Alternate Dispute Resolution (ADR): Mediation, Lok Adalat and More

Which ADR method suits my dispute?

Start with one question: do you need someone to decide, or do you need help agreeing? If the parties still talk and there is room for a deal, mediation or conciliation is usually the right first step. If the relationship has broken down and you need a binding decision, but want it privately and faster than a suit, arbitration fits, provided both sides have agreed to it. If a case is already pending and the dispute is mainly about the amount, a Lok Adalat can close it in a day.

Some disputes suit ADR particularly well: partnership and family business breakups, landlord and tenant disagreements over commercial premises, supply and payment disputes between businesses that want to keep trading, matrimonial disputes involving children, and cheque bounce and loan recovery matters where the real question is a payment schedule. In all of these, a negotiated outcome can include things a court cannot order, such as a staggered exit, an apology, a future supply arrangement or a visitation schedule that both parents can actually keep.

Other disputes need a court. If you need an urgent injunction, if the other side is hiding assets or has committed a fraud, or if a point of law needs to be settled publicly, ADR can still come later, but it should not be the first move.

Mediation, conciliation, arbitration and Lok Adalat compared

The four main methods differ on who decides, how the outcome binds, and what happens if there is no agreement.

Is a mediated settlement legally binding in India?

It depends on the route. A settlement reached in court-referred mediation is placed before the court, which records it and passes a decree or order in terms of the compromise under Order XXIII rule 3 of the Code of Civil Procedure. That decree is enforceable like any other. A settlement in a Lok Adalat becomes an award that is deemed to be a decree. A settlement signed after conciliation under the Arbitration and Conciliation Act has the same status as an arbitral award.

Under the Mediation Act 2023, a mediated settlement agreement signed by the parties and authenticated by the mediator is final and binding, and can be enforced like a judgment of a court once the relevant provisions are in force. It can be challenged only on narrow grounds: fraud, corruption, impersonation, or that the dispute was not fit for mediation, within 90 days.

A private settlement reached over lunch, without any of these routes, is still a contract. It binds, but enforcing it means filing a suit on the agreement, which defeats much of the purpose. If you are settling a real dispute, put the settlement through one of the routes that gives it the force of a decree, and make sure pending cases are withdrawn or decreed in terms of it.

Mediation in Delhi courts: where it happens and who mediates

Courts in Delhi refer cases to mediation constantly, under section 89 and Order X of the Code of Civil Procedure, and under the family and consumer laws. Matters from the Delhi High Court usually go to the Delhi High Court Mediation and Conciliation Centre, known as Samadhan. Matters from the district courts go to the mediation centres in the district court complexes at Tis Hazari, Saket, Karkardooma, Rohini, Dwarka, Patiala House and Rouse Avenue, and some to the legal services authorities.

Mediators in these centres are trained advocates and, in some cases, retired judicial officers. Court-annexed mediation is free or nominally priced. Sessions are confidential: what is said cannot be used in court, and the mediator's report to the court states only whether the matter settled, not who said what.

In the NCR, the district courts at Surajpur in Gautam Buddh Nagar and at Ghaziabad have their own mediation centres, and the Allahabad High Court has one too. Private mediation, where the parties choose and pay a mediator, is also common in commercial matters and can be arranged quickly when both sides want it.

How a mediation actually runs

Court-annexed and private mediations follow much the same pattern. Expect two to five sessions in an ordinary case, more in a complicated one.

1. Referral or agreement

   The court refers the matter with the parties' consent, or the parties agree to mediate and appoint a mediator. A first date is fixed, and parties are asked to attend in person with their advocates.

2. Joint opening session

   The mediator explains the ground rules: confidentiality, voluntary participation and no recording. Each side briefly states its position, without interruption. This is often the first time either side has heard the other speak calmly.

3. Private sessions

   The mediator meets each side separately, sometimes several times, to understand what really matters, test the strength of positions and explore options. What you say in a private session stays private unless you allow the mediator to share it.

4. Working out terms

   Proposals go back and forth through the mediator. Advocates help check the numbers, the tax impact, the payment schedule and the consequences of default. Nothing binds until it is written and signed.

5. Settlement and return to court

   The terms are written into a settlement agreement signed by both parties and the mediator. In a court-referred case, it goes back to the court to be recorded and decreed. If there is no settlement, the mediator reports failure and the case resumes.

Do I have to try mediation before filing a commercial suit?

Yes, in most cases. Section 12A of the Commercial Courts Act 2015 requires a plaintiff in a commercial dispute of ₹3 lakh or more to exhaust pre-institution mediation before filing, unless the suit seeks urgent interim relief. The Supreme Court has held this to be mandatory, and suits filed without it after August 2022 are liable to be rejected. Courts also look at whether a claim for urgent relief is genuine or only a device to skip mediation.

Pre-institution mediation is run by the legal services authorities under the Commercial Courts (Pre-Institution Mediation and Settlement) Rules 2018. In Delhi, the application goes to the District Legal Services Authority with jurisdiction, or to the Delhi High Court's legal services committee for High Court matters. The authority issues notice to the other side; if it does not appear, a non-starter report is issued and you can file the suit. Mediation is to finish within three months, extendable by two, and that period is excluded from limitation.

A settlement reached in pre-institution mediation has the same status as an arbitral award on agreed terms, so it is directly enforceable. Even where the other side does not settle, the process often narrows the dispute. Our page on the commercial court in Delhi explains what happens when the suit is filed.

What does the Mediation Act 2023 change?

The Mediation Act 2023 is India's first general law on mediation. It provides for voluntary pre-litigation mediation in civil and commercial disputes, sets a time limit of 120 days for completing a mediation, extendable by up to 60 days by consent, and makes a signed mediated settlement agreement enforceable like a court judgment. It allows online mediation with the parties' written consent, and community mediation for disputes that affect peace and harmony in a locality.

The Act sets up the Mediation Council of India to register mediators and mediation service providers and to lay down standards. It lists matters that cannot be mediated, such as most criminal prosecutions, disputes affecting the rights of third parties who are not parties, and certain tax and regulatory matters. Conciliation is treated as a form of mediation, and the Act is designed to replace Part III of the Arbitration and Conciliation Act.

The Act is being brought into force in stages, and some of its provisions, including those on the Mediation Council, have been notified. Before relying on a particular section, such as registration of a settlement or enforcement as a decree, check whether it has been notified. Until then, existing routes, including court-annexed mediation, pre-institution mediation under section 12A and conciliation under the 1996 Act, continue to apply.

The laws that govern ADR in India

ADR draws on several statutes at once. These are the ones that come up most in practice.

Lok Adalat: how settlement works and what you give up

A Lok Adalat is a bench, usually of a judicial officer with a lawyer or social worker, that helps the parties settle. It does not decide a dispute on merits. Cases come to it from courts, where a pending matter is referred with consent or on the court's satisfaction that settlement is possible, or at the pre-litigation stage through the legal services authority. If the parties agree, the bench records an award. If they do not, the case goes back to the court where it was pending, with nothing lost.

National Lok Adalats are held on dates fixed by the National Legal Services Authority several times a year, in every district court complex in Delhi and the NCR on the same day. Cheque bounce cases, bank and finance company recoveries, motor accident claims, electricity and water bills, compoundable criminal cases, traffic challans and some matrimonial and labour disputes are listed in large numbers.

The trade-off is finality. A Lok Adalat award cannot be appealed, and courts will interfere only in a writ petition on narrow grounds such as fraud or lack of consent. So read the settlement terms carefully before you sign, especially the instalment dates and what happens on default. If the case was pending, the court fee paid is refunded.

Permanent Lok Adalat for disputes with public utility services

A Permanent Lok Adalat is different from the ordinary Lok Adalat in one important way: if conciliation fails, it can decide the dispute on merits. It hears disputes about public utility services, such as passenger and goods transport, postal and telephone services, electricity and water supply, sanitation, hospital services and insurance, along with other services the government notifies, up to a value of ₹1 crore. It cannot hear matters relating to non-compoundable offences.

Either party can apply before any court case is filed. Once an application is made, neither side can take the same dispute to court. The Permanent Lok Adalat first tries to bring about a settlement and, failing that, decides the case. Its award is final and binding and is enforced as a decree.

For a householder with an inflated electricity bill, an insurance claim stuck at the grievance stage or a dispute with a hospital over billing, this can be quicker and cheaper than a consumer complaint. For larger or more complicated claims, the consumer commission is usually the better forum, as explained on our page on consumer and competition laws.

Mediation in family disputes: divorce, maintenance and children

Family courts in Delhi are required to attempt settlement, and almost every contested matrimonial matter is referred to mediation at some stage. Mediation in a family case has two possible aims: reconciliation, where both want to try again, or an orderly separation where they do not. The second is far more common. A mediated separation can settle permanent alimony, return of articles and jewellery, custody and visitation, and the withdrawal of all pending cases between the parties, including criminal complaints.

A settlement that includes divorce is usually given effect through a mutual consent petition under section 13B of the Hindu Marriage Act, with a request to waive the six-month waiting period where the case allows it. Where criminal cases such as cruelty complaints are pending, the settlement is placed before the High Court in a petition for quashing under section 528 of the BNSS, which courts commonly allow in genuine matrimonial settlements.

Children are the hardest part and the most important. A parenting plan agreed in mediation, with school holidays, festivals and video calls worked out in detail, tends to last longer than one imposed by order. Our pages on family and divorce law and on a divorce lawyer in Delhi cover the court side.

Can criminal cases be settled through mediation?

Only some. Offences that the law makes compoundable can be settled between the parties, and the case closes on compounding. Cheque bounce cases under section 138 of the Negotiable Instruments Act are compoundable under section 147, and are among the matters most often settled in mediation and Lok Adalats. Our page on cheque bounce cases explains how compounding works at each stage.

Serious non-compoundable offences cannot be compromised by private agreement. For offences that are not compoundable but are essentially private or commercial in character, such as some cheating or breach of trust cases arising from business deals, a settlement can support a petition to the High Court to quash the FIR or complaint. The High Court decides on the facts, and it refuses where the offence affects society at large.

A common misunderstanding is that signing a settlement ends the police case. It does not. The FIR or complaint stays until the court records compounding or the High Court quashes it, so the settlement must provide for that, and payment should usually be linked to those steps.

When ADR is the wrong choice

ADR is not always the sensible course, and pretending otherwise wastes time. If the other side is likely to remove goods, sell property or empty a bank account, go to court for interim protection first. If there has been a clear fraud, a public record may serve you better than a confidential settlement. If one side has far more power, such as an employer over a worker or a large builder over a single buyer, mediation without strong advice can produce an unfair deal.

Watch for mediation used as a delaying tactic. A party that asks for adjournment after adjournment, never brings someone with authority to settle and keeps reopening agreed points is usually buying time. In court-referred mediation you can ask the mediator to close the process and send the matter back. Keep an eye on limitation too: outside the statutory schemes, time spent in informal talks does not stop the clock.

Advocate B.K. Singh's view is that a settlement is worth having only if it is better than the realistic result of litigating, after costs and time. Sometimes it is not, and the honest advice is to go to court.

Drafting dispute resolution clauses and settlement agreements

Many disputes become expensive because the contract said nothing useful about disputes. A tiered clause often works well for business contracts: senior management talks within a fixed period, then mediation within another fixed period, then arbitration or courts. Each tier needs a clear start and end date, so that one side cannot use it to delay a party that needs urgent relief, and the clause should preserve the right to go to court for interim measures.

Settlement agreements deserve the same care. A good settlement names every claim it resolves, sets out payments with dates and modes, says what happens on default (for example, the full amount becomes payable or the suit revives), lists every pending case to be withdrawn and by whom, deals with taxes and stamp duty, and states how it will be made enforceable. Vague terms, such as 'the parties will cooperate', create the next dispute.

We draft and review these clauses and agreements as part of our work on commercial contracts and agreements, and for employment matters on our page on labour and industrial laws.

Preparing for a mediation or Lok Adalat: a checklist

Good preparation is the main reason some mediations settle in two sessions and others drag on.

• Know your numbers: the principal claim, interest, costs, and what you have already paid or received.
• Decide your realistic range in advance: the best you can hope for and the least you will accept, with reasons.
• Work out what you would do if there is no settlement, how long that would take and what it would cost.
• Bring the person who can actually say yes. For a company, carry a board resolution or letter of authority.
• Carry the key documents: contract, ledger, correspondence and any court orders, with copies for the mediator.
• Think about non-money terms that matter to you or the other side: timing, apology, references, future business, custody arrangements.
• Check the tax and stamp duty effect of any payment or transfer before you agree to it.
• Have a draft settlement format ready so that agreed terms can be written down the same day.

Mistakes that undo settlements

• Signing without a default clause. If instalments stop, you need the settlement to say exactly what happens next, or you are back to square one.
• Leaving a case pending. Every suit, complaint and FIR connected with the dispute should be listed, with a date and responsibility for withdrawal, compounding or quashing.
• Settling privately and not recording it. An unrecorded settlement is only a contract. Have it decreed, recorded by the Lok Adalat or signed through a route that makes it enforceable.
• Agreeing to a figure without checking tax. The tax treatment of a settlement amount can change its real value considerably.
• Sending someone without authority. A representative who has to 'check with the boss' turns a one-day settlement into a three-month process.
• Using the mediation room to score points. Admissions are protected by confidentiality, but bad faith in the room makes a later settlement harder.

How we help with ADR, and what it costs

We represent parties in court-annexed and private mediations, pre-institution mediation under section 12A, Lok Adalats, Permanent Lok Adalats, conciliation and arbitration, in Delhi, Gautam Buddh Nagar and Ghaziabad. Advocate Sadhna Singh usually prepares the matter: the chronology, the calculations and a short note of the realistic range. Advocate B.K. Singh advises on whether to settle at all, on what terms, and on how to make the outcome enforceable.

Fees for ADR work are discussed at the first meeting and agreed in writing, stage by stage, often as a fixed fee for preparation and attendance at a set number of sessions, with drafting the settlement as a separate stage. Mediator fees in private mediation, and any institutional or arbitrator fees, are separate. Court-annexed mediation and Lok Adalats charge little or nothing.

To discuss whether ADR suits your dispute, send the papers through our online enquiry page. You can read about Advocate B.K. Singh and Advocate Sadhna Singh on their profiles.