Author – Riya Raj
College – GD Goenka University
To the Point
India’s courts are drowning in a backlog running into tens of millions of cases, and a civil suit can take years to conclude. Mediation and conciliation offer disputants a faster, cheaper, and less adversarial route to resolution one where parties, not judges, author the outcome. Over the last three decades, this once-informal practice has been absorbed into India’s formal legal architecture, culminating in the Mediation Act, 2023. The core issue this article addresses is simple: has the law caught up with the promise of mediation, and what still stands in the way of it becoming India’s default dispute-resolution mechanism rather than its alternative?
Use of Legal Jargon
ADR (Alternative Dispute Resolution) is the umbrella term covering arbitration, mediation, conciliation, and negotiation. Mediation is a facilitative, non-adjudicatory process the mediator has no power to decide the dispute. Conciliation is procedurally similar but statutorily distinct, allowing the neutral (the conciliator) to more actively propose settlement terms. A settlement agreement is the written, signed outcome of successful mediation or conciliation; once it satisfies statutory formalities, it can carry the same legal weight as a decree(a formal court order) or an arbitral award on agreed terms. Section 89 CPC refers to the provision in the Code of Civil Procedure, 1908 empowering courts to refer pending suits to ADR. Pre-institution mediation refers to mediation attempted before a suit is even filed. These terms recur throughout Indian jurisprudence on the subject and are used consistently below.
The Proof
The claims in this article are anchored in statute and precedent rather than general impression. Section 89 of the Code of Civil Procedure, 1908 and Order X Rule 1A give courts the express power to direct parties toward mediation. Section 12A of the Commercial Courts Act, 2015 makes pre-institution mediation compulsory for most commercial suits. Part III of the Arbitration and Conciliation Act, 1996 gives conciliated settlements the same enforceable status as an arbitral award. The Supreme Court’s rulings in Salem Advocate Bar Association v. Union of India and Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. gave institutional shape and procedural clarity to court-referred ADR, while M.R. Krishna Murthi v. New India Assurance Co. Ltd. directly prompted Parliament to consider a standalone mediation law a recommendation realised in the Mediation Act, 2023. Each of these sources is discussed in the sections below.
Abstract
This article examines the evolving legal status of mediation and conciliation in India as instruments of modern dispute resolution. It traces the statutory foundations laid by the Code of Civil Procedure, the Arbitration and Conciliation Act, 1996, and the Commercial Courts Act, 2015, before turning to the landmark judicial decisions that shaped how Indian courts refer disputes to ADR. It then evaluates the Mediation Act, 2023, India’s first dedicated mediation statute against the persistent practical obstacles of low public awareness, an inadequate pool of trained mediators, and historically weak enforceability of settlement agreements. The article concludes that India now possesses a largely complete legal framework for mediation, and that the remaining task is one of implementation rather than legislation.
Relevant Laws / Statutory Provisions
The Code of Civil Procedure, 1908 – Section 89, inserted by the 1999 amendment (effective 2002), permits a court to formulate terms of a possible settlement and refer the dispute to arbitration, conciliation, judicial settlement, or mediation. Order X Rule 1A requires the court to give parties an opportunity to opt for one of these mechanisms.
The Arbitration and Conciliation Act, 1996 -Part III (Sections 61-81) governs conciliation specifically, covering the appointment of conciliators, the conduct of proceedings, and the binding effect of a settlement agreement, which is granted the same status as an arbitral award on agreed terms under Section 74.
The Commercial Courts Act, 2015 (as amended in 2018) – Section 12A mandates pre-institution mediation for commercial disputes not seeking urgent interim relief, with the resulting settlement recorded and enforceable as a decree.
The Mediation and Conciliation Rules, 2004 -Framed to standardise the empanelment of mediators, the procedural conduct of sessions, and confidentiality obligations in court-annexed mediation across various High Courts.
The Mediation Act, 2023 – India’s first standalone mediation statute. It establishes the Mediation Council of India, prescribes a 180-day (extendable by 180 days) timeline for completion, provides for mandatory pre-litigation mediation in specified categories of disputes, and critically makes a signed mediated settlement agreement directly enforceable as a judgment or decree, without requiring a separate enforcement proceeding.
Case Laws
Salem Advocate Bar Association v. Union of India, (2005), The Supreme Court upheld the constitutional validity of the Section 89 CPC amendments and constituted a committee to frame model ADR rules for adoption by courts, giving institutional structure to court-annexed mediation nationwide.
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010), widely regarded as the definitive precedent on Section 89 CPC, the Court corrected drafting anomalies in the provision, clarified the procedure courts must follow when referring disputes to ADR, and set out categories of disputes ordinarily suitable for mediation (contractual, commercial, matrimonial, tortious) as against those unsuitable for it (probate matters, election disputes, criminal prosecutions).
M.R. Krishna Murthi v. New India Assurance Co. Ltd., (2019), The Court directed the Union Government to examine enacting a dedicated mediation statute, observing that a standalone law would lend mediation the institutional credibility that fragmented provisions could not. This judgment is widely credited with initiating the legislative process that produced the Mediation Act, 2023.
Sundaram Finance Ltd. v. T. Thankam, (2015), this case reinforced that a court’s reference to ADR under Section 89 must be a genuine exercise of judicial discretion suited to the nature of the dispute, not a mechanical formality performed for its own sake.
Read together, these decisions trace a judiciary that moved from cautiously permitting ADR to actively institutionalising mediation as a preferred first step in civil and commercial disputes.
Conclusion
Mediation and conciliation in India have travelled from informal, community-based practice to a codified, judicially endorsed, and now independently legislated mechanism. The statutory scaffolding Section 89 CPC, Section 12A of the Commercial Courts Act, and Part III of the 1996 Act was reinforced by judicial direction in Salem Advocate, Afcons Infrastructure, and M.R. Krishna Murthi, and has now been consolidated by the Mediation Act, 2023, which resolves the long-standing enforceability gap that discouraged parties from placing full confidence in mediated outcomes. In my assessment, India’s legal framework for mediation is now largely complete on paper; what remains is a matter of implementation training a larger and more consistent pool of mediators, building public awareness so that mediation is chosen deliberately rather than defaulted away from, and ensuring judicial referral under Section 89 happens as genuine practice rather than procedural formality. If these gaps close, mediation stands positioned to become not merely litigation’s alternative in India, but its primary complement.
FAQs
1. Is a mediated settlement legally binding in India?
Yes, once formalised and signed under the Mediation Act, 2023 or under court-referred/conciliation proceedings, a settlement agreement is enforceable in the same manner as a judgment or decree of a civil court.
2. What is the difference between mediation and conciliation?
Both use a neutral third party, but a conciliator particularly under Part III of the Arbitration and Conciliation Act, 1996 may actively propose settlement terms, while a mediator generally only facilitates the parties’ own negotiation without suggesting outcomes.
3. Can a court force parties into mediation?
Courts can direct parties to attempt mediation under Section 89 CPC, and pre-institution mediation is mandatory for most commercial suits under Section 12A of the Commercial Courts Act, 2015. However, actual participation in substantive negotiation, once the process begins, remains voluntary.
4. Which disputes are considered unsuitable for mediation?
Following Afcons Infrastructure, matters such as probate and succession proceedings, election disputes, serious allegations of fraud, cases requiring protection of minors or persons of unsound mind, and criminal prosecutions are generally excluded from ADR referral.
5. How does the Mediation Act, 2023 improve on the earlier framework?
It creates a dedicated regulatory body (the Mediation Council of India), sets statutory timelines for completion, and makes signed settlement agreements directly enforceable as decrees removing the earlier need for parties to initiate separate proceedings to enforce a mediated outcome.
