ROLE OF REFERRAL JUDGES

Prepared by

H. S. MULIA

Judges who refer the cases for settlement through any of the ADR methods are known as Referral Judges.

Prior to the existence of Section 89 of the Civil Procedure Code, there were various provisions that gave the power to the courts to refer disputes to any ADR system, which sadly have not really been utilized. Such provisions, inter alia, are in the Industrial Disputes Act, the Hindu Marriage Act and the Family Courts Act and also present in a very nascent form under Civil Procedure Code, which are as under :-

Section 80 - (Notice), Section 107(2) - (Appellate Court has same powers as the Court of Original Jurisdiction has), Section 147(2) – (Consent or agreement by persons under disability), Rule 3 of Order 23 (Compromise of suit), Rule 5-B of Order 27 (Suit by or against the Government or Public Officers), Order 32-A (Suit by or against Minors and persons of Unsound Mind) and Order 36 (Special case for Court's opinion).

In para No.16 of the Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., reported in AIR 2010 SCW 4983 it is observed that:-

“The definitions of 'judicial settlement' and 'mediation' in clauses (c) and (d) of section 89(2) shall have to be interchanged to correct the draftsman's error. Clauses (c) and (d) of section 89(2) of the Code will read as under when the two terms are interchanged :

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

(d)for "judicial settlement", the court shall effect a compromise between the parties and shall follow such procedure as may be prescribed”.

  The above changes made by interpretative process shall remain in force till the legislature corrects the mistakes, so that section 89 is not rendered meaningless and infructuous”.

Reference to ADR and statutory requirementSection 89 and Rule 1-A of Order X Code of Civil Procedure, 1908 requires the court to direct the parties to opt for any of the five modes of alternative dispute resolution and to refer the case for Arbitration, Conciliation, Judicial Settlement, Lok Adalat or mediation. While making such reference the court shall take into account the option, if any, exercised by the parties and the suitability of the case for the particular ADR method.

In para No.34 of the Afcons judgment it is held that:-

“We find that section 89 of the CPC has been a non-starter with many courts. Though the process under Section 89 of the CPC appears to be lengthy and complicated, in practice the process is simple. The Referral Judge has to know the dispute; exclude 'unfit' cases (para No.18 the Afcons Judgment); ascertain consent for arbitration or conciliation; if there is no consent, select Lok Adalat for simple cases and mediation for all other cases, reserving reference to a Judge Assisted Settlement only in exceptional or special cases”.

Above referred issue is discussed in detail in para No.26 of the Afcons judgment, which reads as under:-If the parties are not agreeable for either arbitration or conciliation, both of which require the consent of all parties, the court has to consider which of the other three ADR processes (Lok Adalat, Mediation and Judicial Settlement) which do not require the consent of parties for reference, is suitable and appropriate and refer the parties to such ADR process. If mediation process is not available (for want of a mediation centre or qualified mediators), necessarily the court will have to choose between reference to Lok Adalat or Judicial Settlement.

If facility of mediation is available, then the choice becomes wider. If the suit is complicated or lengthy, mediation will be the recognized choice. Mediation is not recommended in all kinds of disputes, specially in those, where interim orders are required from the Court or where an important question of law is to be settled. The mediation is also not recommended, when there is serious imbalance between position of the parties in which fair negotiation is not possible.

If the suit is not complicated and the disputes are easily sortable or could be settled by applying clear cut legal principles, Lok Adalat will be the preferred choice. If the court feels that a suggestion or guidance by a Judge would be appropriate, it can refer it to another Judge for dispute resolution. The court has used its discretion in choosing the ADR process judiciously, keeping in view the nature of disputes, interests of parties and expedition in dispute resolution.

As held in para No.18 the Afcons Judgment, having regard to their nature, the following categories of cases are normally considered unsuitable for ADR process.

A. (i) Representative suits under Order I Rule 8 CPC which involve public interest or interest of numerous persons who are not parties before the court.

ii. Disputes relating to election to public offices.iii. Cases involving grant of authority by the court

after enquiry, as for example, suits for grant of probate or letters of administration.

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

v. Cases requiring protection of courts, as for example, claims against minors, deities and mentally challenged

vi. Suits for declaration of title against the Government.

vii. Cases involving prosecution for criminal offences.

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

i) All cases relating to trade, commerce and contracts, including

- disputes arising out of contracts(including all money suits);

- disputes relating to specific performance;- disputes between suppliers and customers;- disputes between bankers and customers;- disputes between developers/builders and

customers;- disputes between landlords and

tenants/licensor and licensees;- disputes between insurer and insured.

ii) All cases arising from strained or soured relationships, including

- disputes relating to matrimonial causes, maintenance, custody of children;

- disputes relating to partition/division among family members/coparceners/co-owners; and

- disputes relating to partnership among partners.

iii) All cases where there is a need for continuation of the pre-existing relationship inspite of the disputes, including

- disputes between neighbours (relating to easementary rights, encroachments, nuisance, etc.);

- disputes between employers and employees;

- disputes among members of societies/associations/apartment owners' associations;

iv) All cases relating to tortious liability, including

- claims for compensation in motor accidents/other accidents; andv) All consumer disputes, including

- disputes where a trader/supplier/manufacturer/service provider is keen to maintain his business/professional reputation and credibility or product popularity.

The proviso of Regulation No.10(2) of the NALSA (Lok Adalats) Regulations, 2009 provides that matters relating to Divorce and Criminal Cases which are not compoundable under Cr.P.C. shall not be referred to Lok Adalat.

The above enumeration of "suitable" and "unsuitable" categorization of cases is not exhaustive or rigid. They are illustrative which can be subjected to just exceptions or addition by the courts/ tribunals exercising its jurisdiction/discretion in referring a dispute/case to an ADR process.

  In spite of the categorization mentioned above, the Referral Judge must independently consider the suitability of each case with reference to its facts and circumstances.

In view of above, under section 89 CPC, consent of all the parties to the suit is necessary for referring the suit for arbitration where there is no pre-existing arbitration agreement between the parties. Similarly the court can refer the case for conciliation under section 89 CPC only with the consent of all the parties.

However, in terms of Section 89 CPC and the judicial pronouncements, consent of the parties is not mandatory for referring a case for Mediation, Lok Adalat or Judicial Settlement. The absence of consent for reference does not affect the voluntary nature of the mediation process as the parties still retain the freedom to agree or not to agree for settlement during Mediation proceedings (para 26 and 33 of the Afcons Judgment).

In para No.16 of the case of Afcons Judgment, it is held that a Referral Judge is not required to formulate the terms of settlement or to make them available to the parties for their observations. The Referral Judge is required to acquaint himself/herself with the facts of the case and the nature of the dispute between the parties and to make an objective assessment to the suitability of the case for reference to ADR.

Referral Order for MediationThe mediation process is initiated through a referral order. The Referral Judge should understand the importance of a referral order in the mediation process and should not have a casual approach in passing the order. The referral order is the foundation of a court-referred mediation.

Court Case No.... of …In the Court of Hon'ble Additional District Judge, Surat. Applicant/Plaintiff/Appellant/Complainant ….......................

v/sOpponent/Defendant/Respondent/Accused….......................

  ORDER  Upon going through the record of the case and further

considering the facts and circumstances of the cases, it appears to this Court that there exist elements of a settlement which may be acceptable to the parties. Therefore, in exercise of powers conferred u/s 89 of CPC, 1908, I refer this case for exploring the possibilities of settlement through Mediation, on the following conditions.

 (1) Parties to the lis and their advocates/attorneys shall remain present along with the necessary cases papers before the Mediation Centre, District Court Building at …. a.m/p.m on 00/00/20...

 (2) Mediation process/proceeding shall be conducted by the MCPC Trained Mediator. In a Court annexed mediation, the coordinator of the mediation Centre shall appoint the mediator as he may deem fit.

(3) In case of failure of resolution of the referred dispute, the Mediator shall inform the Mediation Centre, by a report, only stating that MEDIATION HAS BEEN UNSUCESSFUL and the Co-ordinator of the Mediation Centre shall inform the same to this Court.

 (4) When an agreement is reached between the parties with regard to all the issues in the suit or proceeding or some of the issues, the same shall be reduced to writing and signed by the parties or their constituted attorney, and counsel, if any.

 (5) The agreement of the parties so signed shall be submitted to the co-ordinator, Mediation Centre, who shall, with a covering letter signed by him forward the same to this Court.

(6) On the expiry of 90 from the date fixed for the first appearance of the parties before the mediator, the mediation shall stand terminated, unless this Court, either suo moto, or upon request by any of the parties, and upon hearing all the parties, is of the view that extension of time is necessary or may be useful; but such extension shall not be beyond a further period of thirty days.

 (7) Next date of formal hearing is fixed on 00/00/20.. (to check the progress of the mediation)

 (8) Photo Copy of relevant case papers/record shall be forwarded to Mediation Centre, forthwith.

Place:................................

Date: (X Y ZZZZZZZZ)

(3rd Additional District Judge, Surat)

Rule 25 of the Mediation Rules, 2015 provides that:-On receipt of settlement agreement, if the Court is satisfied that the parties have settled their disputes voluntarily, the Court may pass appropriate order/decree on the basis of settlement, if the same is not found collusive/illegal/unworkable. However, if the settlement disposed of only certain issues arising in the matter, the Court may record settlement in respect of the issues settled in the mediation and may proceed to decide other issue which are not settled.

  Settlement between the parties shall be final in respect of the proceedings pending before the Court.

Referral Order for Lok Adalat and Judicial Settlement-Referral Judge may refer the case for Lok Adalat or judicial Settlement u/s 89(c) of CPC. While referring the case for Lok Adalat, provisions contained under Section 89 2(b) of CPC, Section 20 of the Legal Services Authorities Act, 1987 and the NALSA (Lok Adalats) Regulations, 2009 has to be scrupulously followed.

While referring the case for Judicial Settlement provisions contained under Section 89 2(c) of CPC, Section 20 of the Legal Services Authorities Act shall apply. Judicial settlement means a compromise entered by the parties with the assistance of the court adjudicating the matter or another judge to whom the court had referred the dispute.

In Black’s Law Dictionary, “judicial settlement” is defined as “the settlement of a civil case with the help of a Judge who is not assigned to adjudicate the dispute”.

Appropriate Stage/s of Reference to ADR processesThe appropriate stage for considering reference to ADR processes in civil suits is after the completion of pleadings and before framing the issues (please see Order X of CPC). If for any reason, the court did not refer the case to ADR process before framing issues, nothing prevents the court from considering reference even at a later stage.

However, considering the possibility of allegations and counter allegations vitiating the atmosphere and causing further strain on the relationship of the parties, in family disputes and matrimonial cases the ideal stage for mediation is immediately after service of notice on the respondent and before the filing of objections/written statements by the respondent (para No.30 of the Afcons judgment).

An order referring the dispute to ADR processes may be passed only in the presence of the parties and/or their authorized representatives.

 

Avoiding delay in Mediation ProceedingsIn order to prevent any misuse of the provision for mediation by causing delay in the trial of the case, the Referral Judge, while referring the case for mediation, shall post the case for further proceedings on a specific date, granting time to complete the mediation process as provided under Rule 18 of the Mediation Rules, 2015.

 

Rule 18 of the Mediation Rules, 2015 reads as under:-

Time limit for completion of mediation:- On the expiry of Ninety days from the date fixed for the first appearance of the parties before the mediator, the mediation shall stand terminated, unless the Court, which referred the matter, either suo moto, or upon request by any of the parties, and upon hearing all the parties, is of the view that extension of time is necessary or may be useful; but such extension shall not be beyond a further period of thirty days.

 

In Rule 14 of the Mediation Rules it is provided that:If a party fails to attend a session notified by the mediator on account of deliberate or willful act, the other party or the mediator can apply to the Court in which the suit or proceeding is pending, in that case Court may issue the appropriate directions having regard to the facts and circumstances of the case.

 

Motivating and preparing the parties for MediationThe Referral Judge plays the most crucial role in motivating the parties to resolve their disputes through mediation. Even if the parties are not inclined to agree for mediation, the Referral Judge may try to ascertain the reason for such disinclination in order to persuade and motivate them for mediation. The Referral Judge should explain the concept and process of mediation and its advantages and how settlement to mediation can satisfy underlying interest of the parties. Even when the case in its entirety is not suitable for mediation a Referral Judge may consider whether any of the issues involved in the dispute can be referred for mediation.

 

Role after conclusion of mediationThe Referral Judge plays a crucial role even

after the conclusion of mediation. Even though the dispute was referred for mediation the court retains its control and jurisdiction over the matter and the result of mediation will have to be placed before the court for passing consequential orders.

  In para No.28 of the Afcons judgment it is held that - Where the reference is to a neutral third party ('mediation' as defined above) on a court reference, though it will be deemed to be reference to Lok Adalat, as court retains its control and jurisdiction over the matter, the mediation settlement will have to be placed before the court for recording the settlement and disposal.

 

However, before considering the report of the mediator the Referral Judge shall ensure the presence of the parties or their authorized representative in the court. If there is no settlement between the parties, the court proceedings shall continue in accordance with law. In order to ensure that the confidentiality of the mediation process is not breached, the Referral Judge should not ask for the reasons for failure of the parties to arrive at a settlement.

Referral Judge should not allow the parties or their counsel to disclose such reasons to the court. However, it is open to the Referral Judge to explore the possibility of a settlement between the parties. To protect confidentiality of the mediation process, there should not be any communication between the Referral Judge and the mediator regarding the mediation during or after the process of mediation. If the dispute has been settled in mediation, the Referral Judge should examine whether the agreement between the parties is lawful and enforceable.

If the agreement is found to be unlawful or unenforceable, it shall be brought to the notice of the parties and the Referral Judge should desist from acting upon such agreement. If the agreement is found to be lawful and enforceable, the Referral Judge should act upon the terms and conditions of the agreement and pass consequential orders. To overcome any technical or procedural difficulty in implementing the settlement between the parties, it is open to the Referral Judge to modify or amend the terms of settlement with the consent of the parties.

Question:- When an agreement is reached between the parties with regard to all the issues in the suit or proceeding or some of the issues, what next to be done by the Court?

Answer is in Rule 24 of the Mediation Rules, 2015. Rule 24 of the Mediation Rules provides as under:When an agreement is reached between the parties with regard to all the issues in the suit or proceeding or some of the issues, the same shall be reduced to writing and signed by the parties or their constituted attorney. If any counsel has represented the parties, the mediator may also sign on the settlement agreement.

[1] The agreement of the parties so signed shall be submitted to the co-ordinator, Mediation Centre, who shall, with a covering letter signed by him forward the same to the Court in which the suit or proceeding is pending.

[2] Where no agreement is arrived at between the parties or where the mediator is of the view that no settlement is possible, he shall report the same in writing to the coordinator, Mediation Centre (only mentioning that Mediation has been unsuccessful - Moti Ram V. Ashok Kumar, Civil Appeal No. 1095 of 2008, December 7, 2010, reported in 2011 (1) SCC 466), who shall, with a covering letter signed by him forward the same to the Court in which the suit or proceeding is pending.

Rule 25 the Mediation Rules provides as under:-Court to record settlement and pass decree:- On receipt of settlement agreement, if the Court is satisfied that the parties have settled their disputes voluntarily, the Court may pass appropriate order / decree on the basis of settlement, if the same is not found collusive / illegal / unworkable. However, if the settlement disposed of only certain issues arising in the matter, the Court may record settlement in respect of the issues settled in the mediation and may proceed to decide other issue which are not settled.

  Settlement between the parties shall be final in respect of the proceedings pending before the Court.

Question:- Whether mediation is possible in pre-litigation cases?

 Yes. As per the Modalities Regarding Referring Of Any Pre-Litigative Matters for Mediation in the Mediation Centres Functioning at the Relevant Places (As approved in the Meeting of the Hon’ble Mediation Monitoring Committee, held on 05.08.2011 and implemented in the State of Gujarat w.e.f. 15.08.2011).

Hon'ble Apex Court in the case of K. Srinivas Rao v/s D.A. Deepa, delivered in Civil Appellate Jurisdiction Civil Appeal No. 1794 of 2013 (Arising out of Special Leave Petition (Civil) No. 4782 of 2007), dated 22nd February, 2013 (reported in AIR 2013 SC 2176) has in para No.36(c) has observed as under:-

  “All mediation centres shall set up pre-litigation desks/clinics; give them wide publicity and make efforts to settle matrimonial disputes at pre-litigation stage”.

Recently (5th February, 2016) Hon'ble Apex Court in the case of Suresh Narayan Kadam v/s Central Bank of India, Petitions for Special Leave to Appeal (C) Nos.1878-1879 of 2009 has emphasized on need for encouraging an amicable settlement process, preferably through mediation, in which the services of a mediator well versed in the art, science and technique of mediation.

Hon'ble Mediation Monitoring Committee has approved the Scheme for Identification of cases for Mediation Reference. Said Scheme is uploaded on the webpage of the GSLSA as well as same has been circulated to all Judicial Officers through Hon'ble Chairpersons of DLSAs/DLSCs. Kindly follow the instructions contained therein.

Difference Between Conciliation and MediationSr. No.

Conciliation Mediation

1 Professional  or  Non  professional Conciliator, which may even include relative, common friend.  

When  matter  is  referred  to  the court  annexed  Mediation  Centre, only  trained  mediator  trained  by MCPC is allowed to mediate.

2 Person facilitating settlement also suggest terms of settlement.

Mediator  facilitating  settlement does  not  suggest  terms  of settlement.

3 If both the parties agree, with the consent  of  parties  conciliator  is appointed as provided u/s 64 of A & C Act, 1996.

Even if, one party agrees or non of the  parties  agree  for  settlement through mediation process, Referral Judge  may  refer  the  case  for Mediation  if  he/she  prima  facie finds that there exist element of a settlement.

4 Award of Conciliator is enforceable under the A & C Act, 1996.

Once  case  is  settled  through mediation  process,  referral  court passes  decree  in  terms  of  the settlement  under  Order  XXIII  of CPC.

5 If  the  case  is  referred  to  the Conciliator  under  the  A  &  C  Act, 1996,  such  case  goes  out  of  the court jurisdiction.

If  the  case  is  referred  to  the Court annexed Mediation Centre u/s 89  of  CPC,  referral  Judge  still retains  the  control  over  said matter.

6 As per the old concept Conciliation is pre­litigation ADR system.

As per the old concept Mediation is post­litigation/pending  litigation ADR system.

Difference between Arbitration and Conciliation.Sr. No.

Arbitration Conciliation

1 Govern by  the First and the Second part of A & C Act.

Govern by the Third part of A & C Act.

2 Adjudicatory  form  of litigation.

Non­Adjudicatory  form  of litigation.

3 Normally  at  the  litigating stage.

Litigation may be pending in court  or  may  be  in  the offing.

4 Once  cases  is  referred  for Arbitration,  it  does  not come  back  to  the  Court  of law  (except  for  filing  an application  for  setting aside  of  an  award  or execution of the award).

It is not always the case in the  Conciliation.  For example ­ Labour matters.

5 Normally  there  is  an Arbitration  Clause  in  the Agreement.

Not always the case.

6 Expert  of  the  subject  works as Arbitrator.

Any  neutral  person  works  as Conciliator.

Difference between Lok Adalat, Permanent Lok Adalat and Continuous Lok Adalat (in the context of State of Gujarat).

Sr. No.

Lok Adalat Permanent Lok Adalat Continuous Lok Adalat

1 As  provided  u/s  89  of CPC  r/w  Section  19  of the LSA Act.

As  provided  under Chapter  VI­A  of  the  LSA Act.

As  provided  under Chapter  VI  of  the  LSA Act.

2 Normally  held  on  non working  Saturdays  or Sundays.

Proposed  to  work  on  all court working days.

Normally  held  on  all working Saturdays.

3 Consisting  of Sitting/Retired  Judicial officer and/or Member/s.

Consisting  of  Retired PDJ/ADJ  as  Chairperson and two other members.

Only  Sitting  Judge,  who has  power  and jurisdiction  to  decide the lis.

4 Jurisdiction  over pending  and  pre­litigation matters.

Jurisdiction  to  decide only  Pre­litigation matters.

Only Pending matters.

5 Jurisdiction  to  decide all  cases  where  there exist  element  of  a settlement,  except  the proviso of Section 19(5)(ii) of the LSA Act.

Only  case  relating  to Public  Utility  Services (mentioned  in notification  dated  5th February, 2016)

Jurisdiction  to  decide pending  cases  where there exist element of a settlement,  except  the proviso of Section 19(5)(ii) of the LSA Act.

6 Helps  parties  to  arrive at amicable settlement.

First  try  to  conciliate and  if,  case  is  not settled,  proceed  to decide case.Concept of Con­Arb.

Helps  parties  to  arrive at amicable settlement.

7 If  case  is  not  settled, case  goes  back  to  the court of law.

Once pre­litigation case if  filed  before  PLA,  it can not be placed before the regular court.

If  case  is  not  settled, case  goes  back  to  the court of law.

Difference between Lok Adalat and Judicial Settlement.

Sr. No.

Lok Adalat Judicial Settlement

1 For  Lok  Adalat  NALSA  (Lok Adalats)  Regulations,  2009 shall apply.

NALSA  (Lok  Adalats) Regulations,  2009  do  not apply.

2 Held  on  particular predetermined  days  (mostly holidays).

Case can be  referred  on any court working day.

3 Even  if,  only  one  J.O.  is posted  at  the  particular station,  Lok  Adalat  can  be held.

If  only  one  J.O.  is  posted at  the  particular  station, Judicial  Settlement  is  not possible  in  the  same station.

4 Effective  in  almost  all cases.

Judge  Assisted  Settlement only  in  exceptional  or special cases.

5 Settlement  of  a  case  with the  help  of  a  Judge  who  is assigned  to  adjudicate  the dispute.

Settlement  of  a  case  with the  help  of  a  Judge  who  is not  assigned  to  adjudicate the dispute.

Which case to be referred to which ADR System?Arbitration:- Consent of all the parties to the suit is necessary for referring the suit for arbitration where there is no pre-existing arbitration agreement between the parties. If there is a pre-existing arbitration agreement between the parties to refer the dispute to Arbitrator, matter may be straightway referred to Arbitral Tribunal.

  Conciliation:- Consent of all the parties to the suit is necessary for referring the suit/litigation for Conciliation.

  Lok Adalat:- MACPs, cases relating to tortious liability, cases where the suits are not complicated and the disputes are easily sortable or could be settled by applying clear cut legal principles. If mediation process is not available for want of a mediation centre or qualified mediators, necessarily the court will have to choose between reference to Lok Adalat and Judicial Settlement.

Mediation:- Matrimonial disputes; maintenance, custody of children; landlord/tenant or licensor and licensees disputes; Commercial disputes; disputes between partners; neighbours (relating to easementary rights, encroachments, nuisance, etc.); disputes between employers and employees; disputes among members of societies / associations / apartment owners' associations and / or organization; U/s 138 of N. I. Act; trader / supplier / manufacturer / service provider is keen to maintain his business / professional reputation and credibility or product popularity; partition / division among family members / coparceners / co-owners; if the suit is complicated or lengthy, mediation will be the recognized choice.

Judicial Settlement:- Only in exceptional or special cases; under Order 36 of CPC (Special case for Court's opinion); if a suggestion or guidance by a Judge would be appropriate, it can refer it to another Judge for Judicial Settlement.

 If case of urgent nature and parties

could not wait till the ensuing Lok Adalat, in absence of Mediation Centre and/or trained Mediators and if, other Judicial Officer of the same Cadre is available in the same station, case may be referred for Judicial settlement.

Thank You…