ALTERNATIVE DISPUTE RESOLUTION

Regal Mentor

The traditional method of resolving disputes, namely litigation, is often

time-consuming, resulting in unnecessary delays in the administration of justice

and placing a heavy burden on the judiciary. In this context, Alternative Dispute

Resolution (ADR) methods such as arbitration, conciliation, and mediation

provide more efficient and timely solutions for resolving conflicts. These ADR

methods are less confrontational and have the potential to yield more amicable

resolutions compared to traditional dispute resolution approaches.

Alternative Dispute Resolution (ADR) is a personal arrangement made by

arties that offers a timely and of course out of court settlement. The system of

ADR emerged as the existing justice system is not able to cope with the ever

increasing burden of civil litigation. The situations were so worse that ingenious

litigants tried gain by delaying the process of justice, others do not enjoy taking

recourse to litigation that consumes innumerable number of years and considerable

amounts by way of expenses. This phenomenon not only exists to India and almost

all the countries have been facing similar situation. Thus it was the necessity of the

era to develop the system of ADR. There are many forms of alternative Dispute

Resolution, the well known and oldest ADR techniques are Arbitration and

conciliation and Mediation. Out of those following are the commonly practiced

methods of ADR.

1. Arbitration

In strict sense, ADR doest not includes arbitration as it contemplates an

imposed decision. As arbitration process settles the disputes outside the courts it is

considered as ADR, as it brings the parties to the negotiating table, identifying

problems, establishing facts, clarifying issues, developing the option of settlement

and ultimately solving the disputes through award which is binding on the parties.

2. Alternative Dispute Resolution under CPC

For making the conciliation scheme more effective, provisions were in

cooperated in CPC by virtue of S.7 of the amendment Act of 1999.

Accordingly

the courts are made obligatory to refer the dispute after the issues are framed for

settlement either by way of arbitration, conciliation, mediation, judicial settlement

or though Lok Adalat. It is only after the parties fail to get their disputes settled

through any one of the alternate dispute resolution methods that the suit shall

proceed further in the Court in which it was filed.

3. Conciliation/Mediation

Mediation or Conciliation is a non-binding procedure in which an impartial

third party, the conciliator assists the parties, to a dispute in reaching a mutually

satisfactory and agreed settlement of the dispute, the neutral person should be

chosen by agreement of the parties. The conciliator the parties individually, but

any information or allegations made by a parry in such an interview should be

disclosed to the other party for comments, without the need for consent from the

disclosing party.

4 Ombudsman

The dictionary meaning of the term “Ombudsman” is a person appointed by

a legislative body, to receive, investigate and report on complaints by private

individuals against government official or a grievance man or an official who is

appointed to investigate a complaint against the administration, any official with

similar function.

5 Lok Adalat

The word Lok Adalat simply means the “Peoples Court”. It may be defined

as a forum where voluntary effort to bring settlement of disputes between the

This amendment was based on the 129th Report of Law Commission of India.

arties. The system of Lok Adalat was introduced in India by the Legal Services

Authorities Act, 1987.

6. Other forms of ADR

1. Negotiation

2. Evaluation

3. Village Courts or Gram Nyayalaya

4. Partnering

5. Facilitation

Part-I

ARBITRATION

Arbitration is an alternative to litigation as a method of dispute resolution.

The above view is common and known by many of them. 'Bernestein defines the

arbitration as a mechanism for the resolution of disputes which takes place usually

in private, pursuant to an agreement between two or more parties agree to be

bound by the decision to be given by the arbitrator according to the law, if so

agreed, other considerations, after a fair hearing, such decision being enforceable

at law. Once Abraham Lincoln quoted, "Discourage litigation. Persuade your

neighbors to compromise whenever you can. Point out to them how the nominal

winner is often a real loser in fees, expenses, and waste of time." In the researchers

view, Arbitration is somewhat a compromise between the respected parties and

also it leads to satisfaction. In this particular project, researcher will analyse the

domestic Arbitration with the critical eye. There is lot of things in the arbitration

process, like the appointment of tile arbitrators, interim measures provision,

setting aside procedure, regarding arbitrability, qualification of thee arbitrators,

lack of trained arbitrators and so on which has to be criticized.

As it is well known to every one that Litigation in Courts, whether in India

or any other country has become so time consuming, expensive, stressful and a no

holds barred contest, that some other way to resolve civil disputes among people

had to be found. Recognizing the need to reduce the burden on Courts and the

huge delays in disposing matters the Parliament has enacted the Arbitration And

Conciliation Act, 1996

THE ARBITRATION AND CONCILIATION ACT, 1996

TOPIC-I

INTRODUCTION

The United Nations Commission on International Trade Law (UNCITRAL)

adopted the UNCITRAL Conciliation Rules in 1980 and in 1985 it adopted the

UNCITRAL Model Law on International Commercial Arbitration. In view of the

desirability of uniformity of the law of arbitral procedures and the specific needs

of international Commercial arbitration practice, the General Assembly of the

United Nations has recommended that all countries give due consideration to the

said Model Law. It has also recommended to use the UNCITRAL Conciliation

Rules, in cases where a dispute arises in the context of international commercial

relations and the parties seek an amicable settlement of that dispute by recourse to

conciliation.

The Model Law and Rules make significant contribution to the

establishment of a unified legal framework for the fair and efficient settlement of

disputes arising in international commercial relations.

In Firm Ashoka Traders v. G D Saluja

the Court observed that Act is

based on the UNCITRAL Model and decided cases under the Act have to be

Preamble to the Act.

applied with caution while determining the issue arising for decision under the

Arbitration And Conciliation Act 1940 . The apex court also decided that under

the scheme of this Act, the arbitration clause is separable from other clauses of the

partnership deed and the clause also constitute an agreement by it self.

In the above case the court also observed that found that the Act is a long

leap in the direction of an alternative dispute resolution system

The Arbitration and Conciliation Act, 1996

was made to consolidate and

amend the law relating to domestic arbitration, international commercial

arbitration and enforcement of foreign arbitral awards and also to define the law

relating to conciliation and for matters connected therewith or incidental thereto.

The Act is intended to provide speedy and alternative solution to the dispute and

avoid retraction of litigation

. The Act is divided into 4 parts. The Act also

provides 3 Schedules.

In FCI v. Indian Council of Arbitration

the apex court observed that the

legislative intent underlying this Act is to minimize the supervisory role of the

courts in the arbitral process

S. 1 of the Act deals with short title, extent and-commencement of the Act.

According to S. 1 (1) this Act maybe called the Arbitration and Conciliation Act,

1996. It extends to the whole of India.

Parts I, III and IV shall extend to the State

of Jammu and Kashmir only in so far as they relate to international commercial

arbitration or, as the case may be, international commercial conciliation.

Explanation to S. 1 (2) states that, the expression “international commercial

conciliation” in S. 1 (2) shall have the same meaning as the expression

(2004) 3 SCC 155

Firm Ashoka Traders v. G D Saluja(2004) 3 SCC 155

Act 26 of 1996.

Fuerst Day Lawson Ltd. v. Jindal exports Ltd (2001) 6 SCC 356r

(2003) 6 SCC 564

S. 1(2).

Proviso to S. 1 (2).

“international commercial arbitration” in 2 (1) (f),

subject to the modification

that for the word “arbitration” occurring therein, the word “conciliation” shall be

substituted. The Act shall be deemed to come into force on the 25th day of January

1996.

Scheme of the Act

Part I deals with domestic arbitration or if the place of arbitration is in

India. It consists of 10 Chapters and Sections from 2 to 43. Further if the place of

arbitration is outside India Part I will not be applicable. In Shreejee Traco India

Pvt. Ltd. V. Paperline International Inc.

the court held that the Act is applicable

only when place of arbitration is in India. Contract of Indian company with a

foreign company contains an arbitration clause specifying New York to be the

place of arbitration, a petition before the Chief Justice of India or his designated

for appointment of an arbitrator is not maintainable .But it is to be noted that if the

law governing the arbitration is Indian Law, even if the place of arbitration is

outside India, Part I will be applicable. Chapter 1, Sections 2 to 6 deal with general

provisions. Chapter 2, Sections 7 to 10 deal with Arbitration Agreement. Part 2, 3

and 4 of the Act, deal with enforcement of certain foreign awards, conciliation and

supplementary provisions respectively.

Definitions under the Act

Arbitration

S. 2 (1) (f) defines “international commercial arbitration” as an arbitration relating to

disputes arising out of legal relationships, whether contractual or not, considered as

commercial under the law in force in India and where at least one of the parties is: (i) An

individual who is a national of, or habitually resident in, any country other than India; or

(ii) A body corporate which is in corporate in any on n try other than India; or (iii)

A company or an association or a body of individuals whose central management

and control is exercised in any country other than India; or (iv). The Government of a

foreign country;

S. 1 (3).

(2003) 9 SCC 79

S. 2 (1) (a) defines “arbitration” as any arbitration whether or not

administered by permanent arbitral institution. S. 2 (1) a is only a inclusive

definition and does not convey the proper meaning of the term. In simle terms

Arbitration is a binding dispute settlement procedure in which the dispute is

submitted to an arbitral tribunal consisting of a sole or an odd number of

arbitrators which makes a decision in the form of an award on the dispute that is

binding on the parties and thus it finally settles the dispute.In Wharton Law

Lexicon the term arbitration is defined as the “determination of a matter in dispute

by the judgment of one or more person’s called arbitrators who in case of

difference usually call in an umpire to decide between them”. Russell says, “The

essence of arbitration is that some dispute is referred by the parties for settlement

to a tribunal of their own choosing” and according to Halsburys Laws of England

Arbitration is the reference of disputes or difference between not less than to

parties, for determining, after hearing both sides in judicial manner by a person or

persons other than a court of competent jurisdiction.

Arbitration Agreement

“Arbitration agreement” according to S. 2 (1) (b), is an agreement referred

to in section 7. As per S. 7 (1) in Part I, “arbitration agreement” means an

agreement by the parties to submit to arbitration all or certain disputes which have

arisen or which may arise between them in respect of a defined legal relationship,

whether contractual or not. An arbitration agreement may be in the form of an

arbitration clause in a contract or in the form of a separate agreement.

Arbitral Tribunal

S. 2 (1) (d) defines “arbitral tribunal” as a sole arbitrator or a panel of

arbitrators. Sections 10 to 15 deal with composition of Arbitral Tribunal. Chapter

S. 7 (2).

4, Sections 16 and 17 deal with the jurisdiction of Arbitral Tribunals. Chapter 5,

Sections 18 to 27 deal with conduct of arbitral proceedings.

Arbitral Award

According to S. 2 (1) (c) an “arbitral award” includes an interim award. S. 2

(7) provides that an arbitral award made under Part I shall be considered as a

domestic award. Chapter 6, Sections 28 to 33 deal with making of arbitral award

and termination of proceedings. Chapter 7, S. 34 deals with recourse against

arbitral award. Chapter 8, Sections 35 and 36 deal with finality and enforcement of

Arbitral Awards. Chapter 9, S. 37 deals with appeals. Chapter 10, 38 to 43 deal

with the miscellaneous provisions.

Arbitration its application and scope

S. 2 (2) provides that Part I of the Act shall apply where the place of

arbitration is in India. This Part shall not affect any other law for the time being in

force by virtue of which certain disputes may not be submitted to arbitration.

Except Ss. 40 (1), 41 and 43, this Part shall apply to every arbitration under any

other enactment for the time being in force, as if the arbitration were pursuant to

an arbitration agreement and as if that other enactment were an arbitration

agreement, except in so far as the provisions of this Part are inconsistent with that

other enactment or with any rules made thereunder.

S. 2 (5) provides that subject to the provisions of S. 2 (4), and save in so far

as is otherwise provided by any law for the time being in force or in any

agreement in force between India and any other country or countries, Part I shall

apply to all arbitrations and to all proceedings relating thereto. Where this Part,

except S. 28, leaves the parties free to determine a certain issue, that freedom shall

S. 2 (3).

S. 2 (4)

include the right of the parties to authorise any person including an institution, to

determine that issue.

S. 2 (8) provides that where Part I of the Act refers to the fact that the

parties have agreed or that they may agree, or in any other way refers to an

agreement of the parties, that agreement shall include any arbitration rules referred

to in that agreement.

S. 2 (9) provides that where Part I, other than S. 25 (a) or S. 32 (2) (a),

refers to a claim, it shall also apply to a counter-claim, and where it refers to a

defence, it shall also apply to a defence to that counter-claim.

TOPIC-II

ARBITRATION AGREEMENT

As per S. 7 (1) in Part I, “arbitration agreement” means an agreement by the

parties to submit to arbitration all or certain disputes which have arisen or which

may arise between them in respect of a defined legal relationship, whether

contractual or not. An arbitration agreement may be in the form of an arbitration

clause in a contract or in the form of a separate agreement.

An arbitration agreement shall be in writing.

As per S. 7 (4) an arbitration

agreement is in writing if it is contained in-

(a) A document signed by the parties;

(b) An exchange of letters, telex, telegrams or other means of telecommunication

which provide a record of the agreement; or

agreement is alleged by one party and not denied by the other.

S. 2 (6)

S. 7 (2).

S. 7 (3).

In Angang Group International Trade Corporation v. Pipavava Railway

Corporation Ltd.

a petition was filed for appointment of an arbitrator under

Section 11. The defendant objected the petition on the ground that there was no

concluded contract between the parties and hence there is no arbitration agreement

as well. The apex court rejected the condition appointed an arbitrator and held

that the parties can rise the objection as to the existence of an agreement before the

arbitrator.

S. 7 (5) provides that the reference in a contract to a document containing

an arbitration clause constitutes an arbitration agreement if the contract is in

writing and the reference is such as to make that arbitration clause part of the

contract.

In Nimet Resources Incorpration v. Esser Steels Ltd.

the Supreme

court held that an arbitration agreement could be in different forms and it may be

by way of an arbitration clause in a contract or in the form of a separate

agreement. But there is a condition is that the arbitration agreement should be in

writing.

Receipt of written communications

S. 3 (1) provides that unless otherwise agreed by the parties

, any written

communication is deemed to have been received if it is delivered to the addressee

personally or at his place of business, habitual residence or mailing address, and if

these places cannot be found after making a reasonable inquiry, a written

communication is deemed to have been received if it is sent to the addressee’s last

known place of business, habitual residence or mailing address by registered letter

or by any other means which provides a record of the attempt to deliver it. The

(2003) 10 SCC 51

AIR (2000) SC 3107

S. 2 (1) (h) defines “party” as a party to an arbitration agreement.

communication is deemed to have been received on the day it is so delivered.

This provisions are not applicable to written communications in respect of

proceedings of any judicial authority.

Waiver of Right to Object

S. 4 provides that a party who knows that any provision of Part I, from

which the parties may derogate, or any requirement under the arbitration

agreement, has not been complied with and yet proceeds with the arbitration

without stating his objection to such non-compliance without undue delay or, if a

the limit is provided for stating that objection, within that period of time, shall be

deemed to have waived his right to so object.

Extent of Judicial Intervention

S. 5 provides that notwithstanding anything contained in any other law for

the time being in force, in matter governed by Part I of the Act, no judicial

authority shall intervene except where so provided in this Part.

Administrative Assistance

S. 6 provide that in order to facilitate the conduct of the arbitral

proceedings, the parties, or the arbitral tribunal with the consent of the parties,

may arrange for administrative assistance by a suitable institution or person.

Power to Refer Parties to Arbitration where there is an Arbitration Agreement

S. 8 (1) provides that a judicial authority before which an action is brought

in a matter, which is the subject of an arbitration agreement, shall, if a party so

applies not later than when submitting his first statement on the substance of the

dispute, refer the parties to arbitration. Such application shall not be entertained

unless it is accompanied by the original arbitration agreement or a duly certified

S. 3 (2)

S. 3 (3)

copy thereof.

Notwithstanding that an application has been made u/S. 8 (1) and

that the issue is pending before the judicial authority, an arbitration may be

commenced or continued and an arbitral award made.

In T . N. E. B v. Sumathi

an appeal by legal heirs of the persons who

died due to electrocution was ending before High Court. The defendants filed a

writ petition before the High Court under Art. 226 claiming compensation for

causing death due to improper maintenance of wires and equipments of T.N.E.B.

The High Court by its own motion appointed a arbitrator to decide the question of

loss . The T.N.E.B preferred an appeal to apex court and on that appeal the apex

court says that no provision to appoint an arbitrator under this Act of 1996.

During the pendency of the case the parties entered into arbitration agreement

accordance to the provision of the new Act and when the award is made it is a

decree.

Existence of dispute

It is to be noted that existence of dispute is a sin quinon for a judicial

authority to refer the case to arbitration

In Muka Sharma v. U. P. Industrial Corporation Association Ltd.

the

revision petitioner filed a suit for eject the respondent from the premises and for

recovery of rent. During the pendency of the suit an application was filed by the

respondent for referring the matter to the arbitrator with mentioning any dispute.

The civil passed the order and appoint an arbitrator. Against this order of the civil

court the revision petitioner filed a review petition before the High Court. The

High Court decided that there is no need to appoint an arbitrator because there no

dispute between the tenanted parties, the rate of rent, and the execution of

S. 8 (2).

S. 8 (3).

(2000) 4 SCC 543

S. 8 (1)

AIR (2002) P&H 232

agreement between parties the order of the court referring parties to arbitration

was bad and the court dismissed the review petition filed by the respondent for

referring the matter to arbitration.

In Peter John Uralil v. Babu Thomas

the appellant is a partner of a bar

attached hotel at Pambady near Kottayam named “ Dhalia Turist Home “ .

There was dispute regarding the share profit and the appellant issued a notice

requested the other partners to refer the dispute to other arbitration and they agreed

to refer the dispute for arbitration. After this the appellant filed an application to

appoint a Receiver to conduct and manage the business of the firm till the dispute

is solved. The district court dismissed the application. On appeal the division

bench of Kerala High Court affirmed the decision of the District court.

Mandatory Duty up on the Court to Refer

Under the 1940 Act the Judicial Authority had the discretion as to refer the

case or to decide the case by itself. This led to several criticisms and the new Act

makes it mandatory for a Court to refer the case for arbitration if there is a

arbitration agreement.

In HPC Ltd. V. Pinckcity Midway petroleums

the apex court held that if

an agreement between the parties before the civil court there is clause of

arbitration . It is mandatory for civil court to refer the dispute to an arbitrator.

Civil Court has no jurisdiction to continue with the suit once an application filed

under Sec. 8 has been filed.

Interim measures by court

S. 2 (1) (e) defines a “Court” as the principal Civil Court of original

jurisdiction in a district, and includes the High Court in exercise of its ordinary

original civil jurisdiction, having, jurisdiction to decide the questions forming the

(2003) 3 KLT 777

(2003) 6 SCC 503 : AIR 2003 SC 2881

subject-matter of the arbitration if the same had been the subject-matter of a suit,

but does not include any civil court of a grade inferior to such principal Civil

Court, or any Court of Small Causes.

S.9 provides that a party may, before or during arbitral proceedings or at

any time after the making of the arbitral award but before it is enforced in

accordance with section 36, apply to a court for the following purposes:

1. Appointment of a guardian for a minor or a person of unsound mind for the

purposes of arbitral proceedings.

2. Interim measure of protection in respect of any of the following matters

namely:

(a) The preservation, interim custody or sale of any goods, which are the subject

matter of the arbitration agreement;

(b) Securing the amount in dispute in the arbitration;

subject-matter of the dispute in arbitration, or as to which any question may arise

therein and authorising for any of the aforesaid purposes any person to enter upon

any land or building in the possession of any party, or authorising any samples to

be taken or any observation to be made, or experiment to be tried, which may be

necessary or expedient for the purpose of obtaining full information or evidence;

(d) Interim injunction or the appointment of a receiver;

(e) Such other interim measure of protection as may appear to the court to be just

and convenient,

The Court in the above said purposes shall have the same power for making

orders as it has for the purpose of, and in relation to, any proceedings before it.

S. 9 (i).

S. 9 (ii).

In Arun Kapur v. Vikram Kapur

the Delhi High Court decided if a party

has to resort to preliminary alternative remedy before the arbitral tribunal , he is

debarred from invoking the jurisdiction of the court under Sec. 9 of the Act . In

ordinary cases if the arbitrator is seized of the matter the interim relief should not

be entertained and the parties should approach the Court for interim relief.

Topic-III

COMPOSITION OF ARBITRAL TRIBUNAL

In the words of "Sir Robert Raymond", CJ stated, "an arbitrator is a private

extra ordinary judge between party and party, chosen by their mutual consent, to

determine controversies between them.

Number of Arbitrators

As per S. 10 (1) the parties are free to determine the number of arbitrators,

provided that such number shall not be an even number. In case of failing of such

determination, the arbitral tribunal shall consist of a sole arbitrator.

In N P Lohia v N K lohia

the apex court took in to consideration of the

validity of an award passed by two arbitrators appointed by the parties to an

agreement .The apex court decided that an award cannot be set aside under Sec.

34 of the Act only for the reason that the award is of an even number of arbitrators

and also says that an arbitrator agreement which permits the parties to appoint an

even number of would not be contrary to provision of Sec. 10 of the Arbitration

and Conciliation Act . Section 10 provides that number of arbitrators shall not be

an even number is a derogable provision

Appointment of Arbitrators

AIR (2002) NOC 103 (Delhi)

S. 10 (2).

AIR (2002) SC 1139

A person of any nationality may be an arbitrator, unless otherwise agreed

by the parties.

As per S. 11 (2) subject to S. 11(6), the parties are free to agree on

a procedure for appointing the arbitrator or arbitrators. S. 11 (6) provides that

where, under an appointment procedure agreed upon by the parties, a party may

request the Chief Justice or any person or institution designated by him to take the

necessary measure, unless the agreement on the appointment procedure provides

other means for securing the appointment if:

(a) A party fails to act as required under that procedure; or

(b) The parties, or the two appointed arbitrators, fail to reach an agreement

expected of them under that procedure; or

him or it under that procedure,

Failing any Agreement on a Procedure for Appointing

S. 11 (3) provides that failing any agreement referred to S. 11 (2) ( i.e.

agreement on a procedure for appointing the arbitrator or arbitrators), in an

arbitration with 3 (three) arbitrators, each party shall appoint 1 (one) arbitrator,

and the 2 (two) appointed arbitrators shall appoint the third arbitrator who shall act

as the presiding arbitrator.

Appointment of Arbitrator by Chief Justice

If appointment procedure u/S. 11 (3) applies and a party fails to appoint an

arbitrator within 30 (thirty) days from the receipt of a request to do so from the

other party; or the 2 (two) appointed arbitrators fail to agree on the third arbitrator

within thirty days from the date of their appointment, the appointment shall be

S. 11 (1).

made, upon request of a party, by the Chief Justice or any person or institution

designated by him.

S. 11 (5) provides that failing any agreement referred to in S. 11 (2), in an

arbitration with a sole arbitrator, if the parties fail to agree on the arbitrator within

30 (thirty) days from receipt of a request by one party from the other party to so

agree the appointment shall be made, upon request of a party, by the Chief Justice

or any person or institution designated by him.

In Datar switchgear Ltd. V. Tata Finance Ltd.

case the apex court

decided that Section 11(5) can be invoked by a party who has requested the other

party appoint an arbitrator and the latter files to make any appointment with in 3

days from the receipt of the notice. The apex court also decide that the application

of Section 11(6) of the Act deals with the power of Chief Justice or his designate

to take necessary steps to appointment of arbitrator or arbitrators , on the request

of a party to the arbitration agreement when it failure to act as per the agreed

procedure .

In Konkan Railway Corporation Ltd. V. Rani constructions Pvt. Ltd.

the

constitutional bench of Supreme Court decided that the order of the Chief Justice

or his designated under Section 11 nominating an arbitrator is not an adjudicatory

order and the Chief Justice and his designate is not a tribunal and such an order

cannot properly be made the subject of a petition for special leave to under Article

136 of the Constitution of India. The bunch also decided that a party who has

justifiable doubts about the arbitrator’s independence or impartially can

challenged that the arbitrator under Sec. 12 by adopting the procedure under Sec.

13 of the Act .

S. 11 (4).

(2000) 8 SCC 151

(2002) 2 SCC 388 : AIR 2002 SC 778

But in SBP & Co. v.Patel Eng. Ltd

seven Judge of Supreme Court

reconsidered and over ruled the decision in Konkan Railway case (2002) 2 SCC

388 . The court held that the power exercised by the Chief Justice of India under

Section 11(6) of the Act is not an administrative power but it is a judicial power .

Finality of decisions

A decision on a matter entrusted by S. 11(4) or S. 11 (5) or S. 11 (6) to the

Chief Justice or the person or institution designated by him is final.

Qualifications and considerations

The Chief Justice or the person or institution designated by him, in

appointing an arbitrator, shall have due regard to

(a)Any qualifications required of the arbitrator by the agreement of the parties; and

(b)Other considerations as are likely to secure the appointment of an independent

and impartial arbitrator.

International Commercial Arbitration

S. 11 (9) provides that in the case of appointment of sole or third

arbitrator in an international commercial arbitration, the Chief Justice of India or

the person or institution designated by him may appoint an arbitrator of a

nationality other than the nationalities of the parties where the parties belong to

different nationalities. The Chief Justice may make such scheme, as he may deem

appropriate for dealing with matters entrusted by S. 11 (4) or S. 11 (5) or S. 11 (6)

to him.

(2005) 8 SCC

S. 11 (7).

S. 11 (8).

S. 11 (10).

In Shreejee Traco India Pvt. Ltd. V. Paperline International Inc.

the

court held that the Act is applicable only when place of arbitration is in India .

Contract of Indian company with a foreign company contains an arbitration clause

specifying New York to be the place of arbitration , a petition before the Chief

Justice of India or his designated for appointment of an arbitrator is not

maintainable .

Multiplicity of request

S. 11 (11) provides that where more than one request has been made under

S. 11 (4) or S. 11 (5) or S. 11 (6) to the Chief Justices of different High Courts or

their designates, the Chief Justice or his designate to whom the request has been

first made under the relevant subsection shall alone be competent to decide on the

request.

Authority

S. 11 (12) provides that: where the matters referred to in S. 11 (4), S. 11

(5), S. 11 (6), S. 11 (7), S. 11 (8) and S. 11 (10) arise in an international

commercial arbitration, the reference to “Chief Justice” in those subsections shall

be construed as a reference to the “Chief Justice of India”.

Where the matters

referred to in S. 11 (4), S. 11 (5), S. 11 (6), S. 11 (7), S. 11 (8) and S. 11 (10) arise

in any other arbitration, the reference to “Chief Justice” in those sub-sections shall

be construed as a reference to the Chief Justice of the High Court within whose

local limits the principal Civil Court referred to in 2 (1) (e) is situate and, where

the High Court itself is the Court referred to in that clause, to the Chief Justice of

that High Court.

Grounds for Challenge

(2003) 9 SCC 79

S. 11 (12) (a).

S. 11 (12) (b).

By virtue of S. 12 (1) when a person is approached in connection with his

possible appointment as an arbitrator, he shall disclose in writing any

circumstances likely to give rise to justifiable doubts as to his independence or

impartiality. S. 12 (2) provides that an arbitrator, from the time of his appointment

and throughout the arbitral proceedings, shall, without delay, disclose to the

parties in writing any circumstances referred to S.12 (1) unless they have already

been informed of them by him.

As per S. 12 (3) an arbitrator may be challenged only if-

(a) Circumstances exist that give rise to justifiable doubts as to his independence

or impartiality, or

(b) He does not possess the qualifications agreed to by the parties.

S. 12 (4) provides that a party may challenge an arbitrator appointed by

him, or in whose appointment he has participated, only for reasons of which he

becomes aware after the appointment has been made.

Challenge Procedure

S. 13 (1) provides that subject to S. 13 (4), the parties are free to agree on a

procedure for challenging an arbitrator. Failing any such agreement, a party who

intends to challenge an arbitrator shall, within fifteen days after becoming aware

of the constitution of the arbitral tribunal or after becoming aware of any

circumstances referred to in S. 12 (3), send a written statement of the reasons for

the challenge to the arbitral tribunal.

Unless the arbitrator challenged under S. 13

(2) withdraws from his office or the other party agrees to the challenge, the arbitrat

tribunal shall decide on the challenge.

S. 13 (4) provides that if a challenge under any procedure agreed upon by

the parties or under the procedure under S. 13 (2) is not successful, the arbitral

S. 13 (2)

S. 13 (3).

tribunal shall continue the arbitral proceedings and make an arbitral award. Where

an arbitral award is made under S. 13 (4), the party challenging the arbitrator may

make an application for setting aside such an arbitral award in accordance with

section 34.

Where an arbitral award is set aside on an application made under

S.13 (5), the court may decide as to whether the arbitrator who is challenged is

entitled to any fees.

Termination of mandate of an arbitrator

Failure or impossibility to act

S. 14 (1) provides that the mandate of an arbitrator shall terminate if:

(a) He becomes de jure or de facto unable to perform his functions or for other

reasons fails to act without undue delay; and

(b) He withdraws from his office or the parties agree to the termination of his

mandate.

S. 14 (2) provides that if a controversy remains concerning any of the

grounds referred to in S. 14 (1) (a), a party may, unless otherwise agreed by the

parties, apply to the court to decide on the termination of the mandate.

S. 14 (3) provides that if, under S. 14 or S. 13 (3), an arbitrator withdraws

from his office or a party agrees to the termination of the mandate of an arbitrator,

it shall not imply acceptance of the validity of any ground referred to in S. 14 or

S. 12 (3).

Termination of mandate and substitution of arbitrator

S. 15 (1) provides that in addition to the circumstances referred to in S. 13 or S.

14, the mandate of an arbitrator shall terminate:

(a) Where he withdraws from office for any reason; or

S. 13 (5).

S. 13 (6)

(b) By or pursuant to agreement of the parties.

Where the mandate of an arbitrator terminates, a substitute arbitrator shall

be appointed according to the rules that were applicable to the appointment of the

arbitrator being replaced.

Unless otherwise agreed by the parties, where an

arbitrator is replaced under S. 15 (2), any hearings previously held may be

repeated at the discretion of the arbitral tribunal.

S. 15 (4) provides that unless otherwise agreed by the parties, an order or

ruling of the arbitral tribunal made prior to the replacement of an arbitrator under

this section shall not be invalid solely because there has been a change in the

composition of the arbitral tribunal.

Topic -IV

JURISDICTION OF ARBITRAL TRIBUNALS

Competence of arbitral tribunal to rule on its jurisdictional

S. 16 (1) provides that the arbitral tribunal may rule on its own jurisdiction,

including ruling on any objections with respect to the existence or validity of the

arbitration agreement, and for that purpose:

(a) An arbitration clause which forms part of a contract shall be treated as an

agreement independent of the other terms of the contract; and

(b) A decision by the arbitral tribunal that the contract is null and void shall not

entail ipso jure the invalidity of the arbitration clause.

S. 15 (2).

S. 15 (3)

S. 16 (2) provides that a plea that the arbitral tribunal does not have

jurisdiction shall be raised not later than the submission of the statement of

defence; however, a party shall not be precluded from raising such a plea merely

because that he has appointed, or participated in the appointment of, an arbitrator.

A plea that the arbitral tribunal is exceeding the scope of its authority shall be raise

as soon as the matter alleged to be beyond the scope of its authority is raised

during the arbitral proceedings.

As per S. 16 (4) the arbitral tribunal may, in

either of the cases referred to in S. 16 (2) or S. (3), admit a later plea if it considers

the delay justified.

The arbitral tribunal shall decide on a plea referred to in S.16 (2) or S.16 (3)

and, where the arbitral tribunal takes a decision rejecting the plea, continue with

the arbitral proceedings and make an arbitral award.

S. 16 (6) provides that a

party aggrieved by such an arbitral award may make an application forgetting

aside such an arbitral award in accordance with section 34.

Interim measures ordered by arbitral tribunal

S. 17 (1) provides that unless otherwise agreed by the parties, the arbitral

tribunal may, at the request of a party, order a party to take any interim measure of

protection as the arbitral tribunal may consider necessary in respect of the subject-

matter of the dispute. The arbitral tribunal may require a party to provide

appropriate security in connection with the ordered measure.

Topic-V

CONDUCT OF ARBITRAL PROCEEDINGS

S. 16 (3).

S. 16 (5).

S. 17 (2).

The parties shall be treated with equality and each party shall be

given a full opportunity to present his case.

Determination of rules of procedure

S. 19 (1) provides that the arbitral tribunal shall not be bound by the

Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of

1872).

Subject to Part I, the parties are free to agree on the procedure to be

followed by the arbitral tribunal in conducting its proceedings.

Failing any such

agreement, the arbitral tribunal may, subject to this Part, conduct the proceedings

in the manner it considers appropriate.

The power of the arbitral tribunal under S.

19 (3) includes the power to determine the admissibility, relevance, materiality

and weight of any evidence.

Place of Arbitration

S. 20 (1) provides that the parties are free to agree on the place of

arbitration. Failing any agreement referred to in S. 20 (1), the place of arbitration

shall be determined by the arbitral tribunal having regard to the circumstances of

the case, including the convenience of the parties.

Notwithstanding S.20 (1) or S.

20 (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at

any place it considers appropriate for consultation among its members, for hearing

witnesses, experts or the parties, or for inspection of documents, goods or other

property.

Commencement of Arbitral Proceedings

S. 18.

S. 19 (2).

S. 19 (3)

S. 19 (4).

S. 20 (2).

S. 20 (3).

S. 21 provides that unless otherwise agreed by the parties, the arbitral

proceedings in respect of a particular dispute commence on the date on which a

request for that dispute to be referred to arbitration is received by the respondent.

Language

The parties are free to agree upon the language or languages to be used in

the arbitral proceedings.

Failing any such agreement, the arbitral tribunal shall

determine the language or languages to be used in the arbitral proceedings.

The

agreement or determination, unless otherwise specified, shall apply to any written

statement by a party, any hearing and any arbitral award, decision or other

communication by the arbitral tribunal.

The arbitral tribunal may order that any

documentary evidence shall be accompanied by a translation into the language or

languages agreed upon by the parties or determined by the arbitral tribunal.

Statements of claim and defence

S. 23 (1) provides that within the period of time agreed upon by the parties

or determined by the arbitral tribunal, the claimant shall state the facts supporting

his claim, the points at issue and the relief or remedy sought, and the respondent

shall state his defence in respect of these particulars, unless the parties have

otherwise agreed as to the required elements of those statements. The parties may

submit with their statements all documents they consider to be relevant or may add

a reference to the documents or other evidence they will submit.

Unless otherwise agreed by the parties, either party may amend or

supplement his claim or defence during the course of the arbitral proceedings,

S. 22 (1).

S. 22 (2).

S. 22 (3).

S. 22 (4).

S. 23 (2).

unless the arbitral tribunal considers it inappropriate to allow the amendment or

supplement having regard to the delay in making it.

Hearings and written proceedings

By virtue of S. 24 (1) unless otherwise agreed by the parties, the

arbitral tribunal shall decide whether to hold oral hearings for the presentation of

evidence or for or a argument, or whether the proceedings shall be conducted on

the basis of documents and other materials. Proviso to S. 24 states that the arbitrat

tribunal shall hold oral hearings, at an appropriate state of the proceedings, on a

request by a party, unless the parties have agreed that no oral hearing shall be held.

S. 24 (2) provides that the parties shall be given sufficient

advance notice of any hearing and of any meeting of the arbitral tribunal for the

purposes of inspection of documents, goods or other property. All statements,

documents or other information supplied to, or applications made to the arbitral

tribunal by one party shall be communicated to the other party, and any expert

report or evidentiary document on which the arbitral tribunal may rely in making

its decision shall be communicated to the parties.

Default of a party

S. 25 provides the consequence in case of default of parties. Unless

otherwise agreed by the parties, or without showing sufficient cause, if :

1. Claimant fails

If the claimant fails to communicate his statement of claim in

accordance with subsection (1) of section (2), the arbitral tribunal shall terminate

the proceedings

;

S. 23 (3).

S. 24 (3).

S. 25 (a).

2. Respondent fails

If the respondent fails to communicate his statement of defence in

accordance with sub-section (1) of section 23, the arbitral tribunal shall continue

the proceedings without treating that failure in itself as an admission of the

alienations by the claimant

;

3. Non-appearance in a tan oral hearing or failing to produce documentary

evidence.

If a party fails to appear a tan oral hearing or to produce documentary

evidence, the arbitral tribunal may continue the proceedings and make the

arbitration award on the evidence before it.

Appointment of experts by arbitral tribunal

S. 26 (1) provides that unless otherwise agreed by the parties, the arbitral

tribunal may appoint one or more experts to report to it on specific issues to be

determined by the arbitral tribunal, and require a party to give the expert any

relevant information or to produce, or to provide access to, any relevant

documents, goods or other property for his inspection.

By virtue of S. 26 (2) unless otherwise agreed by the parties, if a party so

requests or if the arbitral tribunal considers it necessary, the expert shall, after

delivery of his written or oral report, participate in an oral hearing where the

parties have the opportunity to put questions to him and to present expert

witnesses in order to testify on the points at issue.

Unless otherwise agreed by the parties, the expert shall, on the request of a

party, make available to that party for examination all documents, goods or other

S. 25 (b).

S. 25 (c).

S. 26 (1) (a) & (b).

property in the possession of the expert with which he was provided in order to

prepare his report.

Court assistance in taking evidence

S. 27 (1) provides that the arbitral tribunal, or a party with the approval of

the arbitral tribunal, may apply to the court for assistance in taking evidence. Such

an application shall specify the following

(a) The names and addresses of the parties and the arbitrators;

(b) The general nature of the claim and the relief sought;

(d) The name and address of any person to be heard as witness or expert

witness and a statement of the subject-matter of the testimony required;

(e) The description of any document to be produced or property to be

inspected.

S. 27 (3) provides that the court may, within its competence

and according to its rules on taking evidence, execute the request by ordering that

the evidence be provided directly to the arbitral tribunal. While making an order

the court may, issue the same processes

to witnesses as it may issue in suits tried

before it.

S. 27 (5) provides that persons failing to attend in accordance with such

process, or making any other default, or refusing to give their evidence, or guilty

of any contempt to the arbitral tribunal during the conduct of arbitral proceedings,

shall be subject to the like disadvantages, penalties and punishments by order of

the court on the representation of the arbitral tribunal as they would incur for the

like offences in suits tried before the court.

S. 26 (3).

S. 27 (2).

The expression “Processes” includes summonses and commissions for the examination

of witnesses and summonses to produce documents. [S. 27 (6)].

S. 27 (4).

Topic-VI

ARBITRAL AWARDS

Making of Arbitral Award and Termination of Proceedings

Rules applicable to substance of dispute where the place of arbitration is situate in

India

1. Arbitration other than an international commercial arbitration

In an arbitration other than an international commercial arbitration, the

arbitral tribunal shall decide the dispute submitted to arbitration in accordance

with the substantive law for the time being in force in India.

2. International commercial arbitration

In international commercial arbitration

(i) The arbitral tribunal shall decide the dispute in accordance with the rules of

law designated by the parties as applicable to the substances of the dispute;

(ii) Any designation by the p arties of the law or legal system of a given

country shall be construed, unless otherwise expressed, as directly referring to the

substantive law of that country and not to its conflict of laws rules;

(iii) Failing any designation of the law under clause (a) by the parties, the arbitrat

tribunal shall apply the rules of law it considers to be appropriate, given all the

circumstances surrounding the dispute.

S. 28 (2) provides that the arbitral tribunal shall decide ex aequo et bono or

as amiable compositeur only if the parties have expressly authorised it to do so. In

all cases, the arbitral tribunal shall decide in accordance with the terms of the

S. 28 (1) (a).

S. 28 (1) (b).

contract and shall take into account the usages of the trade applicable to the

transaction.

Decision making by panel of arbitrators

S. 29 (1) provides that unless otherwise agreed by the parties, in arbitral

proceedings with more than one arbitrator, any decision of the arbitrat tribunal

shall be made by a majority of all its members. As per S. 29 (2) notwithstanding S.

29 (1), if authorised by the parties or all the members of the arbitrat tribunal,

questions of procedure may be decided by the presiding, arbitrator.

Settlement

S. 30 (1) provides that it is not incompatible with an arbitration

agreement for an arbitral tribunal to encourage settlement of the dispute and, with

the agreement of the parties; the arbitral tribunal may use mediation, conciliation

or other procedures at any time during the arbitral proceedings to encourage

settlement. S. 30 (2) provides that if, during, arbitral proceedings, the parties settle

the dispute, the arbitral tribunal shall terminate the proceedings and, if requested

by the parties and not objected to by the arbitral tribunal, record the settlement in

the form of an arbitral award on agreed terms.

Arbitral Award

An arbitral award on agreed terms shall be made in accordance with

section 31 and shall state that it is an arbitral award.

S. 30 (4) provides that an

arbitrat award on agreed terms shall have the same status and effect as any other

arbitral award on the substance of the dispute.

Form and contents of arbitral award

1. Written and signed

S. 28 (3).

S. 30 (3).

S. 31 (1) provides that an arbitral award shall be made in writing and

shall be signed by the members of the arbitral tribunal. For the purposes of S. 31

(1), in arbitral proceeding with more than one arbitrator, the signatures of the

majority of all the members of the arbitral tribunal shall be sufficient so long as

the reason for any omitted signature is stated.

2. Reasons

The arbitral award shall state the reasons upon which it is based

, unless-

(a) The parties have agreed that no reasons are to be given, or

(b) The award is an arbitral award on a-reed terms under section 30.

3. Date and place

S. 31 (4) provides that the arbitral award shall state its date and the place of

arbitration as determined in accordance with S. 20 and the award shall be deemed

to have been made at that place.

4. Copy to be delivered

S. 31 (5) provides that after the arbitral award is made, a signed copy shall

be delivered to each party.

5. Interim arbitral award

S. 31 (6) provides that the arbitral tribunal may, at any time during the

arbitral proceedings, make an interim arbitral award on any matter with respect to

which it may make a final arbitral award.

6. Interest rate

S. 31 (7) (a) provides that unless otherwise agreed by the parties, where and

in so far as an arbitral award is for the payment of money, the arbitral tribunal may

include in the sum for which the award is made interest, at such rate as it deems

S. 31 (2).

S. 31 (3).

reasonable, on the whole or any part of the money, for the whole or any part of the

period between the date on which the cause of action arose and the date on which

the award is made. A sum directed to be paid by an arbitral award shall, unless the

award otherwise directs, carry interest at the rate of 18 % p.a. (eighteen percent

per annum) from the date of the award to the date of payment.

7. Costs of arbitration

Unless otherwise agreed by the parties, the costs of an arbitration shall be

fixed by the arbitral tribunal.

The arbitral tribunal shall specify

the following:

(i) The party entitled to costs,

(ii) The party who shall pay the costs,

(iii) The amount of costs or method of determining that amount, and

(iv)The manner in which the costs shall be paid.

Explanation to S. 31 (8) provides that for the purpose of S. 31 (8) (a), “costs”

means reasonable costs relating to:

(i) The fees and expenses of the arbitrators and witnesses,

(ii) Legal fees and expenses,

(iii) Any administration fees of the institution supervising the arbitration, and

(iv) Any other expenses incurred in connection with the arbitral proceeding and

the arbitral award.

Termination of proceedings

The arbitral proceeding shall be terminated by the final arbitral award or by

all order of the arbitral tribunal u/S. 32 (2).

S. 32 (2) provides that the arbitral

tribunal shall issue an order for the termination of the arbitral proceedings where:

S. 31 (7) (b)

S. 31 (8) (a).

S. 31 (8) (b)

(a) The claimant withdraws his claim, unless the respondent objects to the order

and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a

final settlement of the dispute,

(b) The parties agree on the termination of the proceedings as, or

other reason become unnecessary or impossible.

Subject to section 33 and S. 34 (4), the mandate of the arbitral tribunal shall

terminate with the termination of the arbitral proceedings.

Correction and Interpretation of Award; Additional Award

Section 31 shall apply to a correction or interpretation of the arbitral award

or to an additional arbitral award made u/S. 33.

S. 33 (1) provides that within 30 (thirty) days from the receipt of the

arbitral award, unless another period of time has been agreed upon by the parties:

(a) A party, with notice to the other party, may request the arbitral tribunal to

correct any computation errors, any clerical or typographical errors or any other

errors of a similar nature occurring in the award;

(b) If so agreed by the parties, a party, with notice to the other party, may request

the arbitral tribunal to give an interpretation of a specific point or part of the

award.

S. 33 (2) provides that if the arbitral tribunal considers the request made

u/S. 33 (1) to be justified, it shall make the correction or give the interpretation

within 30 (thirty) days from the receipt of the request and the interpretation shall

form part of the arbitral award. S. 33 (3) provides that the arbitral tribunal may

S. 32 (1).

S. 32 (3).

S. 33 (7).

correct any error of the type referred to in S. 33 (1) (a), on its own initiative,

within 30 (thirty) days from the date of the arbitral award.

Additional Arbitral Award

S. 33 (4) provides that unless otherwise agreed by the parties, a party

with notice to the other party, may request, within 30 (thirty) days from the receipt

of the arbitral award, the arbitral tribunal to make an additional arbitral award as to

claims presented in the arbitral proceedings but omitted from the arbitral award. S.

33 (5) provides that if the arbitral tribunal considers the request made u/S. 33 (4)

to be justified, it shall make the additional arbitral award within 60 (sixty) days

from the receipt of such request.

Extension of period of time

S. 33 (6) provides that the arbitral tribunal may extend, if necessary, the period of

time with in which it shall make a correction, give an interpretation or make an

additional arbitral award u/S. 33 (2) or (5).

Topic-VII

RECOURSE AGAINST ARBITRAL AWARD

Application for setting aside arbitral award

Recourse to a court against an arbitral award may be made only by

an application for setting aside such award in accordance with S. 34 (2) and (3).

S. 34 (2) provides that an arbitral award may be set aside by the court only

if:

(a) The party making the application furnishes proof that-

(i) A party was under some incapacity, or

S. 34 (1).

(ii) The arbitration agreement is not valid under the law to which the parties have

subjected it or, failing any indication thereon, under the law for the time being in

force; or

(iii) The party making the application was not given proper notice of the

appointment of an arbitrator or of the arbitral proceedings or was otherwise unable

to present his case; or

(iv) The arbitral award deals with a dispute not contemplated by or not falling

within the terms of the submission to arbitration, or it contains decisions on

matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated

from those not so submitted, only that part of the arbitral award which contains

decisions on matters not submitted to arbitration may be set aside; or

(v) The composition of the arbitral tribunal or the arbitral procedure was not in

accordance with the agreement of the parties, unless such agreement was in

conflict with a provision of this Part from which the parties cannot derogate, or,

failing such agreement, was not in accordance with this Part; or

(b) The court finds that-

(i) The subject-matter of the dispute is not capable of settlement by arbitration

under the law for the time being in force, or

(ii) The arbitral award is in conflict with the public policy of India. For the

avoidance of any doubt, that an award is in conflict with the public policy of India

if the making of the award was induced or affected by fraud or corruption or was

in violation of section 75 or section 81.

Declared by explanation to S. 34 (2) (b) (ii).

In Ircon International Ltd. v. Arvind Contruction Company Ltd.

, the Delhi

High Court held that an award can be setaside only if any one of the 5 grounds

mentioned under section 34 (2) (a) or any one of 2 grounds enumerated in section

34 (2) (b) of the Arbitration and Conciliation Act, 1996. The following are the 5

grounds mentioned in section 34 (2) (a).

i. Incapacity of a party.

ii. Arbitration agreement is not valid.

iii. Not given proper notice.

iv. Arbitral award deals with a dispute not contemplated within the terms of

submission to arbitration.

v. Composition of Arbitral Tribunal or Arbitral Procedure was not in

accordance with the agreement.

The following are the 2 grounds mentioned in section 34 (2) (b)

i. The subject matter of dispute is not capable of settlement by Arbitration

ii. The Arbitral award is in conflict with the Public Policy of India.

Court also observed that to moving an application for set aside an arbitral

award has no power to sit as court of appeal over the decision of the arbitrator and

it cannot substitute its own views in place of the views of the arbitrator even if the

same is incorrect.

In Union of India v. Popular Construction Co.

, the apex court held that an

application under section 34 of the Arbitration and Conciliation Act 1996 to set

aside arbitral award is to be filed within the period prescribed under sub-section of

section 34 of the said Act. Recourse against an arbitral award cannot be made

beyond the period prescribed. In the above mentioned case the award was made by

(2000) (1) Raj 111

(2001) 8 SCC 470

the arbitrator on 29 – 8 – 1998. But the appellant filed an application for setting

aside the award before HC only on 19 – 4 – 1999. The court cannot forgive the

delay by applying section 5 of the Limitation Act, 1963. On applying the grounds

under section 34 of the said Act, the application was dismissed. By virtue of

section 34 of the said Act, an application for setting aside an arbitral award is to be

made within 3 months from the date on which the party making the application

had received the arbitral award. If there is any sufficient cause that prevents from

making the application within the said period and the court is satisfied with such

cause, it may get a further period of 30 days, but not thereafter. The appellant filed

an appeal to the apex court. The apex court confirmed the decision of the High

Court and dismissed the appeal.

In Rai India Technical and Economic Services Ltd., Banglore v. Ravi

Contsructions, Banglore

, the court held that only by the grounds applicable in

section 34 of the Arbitration and Conciliation Act 1996, an arbitral award can be

challenged. The scope of said provisions for set aside an award is far less than the

scope of the provisions under sections 30 and 33 of the Arbitration Act, 1940.

In Sarkar Enterprises v. Garden Reach Shipbuilders & Engineers Ltd.

the High Court found that if the petitioner did not take jurisdictional point before

the Arbitrator and allowed to pass a final award, it cannot let to be taken in the

application for setting aside the award for the first time. In such a case, the law of

acquiescence will be applicable. Further the court was held that it cannot probe the

mental process of an arbitrator in an application under section 34 of the

Arbitration and Conciliation Act, 1996 about sufficiency of evidence.

Insufficiency of evidence, if any, cannot nullify the award.

Period of making application

AIR 2002 NOC 30 (Kant) p. 14

AIR 2002 Cal. 69

S. 34 (3) provides that an application for setting aside may not be

made after 3 (three) months have elapsed from the date on which the party making

that application had received the arbitral award or, if a request had been made

under section 33, from the date on which that request had been disposed of by the

arbitral tribunal. If the court is satisfied that the applicant was prevented by

sufficient cause from making the application within the said period of three

months it may entertain the application within a further period of thirty days, but

not thereafter.

Adjournment of the proceedings

S. 34 (4) provides that on receipt of an application u/S. 34 (1), the

court may, where it is appropriate and it is so requested by a party, adjourn the

proceedings for a period of time determined by it in order to give the arbitral

tribunal an opportunity to resume the arbitral proceedings or to take such other

action as in the opinion of arbitral tribunal will eliminate the grounds for setting

aside the arbitral award.

Finality of arbitral awards and Enforcement

S. 35 provides that subject to this Part an arbitral award shall be final and

binding on the parties and persons, claiming under them respectively. Where the

time for making an application to set aside the arbitral award under section 34 has

expired, or such application having been made, it has been refused, the award shall

be enforced under the Code of Civil Procedure, 1908 in the same manner as if it

were a decree of the court.

In Friends Coal Carbonisation v. Hindustan Zinc Ltd.

, there was a

contract between appellant and the respondent for supply of metallurgical coke. As

per the contract the appellant had to use Coking Coal Washery Grade – II for the

manufacturing of metallurgical coke, to be supplied to the respondent. In order to

Proviso to S. 34 (3).

AIR 2002 Raj. 116

maintain the requisite quality of metallurgical coke the parties have subsequently

agreed to use Coking Coal Washery Grade – I for the manufacturing metallurgical

coke. When the appellant charged higher price for metallurgical coke on account

of the use of Coal Washery Grade – I, the respondent disputed. Then the appellant

requested to the arbitrators for submitting the dispute as per the arbitration

agreement contained in the contract. By referring the matter, the arbitrators made

an award and held that the appellant was entitled to the escalation price of Rs. 41,

78,353.36 along with interest @ 21 % from the date of award to the date of

realisation. The respondent filed an application to the District Court for setting

aside the award on the ground that the award was beyond the scope of reference.

The District Court partly allowed application and found that the appellant

was entitled only for Rs. 11, 42,203.90 along with the interest. Against this

decision appellant filed an appeal to the High Court under Section 37 of the

Arbitration and Conciliation Act, 1996. the HC found that the award was not

beyond the scope of reference. The HC set aside the decision of the District Court

and restored the award.

In Narayan Prasad Lohia v. Nikunj Kumar Lohia

, the appellant and the

respondent are family members who had disputes in their family business and

properties. The both parties approached the arbitrators, one Mr. Pramod Kumar

Khaitan and the other one is Mr. Sardul Singh Jain, and an award passed by the

arbitrators on 6th October 1996. But the respondent filed applications before

Calcutta High Court for setting aside the award on the ground that the arbitration

made by two arbitrators is void and invalid as per section 10(1) of the Arbitration

and Conciliation Act, 1996. As per the said section, the parties are free to

determine the number of arbitrators such number shall not be an even number. So

the arbitral award was unenforceable and not binding on the parties. The HC

accepted these contentions and set aside the award.

AIR 2002 SC 1139

Against this decision, the appellant gave an appeal to the Apex Court. The

Court interpreted the section 34(2)(a)(v) of the Arbitration and Conciliation

Act,1996 and declared that

- the section states that if the composition of the arbitral tribunal or the

arbitral procedure was not in accordance with the agreement of the

parties, then the Court can set aside the arbitral award.

- If the composition is in accordance with the agreement of the parties, there

can be no challenge under this provision merely on the ground that the

composition of the arbitral tribunal and procedures was in conflict with

the provisions of Part I of the Arbitration and Conciliation Act, 1996. So

in the founding of Apex Court, section 10(1) of the said Act is a

derogatable provision.

- If there is no agreement providing for the composition of the arbitral

tribunal or the procedure was not in accordance with Part I of the said

Act, then also a challenge to the award would be available.

In this case Supreme Court decided to set aside the judgment of the High Court.

In Smita Conductors Ltd. v. Euro Alloys Ltd.

, the Apex Court found that a

foreign award cannot be recognized or enforced if it is contrary to section

34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996. (i.e., contrary to (1)

fundamental policy of Indian Law; or (2) the interest of India; or (3) justice or

morality)

Topic-XI

APPEALS

Appealable orders

(2001) 7 SCC 728

S. 37 (1) provides that an appeal shall lie from the following orders (and

from no others) to the court authorised by law to hear appeals from original

decrees of the court passing the order, namely: -

(a) Granting or refusing to grant any measure under section 9;

(b) Setting aside or refusing to set aside an arbitral award under section 34.

By virtue of S. 37 (2) an appeal shall also lie to a court from an order of the

arbitral tribunal:

(a) Accepting the plea referred to in S. 16 (2) or (3); or

(b) Granting or refusing to grant an interim measure u/S. 17.

Second appeal

No second appeal shall lie from an order passed in appeal u/S. 37,

but nothing in this section shall affect or take away any right to appeal to the

Supreme Court.

100

In M/s ITI Ltd. v. M/s Siemens Public Communications Network Ltd.

101

, the

Apex Court held order passed by the Civil Court in appeal filed under section 37

of the Arbitration and Conciliation Act, 1996 is revisable by High Court under

section 115 of the Code of Civil Procedure. The former said Act only bars a

second appeal and not revision. The Act does not expressly prohibit the

applicability of Code of Civil Procedure. It cannot be said that a revision under

section 115 of the Code of Civil Procedure would be a judicial interference not

provided for in section 5 of the Arbitration and Conciliation Act, 1996.

Topic-X

DEPOSITS AND COSTS

Deposits

100

S. 37 (3).

101

AIR 2002 SC 2308

S. 38 (1) provides that the arbitral tribunal may-fix the amount of the

deposit or supplementary deposit, as the case may be, as an advance for the costs

referred to in S. 31 (8), which it expects will be incurred in respect of the claim

submitted to it and in cases where, apart from the claim, a counter-claim has been

submitted to the arbitrat tribunal, it may fix separate amount of deposit for the

claim and counter claim.

102

As per S. 38 (2) the deposit referred to in S. 38 (1) shall be payable

in equal shares by the parties and where one party fails to pay his share of the

deposit, the other party may pay that share.

103

In cases where the other party also

does not pay the aforesaid share in respect of the claim or the counter-claim, the

arbitral tribunal may suspend or terminate the arbitral proceedings in respect of

such claim or counter-claim, as the case may be

104

Upon termination of the arbitral proceedings, the arbitral tribunal shall

render an accounting to the parties of the deposits received and shall return any

unexpended balance to the party or parties’, as the case may be.

Lien on arbitral award and deposits as to costs

S. 39 (1) provides that subject to the provisions of S. 39 (2) and to any provision to

the contrary in the arbitration agreement, the arbitral tribunal shall have a lien on

the arbitral award for any unpaid costs of the arbitration.

Refusal to deliver arbitral tribunal award

S. 39 (2) provides that if in any case an arbitral tribunal refuses to deliver

its award except on payment of the costs demanded by it, the court may, on an

application in this behalf, order that the arbitral tribunal shall deliver the arbitral

award to the applicant on payment into court by the applicant of the costs

demanded, and shall, after such inquiry, if any, as it thinks fit, further order that

102

Proviso to S. 38 (1).

103

Proviso I to S. 38 (2).

104

Proviso II to S. 38 (2).

out of the money so paid into court there shall be paid to the arbitral tribunal by

way of costs such sum as the court may consider reasonable and that the balance

of the money, if any, shall be refunded to the applicant.

Such an application may be made by any party unless the fees demanded

have been fixed by written agreement between him and the arbitral tribunal, and

the arbitral tribunal shall be entitled to appear and be heard on any such

application.

105

Costs of arbitration

S. 39 (4) provides that The court may make such orders as it thinks fit

respecting the costs of the arbitration where any question arises respecting such

costs and the arbitral award contains no sufficient provision concerning them.

Arbitration agreement not to be discharged by death of party thereto

S. 40 (1) provides that an arbitration agreement shall not be

discharged by the death of any party thereto either as respects the deceased or as

respects any other party, but shall in such event be enforceable by or against the

legal representative

106

of the deceased. The mandate of an arbitrator shall not be

terminated by the death of any party by whom he was appointed.

107

Nothing in S. 40 shall affect the operation of any law by virtue of which

any right of action is extinguished by the death of a person.

108

Provisions in case of insolvency

S. 41 (1) provides that where it is provided by a term in a contract to which

an insolvent is a party that any dispute arising there out or in connection therewith

105

S. 39 (3).

106

S. 2 (1) (g) defines “legal representative” as a person who in law represents the estate

of a deceased person, and includes any person who intermeddles with the estate of the

deceased, and, where a party acts in a representative character, the person on whom the

estate devolves on the death of the party so acting.

107

S. 40 (2).

108

S. 40 (3).

shall be submitted to arbitration, the said term shall, if the receiver

109

adopts the

contract, be enforceable by or against him so far as it relates to any such dispute.

S. 41 (2) provides that where a person who has been adjudged an insolvent

had, before the commencement of the insolvency proceedings, become a party to

an arbitration agreement, and any matter to which the agreement applies is

required to be determined in connection with, or for the purposes of, the

insolvency proceedings, then, if the case is one to which S. 41 (1) does not apply,

any other party or the receiver may apply to the judicial authority having

jurisdiction in the insolvency proceedings for an order directing that the matter in

question shall be submitted to arbitration in accordance with the arbitration

agreement, and the judicial authority may, if it is of opinion that, having regard to

all the circumstances of the case, the matter ought to be determined by arbitration,

make an order accordingly.

Jurisdiction

S. 42 provides that notwithstanding anything contained elsewhere in this

Part or in any other law for the time being in force, where with respect to an

arbitration agreement any application under this Part has been made in a court, that

court alone shall have jurisdiction over the arbitral proceedings and all subsequent

applications arising out of that agreement and the arbitral proceedings shall be

made in that court and in no other court.

Limitations

S. 43 (1) provides that the Limitation Act, 1963

110

, shall apply to

arbitrations as it applies to proceedings in court. For the purposes of S. 43 and the

109

The expression “receiver” in this section includes an Official Assignee [S. 41 (3)].

110

36 of 1963

Limitation Act, 1963 (36 of 1963), an arbitration shall be deemed to have

commenced on the date referred in S. 21.

111

S. 43 (3) provides that where an arbitration agreement to submit future

disputes to arbitration provides that any claim to which the agreement applies shall

be barred unless some step to commence arbitral proceedings is taken within a

time fixed by the agreement, and a dispute arises to which the agreement applies,

the court, if it is of opinion that in the circumstances of the case undue hardship

would otherwise be caused, and notwithstanding that the time so fixed has expired,

may on such terms, if any, as the justice of the case may require, extend the time

for such period as it thinks proper.

S. 43 (4) provides that where the court orders that an arbitral award be set

aside, the period between the commencement of the arbitration and the date of the

order of the court shall be excluded in computing the time prescribed by the

Limitation Act, 1963, for the commencement of the proceedings (including

arbitration) with respect to the dispute so submitted.

Topic-XI

ENFORCEMENT OF FOREIGN AWARDS

Even before the constitution of India came in to effect, India is a party to

various international conventions on arbitration. India became party to the Geneva

Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the

Execution of Foreign Arbitral Awards, 1927 under the authority of His Britannic

Majesty over British India. In order to give effect to the Protocol of 1923 and the

Convention of 1927, The Arbitration (Protocol and Convention) Act, 1937

112

was

enacted, which came into force on 4th March, 1937. The Act provides for the

111

S. 43 (2); S. 21 of this Act deals with commencement of Arbitral Proceedings: See

supra.

112

Repealed by Section 10 of Foreign Awards (Recognition and enforcement) Act 1961

enforcement of arbitral agreements to which the Protocol applied and the

enforcement of foreign arbitral awards to which the Convention of 1927 applied.

Later India became a party to the New York Convention of 1958 on 10th

June, 1958 and ratified it on 13th July, 1961. India has enacted Foreign Awards

(Recognition and Enforcement) Act, 1961, which came into force on 30th

November, 1961, to give effect to the provisions of Protocol and the two

Conventions. The Foreign Awards (Recognition and Enforcement) Act, 1961 also

prescribed the law and procedure for the enforcement of foreign awards in India.

Definition of Foreign Awards

According to Section 2 of Foreign Awards Act, 1961

113

foreign award

means ‘an award made on or after October 11, 1960 on differences arising

between persons out of legal relationships, whether contractual or not, which are

considered to be commercial under the law in force in India’.

The Arbitration and Conciliation Bill, 1996, was passed by both houses of

Parliament and received the President’s assent on 16th August, 1996 and came on

the Statute Book as The Arbitration And Conciliation Act, 1996 (26 Of 1996). The

Arbitration (Protocol and Convention) Act, 1937 and Foreign Awards

(Recognition and enforcement) Act 1961 have been repealed by the Arbitration

and Conciliation Act, 1996

114

. The new Act is intended to consolidate and amend

the law relating to international commercial arbitration and enforcement of foreign

arbitral awards

115

. The Act also provides for matters connected therewith and

incidental thereto on the basis of the Model Law on International Commercial

113

Foreign Awards (Recognition and enforcement) Act, 1961

(repealed) (now Section 44 of the Arbitration and Conciliation Act, 1996)

114

Repealed under Section 85(1) of Part IV of which incorporates Supplementary

provisions

115

Act is primarily intended to consolidate and amend the law relating to domestic

arbitration, international commercial arbitration and enforcement of foreign arbitral

awards as also to define the law relating to conciliation and for matters connected

therewith or incidental thereto.

Arbitration adopted by the United Nations Commission on International Trade

Law UNCITRAL in 1985.

Chapter I of Part II of the Act deals with New York Convention Awards.

According to the Section 44 of Arbitration and Conciliation Act, 1996, the

“foreign award” means an arbitral award on differences between persons arising

out of legal relationships, whether contractual or not, considered as commercial

under the law in force in India, made on or after the 11th day of October, 1960-

(a) In pursuance of an agreement in writing for arbitration to which the

Convention set forth in the First Schedule applies, and

(b) In one of such territories as the Central Government, being satisfied that

reciprocal provisions have been made may, by notification in the Official Gazette,

declare to be territories to which the said Convention applies

116

Chapter II of Part II of the Act deals with New York Convention Awards

According to Section 53 of the Act “foreign award” means an arbitral award on

differences relating to matters considered as commercial under the law in force in

India made after the 28th day of July, 1924, -

(a) In pursuance of an agreement for arbitration to which the Protocol set forth

in the Second Schedule applies, and

(b) Between persons of whom one is subject to the jurisdiction of some one of

such Powers as the Central Government, being satisfied that reciprocal provisions

have been made, may, by notification in the Official Gazette, declare to be parties

116

Article I (3) of NY Convention says that when signing, ratifying or acceding to this

Convention, or notifying extension under article X hereof, any State may on the basis of

reciprocity declare that it will apply the Convention to the recognition and enforcement

of awards made only in the territory of another Contracting State. It may also declare that

it will apply the Convention only to differences arising out of legal relationships, whether

contractual or not, which are considered as commercial under the national law of the

State making such declaration.

to the Convention set forth in the Third Schedule, and of whom the other is subject

to the jurisdiction of some other of the Powers aforesaid, and

reciprocal provisions have been made, may, by like notification, declare to be

territories, to which the said Convention applies, And for the purposes of this

Chapter an award shall not be deemed to be final if any proceedings for the

purpose of contesting the validity of the award are pending in the country in which

it was made

Thus a foreign award is defined as “an arbitral award on differences

between persons arising out of legal relationships whether contractual or not,

considered as commercial under the law in force in India in pursuance of which

either the Geneva Convention or the New York Convention applies and which is

made in one of such territories where reciprocal provisions have been made for

enforcement of award”

117

In a nutshell, “foreign award” includes arbitral awards governed by,

i. The Geneva Protocol on Arbitration Clauses of 1923,

ii. The Geneva Convention on the Execution of Foreign Arbitral Awards,

1927,

iii. The New York Convention on the Recognition and Enforcement of

Foreign Arbitral Awards 1958 and

Foreign Award

117

M. Dhyan Chinnappa “Enforcement of Arbitral Awards”(2002) 8 SCC (Jour) 39

An arbitral award on differences between persons arising out of legal

relationships, whether contractual or not,

Considered as commercial under the law in force in India

Governed by

NY Convention Geneva Convention Geneva

Protocol

1958 1927 1923

I. PRE-REQUISITES AS TO ENFORCEABILITY OF FOREIGN AWARDS

Award should not be governed by Indian Law

According to Section 9 of Foreign Awards Act 1961 to qualify as a foreign award,

the award should have been made in pursuance of an agreement in writing and not

to be governed by the law of India

118

. Furthermore, such an award should have

been made outside India in the territory of a foreign State notified by the

Government of India as having made reciprocal provisions for enforcement of the

Convention

119

118

Section 9(b) of Foreign Awards Act is omitted .( Section 9(b) Says that “Nothing in

this act shall apply to any award made on an arbitration agreement governed by law of

India”

119

Article 1 (3) of NY Convention has incorporated principle of Reciprocity. The Article

says that When signing, ratifying or acceding to this Convention, or notifying extension

under article X hereof, any State may on the basis of reciprocity declare that it will apply

the Convention to the recognition and enforcement of awards made only in the territory

of another Contracting State. It may also declare that it will apply the Convention only to

Thus an “award is ‘foreign’ not merely because it is made in the territory of a

foreign State, but because it is made in such a territory on an arbitration agreement

not governed by the law of India”

120

. If an award is made on arbitration agreement

governed by the law of India, though rendered outside India will not be treated as

a ‘foreign award’. An arbitral award becomes complete on signature. “It is

perfected by signature at the place where it is signed irrespective of the place

where it was made”

121

. Subject to these conditions a foreign award shall be treated

as binding for all purposes like a domestic award

122

Award should be Final

A foreign award to be enforceable it should be certified and attested as final

award. The Bombay High Court in Euro Asia Chartering Corporation Pvt Ltd. Vs

Fortune International Limited

123

held that in order to enforce a foreign award it

should be certified and attested as final award. The Court further held that such an

award can be put in execution directly without applying for determination of

enforceability of award.

In Shin-Etsu Chemical Co Ltd v Aksh Optifibre Ltd

124

the Supreme Court, held

that a challenge to the arbitration agreement under s 45 on the ground that it is

‘null and void, inoperative or incapable of being performed’ is to be determined on

a prima facie basis. It was observed that

“If it were to be held that the finding of the court under Section 45 should be a

final, determinative conclusion, then it is obvious that, until such a pronouncement

differences arising out of legal relationships, whether contractual or not, which are

considered as commercial under the national law of the State making such declaration.

120

NTPC v. Singer Co. AIR 1993 SC 998

121

Avtar Singh, Law of Arbitration and Conciliation, Seventh Edition, 2006p. 344

122

Section 46 of the Act of 1996(previously Section 4 of Foreign Awards Act 1961.

According to Section 4 a foreign award shall, subject to the provisions of this Act, be

enforceable in India as if it were an award made on a matter referred to arbitration in

India.

123

AIR 2002 Bombay 447

124

77 2005 (6) SCALE 561.

is made, the arbitral proceedings would have to be in limbo. This evidently defeats

the credo and ethos of the Act, which is to enable expeditious arbitration without

avoidable intervention by judicial authorities”.

Thus under aforementioned situation a, a foreign arbitration may well come to a

halt pending final decision from an Indian court, but otherwise proceedings under

s 45 would not have any significant effect impeding progress of a foreign

arbitration.

II. ENFORCEMENT OF FOREIGN AWARDS AND RECIPROCITY

The Principle of reciprocity and that is clear incorporated in at Sections

44(b) and 53(c) of the Act. Unless the award is made in a territory where

reciprocal provision exists as in India, the award will become unenforceable even

though the parties belong to nations which signed or ratified the Conventions.

But the United States Court in Fertilizer Corpn. of India v. IDI

Management, Inc.

125

, where an award rendered in India was sought to be enforced

in the United States. It was contented that India would not have enforced the

award had it been rendered in the United States against Fertilizer Corporation. The

Court examined the reciprocity defence and held that reciprocity contemplated by

the Convention only required that India be a signatory to the Convention;

reciprocity does not extend to the judicial interpretation and enforcement policies

of the contracting State in which the award was rendered.

Similarly in Iran Aircraft Industries v. Avco Corpn

126

the New York

Convention was held applicable to an award made in the Netherlands against a US

company in favour of an Iranian company, although Iran has not ratified the

convention.

Foreign award – Making Rule of court

125

517 F. Supp. 948 (SD of Ohio 1981)

126

980 F 2d 141 (2d Cir 1992)

The new Act has made substantial changes regarding the law relating to

enforcement of foreign awards in contrast to the Foreign Awards (Recognition and

Enforcement) Act, 1961 and the Arbitration (Protocol and Convention), Act 1937.

According to the Act of 1961 the party seeking enforcement was required to file

the award in court and the court was required to pronounce judgment according to

the award, once it came to the conclusion that the award was enforceable. Upon

the judgment so pronounced a decree was to follow.

But under the new Act, the executing court is to merely satisfy itself that

the award is enforceable and the award is to be enforced as if it is a decree of the

court. Amongst the main objectives of the new Act (set out in the Statement of

Objects and Reasons) are ‘to minimize the supervisory role of courts in the arbitral

process’ and ‘to provide that every final arbitral award is enforced in the same

manner as if it were a decree of the Court’.

In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd

127

, wherein it has been

held that under the new Act, two separate proceedings, one for deciding on the

enforceability to make the foreign ward rule of the court or decree and the other to

take up execution thereafter is not contemplated.

Thus we may safely conclude that enforcement of arbitral awards in the

international scenario assumes greater significance than domestic arbitration since

now the law and rules regarding enforcement in the domestic arena are fairly well

settled

128

Topic -XII

NEW YORK CONVENTION AWARDS

The New York Convention on the Recognition and Enforcement of Foreign

Arbitral Awards was done at New York on 10 June 1958 and came into force on 7

127

(2001) 6 SCC 356

128

M. Dhyan Chinnappa “Enforcement of Arbitral Awards”(2002) 8 SCC (Jour) 39

June 1959. The present Convention was formulated by the United Nations

Conference on International Commercial Arbitration

129

, convened under the

auspicious of Economic and Social Council of the United Nations

130

. India was a

participant to the Conference and signed the convention on 10 Jun 1958 later

ratified the convention on 13 July 1960

131

. As many as 96 countries have ratified

the New York Convention including India.

The U.S. Supreme Court in Scherk v. Alberto Culver Co.

132

described the

goal of N.Y. Convention as folows:

"The goal of the (NY)Convention, and the principal purpose underlying

American adoption and implementation of it, was to encourage the recognition and

enforcement of commercial arbitration agreements in international contracts and to

unify the standards by which agreements to arbitrate are observed, and arbitral

awards are enforced in signatory countries."

The NY convention does not expressly define the term ‘foreign awards’,

but Article I (1) of the Convention has clearly marked the scope of the term.

Article I (1) says that the “Convention shall apply to the recognition and

enforcement of arbitral awards made in the territory of a State other than the State

where the recognition and enforcement of such awards are sought, and arising out

of differences between persons, whether physical or legal. It shall also apply to

arbitral awards not considered as domestic awards in the State where their

recognition and enforcement are sought”.

129

The Conference met at the Headquarters of the United Nations in New York from 20

May to 10 June 1958

130

Under the resolution No. 604 (XXI) of the Economic and Social Council of the United

Nations adopted on 3 May 1956.

131

United Nations, Treaty Series, vol. 330, p. 3.

132

417 U.S. 506, 75 (1974): Y.B. 11976 U.S. 4, as quated by HC Johari , Commentray on

Arbitration and Concilliation Act 1996, Vol.2 2002

The Arbitration Act of 1996 also defines the foreign award under the

purview of the NY Conventions. According to Section 44 of the act a foreign

award means an arbitral award on differences between persons arising out of legal

relationship, whether contractual or not.

Article II (1) of the NY Convention Says that Each Contracting State shall

recognize an agreement in writing under which the parties undertake to submit to

arbitration all or any differences which have arisen or which may arise between

them in respect of a defined legal relationship, whether contractua1 or not,

concerning a subject matter capable of settlement by arbitration. Thus “It is

necessary that the relationship should fall within the meaning of the word

"commercial" under the law in force in India”

133

. Section 44 stipulates that the

award should be made on or after the 11th day of October, 1960. The award

should be in pursuance of an agreement in writing for arbitration to which the

convention set forth in the first Schedule applies

134

. Article II (2) of the NY

Convention Says that the term "agreement in writing" shall include an arbitral

clause in a contract or an arbitration agreement, signed by the parties or contained

in an exchange of letters or telegrams.

Section of 7 the Act of 1996 has incorporated above mentioned principles

of the NY Convention. According to Section 7,

(1) “arbitration agreement” means an agreement by the parties to

submit to arbitration all or certain disputes which have arisen or which may arise

between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause

in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

133

Avtar Singh, Law of Arbitration and Conciliation, Seventh Edition, 2006p. 344

(4) An arbitration agreement is in writing if it is contained in-

(a) A document signed by the parties;

(b) An exchange of letters, telex, telegrams or other means of

telecommunication which provide a record of the agreement; or

existence of the agreement is alleged by one party and not denied by the other.

(5) There reference in a contract to a document containing an arbitration

clause constitutes an arbitration agreement if the contract is in writing and the

reference is such as to make that arbitration clause part of the contract.

It is further necessary that the award was made in one of such territories as

the Central Government may declare by notification in the Official Gazette to be

territories to which the convention applies. Such declaration is made on the

Government being satisfied that reciprocal provisions have been made

135

POWER OF COURT TO REFER PARTIES TO ARBITRATION

According to Section 45 notwithstanding anything contained in Part I or in

the Code of Civil Procedure

136

, a judicial authority, when seized of an action in a

matter in respect of which the parties have made an agreement referred to in

section 44, shall, at the request of one of the parties or any person claiming

through or under him, refer the parties to arbitration, unless it finds that the said

agreement is null and void, inoperative or incapable of being performed.

135

Article 1 (3) of NY Convention has incorporated principle of Reciprocity. The Article

says that When signing, ratifying or acceding to this Convention, or notifying extension

under article X hereof, any State may on the basis of reciprocity declare that it will apply

the Convention to the recognition and enforcement of awards made only in the territory

of another Contracting State. It may also declare that it will apply the Convention only to

differences arising out of legal relationships, whether contractual or not, which are

considered as commercial under the national law of the State making such declaration.

136

The Code of Civil Procedure 1908 (5 of 1908)

Thus a judicial authority can refer the parties to arbitration, except if it

found that the said agreement is null and void, inoperative or incapable of being

performed

137

Binding Effect of a Foreign Awards

According to Section 46 any foreign award which would be, enforceable

under this Chapter shall be treated as binding for all purposes on the persons as

between whom it was made, and may accordingly be relied on by any of those

persons by way of defence, set off or otherwise in any legal proceedings in India

and any references in this Chapter to enforcing a foreign award shall be construed

as including references to relying on; an award. It is also clear from the objectives

contained in para 4 of the Statement of Objects and Reasons, Sections 47 to 49 and

the scheme of the Act that every final arbitral award is to be enforced as if it were

a decree of the court.

“In order to make the chapter really effective, Section 46 declares that any

foreign award which would be enforceable under the Act shall be treated as

binding for all purposes on the parties to the agreement. It can be relied on by any

of those parties by way of defense, set-off or otherwise in any legal proceedings in

India

138

”.

The Supreme Court in Fuerst Day Lawson Ltd. V. Jindal Exports Ltd

139

made a lucid approach of Section 46 the Supreme Court held that “ Once the court

decides that the foreign award is enforceable, it can proceed to take further

effective steps for execution of the same. There arises no question of making

foreign award a rule of court again. There is no need to take two separate

proceedings resulting in multiplicity of litigation”.

137

. Held in Coreales and Financiers v State Trading Corporation, AIR 1998 Guj 94.In

this case the Court refused to order reference as it found the agreement to be null and

void.

138

Avtar Singh, Law of Arbitration and Conciliation, Seventh Edition, 2006p. 346

139

AIR 2001 SC 2293

Thus the Supreme Court has made it obvious that for enforcement of a

foreign award there is no need to take separate proceedings, one for deciding the

enforceability of the award to make it a rule of the court or decree and the other to

take up execution

140

Perquisites regarding the Enforcement of Foreign Awards

The Section 47 of the Act provides for certain conditions to be fulfilled

before enforcement of the foreign Award.

According to Section 47 (1) The party applying for the enforcement of a

foreign award shall, at the time of the application, produces before the court-

(a) The original award or a copy thereof, duly authenticated in the manner

required by the law of the country in which it was made;

(b) The original agreement for arbitration or a duly certified copy thereof, and

award.

According to Section 47 (2) If the award or agreement to be produced

under sub-section (1) is in a foreign language, the party seeking to enforce the

award shall produce a translation into English certified as correct by a diplomatic

or consular agent of the country to which that party belongs or certified as correct

in such other manner as may be sufficient according to the law in force in India.

Thus the party seeking enforcement of a foreign award has to produce at the time

of the application the following documents:

1. The original award or its copy which is duly authenticated in the manner

required by the law of the country in which the award was made;

2. The original agreement of arbitration or duly certified copy;

140

While arriving to the decision the relied up on the decision in Thyssen Stahlunion v.

SIAL India Ltd, (1999) 9 SCC 334.

3. Such evidence as is necessary to prove that the award is a foreign award.

Explanation

141

to the section 47 says that for the purposes of these

provisions, court means only the Principal Civil Court of Original Jurisdiction in a

District and also includes the High Court in exercise of its ordinary original civil

jurisdiction.

Refusal for Enforcement of Foreign Awards

Enforcement of Foreign Awards may be refused by the Court on two

contingences vz.

I. On the request of the parties [Section 48(1)].

II. If the Court finds that the Award is not maintainable [Section 48(2)].

I. On the request of the parties

142

1. Incapacity of Parties

On furnishing the proof that the parties to the agreement were under some

incapacity under the law applicable to them, the enforcement of the foreign award

may be refused

143

2. Invalidity of Agreement clause

On furnishing the proof that the agreement referred to in Section 44 is not

valid under the law to which the parties have subjected it or, failing any indication

141

Explanation. -In this section and all the following sections of this Chapter, “Court”

means the principal Civil Court of original jurisdiction in a district, and includes the High

Court in exercise of its ordinary original civil jurisdiction, having jurisdiction over the

subject-matter of the award if the same had been the subject-matter of a suit, but does not

include any civil court of a grade inferior to) such principal Civil Court, or any Court of

Small, Causes.

142

Section 48(1)

143

Section 48(1)(a)

about it, under the law of the country where the award was made, the enforcement

of the foreign award may be refused

144

3. Lack of Proper Notice

145

On furnishing the proof the enforcement of a foreign award may be refused

under this clause on any of the following grounds:

(a) That the party against whom the award is invoked was not given proper notice

of the appointment of the arbitrator,

(b) That the party against whom the award is invoked was not given proper notice

of the arbitral proceedings,

present his case.

4. Award beyond the Scope of Reference

146

An award which is outside the submission cannot be enforced. Section

48(1)(c) specifies that the enforcement of a foreign award may be refused if it

deals with a difference (a) not contemplated by the reference, or (b) not falling

within the terms of the reference, or (c) it contains a decision on matters beyond

the scope of reference. But it is to be noted that the awards may be enforced

partially. This could be done only when such separation is possible. If such

separation is not possible, the enforcement of the decision may be refused in its

entirety.

5. Illegality in Composition of Arbitral Tribunal or in Arbitral Procedure

147

Enforcement of a foreign award may be refused if the composition of the

arbitral tribunal or the arbitral procedure was not in accordance with the agreement

144

Section 48(1)(a)

145

Section 48(1)(b)

146

Section 48(1)(c)

147

Section 48(1)(d)

of the parties, or in the absence of such agreement, was not in accordance with the

law of the country where the arbitration took place.

6. Award not yet binding

148

Enforcement of a foreign award may be refused if the award has not yet

become binding on the parties, or has been set aside or suspended by a competent

authority of the country in which that award was made.

II. If the Court finds that the Award is not maintainable

149

Enforcement of an arbitral award may also be refused if the court finds that-

1. The Dispute is not Arbitrable

Enforcement of an award may be refused if the court finds that the subject-

matter of the difference is not capable of settlement by arbitration under the law of

India

150

. As early as in 1926 in Umer v. Dadli

151

the Court held that when the court

finds that the subject-matter of the difference is not capable of settlement by

arbitration under the law of India Enforcement of an award may be refused

2. Award against Public Policy

According to Section 48(2)(b) if the court finds that the enforcement of the award

would be contrary to the public policy of India, the enforcement of the foreign

award may be refused.

The Explanation to this provision clarifies that an award would be in

conflict with public policy of India if the making of the award was induced or

affected by fraud or corruption. Thus, enforcement of an award may also be

refused if it was obtained by suppressing facts, by misleading or deceiving the

arbitrator, by bribing the arbitrator, by exerting pressure on the arbitrator, etc.

148

Section 48(1)(e)

149

Section 48(2)

150

Section 48(2)(a)

151

AIR 1926 Sind 128

Right to Appeal

The Section 50 of the Act deals with the appealable orders. According to

Section 50 (1) an appeal shall lie from the order refusing to refer the parties to

arbitration or enforce a foreign award. The Section clearly says that there could be

no second appeal. But Section 50 is not barring the jurisdiction of Supreme Court

to hear Appeals.

Topic XIII

GENEVA CONVENTION AWARDS

As mentioned earlier India became party to the Geneva Protocol on

Arbitration Clauses of 1923 and the Geneva Convention on the Execution of

Foreign Arbitral Awards, 1927 under the authority of His Britannic Majesty over

British India. In order to give effect to the Protocol of 1923 and the Convention of

1927, The Arbitration (Protocol and Convention) Act, 1937

152

was enacted, which

came into force on 4th March, 1937. The Act provides for the enforcement of

arbitral agreements to which the Protocol applied and the enforcement of foreign

arbitral awards to which the Convention of 1927 applied.

Later these provisions of the Act of 1937 were incorporated in Chapter II of

Part II of Arbitration and Conciliation Act, 1996.

Section 53 of the new Act defines "foreign award" or the Geneva

Convention Awards. According to Section 53 of the Act:

"Foreign award" means an arbitral award on differences relating to matters

considered as commercial under the law in force in India made after the 28th day

of July, 1924,

152

Repealed by Section 10 of Foreign Awards (Recognition and enforcement) Act 1961

(a) in pursuance of an agreement for arbitration to which the Protocol set forth in

the Second Schedule

153

applies, and

(b) between persons of whom one is subject to the jurisdiction of someone of such

Powers as the Central Government, being satisfied that reciprocal provisions have

been made, may, by notification in the Official Gazette, declare to be parties to the

Convention set forth in the Third Schedule

154

, and of whom the other is subject to

the jurisdiction of some other of the Powers aforesaid, and

reciprocal provisions have been made, may, by like notification, declare to be

territories to which the said Convention applies, and for the purposes of this

Chapter an award shall not be deemed to be final if any proceedings for the

purpose of contesting the validity of the award are pending in the country in which

it was made.

Thus under Section 53 of the Act Geneva Convention Award Means an

Award in Pursuance of the Protocol of 1923 and the Convention of 1927, The

Arbitration (Protocol and Convention) Act, 1937. It is to be noted that Section 53

‘principle of finality of the award’.

The Section 53 (3) makes it clear that an award cannot be enforced in India

unless it is a final order of the Arbitral Tribunal. A foreign award to be

enforceable it should be certified and attested as final award. The Bombay High

Court in Euro Asia Chartering Corporation Pvt Ltd. Vs Fortune International

Limited

155

held that in order to enforce a foreign award it should be certified and

153

The Second Schedule reproduces the text of the Protocol on Arbitration Clauses

concluded in 1934.

154

The Third Schedule contains the provisions of the Convention on the Execution of

Foreign Arbitral Awards, 1937.

155

AIR 2002 Bombay 447

attested as final award. The Court further held that such an award can be put in

execution directly without applying for determination of enforceability of award.

Power of Judicial Authority to refer parties to arbitration

The Section 54 of the Act confers the judicial authority to refer the parties

to arbitration when seized of a dispute regarding a contract made between parties.

According to the Section 54

156

, a judicial authority, on being seized of a

dispute regarding a contract made between persons to whom Section 53 applies

and including an arbitration agreement, whether referring to present or future

differences, which is valid under that section and capable of being carried into

effect, shall refer the parties on the application of either of them or any person

claiming through or under him to the decision of the arbitrators and such reference

shall not prejudice the competence of the judicial authority in case the agreement

or the arbitration cannot proceed or becomes inoperative.

Thus Section makes it mandatory to refer such dispute to arbitration on the

application of either party.

Foreign award when binding [Section 55]

Section 55 provides that a foreign award which is enforceable under the Act

[Part II, Chap 21 shall be binding for all purposes. A foreign award which would

he enforceable shall be treated as binding on the persons as between whom it was

made, and may accordingly be relied on by any of those persons by way of

defence, set-off or otherwise in any legal proceedings in India and any references

to enforcing a foreign award shall be construed as including references to relying

on an award.

Documentary evidence for enforcement of foreign award [Section 561

156

Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908

(5 of 1908)

Section 56 provides for documentary evidence to be produced before the court' by

a party seeking to enforce a foreign award. A party who wishes to enforce a

foreign award must make an application to the court and produce the following

documentary evidence

(a) the original award or its copy duly authenticated in the manner required

by the law of the country in which it was made,

(b) evidence proving that the award has become final, and

Section 57(1)(x) and (c) are satisfied.

If any document required to be produced is in a foreign language, the party

seeking to enforce the award shall produce a translation into English certified as

correct by a diplomatic or consular agent of the country to which that party

belongs or certified as correct in such other manner as may be sufficient according

to the law in force in India.

Conditions for enforcment of foreign award [Section 57(1)]

Section 57(1) lays down the conditions that are required to be satisfied for

enforcement of a foreign award. These conditions are five in number:

(a) The award has been made in pursuance of a submission to arbitration, which is

valid under the law applicable thereto;

(b) The subject-matter of the award is capable of settlement by arbitration under

the law of India;

submission to arbitration or constituted in the manner agreed upon by the parties

and in conformity with the law governing the arbitration procedure;

(d) The award has become final in the country in which it has been made, in the

sense that it will not be considered as such if it is open to, opposition or appeal or

if it is proved that any proceedings for the purpose of contesting the validity of the

award are pending;

(e) The enforcement of the award is not contrary to the public policy or the law of

India. An award is in conflict with the public policy of India if the making of the

award was induced or affected by fraud or corruption.

157

S. 57 (2) provides that even if the conditions laid down in S. 57 (1) are fulfilled,

enforcement of the award shall be refused if the court is satisfied that-

(a) The award has been annulled in the country in which it was made;

(b) The party against whom it is sought to use the award was not given notice of

the arbitration proceedings in sufficient time to enable him to present his case; or

that, being under a legal incapacity, he was not properly represented;

the terms of the submission to arbitration or that it contains decisions on matters

beyond the scope of the submission to arbitration. If the award has not covered all

the differences submitted to the arbitral tribunal, the court may, if it thinks fit,

postpone such enforcement or grant it subject to such guarantee as the court may

decide.

158

S. 57 (3) provides that if the party against whom the award has been made

proves that under the law governing the arbitration procedure there is a ground,

other than the grounds referred to in S. 57 (1) (a) and (c) and S. 57 (2) (b) and (c)

entitling him to contest the validity of the award, the court may, if it thinks fit,

either refuse enforcement of the award or adjourn the consideration thereof, giving

157

Explanation to S. 57 (1) (e).

158

Proviso to S. 57 (2) (c).

such party a reasonable time within which to have the award annulled by the

competent tribunal.

Award deemed to be a decree

As per S. 58, where the court is satisfied that the foreign award is

enforceable under this Chapter, the award shall be deemed to be a decree of the

court.

Appeal

S. 59 (1) provides that an appeal shall lie from the order refusing-

(a) To refer the parties to arbitration under section 54; and

(b) To enforce a foreign award under section 57, to the court authorised by law to

hear appeals from such order.

Second Appeal

S. 59 (2) provides that no second appeal shall lie from an order passed in

appeal under this section, but nothing in this section shall affect or take away any

right to appeal to the Supreme Court. Nothing in this Chapter shall prejudice any

right, which any person would have had of enforcing in India of any award or of

availing himself in India of any award if this Chapter had not been enacted.

159

PART-II

ALTERNATIVE DISPUTE RESOLUTION UNDER CPC

Arbitration is becoming more and more popular, especially in disputes

relating to international trade agreements. This is because the parties can expect an

expeditious and fair decision from an arbitrator who is chosen with their consent.

159

S. 60.

Settlement of disputes through conciliation, which is legally recognized in labour

law, was being used as an informal method in settlement of other types of

disputes. Subsequently this method gathered momentum as a part of the legal aid

movement in India. Lok adalats, which literally means people’s courts, were

organized in all parts of the country with the active involvement of judges and

lawyers for the settlement of disputes through conciliation. Lok adalats are granted

statutory recognition in India by an amendment to the Legal Services Authorities

Act in 2002. Thus the decisions of Lok Adalats are now having binding force.

160

For making the conciliation scheme more effective, provisions were in

cooperated in CPC by virtue of S.7 of the amendment Act of 1999.

161

Accordingly

the courts are made obligatory to refer the dispute after the issues are framed for

settlement either by way of arbitration, conciliation, mediation, judicial settlement

or though Lok Adalat. It is only after the parties fail to get their disputes settled

through any one of the alternate dispute resolution methods that the suit shall

proceed further in the Court in which it was filed.

Settlement of Disputes outside the Court

By virtue of S.89 (1) of the Act where it appears to the Court that there

exist 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;

160

N. K. Jayakumar, Lectures in Jurisprudence (2004), p. 180.

161

This amendment was based on the 129th Report of Law Commission of India.

(d) mediation.

By virtue of S.89 (2) of the Code where a dispute has been referred-

(a) for arbitration or conciliation, the provisions of the Arbitration and

Conciliation Act, 1996

162

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

163

and all other provisions of that

Act shall apply in respect of the dispute so referred to the Lok Adalat;

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

164

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.

In Vasudevan v. State of Kerala

165

, it was held that the plaintiff is entitled

for refund of the full court fee paid in the suit which was ultimately referred to the

Lok Adalat and settlement between the parties.

In Payyannur Co-op. Educational Society v. Narayanan

166

, it was held that

a suit by the worshipper challenging the sale deed executed by trustee is

maintainable.

162

26 of 1996.

163

39 of 1987.

164

39 of 1987.

165

2003 (3) KLT 993.

Special Case: Power to State Case for Opinion of Court

By virtue of S.90 of the Code where any person agree in writing a state a

case for the opinion of the Court, then the Court shall try determine the same in

the manner prescribed.

Public Nuisances (S.91)

By virtue of S.268 of the Indian Penal Code Public nuisance an act or

illegal omission which causes any common injury’ danger or annoyance to the

public or to the people in general who dwell or occupy property in the vicinity, or

which must necessarily cause injury, obstruction, danger or annoyance to persons

who may have occasion to use any public right.

Following are the remedies available against public nuisance: (1) Criminal

Action

A person committing public nuisance is liable for prosecution. Magistrates

are conferred with summary powers under Ss.133-134 of the Code of Criminal

Procedure for removal of Public Nuisance.

(2) Civil Remedy

S.91 (1) of CPC provides that in the case of a public nuisance of other

wrongful act affecting, or likely to affect, the public, a suit for a declaration and

injunction or for such other relief as may be appropriate in the circumstances of

the case, may be instituted,-

(a) by the Advocate-General, or

(b) with the leave of the Court, by two or more persons, even though no

special damage has been caused to such persons by reason of such

public nuisance or other wrongful act.

Conditions to be fulfilled for ordering injunction are the following:

166

2000 (3) KLT 129: 2000 (2) KLJ 508.

1. Nothing in this section shall be deemed to limit or otherwise affect

any right of suit which may exist independently of its provisions.

167

2. The injury must be irreparable.

3. If an illegal act is committed, which in its very nature tends to cause

injury to public, injunction can be granted to restrain the act without

proof of any actual injury to the public.

4. Public nuisance is not excused on the ground that it causes some

convenience or advantage to some persons.

5. Apprehension of future mischief is not a ground for injunction.

In Narayani v. Govindan

168

, it was held that suit in respect of an

obstruction to a village pathway is maintainable even if no special damage is

alleged or proved.

Public Charities

According to S.92 for meeting a situation in which there has been a breach

of trust of a charitable or religious nature. The aim of the section is to protect the

rights of the public in such trusts and to enable the public, the Advocate General

and the courts to stop the misuse of the income from charitable institutions. At the

same time multifarious and vexatious suit are being filed by irresponsible persons

against the trustees have to be avoided.

The Advocate General, or two or more persons having an interest and

having obtained the leave of the court may institute a suit. It may be in the

principal civil court of original jurisdiction or in any other court empowered in

that behalf by the State Government. However, within the local limits of such

court the whole or any part of the subject-matter of the trust should be situated.

167

S.91 (2).

168

1968 KLT 626: 1968 KLR 639: ILR 1968 (2) Ker.471.

The suit may be for getting one or the other relief noted below under a different

heading.

A suit under S.92 presupposes the existence of a public trust of a religious

or charitable nature. The suit can proceed only on the allegation that there was a

breach of trust or that the directions of the court are necessary for the

administration of such trust. There may be a prayer for one or the other of the

reliefs that are specifically mentioned in the section. As was observed in Abdur

Rahim v. Barkat Ali

169

a suit for a declaration that certain property appertains to a

religions trust may be under the general law and not under S.92.

Essential Requirements for invoking S.92:

(a) There shall be an express or constructive trust.

(b) It must be for a public purpose of a charitable or religions nature.

(d) It may be a representative suit on behalf of and in the interest of the

public.

(e) The relief or reliefs claimed must be one or the others mentioned in

S.92.

In Deokinandan v. Muralidhar

170

, the Apex Court found that S.92 applies

in the case of public trusts. In such a trust the beneficiaries will be persons who are

general public or a class which is capable of ascertainment. Thus in such suits

public purpose must be involved. Similarly in Rajindra Rai v. State of Bihar

171

, the

S.C observed that for the applicability of S.92 the suit must be fundamentally on

behalf of the public for the vindication of a public right.

169

AIR 1929 PC 16.

170

AIR 1957 SC 133.

171

AIR 1974 SC 2141.

In Duttgir Mahant v. Rishi Ram

172

, it was held that court cannot enquire

whether the trustees were validly appointed under provisions of section 92.

Similarly in R. Venugopala Naidu v. Venkatarayulu Naidu Charities

173

, it was held

that sale of property of religious and charitable endowments by private negotiation

should not be permitted by court unless justified by special reasons.

A suit under S.92 can be brought by-

(a) The Advocate General or such officer as the State Government may

appoint in that behalf

174

; or

(b) By two or more persons having an interest in the trust and having

obtained the leave of the court.

The advocate General must satisfy himself that there is a prima facie case

of either a breach of trust or of the necessity of obtaining directions from the court.

Reliefs

Under S.92 the court can grant one or more of the following reliefs:

1. Removing any trustee;

2. Appointing a new trustee;

3. Vesting any property in a trustee;

4. Directing a trustee to deliver possession of any trust property to

the person entitled for such possession;

5. Directing accounts and inquiries;

6. Declaring what portion of the trust property is to be allocated to

any particular object of the trust;

172

AIR 1993 P&H 231: 1993 (1) Cur LJ 209: (1993) Pun LR 95.

173

AIR 1990 SC 444.

174

Section 93.

7. Authorising the whole or any part of the trust property to be let,

sold, mortgaged or exchanged;

8. Setting a scheme; or

9. Granting such further or other relief as the nature of the case may

require.

Part-III

CONCILIATION

Conciliation/Mediation

In a Conciliation or Mediation proceeding the conciliator or mediator does

not himself decide the dispute. The conciliator or mediator helps the parties in

identifying the common ground that parties may arrive at settlement. The term

Conciliation is sometimes used interchangeably with mediation. The only

difference is that conciliation is well structured than mediation.

The difference between mediation and conciliation is that in mediation, a

mediator would endeavour to help the disputing parties to reach a mutually

agreeable solution whereas in conciliation, the conciliator would settle the dispute

himself in an informal and friendly manner with the agreement of both the parties.

Mediation is a non-binding procedure in which an impartial and neutral third

party, the mediator, assists the parties to a dispute in reaching a mutually satisfactory and

agreed settlement of the dispute. The mediator holds private sessions with each party

separately and goes back and forth between them summarising progress in joint sessions

from time to time until agreement is reached or the negotiations breakdown or are

suspended. The meditation process is informal and an assisted negotiation of a dispute

settlement. Co-mediation is a type of mediation by two or more mediators who may be

from the same or different disciplines and who may work in tandem, or share different

task within the mediation or both. Part III (Ss. 61 to 81) of The Arbitration Act deals

with conciliation and mediation proceedings.

Application and scope

S. 61 (1) provides that save as otherwise provided by any law for the time being in

force and unless the parties have otherwise agreed, this Part shall apply to conciliation of

disputes arising out of legal relationship, whether contractual or not and to all

proceedings relating thereto. This Part shall not apply where by virtue of any law for the

time being in force certain disputes may not be submitted to conciliation.

175

Commencement of conciliation proceedings

S. 62 (1) provides that the party initiating conciliation shall send to the other party

a written invitation to conciliate under this Part, briefly identifying the subject of the

dispute. Conciliation proceedings shall commence when the other party accepts in writing

the invitation to conciliate.

176

If the other party rejects the invitation, there will be no

conciliation proceedings.

177

S. 62 (4) provides that if the party initiating conciliation does not receive a reply

within 30 (thirty) days from the date on which he sends the invitation, or within such

other period of time as specified in the invitation, he may elect to treat this as a rejection

of the invitation to conciliate and if he so elects, he shall inform in writing the other party

accordingly.

Appointment of conciliators

Number of conciliators

S. 63 (1) provides that there shall be one conciliator unless the parties agree that there

shall be two or three conciliators. Where there is more than one conciliator, they ought, as

a general rule, to act jointly.

178

175

S. 61 (2).

176

S. 62 (2).

177

S. 62 (3).

178

S. 63 (2).

S. 64 (1) provides that subject to S. 64 (2):

(a) In conciliation proceedings with one conciliator, the parties may agree on the name of

a sole conciliator;

(b) In conciliation proceedings with two conciliators, each party may appoint one

conciliator;

conciliator and the parties may agree on the name of the third conciliator who shall act as

the presiding conciliator

Assistance

Parties may enlist the assistance of a suitable institution or person in connection

with the appointment of conciliators, and in particular

179

(a) A party may request such an institution or person to recommend the names of suitable

individuals to act as conciliator; or

(b) The parties may agree that the appointment of one or more conciliators be made

directly by such an institution or person. In recommending or appointing individuals to

act as conciliator, the institution or person shall have regard to such considerations as are

likely to secure the appointment of an independent and impartial conciliator and, with

respect to sole or third conciliator, shall take into account the advisability of appointing

conciliators of a nationality other than the nationalities of the parties.

180

Submission of statements to conciliator

In S. 65 and all the following sections of Part dealing with conciliation (i.e. Part

III) , the term “conciliator” applies to a sole conciliator, two or three conciliators as the

179

S. 64 (2).

180

Proviso to S. 64 (2) (b).

case may be.

181

The conciliator is not bound by the Code of Civil Procedure, 1908 (5 of

1908) or the Indian Evidence Act, 1872 (1 of 1872).

182

Written statement

S. 65 (1) provides that the conciliator, upon his appointment, may request each

party to submit to him a brief written statement describing the general nature of the

dispute and the points at issue. Each party shall send a copy of such statement to the

other party. The conciliator may request each party to submit to him a further written

statement of his position and the facts and grounds in support thereof, supplemented by

any documents and other evidence that such party deems appropriate. The party shall

send a copy of such statement, documents and other evidence to the other party.

183

Additional information

At any stage of the conciliation proceedings, the conciliator may request a party to

submit to him such additional information, as he deems appropriate.

184

Role of conciliator

1. Assisting the parties

S. 67 (1) provides that the conciliator shall assist the parties in an independent and

impartial manner in their attempt to reach an amicable settlement of their dispute.

Administrative assistance

In order to facilitate the conduct of the conciliation proceedings, the parties, or the

conciliator with the consent of the parties, may arrange for administrative assistance by a

suitable institution or person.

185

2. Conducting the conciliation proceedings

181

Explanation to S. 65 (3).

182

S. 66.

183

S. 65 (2),

184

S. 65 (3).

185

S. 68.

S. 67 (3) provides that the conciliator may conduct the conciliation proceedings in

such a manner as he considers appropriate, taking into account the circumstances of the

case, the wishes the parties may express, including any request by a party that the

conciliator hear oral statements, and the need for a speedy settlement of the dispute.

Principles of objectivity, fairness and justice

S. 67 (2) provides that the conciliator shall be guided by principles of objectivity,

fairness and justice, giving consideration to, among other things, the rights and

obligations of the parties, the usages of the trade concerned and the circumstances

surrounding the dispute, including any previous business practices between the parties.

3. Settlement of the dispute

S. 67 (4) provides that the conciliator may, at any stage of the conciliation

proceedings, make proposals for a settlement of the dispute. Such proposals need not be

in writing and need not be accompanied by a statement of the reasons therefor.

4. Disclosure of information

S. 70 provides that when the conciliator receives factual information concerning

the dispute from a party, he shall disclose the substance of that information to the other

party in order that the other party may have the opportunity to present any explanation,

which he considers appropriate. When a party gives any information to the conciliator

subject to a specific condition that it be kept confidential, the conciliator shall not

disclose that information to the other party.

186

5. Formulating the terms of a possible settlement

S. 73 (1) provides that when it appears to the conciliator that there exist elements of a

settlement, which may be acceptable to the parties, he shall formulate the terms of a

possible settlement and submit them to the parties for their observations. After receiving

the observations of the parties, the conciliator may reformulate the terms of a possible

settlement in the light of such observations.

6. Drawing up of settlement agreement.

186

Proviso to S. 70.

The settlement agreement shall have the same status and effect as if it is an

arbitral award on agreed terms on the substance of the dispute rendered by an arbitral

tribunal under section 30.

187

S. 73 (2) provides that if the parties reach agreement on a settlement of the

dispute, they may draw up and sign a written settlement agreement. If requested by the

parties, the conciliator may draw up, or assist the parties in drawing up, the settlement

agreement.

S. 73 (3) provides that when the parties sign the settlement agreement, it shall be

final and binding on the parties and persons claiming under them respectively.

6. Authenticating settlement agreement

S. 73 (4) provides that the conciliator shall authenticate the settlement agreement

and furnish a copy thereof to each of the parties.

7. Fixing of Costs

S. 78 (1) provides that upon termination of the conciliation proceedings, the

conciliator shall fix the costs of the conciliation and give written notice thereof to the

parties. Costs here means reasonable costs relating to

188

(a) The fee and expenses of the conciliator and witnesses requested by the conciliator

with the consent of the parties;

(b) Any expert advice requested by the conciliator with the consent of the parties;

(d) Any other expenses incurred in connection with the conciliation proceedings and the

settlement agreement.

The costs shall be home equally by the parties unless the settlement agreement

provides for a different apportionment. All other expenses incurred by a party shall be

home by that party.

189

187

S. 74.

188

S. 78 (2).

189

S. 78 (3).

8. Direct the parties to deposit the costs

S. 79 (1) provides that the conciliator may direct each party to deposit an equal

amount as an advance for the costs referred to in S. 78 (2) which he expects will be

incurred. S. 79 (2) provides that during the course of the conciliation proceedings, the

conciliator may direct supplementary deposits in an equal amount from each party.

S. 79 (3) provides that if the required deposits u/S. 79 (1) and (2) are not paid in

full by both parties within 30 (thirty) days, the conciliator may suspend the proceedings

or may make a written declaration of termination of the proceedings to the parties,

effective on the date of that declaration. Upon termination of the conciliation

proceedings, the conciliator shall render an accounting to the parties of the deposits

received and shall return any unexpended balance to the parties.

190

9. Other proceedings

S. 80 provides that unless otherwise agreed by the parties,

(a) The conciliator shall not act as an arbitrator or as a representative or counsel of a party

in any arbitral or judicial proceeding in respect of a dispute that is the subject of the

conciliation proceedings;

(b) The conciliator shall not be presented by the parties as a witness in any arbitral or

judicial proceeding.

Conciliator- Party Relationship

1. Communication between conciliator and parties

S. 69 (1) provides that the conciliator may invite the parties to meet him or may

communicate with them orally or in writing. He may meet or communicate with the

parties together or with each of them separately. Unless the parties have agreed upon the

place where meetings with the conciliator are to be held, such place shall be determined

by the conciliator, after consultation with the parties, having regard to the circumstances

of the conciliation proceedings.

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190

S. 79 (4).

191

S. 69 (2).

2. Co-operation of parties with conciliator

S. 71 provides that the parties shall in good faith cooperate with the conciliator

and, in particular, shall endeavor to comply with requests by the conciliator to submit

written materials, provide evidence and attend meetings.

3. Suggestions by parties for settlement of dispute

S. 72 provides that each party may, on his own initiative or at the invitation of the

conciliator, submit to the conciliator suggestions for the settlement of the dispute.

4. Confidentiality

Notwithstanding anything contained in any other law for the time being in force,

the conciliator and the parties shall keep confidential all matters relating to the

conciliation proceedings. Confidentiality shall extend also to the settlement agreement,

except where its disclosure is necessary for purposes of implementation and

enforcement.

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Termination of conciliation proceedings

By virtue of S. 76 the conciliation proceedings shall be terminated by the following:

(a) Signing of the settlement agreement by the parties on the date of the agreement; or

(b) A written declaration of the conciliator, after consultation with the parties, to the

effect that further efforts at conciliation are no longer justified, on the date of the

declaration; or

conciliation proceedings are terminated, on the date of the declaration; or

(d) A written declaration of a party to the other party and the conciliator, if appointed, to

the effect that the conciliation proceedings are terminated, on the date of the declaration.

Resort to arbitral or judicial proceedings

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S. 75

S. 77 provides that the parties shall not initiate, during the conciliation

proceedings, any arbitral or judicial proceedings in respect of a dispute that is the subject-

matter of the conciliation proceedings except that a party may initiate arbitral or judicial

proceedings where, in his opinion, such proceedings are necessary for preserving his

rights.

Admissibility of evidence in other proceedings

S. 81 povides that the parties shall not rely on or introduce as evidence in arbitral

or judicial proceedings, whether or not such proceedings relate to the dispute that is the

subject of the conciliation proceedings:

(a) Views expressed or suggestions made by the other party in respect of a possible

settlement of the dispute;

(b) Admissions made by the other party in the course of the conciliation proceedings;

(d) The fact that the other party had indicated his willingness to accept a proposal for

settlement made by the conciliator.

Supplementary Provisions

Power of High Court to make rules

As per S. 82 of the Act the High Court may make rules consistent with this

Act as to all proceedings before the court under this Act.

Removal of difficulties

S. 83 (1) provides that if any difficulty arises in giving effect to the

provisions of this Act, the Central Government may, by order published in the Official

Gazette, make such provisions, not inconsistent with the provisions of this Act as appear

to it to be necessary or expedient for removing the difficulty. No such order shall be made

after the expiry of a period of two years from the date of commencement of this Act.

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83 (2) provides that every order made under S. 83 shall, as soon as may be after it is

made, be laid before each House of Parliament.

Power to make rules

S. 84 (1) provides that the Central Government may, by notification in the

Official Gazette, make rules for carrying out the provisions of this Act. S. 84 (2) provides

that every rule made by the Central Government under this Act shall be laid, as soon as

may be, after it is made before each House of Parliament while it is in session, for a total

period of 30 (thirty) days which may be comprised in one session or in two or more

successive sessions, and if, before the expiry of the session immediately following the

session or the successive sessions aforesaid, both Houses agree in making any

modification in the rule or both Houses agree that the rule should not be made, the rule

shall thereafter have effect only in such modified form or be of no effect, as the case may

be; so, however, that any such modification or annulment shall be without prejudice to

the validity of anything previously done under that rule.

Repeal and saving

S. 85 (1) provides that the Arbitration (Protocol and Convention) Act,

1937

194

, the Arbitration Act, 1940

195

and the Foreign Awards (Recognition and

Enforcement) Act, 1961

196

are hereby repealed.

S. 85 (2) provides that notwithstanding such repeal:

(a) The provisions of the said enactments shall apply in relation to arbitral proceedings

which commenced before this Act came into force unless otherwise agreed by the parties

but this Act shall apply in relation to arbitral proceedings which commenced on or after

this Act comes into force;

193

Proviso to S. 83 (1).

194

(6 of 1937).

195

(10 of 1940).

196

(45 of 1961).

(b) All rules made and notifications published, under the said enactments shall, to the

extent to which they are not repugnant to this Act, be deemed respectively to have been

made or issued under this Act.

Repeal of Ordinance 27 of 1996 and Saving

S. 86 (1) provides that The Arbitration and Conciliation (Third) Ordinance, 1996

197

hereby repealed. Notwithstanding such repeal, any order, rule, notification or scheme

made or anything done or any action taken is pursuance of any provision of the said

Ordinance shall be deemed to have been made, done or taken under the corresponding

provisions of this Act.

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PART-IV

OMBUDSMAN

The dictionary meaning of the term “Ombudsman” is a person appointed by

a legislative body, to receive, investigate and report on complaints by private

individuals against government official or a grievance man or an official who is

appointed to investigate a complaint against the administration, any official with

similar function. Origin of Ombudsman System

The institution of Ombudsman originated in Sweden in 1809. Finland

adopted this system in1919and Denmark in 1953. But New Zealand is the first

country with a parliamentary form of government to adopt it

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. However the

system of Ombudsman was popularized by the insurance industry in UK.

“Justice”, the British wing of the International Commission of Jurists constituted a

Committee headed by Sir John Whyatt published the Report with the title, ‘the

Citizen and Administration- the Redress of Grievances’, in 1961. In 1967 an

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(27 of 1996).

198

S. 86 (2).

199

it was adopted by New Zealand in 1962

institution which is rudimentary form of Ombudsman came into being in England

under the Parliamentary Commissioner Act. 1967.

Object of Ombudsman System

The Ombudsman System is primarily intended to be an adjudicatory system

for administrative actions. It purpose is to rectify the various hardships faced by

citizens from the administrative authorities. The Administrative authorities may be

insensitive or causing undue delay or over enthusiastic pursuit of policy or mala

fide exercise of power. To be precise ombudsman system is intended to curb what

is commonly referred as ‘maladministration’.

The term Ombudsman refers to an official who is appointed to investigate

complaints against the administration. An ombudsman can give relief on many

grounds on which the courts are not able to provide any relief. One essential

feature of 'ombudsman' is that he has access to departmental files on the basis of

which conclusions regarding fault or lapse could be arrived at. Engagement of

lawyer is said to be not necessary as it is said that the Ombudsman himself is the

complaint's lawyer. Usually he is appointed by the legislature acting on behalf of it

and reporting to the legislature. To some extent he also acts as an external agency

to probe into administrative faults. Citizen's grievances are investigated

independently and he assists the citizen to get adequate remedy from the

department concerned.

System of Ombudsman in India - Lokpal

The Administrative Reforms Commission recommended the adoption of an

ombudsman type institution in India. The Commission said that the redressal of

citizens grievances is basic to the functioning of democratic governments and will

strengthen the government in administering the laws of the land. There is a general

feeling of prevalence of corruption and inefficiency. An institution suitable to the

federal structure, parliamentary form of government and ministerial responsibility

was to be evolved for the purpose. The Law Commission of India in its 100th

Report on Litigation by and against the Government recommended the adoption of

the Ombudsman in India.

The Lokpal Bill of 1971 and the Lokpal Bill of 1977 though lapsed,

provided the basis or model for further legislation. The Bill of 1971 sought to

provide for investigation of complaints as well as redressal of grievances of

citizens. Its emphasis lay on maladministration. The 1971 Bill shifted the

emphasis on corruption. Thus in a way the new approach has gone away from the

Ombudsman model. The Bill was again introduced in 1985 which was referred to

a Joint Committee of both the Houses. It was opposed as a very restrictive Bill.

The opposition wanted to bring the Prime Minister also within the purview of the

Lokpal. The 1939 Bill included the Prime Minister also within the purview of the

Lokpal.

There can be a Chairman and two members appointed by the President in

consultation with the Chief Justice of India. Only persons who are or who have

been judges of the Supreme Court are eligible to be appointed. Persons holding

office of profit are disqualified from becoming the Chairman or members. Special

procedure is prescribed for removal of a person once appointed.

The object is to inquire into any matter involved in or arising from or

connected with any allegation made in a complaint. A complaint is one as against

a public functionary alleging the commission of an offence under the Prevention

of Corruption Act. Public functionary includes one who holds, or has held, the

office of Prime Minister, Minister Minister of state or Deputy Minister of the

Union. Connected matters as far as it is required for inquiry into the above

mentioned allegation may also be looked into. In effect it amounts to a pre-trial

enquiry into matters alleged to be offences under the Prevention of Corruption

Act.

The complaint can be made by any person other than a public servant

which is very widely defined in the Act. The complaint is to be in the prescribed

form. A deposit Rs. 1000 is to be made with the complaint. This is to avoid

frivolous and vexatious complaints. If the complaint has been substantiated the

complainant can be awarded a compensation. The Lokpal shall be entitled to try

certain offences like giving of false evidence. The Lokpal shall require any public

servant to furnish information or produce documents relevant to the inquiry. The

evidence collected by the Lokpal in the course of the inquiry is to be treated as

confidential. No court could compel the Lokpal or any officer working on its

behalf to give evidence relating to the information collected.

The Lokpal is endowed with the jurisdiction to summon attendance of persons, to

examine them on oath, to require discovery and production of documents, to

accept affidavits, to requisition public documents and to issue commissions.

Though the Lokpal is having the power to determine the procedure of inquiry,

there is no power to act suo mofu.

THE BANKING OMBUDSMAN SCHEME, 1995

In India presently there are two Ombudsman Schemes one in Banking

Ombudsman and other in the Building Society’s Ombudsman. The Banking

Ombudsman Scheme was sponsored by the banks through a voluntary scheme and

started functioning w.e.f. January, 1986. The system of Ombudsman is in vogue

in various countries like U.K, New Zealand and Australia. The Government of

India also considered to introduce the system of appointing Banking Ombudsman

to redress the grievances of the customers against the banks.

The scheme known as Banking Ombudsman Scheme, 1995 was framed by

the Reserve Bank of India and issued under Section 35-A of the Banking

Regulation Act, 1949 being satisfied that it is necessary in public interest and in

the interest of banking policy to provide such scheme for redressal of grievances

against deficiency in banking services concerning loans and advances and other

specified matters. Under Section 35-A Banking Regulation Act, 1949 the Reserve

Bank has the power to issue directions to the banks in public interest and in the

interest of banking policy. Such direction is binding on the banks. The Banking

Ombudsmans have only administrative powers and not having quasi judicial

authority, whose decisions are binding upon the complainant and the banks

equally. Therefore the Banking Ombudsman has no authority to enforce the

awards passed by it against the complainant. The machinery which is provided by

the Banking Ombudsman is more of a persuasive nature. The awards passed by

the Banking Ombudsman cannot be enforced except with the help of the Reserve

Bank of India, which may use its power conferred to it under Banking Regulation

Act, 1949. It would have been better and more appropriate, if the Banking

Ombudsman Scheme would have been enacted by a statute, conferring all

statutory powers on the Banking Ombudsman like a civil court, so that the scheme

would have been more useful.

Applicability of the Scheme

The Banking Ombudsman Scheme, 1995 applies to the business in India of

every commercial bank (other than Regional Rural Banks) and Scheduled Primary

Co-operative banks having a place of business in India, whether such bank is

incorporated in India or outside India.

Object of the Scheme

The object of the scheme is to enable resolution of complaints relating to

provision of banking services and to facilitate the satisfaction, or settlement of

such complaints.

PART- V

LOK ADALAT

The word Lok Adalat simply means the “Peoples Court”. It may be defined

as a forum where voluntary effort to bring settlement of disputes between the

arties. According to Justice PN Bhagwathi “ resolving disputes through Lok

Adalat not only minimizes litigation expenditure, it saves valuable time of the

Parties and also facilitates inexpensive and prompt remedy appropriately to the

satisfaction of the parties”.

The system of Lok Adalat was introduced in India by the Legal Services

Authorities Act, 1987. The preamble of the Act says that the Act aims at

organising Lok Adalats to secure that the operation of the legal system promotes

justice on a basis of equal opportunity. Thus System of Lok Adalats is inspired by

the Art-39A of the Constitution of India. Chapter VI of the Act deals with the

organisation of lok Adalats.

Organisation of Lok Adalats

By virtue Section 19(1) every State Authority or District Authority or the

Supreme Court Legal Services Committee or every High Court Legal Services

Committee or, as the case may be, Taluk Legal Services Committee may organise

Lok Adalats at such intervals and places and for exercising such jurisdiction and

for such areas as it thinks fit.

By virtue Section 19 (2) every Lok Adalat organised for an area shall

consist of such number of-

(a) Serving or retired judicial officers; and

(b) Other persons, of the area as may be specified by the State Authority

or the District Authority or the Supreme Court Legal Services

Committee or the High Court Legal Services Committee, or as the

case may be, the Taluk Legal Services Committee, organising such

Lok Adalat.

By virtue Section 19 (3) the experience and qualifications of other persons

referred to in clause (b) of sub-section (2) for Lok Adalats organised by the

Supreme Court Legal Services Committee shall be such as may be prescribed by

the Central Government in consultation with the Chief Justice of India.

By virtue Section 19 (4) the experience and qualifications of other persons

referred to in clause (b) of subsection (2) for Lok Adalats other than referred to in

sub-section (3) shall be such as may be prescribed by the State Government in

consultation with the Chief Justice of the High Court.

Jurisdiction

By virtue Section 19 (5) a Lok Adalat shall have jurisdiction to determine

and to arrive at a compromise or settlement between the parties to a dispute in

respect of-

(i) Any case pending before; or

(ii) Any matter, which is falling within the jurisdiction of, and is not brought

before, any court for which the Lok Adalat is organized.

How ever the Lok Adalat shall have no jurisdiction in respect of any case or

matter relating to an offence not compoundable under any law.

Cognizance of cases by Lok Adalats.

By virtue of Section 20 (1) Lok Adalats.can take Cognizance if

(a) The parties thereof agree; or

(b) One of the parties thereof makes an application to the court, for referring

the case to the Lok Adalat for settlement and if such court is prima facie satisfied

that there are chances of such settlement; or

(ii) The court is satisfied that the matter is an appropriate one to be taken

cognizance of by the Lok Adalat, the court shall refer the case to the Lok

Adalat.

How ever that no case shall be referred to the Lok Adalat under sub-clause

(b) of clause (i) or clause (ii) by such court except after giving a reasonable

opportunity of being heard to the parties.

By virtue of Section 20 (4) every Lok Adalat shall, while determining any

reference before it under this Act, act with utmost expedition to arrive at a

compromise or settlement between the parties and shall be guided by the

principles of justice, equity, fair play and other legal principles.

By virtue of Section 20 (5) where no award is made by the Lok Adalat on

the ground that no compromise or settlement could be arrived at between the

parties, the record of the case shall be returned by it to the court, from which the

reference has been received under sub-section (1) for disposal in accordance with

law.

By virtue of Section 20 (6) where no award is made by the Lok Adalat on

the ground that no compromise or settlement could be arrived at between the

parties, in a matter referred to in sub-section (2), that Lok Adalat shall advice the

parties to seek remedy in a court.

By virtue of Section 20 (7) if the record of the case is returned under sub-

section (5) to the Court, such court shall proceed to deal with such case from the

stage, which was reached before such reference under sub-section (l)].

Award of Lok Adalat

By virtue of Section 21 (1) every award of the Lok Adalat shall be deemed

to be a decree of a civil court or, as the case may be, an order of any other court

and where a compromise or settlement has been arrived at, by a Lok Adalat in a

case referred to it under sub-section (I) of section 20, the court-fee paid in such

case shall be refunded in the manner provided under the Court Fees Act, (7 of

1870).]

By virtue of Section 21 (2) every award made by a Lok Adalat shall be

final and binding on all the parties to the dispute, and no appeal shall lie to any

court against the award.

Powers of Lok Adalats

By virtue of Section 22 (1) the Lok Adalat shall, for the purposes of

holding any determination under this Act, have the same powers as are vested in a

civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit

in respect of the following matters, namely: -

(a) The summoning and enforcing the attendance of any witness and

examining him on oath;

(b) The discovery and production of any document;

(d) The requisitioning of any public record or document or copy of such record

or document from any court or office; and

(e) Such other matters as may be prescribed.

By virtue of Section 22 (2) ithout prejudice to the generality of the powers

contained in sub-section (1), every Lok Adalat shall have the requisite powers to

specify its own procedure for the determination of any dispute coming before it.

By virtue of Section 22 (3) a proceedings before a Lok Adalat shall be

deemed to be judicial proceedings within the meaning of sections 193, 219 and

228 of the Indian Penal Code (45 of 1860) and every Lok Adalat shall be deemed

to be a civil court for the purpose of section 195 and Chapter XXVI of the Code of

Criminal Procedure, 1973 (2 of 1974)

PART- VI

OTHER FORMS OF ADR

1. Negotiation

Negotiation is a non-binding no contentious procedures were discussions

between the parties are initiated without the intervention of third party with the

object of arriving at a negotiated settlement of the dispute. In this procedure a

party directly approaches the other with the offer of a negotiated settlement based

on an objective assessment of each other’s position: objectivity and willingness to

arrive at a negotiated settlement on the part of both the parties are essential

characteristics.

2. Evaluation

Evaluation is a non-binding assessment of the dispute, the viability of

proposed settlement terms, or to any other aspect of a dispute. It provides the study

of root-cause of the disputes and then suggests possible solution for the removal of

problems which cause the dispute.

It is well settled that arbitration is different from valuation. In Re Carcus

Wilson and Greene

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in this case the Carus Wilson sold some land to Greene. In

the land there was some growing timber and Greene agreed to pay for it at a

valuation made by two valuers. The parties already agreed that if the valuers fail to

agree they should appoint umpire should make a valuation. The valuers failed to

agree and the umpire made a valuation. In this case the question was whether this

was arbitration. The court held that it not arbitration.

3. Village Courts or Gram Nyayalaya

The Gram Nyayalya or village Court are primarily Panchayti Raj

institutions constituted for the settlement of disputes of “local Nature”. These

Courts are usually units of Local Self Governments. These institutions are to be

viewed are objectives enshrined in Article 40.

4. Partnering

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(1886) 18 QDB 7 CA

Partnering is a non-binding process that seeks solution for common

problems by cooperation of participants have in common. It is based on win- win

principle and hence yields reconciliation. It is based on periodical meetings during

implementation of project; often in presence of a neutral facilitator; discussion of

problem areas in presence of senior management.

5. Facilitation

Facilitation is a voluntary assistance provided to the parties to a dispute by

a neutral third party, to help them to deal constructively with the issues between

them.