Afcons Infrastructure Ltd 1.docx

CASE REVIEW 1 A NEED FOR REVISITING AFCONS INFRASTRUCTURE LTD. V CHERIAN VARKE KusumR BC0160022 BRIEF FACTS: The case arose between one party (appellants) who had entered into a contract of construction of roads and bridges with the other party (the second respondent). The appellants had subcontracted their work to the first respondents. The disputes arose due to the breach of contract. The question under consideration was whether without a pre-existing agreement between the parties, the Court may refer the matter for arbitration , without the consent of the parties or not? ISSUES AND THE JUDGEMENT OF THE COURT: It is the duty of the judges that they should practise the law not only by means of law and principles through coercion, but should also utilise their skills of persuasion. The present case relates to interpretation of Section 89 of CPC, thus considering the twofold issues- Whether the consent of the parties is necessary to initiate the process of arbitration when there is no preexisting arbitration contract in existence? Secondly, what is the procedure that is to be followed under the Section 89 of CPC by a Court to refer the dispute for out of court settlement? The author agrees with the Court with respect to the former question, however, attempts to reconsider the latter. The author does not dispute that the consent of the parties is necessary for referring the matter for settlement through arbitration. ANALYSIS OF THE JUDGEMENT: According to Afcon, when a case is pending before a Court, it cannot attempt for a judicial settlement. A Court does not possess the power to send the case to another court without proper rules for the purpose of judicial settlement. It will be problematic for the District Judge to decide upon which Court or Judge the matter should be sent to without the rules. In the view of the author, there is no necessity to fully debar the judge who is hearing the case to try settling the dispute. Firstly, the section does not exclusively debar the judge from such action. Secondly, even in Afcon , it was held that,

“If the Judge in charge of the case assists the parties and if settlement negotiations fail, he should not deal with the adjudication of the matter, to avoid apprehensions of bias and prejudice. It is therefore advisable to refer cases proposed for Judicial Settlement to another Judge.”1 In the case it was also held that “The requirement in Section 89(1) that the court should formulate or reformulate the terms of settlement would only mean that court has to briefly refer to the nature of dispute and decide upon the appropriate ADR process.”2 However, it is difficult to agree to this view of the Court. The case has not dealt into and tried to find out the reasons behind such exercise are stated in the first sentence of Section 89(1) of CPC. The purpose is not very clearly expressed through the section. This may also count as a drafting error. This is because, such exercise is only needed in the case of a judicial settlement. But, such exercise is not necessary in the other forms of ADR processes. Thus, it might not be a correct interpretation to debar the judge to attempt judicial settlement. In the view of the author, the section should be interpreted as the judge may at any point, which may be before or after hearing of the arguments should attempt, through persuasion for settlement of the disputes or may send it to other judge, provided there are rules which guides it. Also, since the Section uses the word ‘Court’ and not ‘trial court’, therefore, such settlement may be referred to by the Appellate Court also. In the appeal stage, also the parties would be at a better position to understand the worth of the case after the judgement of the Court. If the judge finds that there is an interest of the parties, however, strong or feeble be it, to settle the disputes through arbitration, he may give an order accordingly. It should depend on case to case basis whether the judge think that judicial settlement might take up a time and it would cause delay, it might persuade the parties to consider the other options available under ADR .

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Afcons Infrastructure Ltd. v Cherian Varke, (2010) 8 SCC 24, ¶ 32 Supra 1.