Section 89 CPC Was Meant to Divert Cases to Mediation. Courts Treat It as a Box to Tick
A provision that requires every civil court to consider settlement before trial has become a line in an order sheet.
The Counsel's view
- Section 89 obliges every civil court to consider, after pleadings, whether the dispute should go to mediation or another settlement forum. Most courts record that they have considered it and move on.
- The Supreme Court settled how the provision works in 2010. What is missing is not law but data, capacity and consequence.
- Courts should record reasons for not referring, publish referral figures and impose costs on parties who refuse mediation without reason.
Section 89 of the Code of Civil Procedure is twenty-four years old. It was inserted on the recommendation of the Law Commission and the Malimath Committee to do one thing: make every civil court ask, before a suit goes to trial, whether it needs to. Where the court finds elements of a settlement, it is to refer the parties to arbitration, conciliation, a Lok Adalat, judicial settlement or mediation. The Supreme Court upheld the provision in Salem Advocate Bar Association in 2003 and 2005, and in Afcons Infrastructure in 2010 told the courts exactly how to apply it: consider referral in every suit once pleadings are complete, refer to mediation or a Lok Adalat without needing consent, pass a brief order recording the consideration. The order is passed. The consideration, in most courts, is not.
What the order sheets show
Ask for the Section 89 orders in any district court outside the handful with established mediation centres and the pattern is the same. The order records that the court has considered the matter and that the parties do not wish to settle, or that the case is not fit for referral, in a sentence that does not vary from suit to suit. No one is asked. The lawyers, who are paid by the hearing, do not raise it. The judge, who is measured by disposals and knows that a failed mediation returns the case to the board three months older, does not press. The provision that was meant to divert a share of civil litigation away from trial has become a procedural step on the way to it.
Why it has gone this way
- There is nowhere to send the case. Court-annexed mediation centres exist in the High Courts and in the larger district courts. In most of the country the only forum is the Lok Adalat, which is suited to small, liquidated claims and not to the commercial, property and partnership disputes that clog civil courts.
- No one counts. The National Judicial Data Grid records pendency and disposal. It does not record referrals under Section 89, settlements reached, or the time saved. A provision no one measures is a provision no one is accountable for.
- The incentives all run to trial. Lawyers are paid per appearance; judges are assessed on disposals; a settled case counts for less than a decided one in most High Courts' performance metrics.
- The Mediation Act did not fix it. The 2023 Act made pre-litigation mediation voluntary and, in Section 7, preserved the court's power to refer parties at any stage. It did not oblige the court to use it, fund the centres or count the results. Two years on, the Act's mediation uptake is low for the same reasons.
A provision no one measures is a provision no one is accountable for.
The Editorial Board
What should change
- Reasons for not referring. Afcons asked for a brief order recording consideration. It should be an order recording reasons — the category of the case, whether the parties were heard on referral, and why the court declined. A formulaic order should be a ground of appeal, as it is for any other unreasoned order.
- Count referrals. The Data Grid should carry, for every court, the number of suits referred under Section 89, the mode, the outcome and the time to settlement. High Courts should include settlements in judges' disposal credit at parity with judgments.
- Costs for unreasonable refusal. A party that declines a referral to mediation without reason, and then loses at trial, should bear the other side's costs from the date of refusal, as English courts have done since Halsey and Churchill. Section 35 of the Code already permits it; practice directions should require it.
- Build the centres. A mediation centre with trained mediators in every district court complex is a capital project of modest cost compared with the courtrooms the backlog otherwise requires; the e-Courts project's third phase can fund it.
- Pay the mediators. Fees for court-annexed mediation have not kept pace with anything; the bar will not supply mediators at rates that do not cover a day's practice.
The Supreme Court has said, in every judgment on the subject since 2003, that Section 89 is mandatory in the sense that the court must consider it. The courts have complied with the letter. The purpose — fewer trials, faster settlements, courtrooms kept for the disputes that need them — waits on a system that counts what it does and consequences for those who do not.
What does Section 89 of the CPC provide?
That a court finding elements of settlement must refer the dispute to arbitration, conciliation, a Lok Adalat, judicial settlement or mediation; Order X Rules 1A to 1C require the court to direct parties to choose a mode after admissions and denials.
What did the Supreme Court decide in Afcons Infrastructure?
That courts must consider referral in every suit after pleadings, that mediation, Lok Adalat and judicial settlement need no consent while arbitration and conciliation do, that settlement terms need not be formulated first, and that a brief order recording the consideration must be passed; it also listed suitable and unsuitable categories.
Can a court force parties into mediation?
It can refer them without consent, under Section 89 and Section 7 of the Mediation Act, though it cannot compel a settlement; arbitration and conciliation require consent.
How many cases are referred under Section 89?
No national figure exists. Referrals are concentrated in courts with established mediation centres and are a small fraction of suits elsewhere, mostly family and motor accident disputes.
Editorials represent the collective view of The Counsel's editorial board. Read our analysis of the Mediation Act, two years on.
The Editorial Board
Editorials are written by The Counsel's editors and represent the newspaper's institutional view.
This editorial is for general information only and does not constitute legal advice. Readers should consult a qualified lawyer about their own circumstances.