Order on Interim Application — Section 89 Reference, Mediation

Not every interim application asks for an injunction or an attachment. One of the most consequential interlocutory orders a civil court can pass is the order that refers the parties to an alternative dispute resolution (ADR) process under Section 89 of the Code of Civil Procedure, 1908. Read with Order X Rules 1A, 1B and 1C, and now supplemented by the Mediation Act, 2023, Section 89 converts the court from a pure adjudicator into a facilitator who must, at a defined stage, ask whether the dispute is fit to be settled rather than fought. For a judiciary aspirant, the order on an interim application for reference to mediation is a deceptively simple draft that hides a tangled statutory history, a famous drafting error corrected by the Supreme Court, and a body of guidance on which cases should and should not be sent to ADR. This chapter walks through the statutory scheme, the controlling precedents, and the anatomy of a clean, appeal-proof reference order.

What the Interim Application Actually Seeks

An interim application invoking Section 89 is not a prayer for relief on the merits. It asks the court to record that the suit contains "elements of a settlement which may be acceptable to the parties" and to refer the dispute, or a severable part of it, to one of the five ADR processes named in the statute. The application may be filed by a party, or the court may act suo motu, because the duty under Section 89 is cast on the court itself. The order that follows is interlocutory: it does not dispose of the suit, it suspends the adversarial timeline while the parties attempt a negotiated outcome. Understanding this framing is essential, because the relief the drafter records, the conditions imposed, and the consequences of failure all flow from the limited, procedural character of the order. For the foundational vocabulary of interlocutory drafting, see the Bail & Misc Order Drafting hub and the introduction to the series.

The five processes listed in Section 89(1) are arbitration, conciliation, judicial settlement including settlement through a Lok Adalat, and mediation. Of these, the order referring parties to mediation is by far the most common in trial courts today, and it is the focus of this chapter, though the drafter must always identify which of the five processes is being invoked because the governing statute differs for each.

The Statutory Scheme — Section 89 CPC and Order X

Section 89 of the Code of Civil Procedure was inserted by the CPC (Amendment) Act, 1999 and brought into force, along with the allied amendments to Order X, on 1 July 2002. Section 89(1) provides that 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, give them to the parties for their observations, and after receiving the observations, reformulate the terms of a possible settlement and refer the same for arbitration, conciliation, judicial settlement including Lok Adalat, or mediation. Section 89(2) then prescribes the governing law for each route: for arbitration or conciliation the Arbitration and Conciliation Act, 1996 applies; for a Lok Adalat or judicial settlement the Legal Services Authorities Act, 1987 applies; and for mediation the court is to effect a compromise between the parties following the prescribed procedure.

Order X Rule 1A obliges the court, after recording admissions and denials, to direct the parties to opt for one of the Section 89 modes; Rule 1B requires the parties to appear before the chosen forum or authority; and Rule 1C allows the presiding officer of that forum to refer the matter back to the court if it is not proper to proceed with the ADR process. The scheme is therefore a closed loop: the suit leaves the docket for ADR and returns either as a settled matter to be decreed or as a contested matter to be tried.

The Famous Drafting Error — Afcons Infrastructure

Section 89 as enacted contained a conspicuous inconsistency. Clause (c) of sub-section (2) purported to define "judicial settlement" in language that actually described mediation, and clause (d) defined "mediation" in language that described judicial settlement. The two definitions were transposed. In Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24, the Supreme Court held that this was a drafting error and that the definitions in clauses (c) and (d) of Section 89(2) must be interchanged to make the provision workable. After the interchange, judicial settlement means a settlement by a court-connected institution or person to whom the dispute is referred, while mediation means the court effecting a compromise through a trained neutral. The Court read this corrected meaning into the section as a matter of purposive interpretation, and every reference order drafted today proceeds on the corrected text rather than the literal language of the 2002 enactment.

This is the single most examined point on Section 89, and a drafter who reproduces the uncorrected statutory definitions in a reference order reveals an ignorance of Afcons. The corrected understanding governs both the choice of process and the statute the order must cite.

Timing — When the Court Must Consider Reference

Afcons also settled the timing question. The Court held that the only practical way to read Section 89 with Order X Rule 1A is that after the pleadings are complete, and after recording admissions and denials, but before framing the issues, the court must have a hearing to consider recourse to an ADR process. The Court described this hearing as mandatory: the court must apply its mind to whether the dispute is fit for ADR at that stage. A reference order should therefore recite that pleadings are complete and that the matter has reached the Section 89 stage, because an order passed prematurely, before issues could even be contemplated, or belatedly, after a full trial, invites the criticism that the court did not follow the Afcons sequence.

The earlier Constitution-era guidance in Salem Advocate Bar Association v. Union of India (II), (2005) 6 SCC 344, had already emphasised that Section 89 was intended to be invoked early and effectively, and had directed the constitution of a committee under Justice M. Jagannadha Rao to frame model rules for the ADR processes. Afcons built on this by fixing the precise procedural moment for the mandatory hearing.

Salem Bar and the Model ADR Rules

The validity and workability of Section 89 were tested twice in the Salem Advocate Bar Association litigation. In the second decision, Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344, decided on 2 August 2005, the Supreme Court upheld the constitutionality of the 1999 and 2002 amendments and considered the report of the committee chaired by Justice M. Jagannadha Rao. The Court approved model case-management rules and model ADR and mediation rules, leaving it to the High Courts to adopt them with or without modification for giving effect to Section 89. Most High Courts have since notified mediation rules under this mandate, and a sound reference order to mediation should cite the relevant High Court mediation rules alongside Section 89.

The drafter must therefore know which set of rules governs in the relevant State, because the order will typically direct the parties to appear before the mediation centre constituted under those rules and will fix the timeline and the reporting obligation that the rules prescribe.

Consent — Why Arbitration Differs From Mediation

A crucial distinction runs through Section 89 drafting: of the five processes, arbitration alone is adjudicatory and produces a binding award, while conciliation, judicial settlement, Lok Adalat and mediation are non-adjudicatory and depend on agreement. In Afcons, the Supreme Court held that a civil court exercising power under Section 89 cannot refer a suit to arbitration unless all the parties to the suit agree to such a reference; the court cannot foist arbitration on unwilling parties through Section 89 because arbitration ousts the court's jurisdiction and culminates in a binding award. By contrast, the court may refer parties to mediation, conciliation, Lok Adalat or judicial settlement even without mutual consent, because those processes do not bind the parties unless and until they themselves agree to a settlement.

For the drafter this means a reference order to mediation can be passed over a party's objection and need only record the court's satisfaction that elements of settlement exist, whereas an order referring the dispute to arbitration must record the consent of all parties on the face of the order. Confusing the two is a frequent and fatal drafting error.

Which Cases Should and Should Not Be Referred

Afcons offered illustrative, non-exhaustive categories. Cases unsuited to ADR include representative suits under Order I Rule 8, election disputes, suits involving grant or cancellation of statutory rights against the public, cases of serious and specific allegations of fraud, fabrication or forgery, suits for declaration of title against the Government, and prosecutions for criminal offences. Cases ordinarily suitable for ADR, and mediation in particular, include disputes relating to trade, commerce and contracts, ordinary money claims, disputes between neighbours, partners and family members, matrimonial and maintenance disputes, and disputes arising from strained personal or commercial relationships where continued litigation would only worsen matters.

The Court clarified that where a case falls within an excluded category there need be no reference, but in all other cases reference to an ADR process is the norm rather than the exception. A reference order is stronger when it briefly records why the dispute falls within a suitable category rather than merely reciting the statutory formula. The same suitability analysis informs companion drafting topics such as the structure and components of a reasoned order.

The Mediation Act, 2023 — A New Statutory Layer

The Mediation Act, 2023 now overlays the Section 89 framework. Section 5 of the Act permits parties to voluntarily, and by mutual consent, opt for pre-litigation mediation in civil and commercial disputes irrespective of any mediation agreement, although the original proposal for compulsory pre-litigation mediation was diluted to a voluntary scheme except where another law, such as the Commercial Courts Act, 2015, already mandates it. More importantly for the interim-application drafter, Section 7 of the Act empowers any court or tribunal to refer the parties to mediation at any stage of a proceeding, even where the dispute was not earlier settled under Section 5.

The practical effect is that a present-day reference to mediation may rest on Section 89 CPC, on Section 7 of the Mediation Act, 2023, or on both, and a careful order will cite the provision actually relied upon. The Act also provides for the registration and enforceability of mediated settlement agreements, which strengthens the value of a successful reference. Aspirants should treat the Act as the modern statutory companion to Section 89 rather than a replacement, since Section 89 remains in force.

Matrimonial Disputes — A Special Case for Mediation

Family and matrimonial litigation is the paradigm category for mediation reference. In K. Srinivas Rao v. D.A. Deepa, (2013) 5 SCC 226, the Supreme Court directed that matrimonial disputes, particularly those relating to custody of children, maintenance, education and property, are eminently fit for mediation, and recommended that at the earliest stage when such a dispute is taken up by the Family Court or the court of first instance it should be referred to a mediation centre. The Court noted that a significant proportion of matrimonial disputes are settled through mediation centres and that early reference preserves relationships and reduces acrimony.

A reference order in a matrimonial matter therefore stands on especially firm ground, and the drafter may legitimately rely on K. Srinivas Rao to record that the category itself is presumptively suitable. The same decision also held that lodging a false criminal complaint can amount to matrimonial cruelty, underlining how intertwined the civil and quasi-criminal aspects of family disputes can be, and why a settlement-oriented order serves the ends of justice.

Motor Accident Claims and Institutional Mediation

The push towards mediation has extended to motor accident compensation. In M.R. Krishna Murthi v. New India Assurance Co. Ltd., decided on 5 March 2019, the Supreme Court urged the Government to consider setting up a Motor Accidents Mediation Authority and to examine amendments to the Motor Vehicles Act, and impressed upon Motor Accident Claims Tribunals the desirability of referring claims to mediation for early resolution. Although the decision is best known for revising the compensation awarded, its institutional recommendations on mediation are frequently examined.

For the drafter, the lesson is that even statutory-tribunal proceedings outside the strict ambit of the CPC are increasingly funnelled into mediation, and the reasoning of M.R. Krishna Murthi supports a liberal, settlement-oriented reading of the court's referral power wherever a claim turns largely on quantum rather than contested liability.

Settlement on the Criminal Side — Quashing After Compromise

Although Section 89 CPC and the Mediation Act operate on the civil side, the spirit of settlement reaches into criminal litigation through the inherent power to quash proceedings after a compromise. In Gian Singh v. State of Punjab, (2012) 10 SCC 303, a three-Judge Bench held that the High Court's power under Section 482 of the Code of Criminal Procedure to quash proceedings on the basis of a settlement is distinct from compounding under Section 320, and may be exercised where the dispute is predominantly civil or personal in flavour, such as those arising from commercial, financial, matrimonial or family relationships, but not in heinous offences or offences against society such as those under special statutes.

This matters to the drafter of miscellaneous orders because mediation increasingly produces settlements in matters with a criminal overlay, and the order recording or relying on such a settlement must be sensitive to the Gian Singh line between quashable, compromise-based disputes and offences that cannot be settled. The interplay with bail and other miscellaneous orders is developed in the chapters on bail orders in non-bailable offences and anticipatory bail orders.

Anatomy of a Reference-to-Mediation Order

A clean order on an interim application for reference to mediation has a predictable architecture. It opens with the cause-title and the number of the application. It records the stage of the suit, confirming that pleadings are complete and the matter has reached the Section 89 stage as required by Afcons. It then records the court's satisfaction that elements of a settlement exist and identifies the suitable category into which the dispute falls. The operative paragraph names the specific ADR process chosen, almost always mediation, and the governing law, namely Section 89 CPC read with the relevant High Court mediation rules, and where applicable Section 7 of the Mediation Act, 2023.

The order then directs the parties to appear before the named mediation centre or mediator on a fixed date, fixes an outer time-limit for the mediation, and directs the mediator to report the outcome to the court. It expressly provides that if mediation fails, the suit will be restored to its original number and proceed from the stage of framing of issues, preserving the parties' rights and the limitation position. Finally, it records that the reference does not amount to an expression of opinion on the merits. This last recital protects against any later allegation of pre-judgment.

Common Drafting Errors and How to Avoid Them

Several errors recur in poorly drafted reference orders. The first is reproducing the uncorrected definitions of mediation and judicial settlement, ignoring the interchange mandated by Afcons. The second is referring parties to arbitration without recording their consent, contrary to the consent requirement in Afcons. The third is passing the order at the wrong stage, either before pleadings are complete or after the issues have long been framed and evidence recorded, breaching the mandatory-hearing timing. The fourth is failing to fix a timeline or a reporting obligation, leaving the suit in limbo with no mechanism for its return to the docket under Order X Rule 1C.

A fifth and subtle error is expressing a view on the merits while recording satisfaction that settlement elements exist; the order must be carefully worded so that the recital of suitability does not read as a finding on the disputed questions. A sixth error is the omission of any reference to the High Court mediation rules notified pursuant to Salem Advocate Bar Association v. Union of India, (2005) 6 SCC 344, which supply the procedural skeleton for the mediation that the bare section does not. A seventh is treating the reference as a final disposal of the suit rather than as an adjournment, which can lead to the suit being erroneously consigned to the record room. Avoiding these errors produces an order that survives challenge and serves the underlying purpose of Section 89, which is to spare the parties and the court the cost of an avoidable trial. For the discipline of writing reasons that withstand scrutiny, compare the treatment in the order structure chapter.

Consequences of Reference and Restoration to the Docket

Once the reference order is passed, the suit stands adjourned for the mediation. If the parties reach a settlement, the mediator records it and forwards it to the court, which examines it and, if lawful, passes a decree in terms of the settlement; a mediated settlement under the Mediation Act, 2023 carries statutory enforceability. If the mediation fails, the presiding officer of the ADR forum refers the matter back under Order X Rule 1C, and the court restores the suit and proceeds to frame issues and try the dispute. The reference does not extinguish any right, defence or limitation advantage, and a well-drafted order says so expressly.

Because the order is interlocutory and procedural, it is generally not appealable as a decree, though it may be tested in revision or under Article 227 of the Constitution in cases of jurisdictional error, such as a forced reference to arbitration without consent contrary to Afcons. A reference that respects the consent rule, the timing rule and the suitability categories rarely attracts interference, because the supervisory court is slow to disturb a procedural order that merely affords the parties an opportunity to settle. The drafter who understands both the limited appealability and the substantive guidance in Afcons, Salem Bar, K. Srinivas Rao and the Mediation Act, 2023 will produce an order that moves the litigation forward rather than spawning a fresh round of interlocutory skirmishing. For the broader map of miscellaneous orders, return to the series hub.