IN THE HIGH COURT OF DELHI
PRADEEP NANDRAJOG,J.R.MIDHA
D.D.A - Appellant
Versus
HAPPY HIMALAYA CONSTRUCTION CO. - Respondent
RFA 354/2008
Decided On : 10-11-2008
Section 89 - Interpretation of Section 89 of the Code of Civil Procedure, 1908 - 89
Fact of the Case:
The dispute centered on the interpretation of Section 89 of the Code of Civil Procedure, 1908, regarding the referral of disputes to Alternative Dispute Resolution Mechanism. The respondent filed an application under Section 89 during the ongoing litigation, leading to the impugned order referring the matter to an arbitrator.
Finding of the Court:
The court found that the essential requirement of Section 89, including the need for the judge's opinion on the possibility of settlement and the formulation of settlement terms, was not met. The court also noted that the impugned order did not consider the possibility of settlement or the terms of possible settlement, and failed to record the legal ratio of the decisions referred to in the order.
Issues: The issues revolved around the proper application of Section 89, the necessity of considering the possibility of settlement, and the failure to record the legal ratio of the referred decisions.
Ratio Decidendi: The court emphasized the importance of fulfilling the essential requirements of Section 89, including the judge's opinion on settlement elements and the formulation of settlement terms. The court also highlighted the need to consider the possibility of settlement and the terms of possible settlement before referring the matter to an Alternative Dispute Resolution Mechanism.
Final Decision: The impugned order referring the matter to an arbitrator was set aside, and the suit was restored for decision as per law.
1. Heard learned counsel for the parties for final disposal.
.2. The dispute centers on the interpretation of Section 89 of the Code of Civil Procedure, 1908 which reads as under:- 89. Settlement of disputes outside the Court.(1) Where it appears to the Court that there exists elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat, or (d) mediation. (2) Where a dispute has been referred (a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act; (b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall apply in respect of the dispute so referred to the Lok Adalat; (c) for judicial settlement, 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 mediation, the Court
.shall effect a compromise between the parties and shall follow such procedure as may be prescribed.
3. Needless to state, resolution of disputes through Alternative Dispute Resolution Mechanism has to be encouraged and hence every attempt has to be made to interpret Section 89 of the Code of Civil Procedure, 1908 which broadens the span of the sweep of the words of the section but with caution. It would be impermissible for a Court to violate the mandate of the legislature, by, under the garb of interpretation re-write a statute.
4. A perusal of the language of Section 89 of the Code of Civil Procedure, 1908 reveals that the sine qua non for referring the parties to an Alternative Dispute Resolution Mechanism is the opinion recorded by the Judge concerned that there exists elements of a settlement which may be acceptable to the parties followed by the formulation of the terms of the settlement. After so doing, the Court has to take the observation of the parties on the terms of the settlement formulated by the Court and thereafter re-formulate the possible terms of the settlement followed by a reference to an Alternative Dispute Resolution Mechanism.
5. No doubt, the language of the Section does not mandate that the consent of the parties has to be taken, but that does not mean that a Court can resort to a short-cut and without forming an opinion and formulating the terms of the possible settlement refer the subject matter of the dispute to an Alternative Dispute Resolution Mechanism.
.6. On facts, it may be noted that the suit filed by the respondent for recovery was being litigated between the parties before a Civil Court. Pleadings have been pleaded. Issues have been framed. Witnesses of the respondent/plaintiff were being examined. It was the date fixed for PW-1 to be cross-examined. On 19.11.2007, after PW-1 was partly cross-examined, an application was filed by the respondent under Section 89 of the Code of Civil Procedure, 1908 which resulted in the impugned order being passed which reads as under:- Present : As before. Sh.B.M.Sehgal, Advocate, Ld. counsel for plaintiff. PW-1 Sh.Kuldeep Kumar Thakur partly recorded. His examination in chief recorded and partly cross-examined. On the joint request of Ld.counsel for parties, his further cross-examination is deferred. An application u/
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