalat or the permanent Lok Adalat if they are against the
letter and spirit of the Legal Service Authorities Act 1987.
40 State of Punjab v. Jalour Singh, AIR 2008 SC 1209.
41 AIR 2008 HP 59.
P a g e | 48
ADVANTAGES OF LOK ADALAT

The benefits that litigants derive through Lok Adalat are many,
1. There is no court fee and even if the case is already filed in the regular court, the fee paid
will be refunded if the dispute is settled at the Lok Adalat.
2. There is no strict application of the procedural laws and the Evidence Act while assessing
the merits of the claim by the Lok Adalat. The parties to the disputes though represented by
their Advocate can interact with the Lok Adalat judge directly and explain their stands in the
dispute and the reasons therefore, which is not possible in a regular court of law.
3. Disputes can be brought before the Lok Adalat directly instead of going to a regular court
first and then to the Lok Adalat.
4. The decision of Lok Adalat is binding on the parties to the dispute and its order is capable
of execution through legal process. No appeal lies against the order of the Lok Adalat
whereas in regular courts of law there is always a scope to appeal to the higher forum on the
decision of the trial court, which cause delay in the settlement of dispute finally. The reason
being that in a regular court, decision is that of the court but in Lok Adalat it is mutual
settlement and hence no case for appeal will arise. In every respect the scheme of Lok Adalat
is a boon to the litigant public, where they can get their disputes settled fast and free of cost.
5. Last but not the least, faster and inexpensive remedy with legal status.
The scheme also helped the overburdened court to alleviate the burden of arrears of cases and
as the award becomes final and binding upon both the parties, no appeal is filed in the
Appellate Court and, as such, the burden of the Appellate Court in hierarchy is also reduced.
The scheme is not only helpful to the parties but also to the overburdened courts to achieve
the constitutional goal of speedy disposal of the cases.
PERMENENT LOK ADALAT

During the last few years Lok Adalat has been found to be a successful tool of alternate
dispute resolution in India. It is most popular and effective because of its innovative nature
and inexpensive style. The system received wide acceptance not only from the litigants, but
from the public and legal functionaries in general. In India, during the last few years Lok
Adalat has been functioning continuously and permanently in every district centre. In taluk
centres also sittings of Lok Adalats have been held successfully. Several thousands of
P a g e | 49
pending cases and disputes which had not reached law courts has been settled through Lok
Adalats.
The Legal Service Authorities Act, 1987 provides for the conduct of Lok Adalats. Lok
Adalats can deal with pending cases which are referred to it for determination. Lok Adalats
are organised at regular intervals. The Legal Services Authorities Act has been amended in
2002 with the object of establishing Permanent Lok Adalats. Sec. 22 B of the Act provides for
the establishment of the Permanent Lok Adalats. The Central Authority or every State
Authority shall, by notification, establish Permanent Lok Adalats. Every Lok Adalat
established for an area shall consist of the following persons:
1. A person who is, or has been a District Judge or Additional District Judge or has been held
judicial office higher in rank than that of a District Judge. He shall be the Chairman of the
Permanent Lok Adalat.
2. Two persons having adequate experience in public utility service. They are to be nominated
by the Central or State government on the recommendation of the Central or the State
authority.
The major defect of the mechanism of Lok Adalat is that it cannot take a decision, if one of
the parties, is not willing for a settlement, though the case involves an element of settlement.
The adamant attitude shown by one among the parties will render the entire process futile.
Even if all the members of the Lok Adalat are of the opinion that the case is a fit one for
settlement, under the present set-up, they cannot take a decision unless all the parties consent.
Any party to a dispute may, before the dispute is brought before any court, make an
application to the Permanent Lok Adalat for the settlement of the dispute. The Permanent Lok
Adalat shall not have jurisdiction in respect of any matter relating to an offence not
compoundable under any law. It shall not have jurisdiction in the matter where the value of
the property in dispute which exceeds rupees ten lacks. After an application is made to the
Permanent Lok Adalat a party to that application shall not invoke jurisdiction of any court in
the same dispute. When an application is made to the Permanent Lok Adalat, it shall direct
each party to file written statement stating the facts and nature of dispute. After filing of
written statement the Permanent Lok Adalat shall conduct conciliation proceedings. The
Permanent Lok Adalat shall assist the parties to reach an amicable settlement of dispute. If a
P a g e | 50
settlement is arrived at, in the conciliation proceedings, the Permanent Lok Adalat shall
formulate a settlement agreement and obtain signature on the settlement agreement and pass
an award in terms of that agreement. A copy of the award shall furnish to each of the parties
to the dispute. If the parties failed to reach an agreement, the Permanent Lok Adalat shall
decide the dispute. The award of the Permanent Lok Adalat shall be final and binding on all
the parties thereon and on persons claiming under them. Every award shall be deemed to be a
decree of a Civil Court. The Permanent Lok Adalat shall transmit any award made by it to a
civil court having local jurisdiction to execute the same.
LOK ADALAT CASE:- Dinesh Kumar vs Balbir Singh And Ors.

on 12 September, 2007
Equivalent citations: AIR 2008 HP 59, 2008 I ShimLC 54
PETITIONER- Dinesh Kumar
Vs.
RESPONDENT- Balbir Singh And Ors.
DATE OF JUDGEMENT:- 12/9/2008.
Author: R Sharma
Bench: R Sharma
FACTS
A challenge has been laid to the order dated 19.4.2003 passed by the Permanent Lok Adalat,
Kangra at Dharamshala in MACP No. 10-G/2002. . The brief facts necessary for the
adjudication of this petition are that the petitioner was driving his tempo bearing No. HP-205587 on 13.11.2001 and was proceeding from Kaloha to Pragpur. Bus bearing registration
No. HP-55-3486 (M/s. Sayal Bus Service) came from Pragpur side and dashed against the
tempo resulting in grievous injuries to the petitioner. The accident took place around 10.30
A.M. He was firstly taken to hospital at Dehra (District Kangra) and thereafter underwent
treatment in Bharaj Nursing Home, Jallandhar Road, Hoshiarpur. He remained indoor patient
P a g e | 51
in Bharaj Nursing Home with effect from 13.11.2001 to 17.11.2001 and also underwent
surgical operation costing Rs. 80,000/-. He filed a petition before the Motor Accident Claims
Tribunal-1, Kangra at Dharamshala in the month of January, 2002 claiming the compensation
for the grievous injuries received in the accident resulting in fracture of right Tibia and many
other injuries. He had claimed in all Rs. 3 lakhs towards compensation.
Respondents No. 1 and 2 had filed detailed reply to the claim petition and had admitted that
the bus was insured with New India Insurance Company Limited, Branch Office Dev Pal
Chowk, Hamirpur i.e. respondent No. 3. The respondent No. 3 had also filed separate reply
and in preliminary objection it has denied that the bus bearing No. HP-55-3486 was insured
with it. The objection was also taken with regard to the validity of the driving licence of the
petitioner besides the objections of invalid certificate of registration. The learned Motor
Accident Claims Tribunal issued notices to the respondents on 28.2.2002. The Motor
Accident Claims Tribunal, Kangra at Dharamshala has passed the following order on
19.2.2003:
ISSUE
*Whether any case is referred to a Lok Adalat under Sub-section (1) or where a reference has
been made to it under Sub-section (2), the Lok Adalat shall proceed to dispose of the case or
matter and arrive at a compromise or settlement between the parties?
*Whether Section 20 postulates the cases of which the Lok Adalat can take cognizance?
RATIO
This Court is of the view that despite expression used in Sub-section (2) of Section 21 of the
Act that no appeal shall lie to any Court against the award and the expression used like
original suit, application or execution proceedings as mentioned in Sub-section (4) of Section
22(E) will not include the writ jurisdiction. Thus the contention of Mr. B.M. Chauhan with
regard to the maintainability and the adjudication of the writ petition by this Court is
untenable and rejected. The Court has also to ensure that the provisions of the Legal Services
Authorities Act, 1987 are implemented in letter and spirit. The manner in which the
jurisdiction has been exercised by the Permanent Lok Adalat is against the very spirit of the
Act.
P a g e | 52
In case P.T. Thomas v. Thomas Job , cited by Mr. B.M. Chauhan, Advocate will not apply in
the present case since the order passed by the Permanent Lok Adalat is without jurisdiction.
JUDGMENT
The writ petition is allowed. the Permanent Lok Adalat is set aside. The matter is remanded
back to the learned Motor Accident Claims Tribunal, Kangra at Dharamshala with the
directions to decide the same on its own merits within a period of three months from the date
of receipt of record along with copy of this judgment In view of the facts and circumstances
of the case and the manner in which the matter has been compromised by the functionary of
respondent No. 3-company, a costs of Rs. 11,000/- is imposed upon the Divisional Manager
of the New India Assurance Company Limited on whose statement the matter was
compromised. The respondent No. 3 will ensure that the cost is recovered from the Divisional
Manager. To avoid further delay the parties are directed to appear before the learned Motor
Accident Claims Tribunal, Kangra at Dharamshala on 13.10.2007.
CONCLUSION
Lok Adalats play a very important role to advance and strengthen equal access to justice,
the heart of the Constitution of India, a reality. This Indian contribution to world ADR
jurisprudence needs to be taken full advantage of. Maximum number of Lok Adalats needs to
be organized to achieve the Gandhian Principle of Gram Swaraj and access to justice for
all.
Lok Adalat lends itself to easy settlement of money claims; there is scope for other disputes
as well. Partition suits damages and matrimonial cases can be easily settled before Lok Adalat
as the scope for compromise through an approach of give and take is high in these cases. In
Lok Adalat justice is dispensed summarily without too much emphasis on legal technicalities.
It has to be a very effective alternative to litigation. Lok Adalat is a boon to the litigant
public, where they can get their dispute settled faster and at free of cost. Experience has
shown that its one of the efficient and important ADR and most suited to the Indian
environment, culture and social interests. Objective of Lok Adalat is to settle the disputes
which are pending before the courts, by negotiations, conciliation and by adopting persuasive
common sense and human approach to the problems of the disputants. The large population
of India and the illiterate masses have found the regular dispensation of justice through
regular courts very cumbersome and ineffective. The special condition prevailing in the
P a g e | 53
Indian society and due to economic structure, highly sensitized legal service is required
which is efficacious for the poor and the ignorant masses. The Lok Adalat movement is no
more an experiment in India. Its now a success and needs to be replicated in certain matters.
It properly, thoughtfully, and wisely constituted, Lok Adalats can become an additional arm
of existing judicial institution, and moreover, if the process of accumulation of arrears is
reversed and there is less burdening, its qualitative performance can improve.
P a g e | 54
Chapter:- V
LEGAL AID CLINIC

INTRODUCTION
The provision of legal aid to the poor and the disadvantaged exists in all civilised countries,
often guided by charitable and philanthropic concerns. In a democratic set-up, the philosophy
of legal aid has acquired a new meaning, with an emphasis on the concept of equality of all
human beings, increasingly drawn from the universal principles of human rights. Free legal
aid to the poor and marginalised members of society is now viewed as a tool to empower
them to use the power of the law to advance their rights and interests as citizens, and as
economic actors. Such a paradigm shift in the concept of legal aid gains greater importance
when India is viewed as a growing economic power.
Parliament enacted the Legal Services Authorities Act, 1987 in order to give effect to Article
39-A of the Constitution to extend free legal aid, to ensure that the legal system promotes
justice on the basis of equal opportunity. (November 9 is observed as National Legal Services
Day, to commemorate the enactment of the legislation.) Those entitled to free legal services
are members of the Scheduled Castes and the Scheduled Tribes, women, children, persons
with disability, victims of ethnic violence, industrial workmen, persons in custody, and those
whose income does not exceed a level set by the government (currently it is Rs.1 lakh a year
in most States). The Act empowers legal services authorities at the district, State and national
levels, and the different committees (legal services institutions) to organise Lok Adalats to
resolve pending and pre-litigation disputes. It provides for permanent Lok Adalats to settle
disputes involving public utility services. Under the Act, legal services have a meaning that
includes rendering of service in the conduct of any court-annexed proceedings or proceedings
before any authority, tribunal and so on, and giving advice on legal matters. Promoting legal
literacy and conducting legal awareness programmes are functions of legal services
institutions.
An act to constitute legal services authorities to provide free and competent legal service to
the weaker sections of the society to ensure that opportunities for securing justice are not
denied to any citizens by reason of economic or other disabilities, and to organize Lok
P a g e | 55
Adalats to secure that the operation of the legal system promotes justice on a basis of equal
opportunity.
India is a developing country. The development in the industrial sector is very much
appreciable, but still this progress in the field of industrialization, marketing, finance, etc.
cannot hide the indispensable drawbacks of our society like population explosion and
illiteracy. These drawbacks, coupled with environmental and social hinges results in increase
in poverty and lack of food for people.
It is true that the country is going through the phase of development but all the fruits of this
tree are being en- cashed by those who stay in the upper half of the society. The poor resides
in their own world of DARKNESS.
But those who are still neglected are the main foundation of the society that is to be
remembered. So misusing their ignorance and encashing the fruits for the benefit of the upper
half of our society is not at all good for the future of the country.
The society is divided into two parts, according to financial standard, namely HAVES and the
HAVE NOTS. In our country with 100 million people, only a little part of the population
comes within the purview of the HAVES, whereas, the Lions share is the HAVE NOTS.
The HAVE NOTS as well as the HAVES both looks for earning their livelihood, looking for
the benefit of their family, giving a good future to the next generation, some are successful to
it, some are not.42
A legal clinic or law clinic is a nonprofit law practice serving the public interest. Legal clinics
originated as a method of practical teaching of law school students, but today they encompass
also free legal aid with no academic links. In the academic context, these law school clinics
provide hands-on experience to law school students and services to various (typically
indigent) clients. Academic Clinics are usually directed by clinical professors.[1] Many legal
clinics offer pro bono work in one or more particular areas, providing free legal services to
clients. The remainder of this article will discuss clinical legal education.43
42 www.legalserviceindia.com, on 17/11/14 on 01:19pm.
P a g e | 56
In this ways both categories of people spend most of their lives overlooking a lot of facts,
intentionally or unintentionally, that a lot of wrongs are being done against them. Other
people, or the Government or whoever may be is infringing their rights. But the wronged
ones are not very eager to protest against the wrong doer. Even some times they are not
knowledgeable enough that a wrong is being done against them. If they do not know that a
wrong is being done, it is a different scenario. But if they know about the fact, they are still
not standing against it. As because, it may cause a lot of problem in their field of profession
and might have to face a bigger loss. In this way they are actually ABATING THE WRONG.
So, for both the categories of people it is necessary to make them understand what sort of
wrongs they actually are facing and the abatement is also causing a greater harm to the
society and it can hamper the well being of their own next generation. The Legal Aid Clinic
has been working to secure justice for and to protect the rights of the needy.44
WHAT IS LEGAL AID

Under Section 2(1)(c) of the Legal Services Authorities Act, 1987 (hereinafter referred to as
the said Act), Legal Service includes the rendering of any service in the conduct of any
case or other legal proceeding before any court or other authority or tribunal and the giving of
advice on any legal matter; To provide free and competent legal services to the weaker
section of the society was the basic object of enacting the aforesaid Act. Justice - social,
economic and political, is our constitutional pledge enshrined in the preamble of our
Constitution. The incorporation of Article 39-A in the Directive Principles of State Policy in
the year 1976, enjoined upon the State to ensure justice on the basis of equal opportunity by
providing free legal aid.
The assumption of our legal system is that all citizens have equal access to means of legal
redress. Access to inexpensive and expeditious justice is a basic human right. But, in practice,
legal services of all kinds have gone to the highest bidders. Wealthy persons and large
corporations receive the highest quality advice. There should be a system of administration of
justice of which the poorest are able to take advantage. Equal access to the law for the rich
and the poor alike is essential for the maintenance of the rule of law. It is, therefore, essential
to provide adequate legal advice and representation to all those, threatened as to their life,
liberty, property or reputation, who are not able to pay for it.
44 law.ku.edu, on 17/11/14 at 12:05pm.
P a g e | 57
Legal aid is the provision of assistance to people otherwise unable to afford legal
representation and access to the court system. Legal aid is regarded as central in providing
access to justice by ensuring equality before the law, the right to counsel and the right to a
fair trial. This article describes the development of legal aid and its principles, primarily as
known in Europe, the British Commonwealth, India and the United States.
A number of delivery models for legal aid have emerged, including duty lawyers, community
legal clinics and the payment of lawyers to deal with cases for individuals who are entitled to
legal aid.
Legal aid is essential to guaranteeing equal access to justice for all, as provided for by Article
6.3 of the European Convention on Human Rights regarding criminal law cases. Especially
for citizens who do not have sufficient financial means, the provision of legal aid to clients by
governments will increase the likelihood, within court proceedings, of being assisted by legal
professionals for free (or at a lower cost) or of receiving financial aid.45
or levels and should be made available.46
Free legal aid undoubtedly is beneficial to poor people and has been instituted with the noble
purpose. Yet it has become a good ground for breeding corruption. Free legal aid for a fee is
common practice. Once a lawyer is engaged through legal aid, obviously the party or his men
would come to the lawyer for consultation and it is then that they are asked to fish out some
money, which they naturally cannot refuse. One factor that largely contributes to this is that
the meager remuneration (less than Rs. 200/-) paid to the lawyers by Legal Aid Committee is
a paltry and sometimes even does not meet the incidental expenses, what to speak of
compensating the labour put in by the lawyer. Beyond that, the greed to pocket some easy
46 http://www.businessdictionary.com, on 17/11/14 at 01:00pm.
P a g e | 58
money out of the helplessness of the victims is always there. But what speaks worst about the
system is the fact that entrustment of cases under the scheme has become a case of
distribution of largess amongst the favorites just as our Governments are notorious for
distribution of licenses. The distribution is guided by many factors but largely other than by
reason and the capacity to deliver the goods. In the circumstances, expectedly, the quality of
aid is compromised to the determent of the beneficiary and, of course, Justice. The whole
purpose is, thus, defeated.
CONCEPT OF LEGAL AID

Legislative History - The right to assignment of counsel at Government expenses was
emphasized in the 14th Law Commission Report. Thereafter, in 1969, the Law Commission
again strongly recommended that the right of the accused to representation at the cost of
Government should be placed on statutory footing in relation to trials for serious offences and
as a first step in this direction, the Commission proposed that such a right should be available
in all trials before the Court of Session.
In order to achieve the objective enshrined in Article 39-A of the Constitution, Government
had, with the object of providing free legal aid, by a Resolution appointed a Committee for
implementing Legal Aid Scheme to monitor and implement Legal Aid Programmes on a
uniform basis in all States and Union Territories. The said Committee evolved a model
scheme which was accordingly implemented by the Government. But on review, certain
deficiencies were found and it was considered desirable to constitute statutory legal
authorities at National, State and district levels so as to provide effective monitoring of Legal
Aid Programmes.
For the disposal of large number of cases expeditiously and without much cost Lok Adalats
have been constituted and they have been functioning as a voluntary and conciliatory agency
without any statutory backing for its decisions. In order to provide for the composition of
statutory legal authorities and to provide statutory backing to Lok Adalats and its awards the
Legal Services Authorities Bill, 1987, was introduced in the Lok Sabha on 24th August 1987.
Article 39-A of the Constitution provides that the State shall secure that the operation of the
legal system promotes justice on a basis of equal opportunity, and shall, in particular, provide
free legal aid, by suitable legislation or schemes or in any other way, to ensure that
P a g e | 59
opportunities for securing justice are not denied to any citizen by reason of economic or other
disabilities. With the object of providing free legal aid, Government had, by Resolution,
appointed the Committee for Implementing Legal Aid Schemes (CILAS) under the
Chairmanship of Mr. Justice P.N. Bhagwati (as he then was) to monitor and implement Legal
Aid Programmes on a uniform basis in all the States and Union territories CILAS evolved a
model scheme for Legal Aid Programme applicable throughout the country by which several
Legal Aid and Advice Boards have been set up in the States and Union territories, in funded
wholly by grants from the central Government.
Object of the enactment of the said Act - In our democratic set-up, all laws are made for all
men - common or uncommon. By common man, in common parlance, we understand a man
on the street. A man who may not have any status, office, post or rank in society. He is only a
human being, an ordinary citizen with expectations of a just and human order. He may be a
Tom, Dick or Harry, Ram, Rahim or Shyam. The Expression includes a cobbler, sweeper,
baker, butcher, a priest, or a soldier. A person of whatever name and nomenclature known in
the society. A legal system and its effectiveness has to be gauged or measured by the extent of
its usefulness to the common man. The failure of law for common man is due to no change of
hear or outlook of other fellow beings who are privileged and have a better status in the
society. There has been no emotional integration between haves in the society and have nots.
The society cannot be improved by laws. Social reforms are done not by laws but by leaders
in the society who are virtuous, wise and of high moral character. Before making the laws or
along with them, no attempts have to be made on behalf of the State of their agencies to
spread moral education to encourage science with spirituality. The spirituality and science
alone can rule the world including the government based on democracy in the absence of any
effort in proper direction, the common man is deprived of the benefit of the laws enacted for
him which do not reach him due to inefficient bureaucracy and mal-administration.47
PERSONS WHO ARE ENTITLED TO GET FREE LEGAL AID

UNDER THE LEGAL SERVICE AUTHORITY, 1987
47 www.legalserviceindia.com, on 17/11/14 on 01:19pm.
P a g e | 60
Criteria for giving legal service are prescribed under the Section 12 of the said Act. Every
person who has to file or defend a case shall be entitled to legal services under this Act if that
person is a. a member of a Scheduled Caste of Scheduled Tribe; b. a victim of trafficking in
human beings or beggar as referred to in Article 23 of the Constitution; c. a women or a
child;
d. a person with disability as defined in Clause (i) of Section 2 of the person with Disabilities
(Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 . e. a person
under circumstances to the underserved want such as being victim of mass disaster, ethnic
violence, caste atrocity, flood, drought, earthquake or industrial disaster; or an industrial
workman; or in custody, including custody in a protective home within the meaning of clause
(g) of Section 2 of the Immoral Traffic (prevention) Act, 1956 (104 of 1956), or in a juvenile
home within the meaning of clause (j) of Section 2 of the Juvenile Justice Act, 1986 (53 of
1986), or in a psychiatric hospital or psychiatric nursing home within the meaning of clause
(g) of Section 2 of the Mental Health Act, 1987 (14 of 1987); or in receipt of annual income
less than rupees nine thousand or such other higher amount as may be prescribed by the State
Government, if the case is before a court other than the supreme Court, and less than rupees
twelve thousand or such other higher amount as may be [prescribed by the Central
Government, if the case is before the Supreme Court.
Also, there are factors for disentitlement from getting legal aid - As per rules, the following
persons are not entitled to the legal aid unless the Chairman of the Committee approves it as a
special case- (1) Proceedings wholly or partly in respect of defamation or malicious
prosecution or any incidental proceedings thereto; (2) A person charged with contempt of
court proceeding or any incidental proceedings thereto; (3) A person charged with perjury;
(4) Proceedings relating to any election. (5) Proceedings in respect of offences where the fine
imposed is not more than Rs. 50/- (6) Proceedings in respect of economic offences and
offences against social laws, such as, the protection of Civil Rights Act, 1955, and the
Immoral Traffic (Prevention) Act, 1956 unless in shc cases the aid is sought by the victim :
The legal aid is also denied where the person seeking the legal services - (1) is concerned
with the proceedings only in a representative or official capacity; or (2) if a formal party to
the proceedings, not materially concerned in the outcome of the proceedings and his interests
are not likely to be prejudiced on account of the absence of proper representation.
In the above two circumstances even Chairman cannot sanction legal aid as a special case.
P a g e | 61
CONSTITUTIONAL PROVISION RELATING TO LEGAL AID

Legal aid a constitutional right - Articles 21 and 39-A of the Constitution are as under:21. Protection of life and personal liberty No person shall be deprived of his life or
personal liberty except according to procedure established by law. 39A. Equal justice and
free legal aid - The state shall secure that the operation of the legal system promotes Justice
on a basis, of equal opportunity, and shall in particular, provide free legal, aid, by suitable
legislation or schemes or in any other way, to ensure that opportunities for securing Justice
are not denied to any citizen by reason of economic or other disabilities.
Article 21 is a fundamental right conferred under Part III of the Constitution. Whereas Article
39-A is one of the directive principles of the State Policy under Part IV of the Constitution. It
has been held by the Constitution Bench of Supreme Court in Chandra Bhawan Boarding
and Lodging, Bangalore V. State of Mysore,48 that While rights conferred under Part III are
fundamental, the directives given under part IV are fundamental in the governance of the
country. There is no conflict on the whole between the provisions contained in Part III and
Part IV. They are complementary and supplementary to each other.
The Supreme Court in Hussainara Kathoon vs.. Home Secretary, State of Bihar,49 had called
upon the Government to frame appropriate scheme for providing legal aid to the poor. The
following observations were made by the Supreme Court:
We may also take this opportunity of impressing upon the Government of India as also the
State Governments, the urgent necessity of introducing a dynamic and comprehensive legal
service programme with a view to reaching justice to the common man. Today, unfortunately,
in our country the poor are priced out of the judicial system with the result that they are
losing faith in the capacity of our legal system to being about changes in their life conditions
and to deliver justice to them. The poor in their contact with legal system have always been
on the wring side of the law. They have always come across law for the poor rather than
48 AIR 1970 SC 2042.
49 AIR 1979 SC 1369: 1980 [1] SC 98: 1979 [3] SCR 532: 1979 Cri LJ 1045 : 1980 SCC [Cr] 40.
P a g e | 62
law of the poor. The law is regarded by them as something mysterious and forbiddingalways taking something away from them and not as a positive and constructive social device
for changing the socio-economic order and improving their life conditions by conferring
rights and benefits on them. The result is that the legal system has lost its credibility for the
weaker sections of the community. It is, therefore, necessary that we should inject equal
justice into legality and that can be done only by dynamic and activist scheme of legal
services.
In Abdul Hassan Vs. Delhi Vidyut Board,50 the Delhi High Court observed that it is
emphasized in Article 39A that the legal system should be able to deliver justice
expeditiously on the basis of equal opportunity and provide free legal aid to ensure that
opportunities for securing justice are not denied to any citizen by reasons of economic or
other disabilities. It was in this context that the parliament enacted Legal Services Authority
Act, 1987. One of the aims of the Act is to organize Lok Adalat to secure that the operation of
legal system promotes justice on the basis of an equal opportunity. The provisions of the Act,
based on indigenous concept are meant to supplement the court system. They will go a long
way in resolving the 0dispute at almost no cost to the litigants and with minimum delay. The
Act is a legislative attempt to decongest the courts of heavy burden of cases.
The Honble Apex Court found and observed in the case of State of Haryana v. Smt.
Darshana Devi,51 no State, it seems, has , as yet, framed rules to give effect to the benignant
provision of legal aid to the poor in Order XXXIII Rule 9-A, Civil Procedure Code, although
several years have passed since the enactment. Parliament is stultified and the people are
frustrated. Even after a law has been enacted for the benefit of the poor, the State does not
bring into force by willful default in fulfilling the condition sine qua non. It is public duty of
each great branch of Government to obey the rule of law and uphold the tryst with the
Constitution by making rules to effectuate legislation meant to help the poor.
IMPORTANCE OF LEGAL AID
50 AIR 1999 Del 88: 1999 (77) DLT 640 : 1999 (2) AD (Del) 105.
51 AIR 1979 SC 855 : 1979 [2] SCC 236: 1979 [3] SCR 184.
P a g e | 63
The importance of Legal Aid and Awareness Campaigns as a mechanism for social progress
is something that has been repeatedly stressed upon by the Government of India. In the
backdrop of Poverty and Inequality, Legal Aid is an effective way towards attainment of the
ideals of Social, Economic and Political Justice that are enshrined in our Constitution under
the Directive Principles of State Policy.
The Legal Aid Implementation Committee of the Government of India formed out of the
constructive suggestions of the Bhagwati Committee on Jurisdicare of 1977 had envisaged
the setting up of legal aid dispensation clinic in the various state run law schools. Thirty
years hence we stand in a situation where the West Bengal National University of Juridical
Sciences can state that they have indeed met with the suggestions of this committee by way
of its own Legal Aid Clinic. The establishment of the National Law Universities in the
various parts of the country has opened the gateway to work towards this cause in a greater
way. Through a mutually beneficial process of exchange, awareness is spread amongst the
masses about their legal rights and duties, and how to go about seeking the same, and
students of law get exposed to the various problems associated with the real world, thereby
gaining practical knowledge on the subject.
The entire purpose of setting nation wide collegiate clinics is to acclimatize several thousand
law students of the nation to the problems faced by the masses ignorant about their rights and
remedies under the law. The aim is indeed a noble one but there difficulties which still need
to be addressed.
The WBNUJS Legal Aid Cell is one successful beacon while there many more colleges
where such beacons need to be lighted, many thousands whose legal dilemmas need to be
efficiently addressed.
In the recently concluded Intra-State Conference on Legal
Networking in West Bengal, held at The West Bengal National University of Juridical
Sciences(WBNUJS), Prof. B.B. Pande, retired Faculty Advisor of the Legal Aid Society at
The Delhi University Faculty of Law, which was the birthplace of the legal awareness
campaigns in Law Universities, highlighted the importance of a systematic approach
P a g e | 64
tempered with the right intention, and identified WBNUJS as having the most functional
Legal Aid Clinic in India.52
RECENT AMENDMENTS TO MADE TO THE LEGAL

SERVICE AUTHORITIES ACT, 1987
The Legal Services Authorities Act, 1987 was enacted to constitute legal services authorities
for providing free and competent legal services to the weaker sections of the society to ensure
that opportunities for securing justice were not denied to any citizen by reason of economic
or other disabilities and to organize Lok Adalats to ensure that the operation of the legal
system promoted justice on a basis of equal opportunity. The system of Lok Adalat, which is
an innovative mechanism for alternate dispute resolution, has proved effective for resolving
disputes in a spirit of conciliation outside the courts.
However, the major drawback in the existing scheme of organization of the Lok Adalats
under Chapter VI of the said Act is that the system of Lok Adalats is mainly based on
compromise or settlement between the parties. If the parties do not arrive at any compromise
or settlement, the case is either returned to the court of law or the parties are advised to seek
remedy in a court of law. This causes unnecessary delay in the dispensation of justice. If Lok
Adalats are given power to decide the cases on merits in case parties fails to arrive at any
compromise or settlement, this problem can be tackled to a great extent. Further, the cases
which arise in relation to public utility services such as Mahanagar Telephone Nigam
Limited, Delhi Vidyut Board, etc., need to be settled urgently so that people get justice
without delay even at pre-litigation stage and thus most of the petty cases which ought not to
go in the regular courts would be settled at the pre-litigation stage itself which would result in
reducing the workload of the regular courts to a great extent. It is, therefore, proposed to
amend the Legal Services Authorities Act, 1987 to set up Permanent Lok Adalats for
52 www.nujs.edu, on 17/11/14 at 02:38pm.
P a g e | 65
providing compulsory pre-litigative mechanism for conciliation and settlement of cases

relating to public utility services.
The salient features of the amendment are as follows:
1) to provide for the establishment of Permanent Lok Adalats which shall consist of a
Chairman who is or has been a district judge or additional district judge or has held judicial
office higher in rank than that of the district judge and two other persons having adequate
experience in public utility services;
2) (ii) the Permanent Lok Adalat shall exercise jurisdiction in respect of one or more public
utility services such as transport services of passengers or goods by air, road and water,
postal, telegraph or telephone services, supply of power, light or water to the public by any
establishment, public conservancy or sanitation, services in hospitals or dispensaries; and
insurance services;
3) (iii) the pecuniary jurisdiction of the Permanent Lok Adalat shall be up to rupees ten lakhs.
However, the Central Government may increase the said pecuniary jurisdiction from time to
time. It shall have not jurisdiction in respect of any matter relating to an offence not
compoundable under any law;
4) (iv) it also provides that before the dispute is brought before any court, any party to the
dispute may make an application to the Permanent Lok Adalat for settlement of the dispute;
5) (v) where it appears to the Permanent Lok Adalat that there exist elements of a settlement,
which may be acceptable to the parties, it shall formulate the terms of a possible settlement
and submit them to the parties for their observations and in case the parties reach an
agreement, the Permanent Lok Adalat shall pass an award in terms thereof. In case parties to
the dispute fail to reach an agreement, the Permanent Lok Adalat shall decide the dispute on
merits; and
6) (vi) every award made by the Permanent Lok Adalat shall be final and binding on all the
parties thereto and shall be by a majority of the persons constituting the Permanent Lok
Adalat.53
53 www.thehindu.com, on 17/11/14 at 01:11pm
P a g e | 66
LEGAL AID CASE:-Sheela Barse vs State Of Maharashtra on 15

February, 1983
SUPREME COURT OF INDIA

Equivalent citations: 1983 AIR 378, 1983 SCR (2) 337
P PETITIONER: SHEELA BARSE
Vs.
RESPONDENT: STATE OF MAHARASHTRA
DATE OF JUDGMENT15/02/1983
Author: P Bhagwati
Bench: Bhagwati
FACTS
Legal Aid to the poor-Importance of legal aid to the poor explained-Directions given to
Prison authorities and police on providing Legal aid to the poor prisoners. The petitioner, a
journalist, in her letter addressed to this Court stated that Five out of fifteen women prisoners
interviewed by her in the Bombay Central Jail alleged that they had been assaulted by the
police in the police lock up and two of them in particular alleged that they had been assaulted
and tortured in the lock up. Treating the letter as a writ petition the Court issued notices to all
concerned to show cause why the writ petition should not be allowed In the meanwhile the
Director of the College of Social Work custodians. It is also possible that he or the members
of his family may have other problems where legal assistance is required but by reason of his
being incarcerate. it may be difficult if not impossible for him or the members of his family to
obtain proper legal advice or aid. It is therefore essential that legal assistance must be made
available to prisoners in jails whether they be under-trials or convicted prisoners. 338 The
Inspector General of Prisons in Maharashtra should issue a circular to all Superintendents of
Jails in Maharashtra requiring them to send to the Legal Aid Committee of each district in
which the jail is situated.
ISSUES
*Whether the Police officer (accused) has violated the provisions of the Article 14, 21 &39 A
of the Constitution of India?
RATIO
P a g e | 67
section 54 of the Code of Criminal Procedure 1973 to be medically examined. We are aware
that section 54 of the Code of Criminal Procedure 1973 undoubtedly provides for
examination of an arrested person by a medical practitioner at the request of the arrested
person and it is a right conferred on the arrested person. But very often the arrested person is
not aware of this right and on account of his ignorance, he is unable to exercise this right
even though he may have been tortured or malterated by the police in police lock up.
JUDGEMENT
The writ petition will stand disposed of in terms of this order.
CONCLUSION
An act to constitute legal services authorities to provide free and competent legal service to
the weaker sections of the society to ensure that opportunities for securing justice are not
denied to any citizens by reason of economic or other disabilities, and to organize Lok
Adalats to secure that the operation of the legal system promotes justice on a basis of equal
opportunity.
India is a developing country. The development in the industrial sector is very much
appreciable, but still this progress in the field of industrialization, marketing, finance, etc.
cannot hide the indispensable drawbacks of our society like population explosion and
illiteracy. These drawbacks, coupled with environmental and social hinges results in increase
in poverty and lack of food for people. Legal aid is required in many forms and at various
stages, for obtaining guidance, for resolving disputes in Courts, tribunals or other authorities.
It has manifold facets. The explosion in population, the vast changes brought about by
scientific, technological and other developments, and the all round enlarged field of human
activity reflected in modern society, and the consequent increase in litigation in Courts and
other forums demand that the service of competent persons with expertise in law is required
in many stages and at different forums or levels and should be made available.
P a g e | 68
Chapter:- VI
CONCLUSION
programs. Some of these programs are voluntary; others are mandatory. Many individuals
and entities still resist ADR because it lacks the substantive, procedural, and evidentiary
protections available in formal civil litigation. For example, parties to ADR typically waive
their rights to object to evidence that might be deemed inadmissible under the rules of court.
Hearsay evidence is a common example of evidence that is considered by the parties and
intermediaries in ADR forums but that is generally excluded from civil trials. If a disputant
believes that he or she would be sacrificing too many rights and protections by waiving the
formalities of civil litigation, ADR will not be the appropriate method of dispute resolution.
An arbitration agreement is a written contract in which two or more parties agree to settle a
dispute outside of court. The arbitration agreement is ordinarily a clause in a larger contract.
The dispute may be about the performance of a specific contract, a claim of unfair or illegal
treatment in the workplace, a faulty product, among other various issues. People are free to
agree to use arbitration concerning anything that they could otherwise resolve through legal
proceedings.
Conciliation is a voluntary proceeding, where the parties involved are free to agree and
attempt to resolve their dispute by conciliation. The process is flexible, allowing parties to
define the time, structure and content of the conciliation proceedings. These proceedings are
rarely public. They are interest-based, as the conciliator will when proposing a settlement, not
only take into account the parties' legal positions, but also their; commercial, financial and /
or personal interests.
Lok Adalat, as the name suggest means Peoples Court. Lok stands for People and the word
Adalat means Court. Lok Adalat is a special kind of peoples court in which disputes solved
by direct talks between the litigants. The members of legal profession, college students, social
organisations, charitable and philanthropic institutions and other similar organisations may be
P a g e | 69
associated with Lok Adalat. Lok Adalat is a boon to the litigant public, where they can get
their dispute settled faster and at free of cost. Experience has shown that its one of the
efficient and important ADR and most suited to the Indian environment, culture and social
interests. Objective of Lok Adalat is to settle the disputes which are pending before the
courts, by negotiations, conciliation and by adopting persuasive common sense and human
approach to the problems of the disputants. The large population of India and the illiterate
masses have found the regular dispensation of justice through regular courts very
cumbersome and ineffective. The special condition prevailing in the Indian society and due to
economic structure, highly sensitized legal service is required which is efficacious for the
poor and the ignorant masses. The Lok Adalat movement is no more an experiment in India
Lok Adalats play a very important role to advance and strengthen equal access to justice,
the heart of the Constitution of India, a reality.
or levels and should be made available.

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3 en.wikipedia.org, on 17/11/14 at 12:58pm.

ALTERNATIVE DISPUTE RESOLUTION

WHAT IS ALTERNATIVE DISPUTE RESOLUTION (ADR)?

5 www.law.cornell.edu, on 27/9/14 at 09:33pm.

6 www.adamsmith.org, on 27/9/14 at 10:48pm.

KEY FEATURE OF ALTERNATIVE DISPUTE RESOLUTION

9 Legal-dictionary.thefreedictionary.com, on 27/9/14 at 09:37pm.

TYPES OF ALTERNATIVE DISPUTE RESOLUTION

ADVANTAGES & DISADVANTAGES OF ALTERNATIVE

DISTINGUISH BETWEEN ADVANTAGES AND

Cheap, some schemes are completely

ADR is not always cheap, and can be

as expensive as court action.

Quick, many cases can be resolved in a

Not all forms of ADR are quick, in fact

matter of weeks, or even days.

some forms of ADR require a client to

Informality is preferred by many

There can be too much informality, not

popular with sophisticated clients.

Efficient system for recovery of debts,

An unintended and some believe an

undesirable result is the constant use

ADR is seen as compulsory because of

Disadvantages the less powerful side

unprepared side to be assisted a

in a dispute, by assisting negotiation

thereby produces a result that reflects

10 www.lorman.com, on 27/9/14 at 10:04pm.

Popular with claimants who do not

Not popular with lawyers because it is

need to use a lawyer, and in some

not in their financial interests. This has

cases are discouraged by the process

the effect of closing access to the legal

from using a lawyer.

system which should be open "to all".

ARBITRATION :- A CASE STUDY

SCOPE & OBJECT OF THE ARBITRATION AND

11 www.wipo.in, on 16/11/14 at 10:00pm.

14 (2003) 9 SCC 79.

ADVANTAGES AND DISADVANTAGES

Arbitration is often faster than litigation in court

Some of the disadvantages include:

Arbitration agreements are sometimes contained in ancillary agreements, or in small

Arbitrators are generally unable to enforce interlocutory measures against a party,

Agreements which provide that, if a dispute should arise, it will be resolved by

POWERS AND DUTIES OF ARBITRATORS

20 http://jamsadr.com, on 16/11/14 at 05:pm.

Conciliation offers a more flexible alternative to arbitration as well as litigation, for

Parties are directly engaged in negotiating a settlement.

Confidentiality is maintained throughout the proceedings with respect to information

The conciliation prize is a reward gained by the conciliator on a successfully resolved

CASE STUDY: Jagdish Chander vs Ramesh Chander & Ors on

26 www.ficci-arbitration.com, on 17/11/14 at 03:07pm.

FACT OF THIS CASE:

LOK ADALAT AND ITS IMPORTANCE: A PRATICAL

MEANING OF LOK ADALAT

ORGANISATION OF LOK ADALAT

JURISDICTION OF LOK ADALAT

29 Section 19, the Legal Service Authorities Act 1987.

COGNIZANCE OF CASES BY LOK ADALAT