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Project topic:


Submitted By
Fatima inam
Roll no. 1127
3rd Year , 6 th Semester, B.A.LL.B(Hons.)

Submitted to
Faculty of Law

Chanakya national Law University, Patna

APRIL, 2017

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I would like to express my special thanks of gratitude to my teacher who gave me
the opportunity to do this project who has helped me in doing a lot of research and I
came to know about this topic. I would also like to thank my friends who helped me
and even my parents for all sort of financial help. By doing this project I have surely
increased my knowledge.


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The researcher wants to know about the ADR Mechanism.


The researcher has restricted its research to doctrinal method to find out the extent of the
application by the judiciary. Due to limited time, researcher has not discussed it from the
International perspective but limited her research from the Indian Constitutional Law
perspective. Further, researcher has used secondary source to find out the research questions and
limited its study under Indian Law.

While researching, examining, evaluating and analyzing the concept of ADR Mechanism and its
perspective from Indian Constitution, all the data collected is based on the Books, Journal, case
Laws, Legislation, research paper, e-sources, websites, Law commission Report etc. and
eventually to navigate the conclusions and suggestion on the aforesaid study.
The Sources of above mentioned tools is accessed through the CNLU Library, Internet,
Newspaper, Periodicals etc. Further, various approaches are taken into account so as to test and
analyze the issue and to contrive the entire study more circumspection, analytical and receptive
manner for the reader.
The various elements undertaken by the researcher in order to complete its research are as

i. Various national and International authored Books and Journals have been
referred to gain knowledge as well as for getting acquainted with the subject
ii. Online research has been also conducted to understand the various technicalities
of the subject and latest developments in this field. Reference will also be made to
legislations, articles and case laws.
The secondary sources complied in the research includes various articles written by the

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Contents Page





5 .MECHANISM OF ADR 13 to 16



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ADR originated in the USA in a drive to find alternatives to the traditional legal system, felt to
be adversarial, costly, unpredictable, rigid, over-professionalised, damaging to relationships, and
limited to narrow rights-based remedies as opposed to creative problem solving. The American
origins of the concept are not surprising, given certain features of litigation in that system, such
as: trials of civil actions by a jury, lawyers' contingency fees, lack of application in full of the
rule "the loser pays the costs".

ADR is nothing new. This informal quasi judiciary system is as old civilization. Different forms
of ADR have been in existence for thousands of years.1

Beginning in the late nineteenth century, creative efforts to develop the use of arbitration and
mediation emerged in response to the disruptive conflicts between labor and management. In
1898, Congress followed initiatives that began a few years earlier in Massachusetts and New
York and authorized mediation for collective bargaining disputes. In the ensuing years, special
mediation agencies, such as the Board of Mediation and Conciliation for railway labor, (1913)
(renamed the National Mediation Board in 1943), and the Federal Mediation and Conciliation
Service (1947) were formed and funded to carry out the mediation of collective bargaining
disputes. Additional state labor mediation services followed. The 1913 New lands Act and later
legislation reflected the belief that stable industrial peace could be achieved through the
settlement of collective bargaining disputes; settlement in turn could be advanced through
conciliation, mediation, and voluntary arbitration.2
At about the same time, and for different reasons, varied forms of mediation for non-labor
matters were introduced in the courts. When a group of lawyers and jurists spoke on the topic to
an American Bar Association meeting in 1923, they were able to assess court-related conciliation
programs in Cleveland, Minneapolis, North Dakota, New York City, and Milwaukee.
1 visited
on 7:54 p.m ,19 April 19, 2017.

visited on 8 p.m, 19 April,2017.

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Conciliation in a different form also appeared in domestic relations courts. An outgrowth of
concern about rising divorce rates in the postwar 1940's and the 1950's, the primary goal of these
programs was to reduce the number of divorces by requiring efforts at reconciliation rather than
to facilitate the achievement of divorces through less adversarial proceedings. Following
privately funded mediation efforts by the American Arbitration Association and others in the late
1960s, the Community Relations Service (CRS) of the United States Department of Justice
initiated in 1972 a mediation program for civil rights disputes.
suite and assisted in the development and promotion of ADR in the UK. 3. Although a small
number of individual lawyers had been interested in and were practicing
mediation ADR in Britain for some years, it was only in 1989 when the first British based ADR
company - IDR Europe Ltd. - bought the idea across the Atlantic and opened its doors for
business. This was the start of ADR Group. Since then many other ADR organizations, including
CEDR (Centre for Dispute Resolution), followed
ADR, or mediation (as it is now synonymously known as), is used world-wide by Governments,
corporations and individuals to resolve disputes big or small, of virtually any nature and in most
countries of the world.
In developing countries where most people opt for litigation to resolve disputes, there is
excessive over-burdening of courts and a large number of pending cases, which has ultimately
lead to dissatisfaction among people regarding the judicial system and its ability to dispense
justice. This opinion is generated largely on the basis of the popular belief, Justice delayed is
justice denied. However, the blame for the large number of pending cases in these developing
countries or docket explosion, as it is called, cannot be attributed to the Courts alone. The reason
for it being the non-implementation of negotiation processes before litigation. It is against this
backdrop that the mechanisms of Alternative Dispute Resolution are being introduced in these
countries. These mechanisms, which have been working effectively in providing an amicable and
speedy solution for conflicts in developed economies, are being suitably amended and
incorporated in the developing countries in order to strengthen the judicial system. Many
countries such as India, Bangladesh and Sri Lanka have adopted the Alternative Dispute
Resolution Mechanism. However, it is for time to see how effective the implementation of these
mechanism would be in countries.
3 visited on 10 p.m, 19April ,2017.

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In India, the law and practice of private and transactional commercial disputes without court
intervention can be dated back to ancient times. Arbitration or mediation as an alternative to
dispute resolution by municipal courts has been prevalent in India from Vedic times. The earliest
known treatise is the Bhradarnayaka Upanishad, in which various types of arbitral bodies viz (i)
the Puga (ii) the Sreni (iii) the Kula are referred to. These arbitral bodies, known as Panchayats,
dealt with variety of disputes, such as disputes of contractual, matrimonial and even of a criminal
nature.4 The disputants would ordinarily accept the decision of the panchayat and hence a
settlement arrived consequent to conciliation by the panchayat would be as binding as the
decision that was on clear legal obligations.

The Muslim rule in India saw the incorporation of the principles of Muslim law in the Indian
culture. Those laws were systematically compiled in the form of a commentary and came to be
known as Hedaya. During Muslim rule, all Muslims in India were governed by Islamic laws-
the Shariah as contained in the Hedaya. The Hedaya contains provisions for arbitration as well.
The Arabic word for arbitration is Tahkeem, while the word for an arbitrator is Hakam. An
arbitrator was required to posses the qualities essential for a Kazee an official Judge presiding
over a court of law, whose decision was binding on the parties subject to legality and validity of
the award. The court has the jurisdiction to enforce such awards given under Shariah though it is
not entitled to review the merits of the dispute or the reasoning of the arbitrator.5

ADR picked up pace in the country, with the coming of the East India Company. The British
government gave legislative form to the law of arbitration by promulgating regulations in the
three presidency towns: Calcutta, Bombay and Madras. Bengal Resolution Act, 1772 and Bengal
Regulation Act, 1781 provided parties to submit the dispute to the arbitrator, appointed after
mutual agreement and whose verdict shall be binding on both the parties. 6 These remained in
force till the Civil Procedure Code 1859, and were extended in 1862 to the Presidency towns.
4 O P Malhotra, Indu Malhotra, Lexis Nexis, The Law and Practice of Arbitration and Conciliation
(2nd ed., 2006)

5 Id, at 5 and 6.

6 Ivneet Walia, Alternate Dispute Resolution And The Common Man,

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Alternative Dispute Resolution in India is an attempt made by the legislators and judiciary alike
to achieve the Constitutional goal of achieving Complete Justice in India. ADR first started as
a quest to find solutions to the perplexing problem of the ever increasing burden on the courts. A
thought-process that started off to rectify docket explosion, later developed into a separate field
solely catering to various kinds of mechanisms which would resolve disputes without
approaching the Formal Legal System (FLS). The reasoning given to these ADR mechanisms is
that the society, state and the party to the dispute are equally under an obligation to resolve the
dispute as soon as possible before it disturbs the peace in the family, business community,
society or ultimately humanity as a whole. In a civilised society, principles of natural justice
along with the Rule of Law should result incomplete justice in case of a dispute. Rule of Law
is defined as the state of order in which events conform to the law. It is an authoritative, legal
doctrine, principle, or precept applied to the facts of an appropriate case. These definitions give
us the indication that the Rule of Law is a authoritative concept which might lead to a win-lose
situation in cases of dispute.

ADR uses the principles of natural justice in consonance with the Rule of Law, in order to create
a favourable atmosphere of a win-win situation. This is much needed in countries like India
where litigation causes a great deal of animosity between the parties due to the agony caused by
the long-standing litigation. ADR, thus, gains its momentum in India today.7
Alternative Dispute Resolution in India was founded on the Constitutional basis of Articles 14
and 21 which deal with Equality before Law and Right to life and personal liberty respectively.
These Articles are enshrined under Part III of the Constitution of India which lists the
Fundamental Rights of the citizens of India. ADR also tries to achieve the Directive Principle of
State Policy relating to Equal justice and Free Legal Aid as laid down under Article 39-A of the
Constitution. The Acts which deal with Alternative Dispute Resolution are Arbitration and

7 visited on 11:43p.m, 19April , 2017.

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Conciliation Act, 1996 (discussed in detail later) and the Legal Services Authorities Act, 1987.
Section 89 of the Civil Procedure Code, 1908 makes it possible for Arbitration proceedings to
take place in accordance with the Acts stated above.

In India, the quest for justice has been an ideal, which the citizens have been aspiring for
generations down the line. Our Constitution reflects this aspiration in the Preamble itself, which
speaks about justice in all its forms: social, economic and political. Justice is a constitutional
mandate. About half a century of the Constitution at work has tossed up many issues relating to
the working of the judiciary; the most important being court clogging and judicial delays.
Particularly disturbing has been the chronic and recurrent theme of a near collapse of the judicial
trial system, its delays and mounting costs. Here, the glorious uncertainties of the law frustrated
the aspirations for an equal, predictable and affordable justice is also a question, which crops up
often in the minds of the people.

We are a country of a billion people. The fundamental question is: How do we design and
structure a legal system, which can render justice to a billion people? The possibility of a
justice-delivery mechanism in the Indian context and the impediments for dispensing justice in
India is an important discussion. Delay in justice administration is the biggest operational
obstacle, which has to be tackled on a war footing. As Justice Warren Burger, the former Chief
Justice of the American Supreme Court observed in the American context:
The harsh truth is that we may be on our way to a society overrun by hordes of lawyers,
hungry as locusts, and bridges of judges in numbers never before contemplated. The notion
that ordinary people want black-robed judges, well-dressed lawyers, and fine paneled
courtrooms as the setting to resolve their disputes, is not correct. People with legal problems
like people with pain, want relief and they want it as quickly and inexpensively as possible.
This observation with greater force applies in the Indian context.

Therefore, this explains the need for Alternative Dispute Resolution in India. In a country, which
aims to protect the socio-economic and cultural rights of citizens, it is extremely important to
quickly dispose the cases in India, as the Courts alone cannot handle the huge backlog of cases.
This can be effectively achieved by applying the mechanisms of Alternative Dispute Resolution.

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Code of Civil Procedure

The Code of Civil Procedure, 1859 in its sections 312 to 325 dealt with arbitration in suits while
sections 326 and 327 provided for arbitration without court intervention. The Code of Civil
Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of Civil Procedure, 1908 has laid
down that cases must be encouraged to go in for ADR under section 89(1). 8 Under the First
Schedule, Order XXXII A, Rule 3 a duty is cast upon the courts that it shall make an endeavor to
assist the parties in the first instance, in arriving at a settlement in respect of the subject matter of
the suit.9 The second schedule related to arbitration in suits while briefly providing arbitration
without intervention of a court. Order I, Rule 1 of the schedule says that where in any suit, all the
parties agree that any matter in difference between them shall be referred to arbitration, they
may, at any time before judgment is pronounced; apply to the court for an order of reference.
This schedule, in a way supplemented the provisions of the Arbitration Act of 1899.

8 Civil Procedure Code, 1908 as amended and implemented in 2002.

9 Civil Procedure Code 1908, Order XXXII A Rule 3.

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The government enacted the Arbitration and Conciliation Act, 1996 in an effort to modernize the
1940 Act. In 1978, the UNCITRAL Secretariat, the Asian African Legal Consultative Committee
(AALCC), the International Council for Commercial Arbitration (ICCA) and the International
Chamber of Commerce (ICC) met for a consultative meeting, where the participants were of the
unanimous view that it would be in the interest of International Commercial Arbitration if
UNCITRAL would initiate steps leading to the establishment of uniform standards of arbitral
procedure. The preparation of a Model Law on arbitration was considered the most appropriate
way to achieve the desired uniformity. The full text of this Model Law was adopted on 21 st June
1985 by UNCITRAL. This is a remarkable legacy given by the United Nations to International
Commercial Arbitration, which has influenced Indian Law. In India, the Model Law has been
adopted almost in its entirety in the 1996 Act.10 This Act repealed all the three previous statutes.
Its primary purpose was to encourage arbitration as a cost-effective and quick mechanism for the
settlement of commercial disputes. It covers both domestic arbitration and international
commercial arbitration11 It marked an epoch in the struggle to find an alternative to the
traditional adversarial system of litigation in India.

The changes brought about by the 1996 Act were so drastic that the entire case law built up over
the previous fifty-six years on arbitration was rendered superfluous. Unfortunately, there was no
widespread debate and understanding of the changes before such an important legislative change
was enacted. The Government of India enacted the 1996 Act by an ordinance, and then extended
its life by another ordinance, before Parliament eventually passed it without reference to
Parliamentary Committee.

Arbitration, as practiced in India, instead of shortening the lifespan of the dispute resolution,
became one more inning in the game. Not only that, the arbitrator and the parties lawyers

10 Supra note 4, at17, 20 & 23.

11 Supra note 1.

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treated arbitration as extra time or overtime work to be done after attending to court matters.
The result was that the normal session of an arbitration hearing was always for a short duration.
Absence of a full-fledged Arbitration Bar effectively prevented arbitrations being heard
continuously on day-to-day basis over the normal working hours, viz. 4-5 hours every day. This
resulted in elongation of the period for disposal.

Veerappa Moily also said in the ADR congress held in the year 2010 that the 1996 Act, although
modeled along international standards, has so far proved to be insufficient in meeting the needs
of the business community, for the speedy and impartial resolution of disputes in India.12

The Law Commission of India prepared a report on the experience of the 1996 Act and suggested
a number of amendments. Based on the recommendations of the Commission, the Government
of India introduced the Arbitration and Conciliation (Amendment) Bill, 2003, in the Parliament.
The standing committee of law ministry felt that provisions of the Bill gave room for excessive
intervention by the courts in arbitration proceedings.13

12 ADR Congress India 2010

13 Government proposes major changes in Arbitration Act, The Times of India, April 19, 2017.

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ADR can be broadly classified into two categories: court-annexed options (Mediation,
Conciliation) and community based dispute resolution mechanism (Lok-Adalat).

The following are the modes of ADR practiced in India:

1. Arbitration

2. Mediation

3. Conciliation

4. Negotiation

5. Lok Adalat

But here I will be dealing only with Mediation ,Lok Adalat and ODR.


Mediation is a process in which the mediator, an external person, neutral to the dispute, works
with the parties to find a solution which is acceptable to all of them. 14 The basic motive of
mediation is to provide the parties with an opportunity to negotiate, converse and explore options
aided by a neutral third party, to exhaustively determine if a settlement is possible.15

Mediation is negotiation carried out with the assistance of a third party. The mediator, in contrast
to the arbitrator or judge, has no power to impose an outcome on disputing parties.

14 Sriram Panchu, LexisNexis, Mediation: Practice and Law, at 9, (2011).

15Supra note 2, at 234.

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Despite the lack of teeth in the mediation process, the involvement of a mediator alters the
dynamics of negotiations.16 The concept of mediation is not foreign to Indian legal system, as
there existed, different aspects of mediation. The Village Panchayats and the Nyaya Panchayats
are good examples for this. A brief perusal of the laws pertaining to mediation highlights that it
has been largely confined to commercial transactions. The Arbitration and Conciliation Act, 1996
is framed in such a manner that it is concerned mainly with commercial transactions that
involves the common man rather than the common mans interest.

In India, mediation has not yet been very popular. One of the reasons for this is that mediation is
not a formal proceeding and it cannot be enforced by courts of law. There is a lack of initiative
on the part of the government or any other institutions to take up the cause of encouraging and
spreading awareness to the people at large.

Lok Adalats:

Lok Adalat was a historic necessity in a country like India where illiteracy dominated other
aspects of governance. It was introduced in 1982 and the first Lok Adalat was initiated in
Gujarat. The evolution of this movement was a part of the strategy to relieve heavy burden on
courts with pending cases. It was the conglomeration of concepts of social justice, speedy justice,
conciliated result and negotiating efforts. They cater the need of weaker sections of society. It is a
suitable alternative mechanism to resolve disputes in place of litigation. Lok Adalats have
assumed statutory recognition under the Legal Services Authorities Act, 1987. These are being
regularly organized primarily by the State Legal Aid and the Advice Boards with the help of
District Legal Aid and Advice Committees.17

Legal Services Authorities Act, 1987:

The Legal Services Authorities Act, 1987 was brought into force on 19 November 1995. The
object of the Act was to provide free and competent legal services to the weaker sections of the

16 Goldberg, et al Aspen Publishers, Dispute Resolution: Negotiation, Mediation, and Other Processes,
at 107 (5th ed., 2007).

17 Supra note 18, at 97.

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society to ensure that opportunities for securing justice are not denied to any citizen. The concept
of legal services which includes Lok Adalat is a revolutionary evolution of resolution of disputes.
Though settlements were affected by conducting Lok Nyayalayas prior to this Act, the same has
not been given any statutory recognition. But under the new Act, a settlement arrived at in the
Lok Adalats has been given the force of a decree which can be executed through Court as if it is
passed by it. Sections 19, 20, 21 and 22 of the Act deal with Lok Adalat. Section 20 provides for
different situations where cases can be referred for consideration of Lok Adalat.

Honorable Delhi High court has given a landmark decision highlighting the significance of Lok
Adalat movement in the case of Abdul Hasan and National Legal Services Authority v. Delhi
Vidyut Board and Others.18 The court passed the order giving directions for setting up of
permanent Lok Adalats.


The ODR platform is a web-based platform developed by the European Commission. Its
objective is to help consumers and traders resolve their contractual disputes about online
purchases of goods and services out-of-court at a low cost in a simple and fast way.19

It allows consumers to submit their disputes online in any of the 23 official languages of the
European Union. The ODR platform transmits the disputes only to the quality dispute resolution
bodies communicated by Member States.

Member States have to establish a national contact point to provide assistance to users of the
ODR platform. The list of these national contact points is available on the ODR platform.

The ODR platform is accessible to consumers and traders since 15 February 2016.

18 AIR 1999 Del 88.


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India has also incorporated these uniform principles of alternative dispute resolution in the
Arbitration and Conciliation Act, 1996 that was amended in the year 2015. The Arbitration Act
provides for alternative dispute resolution mechanisms like arbitration, conciliations etc for
national and international stakeholders.

Nevertheless, the Arbitration Act has still not considered the use of information and
communication technologies (ICT) for dispute resolution in the desired manner. For instance,
online dispute resolution (ODR) is still missing from the Indian scenario despite the Arbitration
Act. Perry4Law Organisation (P4LO) has been advocating use of ODR in India since 2004. We
have also been managing the exclusive Techno Legal Centre of Excellence for online Dispute
Resolution in India (TLCEODRI) since 2012.

The main objective of TLCEODRI is to promote and use ODR in India for various dispute
resolution purposes. After 13 years of dedicated services and efforts, we can safely claim that
ODR would see active use in the coming years in India. To help national and international ODR
stakeholders, TLCEODRI has also drafted an ODR Clause that they can use in their
agreements, contracts, etc. We have also launched a dedicated blog for ODR training along with
an ODR discussion forum where techno legal aspects would be discussed for the first time in
ODRs history. ODR experts and specialists wishing to enroll with TLCEODRI can also see
the empanelment procedure in this regard. Above all, TLCEODRI has launched the first ever
techno legal ODR portal of India that is covering vast dispute resolution fields. The portal is
known as Online Disputes Resolution & Cyber Arbitration Portal of TLCEODRI where ODR is
used to resolve dispute of national and international stakeholders.

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The evolution of ADR mechanisms was not of that much success. Thereby, the trend is the
imposition of responsibility and duty on Court.

i) Courts are authorized to give directives for the adoption of ADR mechanisms by the parties
and for that purpose Court has to play important role by way of giving guidance. Power is also
conferred upon the courts so that it can intervene in different stages of proceedings. But these
goals cannot be achieved unless requisite infrastructure is provided and institutional frame work
is put to place.

ii) The institutional framework must be brought about at three stages, which are:

1. Awareness: It can be brought about by holding seminars, workshops, etc. ADR literacy
program has to be done for mass awareness and awareness camp should be to change the
mindset of all concerned disputants, the lawyers and judges.

2. Acceptance: In this regard training of the ADR practitioners should be made by some
University together with other institutions. Extensive training would also be necessary to
be imparted to those who intend to act as a facilitator, mediators, and conciliators.
Imparting of training should be made a part of continuing education on different facets of
ADR so far as judicial officers and judges are concerned.

3. Implementation: For this purpose, judicial officers must be trained to identify cases which
would be suitable for taking recourse to a particular form of ADR. 20

iii) ADR Mechanisms to be made more viable: The inflow of cases cannot be stopped because
the doors of justice cannot be closed. But there is a dire need to increase the outflow either by
strengthening the capacity of the existing system or by way of finding some additional outlets.

20 Supra note 11.

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iv)Setting up of Mediation Centres in all districts of each state with a view to mediate all
disputes will bring about a profound change in the Indian Legal system. These Mediation centres
would function with an efficient team of mediators who are selected from the local community

v) Not many Indians can afford litigation. This kind of state of affairs makes common people,
especially rural people, cynical about judicial process. We must take the ADR mechanism
beyond the cities. Gram Nyayalayas should process 60 to 70 percent of rural litigation leaving
the regular courts to devote their time to complex civil and criminal matters.

vi) More and more ADR centres should be created for settling disputes out-of-court. ADR
methods will achieve the objective of rendering social justice to the people, which is the goal of a
successful judicial system.21

vii) The major lacuna in ADR is that it is not binding. One could still appeal against the award
or delay the implementation of the award. Justice delayed is justice denied. The very essence
of ADR is lost if it is not implemented in the true spirit. The award should be made binding on
the parties and no appeal to the court should be allowed unless it is arrived at fraudulently or if
it against public policy.22

21Government of India, Law Commission of India, 222nd report, Need for Justice-dispensation through
ADR etc., at 1.69.

22 Nishita Medha, Alternative Dispute Resolution in India-A study on concepts, techniques, provisions,
problems in

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With the advent of the alternate dispute resolution, there is new avenue for the people to settle
their disputes. The settlement of disputes in Lok Adalat quickly has acquired good popularity
among the public and this has really given rise to a new force to ADR and this will no doubt
reduce the pendency in law Courts. There is an urgent need for justice dispensation through ADR
mechanisms. The ADR movement needs to be carried forward with greater speed. This will
considerably reduce the load on the courts apart from providing instant justice at the door-step,
without substantial cost being involved. If they are successfully given effect then it will really
achieve the goal of rendering social justice to the parties to the dispute.

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Internet sites:

Alternative dispute resolution, Ed. P.C. Rao and William Sheffield, 1st ed.
1997, Universal Law Publishing Co. Pvt. Ltd., Delhi
S.R. Myneni, Arbitration, Conciliation and Alternative Dispute Resolution
Systems, 1st ed.2004, Asia Law House, Hyderabad

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