2005 Supreme(SC) 970

2005(5) Supreme 236
Supreme Court of India
(Under Art. 32 of the Constitution of India)
Y.K. Sabharwal, D.M. Dharmadhikari & Tarun Chatterjee, JJ.
Salem Advocate Bar Association, Tamil Nadu —Petitioner
versus
Union of India —Respondent
Writ Petition (C) No. 496 of 2002
With
Writ Petition (C) No. 570 of 2002
Decided on 2-8-2005
Counsel for the Parties :
For the Petitioner : K. Parasaran, Sr. Advocate, C.S. Vaidyanathan, Sr. Advocate (NP), Arun Mohan Sr. Advocate (NP) K.V. Viswanathan, Advocate/Advocates (Amicus Curiae).
For the Petitioner in W.P.(C) No. 496/02 : T. Raja, Advocate.
For the Petitioner in W.P.(C) No. 570/02 : P.N. Puri, Advocate.
For the B.C.I. : Dev Datt Kamat, Advocate for Attorney General, Shreekant N. Terdal, Advocate T.L.V. Iyer, Sr. Advocate, Ms. Priya Puri and Sanjeev Sachdeva, Advocates.
For the Intervenor in W.P.(C) No. 496/02 : Mrs. Kiran Suri, Himashu Buttan and Mali Santosh, Advocates.

Important point
Committee headed by Justice Jagan­nadha Rao constituted so as to ensure that the amendments made to the Code of Civil Procedure by Amendment Acts of 1999 and 2002 become effective and result in quicker dispensation of justice, has filed its report making recommendations to be considered by the High Courts.

Headnote:(i) Civil Procedure Code, 1908 As Amended by Amendment Acts of 1999 and 2002—Section 26(2); Order VI Rule 15(4)—Various grievances relating to amendments to the Code—­Recommendations of a Committee headed by Justice M. Jagannadha Rao, Chairman, Law Commission of India—Requirement of filing of affidavit along with plaint as provided in Section 26(2) and Order VI Rule 15(4)—Whether illegal and unnecessary—(No)—Such an affidavit would not be evidence for the purpose of the trial—On amendment of the pleadings, a fresh affidavit shall have to be filed in consonance thereof.

       Held : Prior to insertion of aforesaid provisions, there was no requirement of filing affidavit with the pleadings. These provisions now require the plaint to be accompanied by an affidavit as provided in Section 26(2) and the person verifying the pleadings to furnish an affidavit in support of the pleading [Order VI Rule 15(4)]. It was sought to be contended that the requirement of filing an affidavit is illegal and unnecessary in view of the existing requirement of verification of the pleadings. We are unable to agree. The affidavit required to be filed under amended Section 26(2) and Order VI Rule 15(4) of the Code has the effect of fixing additional responsibility on the deponent as to the truth of the facts stated in the pleadings. It is, however, made clear that such an affidavit would not be evidence for the purpose of the trial. Further, on amendment of the pleadings, a fresh affidavit shall have to be filed in consonance thereof. (Para 4)

       (ii) Civil Procedure Code, 1908 As Amended by Amendment Acts, 1999 and 2002—Order XVIII Rule 4—Examination in Chief of a witness on affidavit or cross-examination before a Commissioner—Scope of powers—In some States, advocates are being re­quired to pass a test conducted by the High Court for the purpose of empanel­ling them as Commissioners—It is for the High Courts to examine this aspect and decide to adopt or not such a proce­dure—Whether there is any conflict between Order XVIII Rule 19 and Order XXVI Rule 4A and Order XVIII Rule 5(a), (b)—(No)—Order XVIII Rule 19 and Order XXVI Rule 4A would override Order XVIII Rule 5(a) and (b).

       Held : The amendment provides that in every case, the examination-in-chief of a witness shall be on affidavit. The Court has already been vested with power to permit affidavits to be filed as evidence as provided in Order XIX Rules 1 and 2 of the Code. It has to be kept in view that the right of cross-examination and re-examination in open court has not been disturbed by Order XVIII Rule 4 inserted by amendment. It is true that after the amendment cross-examination can be before a Commissioner but we feel that no exception can be taken in regard to the power of the legislature to amend the Code and provide for the examination-in-chief to be on affidavit or cross-examination before a Commissioner. (Para 5)

       Proviso to sub-rule (2) of Rule 4 of Order XVIII clearly suggests that the court has to apply its mind to the facts of the case, nature of allegations, nature of evidence and importance of the particular witness for determining whether the witness shall be examined in court or by the Commissioner appointed by it. The power under Order XVIII Rule 4(2) is required to be exercised with great circumspection having regard to the facts and circumstances of the case. It is not necessary to lay down hard and fast rules controlling the discretion of the court to appoint Commissioner to record cross-examination and re-examination of witnesses. (Para 5)

       Another contention raised is that when evidence is recorded by the Commissioner, the Court would be deprived of the benefit of watching the demeanour of witness. That may be so but, in our view, the will of the legislature, which has by amending the Code provided for recording evidence by the Commissioner for saving Court’s time taken for the said purpose, cannot be defeated merely on the ground that the Court would be deprived of watching the demeanour of the witnesses. Further, as noticed above, in some cases, which are complex in nature, the prayer for recording evidence by the Commissioner may be declined by the Court. It may also be noted that Order XVIII Rule 4, specifically provides that the Commissioner may record such remarks as it thinks material in respect of the demeanour of any witness while under examination. The Court would have the benefit of the observations if made by the Commissioner. The report notices that in some States, advocates are being required to pass a test conducted by the High Court in the subjects of Civil Procedure Code and Evidence Act for the purpose of empanelling them on the panels of Commissioners. It is a good practice. We would, however, leave it to the High Courts to examine this aspect and decide to adopt or not such a procedure. Regarding the apprehension that the payment of fee to the Commissioner will add to the burden of the litigant, we feel that generally the expenses incurred towards the fee payable to the Commissioner is likely to be less than expenditure incurred for attending the Courts on various dates for recording evidence besides the harassment and inconvenience to attend the Court again and again for the same purpose and, therefore, in reality in most of the cases, there could be no additional burden. (Paras 5 and 6)

       Order XXVI Rule 4-A inserted by Amendment Act of 1999 provides that notwithstanding anything contained in the Rules, any court may in the interest of justice or for the expeditious disposal of the case or for any other reason, issue Commission in any suit for the examination of any person resident within the local limits of the court’s jurisdiction. Order XVIII Rule 19 and Order XXVI Rule 4-A, in our view, would override Order XVIII Rule 5(a) and (b). There is, thus, no conflict. (Para 10)

       (iii) Civil Procedure Code, 1908—Order XVIII Rule 4 as amended—Evidence Act, 1872—Section 154—Power of Commissioner to declare a witness hostile—If a situation as to declaring a witness hostile arises before a Commission recording evidence, the concerned party shall have to obtain permission from the Court u/s 154 of the Evidence Act.

       Held : The discretion to declare a witness hostile has not been conferred on the Commissioner. Under Section 154 of the Evidence Act, it is the Court which has to grant permission, in its discretion, to a person who calls a witness, to put any question to that witness which might be put in cross-examination by the adverse party. The powers delegated to the Commissioner under Order XXVI Rules 16, 16-A, 17 and 18 do not include the discretion that is vested in Court under Section 154 of the Evidence Act to declare a witness hostile. If a situation as to declaring a witness hostile arises before a Commission recording evidence, the con­cerned party shall have to obtain permission from the Court under Section 154 of the Evidence Act and it is only after grant of such permission that the Commis­sioner can allow a party to cross-examine his own witness. Having regard to the facts of the case, the Court may either grant such permission or even consider to withdraw the commission so as to itself record remaining evidence or impose heavy costs if it finds that permission was sought to delay the progress of the suit or harass the opposite party. Another aspect is about proper care to be taken by the Commission of the original documents. Undoubtedly, the Commission has to take proper care of the original documents handed over to him either by Court or filed before him during recording of evidence. In this regard, the High Courts may frame necessary rules, regulations or issue practice directions so as to ensure safe and proper custody of the documents when the same are before the Commissioner. It is the duty and obligation of the Commissioners to keep the documents in safe custody and also not to give access of the record to one party in absence of the opposite party or his counsel. The Com­missioners can be required to redeposit the documents with the Court in case long adjournments are granted and for taking back the documents before the adjourned date. (Paras 11 to 13)

       (iv) Civil Procedure Code, 1908—Order XVIII Rule 17A as deleted by Amendment Act of 2002—Additional evidence—Deletion of Order XVIII Rule 17A by Amendment Act of 2002—Effect of—Deletion of Order XVIII Rule 17A does not disentitle production of evidence at a later stage on such terms as may appear to the Court to be just.

       Held : Even before insertion of Order XVIII Rule 17-A, the Court had inbuilt power to permit parties to produce evidence not known to them earlier or which could not be produced in spite of due diligence. Order XVIII Rule 17-A did not create any new right but only clarified the position. Therefore, deletion of Order XVIII Rule 17-A does not disentitle production of evidence at a later stage. On a party satisfying the Court that after exercise of due diligence that evidence was not within his knowledge or could not be produced at the time the party was leading evidence, the Court may permit leading of such evidence at a later stage on such terms as may appear to be just. (Para 14)

       (v) Civil Procedure Code, 1908—Order VIII Rule 1, as amended by Act 46 of 1999 and by Amendment Act 22 of 2002—Written statement—Exten­sion of time for filing written statement can be maximum for 90 days —Whether provision providing for maximum ­period of 90 days is mandatory—(No).

       Held : It has been common practice for the parties to take long adjournments for filing written statements. The legislature with a view to curb this practice and to avoid unnecessary delay and adjournments, has provided for the maximum period within which the written statement is required to be filed. The mandatory or directory nature of Order VIII Rule 1 shall have to be determined by having regard to the object sought to be achieved by the amendment. It is, thus, necessary to find out the intention of the legislature. The consequences which may follow and whether the same were intended by the legislature have also to be kept in view. (Para 17)

       In the context of the provision, despite use of the word ‘shall’, the court has been given the discretion to pronounce or not to pronounce the judgment against the defendant even if written statement is not filed and instead pass such order as it may think fit in relation to the suit. In construing the provision of Order VIII Rule 1 and Rule 10, the doctrine of harmonious construction is required to be applied. The effect would be that under Rule 10 of Order VIII, the court in its discretion would have power to allow the defendant to file written statement even after expiry of period of 90 days provided in Order VIII Rule 1. There is no restriction in Order VIII Rule 10 that after expiry of ninety days, further time cannot be granted. The Court has wide power to ‘make such order in relation to the suit as it thinks fit’. Clearly, therefore, the provision of Order VIII Rule 1 providing for upper limit of 90 days to file written statement is directory. Having said so, we wish to make it clear that the order extending time to file written statement cannot be made in routine. The time can be extended only in exceptionally hard cases. While extending time, it has to be borne in mind that the legislature has fixed the upper time limit of 90 days. The discretion of the Court to extend the time shall not be so frequently and routinely exercised so as to nullify the period fixed by Order VIII Rule 1. (Para 22)

       (vi) Civil Procedure Code, 1908—Section 39(4) as inserted by Act 22 of 2002—Execution—Whether Section 39(4) prohibits executing Court from executing a decree against a person or property outside its jurisdiction—(Yes)—However, provisions of Order XXI Rule 3 or Order XXI Rule 48 which provide differently, would not be affected by Section 39(4) of the Code.

       Held : Section 39 does not authorise the Court to execute the decree outside its jurisdiction but it does not dilute the other provisions giving such power on compliance of conditions stipulated in those provisions. Thus, the provisions, such as, Order XXI Rule 3 or Order XXI Rule 48 which provide differently, would not be effected by Section 39(4) of the Code. (Para 25)

       (vii) Civil Procedure Code, 1908—Section 64(2) as inserted by Amend­ment Act, 22 of 2002—Attachment of property—No ambiguity in sub-section (2) of Section 64 of the Code.

       Held : Section 64(2) in the Code has been inserted by Amendment Act, 22 of 2002. Section 64, as it originally stood, has been renumbered as Section 64(1). Section 64(1), inter alia, provides that where an attachment has been made, any private transfer or delivery of property attached or of any interest therein contrary to such attachment shall be void as against all claims enforceable under the attachment. Sub-section (2) protects the aforesaid acts if made in pursuance of any contract for such transfer or delivery entered into and registered before the attachment. The concept of registration has been introduced to prevent false and frivolous cases of contracts being set up with a view to defeat the attachments. If the contract is registered and there is subsequent attachment, any sale deed executed after attachment will be valid. If it is unregistered, the subsequent sale after attachment would not be valid. Such sale would not be protected. There is no ambiguity in sub-section (2) of Section 64. (Para 26)

       (viii) Civil Procedure Code, 1908—Order VI Rule 17 as restored by Amen­d­­ment Act 22 of 2002—Amendment of pleadings—Proviso has been added to curtail absolute discretion to allow amendment at any stage—No illegality in the provision.

       Held : Order VI Rule 17 of the Code deals with amendment of pleadings. By Amendment Act 46 of 1999, this provision was deleted. It has again been restored by Amendment Act 22 of 2002 but with an added proviso to prevent application for amendment being allowed after the trial has commenced, unless court comes to the conclusion that in spite of due diligence, the party could not have raised the matter before the commencement of trial. The proviso, to some extent, curtails absolute discretion to allow amendment at any stage. Now, if application is filed after commencement of trial, it has to be shown that in spite of due diligence, such amendment could not have been sought earlier. The object is to prevent frivolous applications which are filed to delay the trial. There is no illegality in the provision. (Para 27)

       (ix) Civil Procedure Code, 1908—Order V Rule 9 as amended—Service of summons by courier or plaintiff—Danger of false reports of service—It is required to be adequately guarded—High Courts would issue requisite guidelines to the trial Courts by framing appropriate rules, regulations or practice directions.

       Held : Order V Rule 9, inter alia, permits service of summons by party or through courier. Order V Rule 9(3) and Order V Rule 9-A permit service of summons by courier or by the plaintiff. Order V Rule 9(5) requires the court to declare that the summons had been duly served on the defendant on the contingencies mentioned in the provision. It is in the nature of deemed service. The apprehension expressed is that service outside the normal procedure is likely to lead to false reports of service and passing of ex parte decrees. It is further urged that courier’s report about defendant’s refusal to accept service is also likely to lead to serious malpractice and abuse. (Para 28)

       Problem in respect of service of summons has been one of the major causes of delay in the due progress of the case. It is common knowledge that the defendants have been avoiding to accept summons. There have been serious problems in process serving agencies in various courts. There can, thus, be no valid objection in giving opportunity to the plaintiff to serve the summons on the defendant or get it served through courier. There is, however, danger of false reports of service. It is required to be adequately guarded. The courts shall have to be very careful while dealing with a case where orders for deemed service are required to be made on the basis of endorsement of such service or refusal. The High Courts can make appropriate rules and regulations or issue practice directions to ensure that such provisions of service are not abused so as to obtain false endorsements. In this regard, the High Courts can consider making a provision for filing of affidavit setting out details of events at the time of refusal of service. For instance, it can be provided that the affidavit of person effecting service shall state as to who all were present at that time and also that the affidavit shall be in the language known to the deponent. It can also be provided that if affidavit or any endorsement as to service is found to be false, the deponent can be summarily tried and punished for perjury and the courier company can be black-listed. The guidelines as to the relevant details to be given can be issued by the High Courts. The High Courts, it is hoped, would issue as expeditiously as possible, requisite guidelines to the trial courts by framing appropriate rules, order, regulations or practice directions. (Para 29)

       (x) Civil Procedure Code, 1908 As Amended by Amendment Acts of 1999 and 2002—Order XVII—Grant of adjournments—Adjournment shall not be granted to a party more than three times during hearing of the suit—Awarding of cost of adjournment has been made mandatory—Limitation of three adjournments would not apply where adjournment is to be granted on account of circumstances which are beyond the control of a party.

       Held : In some extreme cases, it may become necessary to grant adjournment despite the fact that three adjournments have already been granted (Take the example of Bhopal Gas Tragedy, Gujarat earthquake and riots, devastation on account of Tsunami). Ultimately, it would depend upon the facts and circumstances of each case, on the basis whereof the Court would decide to grant or refuse adjournment. The provision for costs and higher costs has been made because of practice having been developed to award only a nominal cost even when adjournment on payment of costs is granted. Ordinarily, where the costs or higher costs are awarded, the same should be realistic and as far as possible actual cost that had to be incurred by the other party shall be awarded where the adjournment is found to be avoidable but is being granted on account of either negligence or casual approach of a party or is being sought to delay the progress of the case or on any such reason. Further, to save proviso to Order XVII Rule 1 from the vice of Article 14 of the Constitution of India, it is necessary to read it down so as not to take away the discretion of the Court in the extreme hard cases noted above. The limitation of three adjournments would not apply where adjournment is to be granted on account of circumstances which are beyond the control of a party. Even in cases which may not strictly come within the category of circumstances beyond the control of a party, the Court by resorting to the provision of higher cost which can also include punitive cost in the discretion of the Court, adjournment beyond three can be granted having regard to the injustice that may result on refusal thereof, with reference to peculiar facts of a case. We may, however, add that grant of any adjournment let alone first, second or third adjournment is not a right of a party. The grant of adjournment by a court has to be on a party showing special and extra-ordinary circumstances. It cannot be in routine. While considering prayer for grant of adjournment, it is necessary to keep in mind the legislative intent to restrict grant of adjournments. (Para 32)

       (xi) Civil Procedure Code, 1908—Order XVIII Rule 2(4) as omitted by Act 46 of 1999—Effect of—Omission of Order XVIII Rule 2(4) by 1999 amend­ment does not take away Court’s inherent power to call for any witness at any stage either suo moto or on prayer of a party.

       Held : Order XVIII Rule 2(4) which was inserted by Act 104 of 1976 has been omitted by Act 46 of 1999. Under the said Rule, the Court could direct or permit any party, to examine any party or any witness at any stage. The effect of deletion is the restoration of the status quo ante. This means that law that was prevalent prior to 1976 amendment, would govern. The principles as noticed hereinbefore in regard to deletion of Order XVIII Rule 17(a) would apply to the deletion of this provision as well. Even prior to insertion of Order XVIII Rule 2(4), such a permission could be granted by the Court in its discretion. The provision was inserted in 1976 by way of caution. The omission of Order XVIII Rule 2(4) by 1999 amendment does not take away Court’s inherent power to call for any witness at any stage either suo moto or on the prayer of a party invoking the inherent powers of the Court. In Order XVIII Rule 2 sub-rules (3A) to 3(D) have been inserted by Act 22 of 2002. The object of filing written arguments or fixing time limit of oral arguments is with a view to save time of court. The adherence to the requirement of these rules is likely to help in administering fair and speedy justice. (Paras 33 and 34)

       (xii) Civil Procedure Code, 1908 As amended by 1999 Act and 2002 Act—Order VII Rule 14—Production of documents—Words ‘plaintiff’s wit­nesses’ in Rule 14(4) to be read as ‘defendant’s witnesses’—Mistake to be expeditiously corrected by the legislature.

       Held : In the aforesaid Rule, it is evident that the words ‘plaintiff’s witnesses’ have been mentioned as a result of mistake seems to have been committed by the legislature. The words ought to be ‘defendant’s witnesses’. (Paras 36)

       Order VII relates to the production of documents by the plaintiff whereas Order VIII relates to production of documents by the defendant. Under Order VIII Rule 1A(4) a document not produced by defendant can be confronted to the plaintiff’s witness during cross-examination. Similarly, the plaintiff can also confront the defendant’s witness with a document during cross-examination. By mistake, instead of ‘defendant’s witnesses’, the words ‘plaintiff’s witnesses’ have been mentioned in Order VII Rule (4). To avoid any confusion, we direct that till the legislature corrects the mistake, the words ‘plaintiff’s witnesses, would be read as ‘defendant’s witnesses’ in Order VII Rule 4. We, however, hope that the mistake would be expeditiously corrected by the legislature. (Para 37)

       (xiii) Civil Procedure Code, 1908 As Amended by 1999 Act and 2002 Act—Sections 35, 35A, 95—Costs—Award of compensatory costs in respect of false or vexatious claims or defences —Appropriate guidelines to be followed by subordinate Courts—It is for the High Courts to examine these aspects.

       Held : Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded on the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In large number of cases, such an order is passed despite Section 35(2) of the Code. Such a practice also encourages filing of frivolous suits. It also leads to taking up of frivolous defences. Further wherever costs are awarded, ordinarily the same are not realistic and are nominal. When Section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the Court in its discretion may direct otherwise by recording reasons thereof. The costs have to be actual reasonable costs including the cost of the time spent by the successful party, the transportation and lodging, if any, or any other incidental cost besides the party of the court fee, lawyer’s fee, typing and other cost in relation to the litigation. It is for the High Courts to examine these aspects and wherever necessary make requisite rules, regulations or practice direction so as to provide appropriate guidelines for the subordinate courts to follow. (Para 39)

       (xiv) Civil Procedure Code, 1908—Section 80—Prior notice of two months to be served on the Government—Requirement to file proper reply to the notice—Award of heavy cost against Government if notice has not been replied or reply is evasive and vague.

       Held : These provisions cast an implied duty on all concerned governments and States and statutory authorities to send appropriate reply to such notices. Having regard to the existing state of affairs, we direct all concerned governments, Central or State or other authorities, whenever any statute requires service of notice as a condition precedent for filing of suit or other proceedings against it, to nominate, within a period of three months, an officer who shall be made responsible to ensure that replies to notices under Section 80 or similar provisions are sent within the period stipulated in a particular legislation. The replies shall be sent after due application of mind. Despite such nomination, if the Court finds that either the notice has not been replied or reply is evasive and vague and has been sent without proper application of mind, the Court shall ordinarily award heavy cost against the Government and direct it to take appropriate action against the concerned Officer including recovery of costs from him. (Para 41)

       (xv) Civil Procedure Code, 1908—Section 115(1), Proviso as substituted by Act 46 of 1999—Omission made in Section 115 of the Code—Constitu­tional powers of High Courts under Article 227 exist untrammeled by the amendment in Section 115 of the Code.

       Held : The aforesaid clause (b) stands omitted. The question is about the constitu­tional powers of the High Courts under Article 227 on account of omission made in Section 115 of the Code. The question stands settled by a decision of this Court in Surya Dev Rai v. Ram Chander Rai & Ors. [2003(6) SCC 675] holding that the power of the High Court under Articles 226 and 227 of the Constitution is always in addition to the revisional jurisdiction conferred on it. Curtailment of revisional jurisdiction of the High Court under Section 115 of the Code does not take away and could not have taken away the constitutional jurisdiction of the High Court. The power exists, untrammeled by the amendment in Section 115 and is available to be exercised subject to rules of self-discipline and practice which are as well settled. (Para 44)

       (xvi) Civil Procedure Code, 1908—Section 148—Powers of Court to ­enlarge time—Amendment provides that the period shall not exceed 30 days in total—However, where sufficient cause exists or events are beyond the control of a party, Court would have inherent power to extend time beyond 30 days.

       Held : There can be many cases where non-grant of extension beyond 30 days would amount to failure of justice. The object of the Code is not to promote failure of justice. Section 148, therefore, deserves to be read down to mean that where sufficient cause exists or events are beyond the control of a party, the Court would have inherent power to extend time beyond 30 days. (Para 47)

       (xvii) Civil Procedure Code, 1908—Order IX Rule 5—Period of seven days mentioned is directory. (Para 48)

       (xviii) Civil Procedure Code, 1908 —Order XI Rule 15—Inspection of documents—Stipulation ‘at or before the settlement of issues’ instead of ‘at any time’ is directory.

       Held : The stipulation in Rule 15 of Order XI confining the inspection of documents ‘at or before the settlement of issues’ instead of ‘at any time’ is also nothing but directory. It does not mean that the inspection cannot be allowed after the settlement of issues. (Para 49)

       (xix) Civil Procedure Code, 1908—Sections 89, 121 to 131—Settlement of disputes outside the Court—Model Alternative Dispute Resolution and Mediation Rules—Draft rules have been finalised by the Justice Jagannadha Rao Committee—High Courts to examine these rules expeditiously and to finalise these within a period of four months.

       Held : Some doubt as to a possible conflict has been expressed in view of use of the word ‘may’ in Section 89 when it stipulates that ‘the Court may reformulate the terms of a possible settlement and refer the same for’ and use of the word ‘shall’ in Order X, Rule 1A when it states that ‘the Court shall direct the parties to the suit to opt either mode of settlements outside the Court as specified in sub-section (1) of Section 89’. (Para 57)

       As can be seen from Section 89, its first part uses the word ‘shall’ when it stipulates that the ‘court shall formulate terms of settlement’. The use of the word ‘may’ in later part of Section 89 only relates to the aspect of reformulating the terms of a possible settlement. The intention of the legislature behind enacting Section 89 is that where it appears to the Court that there exists element of a settlement which may be acceptable to the parties, they, at the instance of the court, shall be made to apply their mind so as to opt for one or the other of the four ADR methods mentioned in the Section and if the parties do not agree, the court shall refer them to one or other of the said modes. Section 89 uses both the word ‘shall’ and ‘may’ whereas Order X, Rule 1A uses the word ‘shall’ but on harmonious reading of these provisions it becomes clear that the use of the word ‘may’ in Section 89 only governs the aspect of reformulation of the terms of a possible settlement and its reference to one of ADR methods. There is no conflict. It is evident that what is referred to one of the ADR modes is the dispute which is summarized in the terms of settlement formulated or reformulated in terms of Section 89. (Para 58)

       A doubt was expressed about the applicability of ADR rules for dispute arising under the Family Courts Act since that Act also contemplates rules to be made. It is, however, to be borne in mind that the Family Courts Act applies the Code for all proceedings before it. In this view, ADR rules made under the Code can be applied to supplement the rules made under the Family Courts Act and provide for ADR insofar as conciliation/mediation is concerned. (Para 63)

       The draft rules have been finalised by the Committee. Prior to finalisation, the same were circulated to the High Courts, subordinate courts, the Bar Council of India, State Bar Councils and the Bar Associations, seeking their responses. Now, it is for the respective High Courts to take appropriate steps for making rules in exercise of rule making power subject to modifications, if any, which may be considered relevant. (Para 67)