Section 89 of CPC : Section 89: Settlement of disputes outside the Court.

Explanation using Example

Example 1:

Mr. Sharma and Mr. Verma are neighbors in Delhi who have a long-standing dispute over the boundary of their properties. Mr. Sharma claims that Mr. Verma has encroached on his land by building a wall. Mr. Verma, on the other hand, argues that the wall is within his property limits. Both parties file a case in the civil court.

During the initial hearings, the judge observes that both parties are open to negotiation and suggests that the matter could be settled outside the court. The judge formulates a possible settlement where Mr. Verma agrees to demolish the wall and rebuild it on the correct boundary line, and Mr. Sharma agrees to bear half the cost of reconstruction.

The judge then refers the case for mediation. A mediator is appointed, and after several sessions, both parties agree to the terms. The mediator drafts a settlement agreement, which is then submitted to the court. The court approves the settlement, and the case is resolved without a prolonged trial.

Example 2:

A small business owner, Ms. Gupta, in Mumbai, has a contractual dispute with a supplier, Mr. Khan. Ms. Gupta claims that Mr. Khan delivered defective goods and demands a refund, while Mr. Khan insists that the goods were of acceptable quality and refuses to issue a refund. Ms. Gupta files a lawsuit against Mr. Khan.

The court, after reviewing the initial pleadings, believes that the dispute can be settled amicably. The judge formulates a settlement proposal where Mr. Khan agrees to replace the defective goods, and Ms. Gupta agrees to pay the remaining balance for the new delivery.

The judge refers the case to Lok Adalat for judicial settlement. At the Lok Adalat, both parties discuss the terms and agree to the proposed settlement. The Lok Adalat records the settlement, and the court dismisses the case based on the agreed terms.

Example 3:

A housing society in Bangalore has a dispute with a construction company over the delay in completing a residential project. The society members file a case against the construction company, seeking compensation for the delay.

The court, during the preliminary hearings, identifies that both parties are willing to negotiate. The judge formulates a settlement where the construction company agrees to complete the project within six months and offers a discount on the final payment as compensation for the delay.

The judge refers the case for arbitration. An arbitrator is appointed, and after reviewing the case, the arbitrator facilitates a settlement agreement based on the court's proposal. The arbitration award is then submitted to the court, which approves it, and the dispute is resolved without further litigation.