Section 89 CPC requires purposive reading; arbitration needs mutual consent, while other ADR referrals may proceed without it.

Section 89 CPC must be read purposively to make the ADR scheme workable: the court need not formulate or reformulate settlement terms before making a reference, but should identify the dispute, inform parties of available ADR options, and then refer the matter after pleadings and before issues are framed. Arbitration under Section 89, however, depends on mutual consent and cannot be imposed without agreement of all parties. Mediation, Lok Adalat and judicial settlement may be chosen without such consent according to the nature of the dispute. The article also notes that a suit referred to arbitration without consent and without following the prescribed procedure is unsustainable.

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Issues: (i) Whether Section 89 of the Code of Civil Procedure requires the court, before referring parties to an alternative dispute resolution process, to formulate or reformulate the terms of settlement and whether its procedural scheme must be read purposively to remove drafting anomalies. (ii) Whether a civil court can refer a suit to arbitration under Section 89 without the consent of all parties.

Issue (i): Whether Section 89 of the Code of Civil Procedure requires the court, before referring parties to an alternative dispute resolution process, to formulate or reformulate the terms of settlement and whether its procedural scheme must be read purposively to remove drafting anomalies.

Analysis: The statutory scheme of Section 89 and Order 10 Rule 1A is defective if read literally, because the court is made to perform settlement-oriented functions before making a reference to an ADR forum. The expressions relating to mediation and judicial settlement in Section 89(2) are interchanged, and the requirement that the court formulate settlement terms is impractical at the pre-reference stage. A purposive construction is therefore necessary to make the provision workable. The court need only identify the nature of the dispute, inform the parties of the available ADR options, and then make an appropriate reference. The procedure under Section 89 must be implemented after completion of pleadings and before framing issues.

Conclusion: The provision must be read purposively, with the drafting errors corrected by interpretation, and the court is not required to formulate or reformulate settlement terms before making an ADR reference.

Issue (ii): Whether a civil court can refer a suit to arbitration under Section 89 without the consent of all parties.

Analysis: Arbitration under Section 89 is governed by the Arbitration and Conciliation Act and presupposes an agreement to arbitrate. In the absence of a pre-existing arbitration agreement, the court may refer the matter to arbitration only if all parties expressly agree when the ADR options are offered. Without such mutual consent, the court lacks jurisdiction to compel arbitration. By contrast, other ADR modes such as mediation, Lok Adalat, and judicial settlement do not require such consent and may be selected by the court according to the nature of the dispute.

Conclusion: A reference to arbitration under Section 89 cannot be made unless all parties consent.

Final Conclusion: The impugned orders were unsustainable because the suit was sent to arbitration without the consent of all parties and without following the proper Section 89 procedure; the matter must now be considered for a suitable non-adjudicatory ADR process.

Ratio Decidendi: Section 89 of the Code of Civil Procedure must be construed purposively so as to make its ADR scheme workable, but reference to arbitration under that provision is permissible only by mutual consent of all parties, whereas the court may choose a non-adjudicatory ADR mode without such consent.

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