AFCONS INFRASTRUCTURE LTD. AND ANR. versus CHERIAN VARKEY CONSTRUCTION CQ. (P) LTD. AND ORS.

AFCONS INFRASTRUCTURE LTD. AND ANR. versus CHERIAN VARKEY CONSTRUCTION CQ. (P) LTD. AND ORS.

A civil court cannot refer a suit to arbitration under Section 89 of the Code of Civil Procedure unless all parties to the suit agree for such reference. Section 89 mandates considering ADR processes after completion of pleadings, but actual reference to arbitration and conciliation can only be by consent. Other ADR processes may proceed without such consent. Section 89 must be interpreted purposively to correct drafting anomalies so as to give effect to its object.

Parties
Appellant: Afcons Infrastructure Ltd.; Respondent: Cherian Varkey Construction Co. (P) Ltd.; Respondents: Others
Jurisdiction
India
Judgment Date
26 July 2010
Procedural Posture
Civil Appeal / Appeal Against High Court Order Affirming Trial Court's Reference to Arbitration Under Section 89 CPC
Outcome
Appeal allowed
Legal Topics
Alternative Dispute Resolution, Section 89 CPC, Interpretation of Statutes
Civil Procedure Alternative Dispute Resolution Section 89 CPC Interpretation of Statutes

Case Brief

Summary, issues, holding and outcome

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Parties

Afcons Infrastructure Ltd.

Appellant

Cherian Varkey Construction Co. (P) Ltd.

Respondent

Others

Respondents

Procedural Posture

Civil Appeal / Appeal Against High Court Order Affirming Trial Court's Reference to Arbitration Under Section 89 CPC

Legal Issues

  1. 1 Whether a civil court can refer a suit to arbitration under Section 89 CPC in the absence of consent of all parties
  2. 2 The correct interpretation and implementation of Section 89 CPC regarding ADR processes

Ratio Decidendi

A civil court cannot refer a suit to arbitration under Section 89 of the Code of Civil Procedure unless all parties to the suit agree for such reference. Section 89 mandates considering ADR processes after completion of pleadings, but actual reference to arbitration and conciliation can only be by consent. Other ADR processes may proceed without such consent. Section 89 must be interpreted purposively to correct drafting anomalies so as to give effect to its object.

Court Disposition

Appeal allowed

Orders

  • The order of the trial court referring the matter to arbitration and the order of the High Court affirming that reference are set aside.
  • The Trial Court will now consider and decide upon a non-adjudicatory ADR process.