VoxJuris
Home › Acts › CPC › Chapter V › Section 89

Code of Civil Procedure, 1908 · Chapter V: Special Proceedings Arbitration

Section 89: Settlement of disputes outside the Court

In plain words

Where the court sees elements of a settlement acceptable to the parties, it must formulate settlement terms, take the parties' observations, and refer the dispute to arbitration, conciliation, judicial settlement including Lok Adalat, or mediation.

  • Arbitration and conciliation follow the Arbitration and Conciliation Act, 1996.
  • Lok Adalat and judicial settlement follow the Legal Services Authorities Act, 1987.
  • For mediation, the court effects a compromise following prescribed procedure.

A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.

Read the in-depth explanation, with key Supreme Court rulings ↓

Official text

(1) 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;

(c) judicial settlement including settlement through Lok Adalat: or

(d) mediation.

(2) Were a dispute has been referred—

(a) for arbitration or conciliation, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply as if the proceedings for arbitration or conciliation were referred for settlement under the provisions of that Act;

(b) to Lok Adalat, the Court shall refer the same to the Lok Adalat in accordance with the provisions of sub-section (1) of section 20 of the Legal Services Authority Act, 1987 (39 of 1987) and all other provisions of that Act shall .apply in respect of the dispute so referred to the Lok Adalat;

(c) for judicial settlement, the Court shall refer the same to a suitable institution or person and such institution or person shall be deemed to be a Lok Adalat and all the provisions of the Legal Services Authority Act, 1987 (39 of 1987) shall apply as if the dispute were referred to a Lok Adalat under the provisions of that Act;

(d) for mediation, the Court shall effect a compromise between the parties and shall follow such procedure as may be prescribed.]

Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.

Understanding this section

Section 89 requires the court, where it appears that elements of a settlement exist, to refer the dispute to arbitration, conciliation, judicial settlement including Lok Adalat, or mediation. It is the CPC's gateway to alternative dispute resolution.

The four routes

  • Arbitration: only with the consent of all parties.
  • Conciliation: only with consent.
  • Judicial settlement, including Lok Adalat.
  • Mediation.

Correcting the drafting

The Supreme Court noted that the definitions of mediation and judicial settlement in sub-section (2) were mixed up, and read them interchanged so they make sense. It also held that courts need not formulate detailed settlement terms before referral; it is enough to consider whether a case is suitable for ADR.

Unsuitable cases

Cases involving serious allegations of fraud, criminal offences, election disputes, matters involving the public at large, and cases requiring the court's protection, such as minors, are generally unsuitable. Most commercial, family and neighbour disputes are suitable.

Timing

The court should consider ADR after pleadings are complete and before framing issues.

Key Supreme Court rulings

Common mistakes

  • Referring a case to arbitration under section 89 without the consent of all parties.

Read with: Section 9 CPC

Prepared with AI assistance as a study aid. Every ruling listed was checked against the Supreme Court's own judgments on this site, and quoted words appear in those judgments; linked names open the full judgment. Read the judgments themselves before relying on them. Not legal advice.

Supreme Court judgments citing the section 89