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CS Professional · Drafting, Pleadings and Appearances · Judicial and Administrative Framework

In a pending commercial suit between Arjun Textiles and Bharat Dyes, the court sees elements of a settlement acceptable to both parties. Under Section 89 of the Code of Civil Procedure, 1908, what should the court do first?

The court should formulate the terms of a possible settlement and give them to the parties for their observations. After that it may reformulate the terms and refer the matter to arbitration, conciliation, judicial settlement including Lok Adalat, or mediation.

  1. AFormulate the terms of settlement and give them to the parties for their observations, then possibly reformulate and refer them to arbitration, conciliation, judicial settlement including Lok Adalat, or mediationCorrect
  2. BImmediately dismiss the suit and direct the parties to arbitration
  3. CPass a decree on the terms without hearing the parties
  4. DRefer the dispute to mediation without formulating any terms

Explanation

Section 89(1) requires the court to formulate the terms of settlement, give them to the parties for observations, and then it may reformulate them and refer the matter to one of the four listed modes. Skipping formulation or dismissing the suit is not provided.

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