Online Dispute Resolution In India (2006)

The aim of this article is to analyse the prospective use of online dispute resolution mechanism (ODRM) in India. The necessity of the same has arisen due to the growing use of alternative dispute resolving mechanism (ADRM) in India to reduce the burdening of the already overburdened courts in India. The popularity and use of ADRM is increasing but it can achieve its best only if the same is integrated with the information technology.

I. Introduction 

The swift growth of e-commerce and web site contracts has increased the potential for conflicts over contracts which have been entered into online. This has necessitated a solution that is compatible with online matters and is netizens centric. This challenging task can be achieved by the use of ODRM in India. The use of ODRM to resolve such e-commerce and web site contracts disputes are crucial for building consumer confidence and permitting access to justice in an online business environment. These ODRM are not part and parcel of the traditional dispute resolution machinery popularly known as “judiciary” but is an alternative and efficacious institution known as ADRM. Thus, ADR techniques are extra-judicial in character. They can be used in almost all contentious matters, which are capable of being resolved, under law, by agreement between the parties. They have been employed with very encouraging results in several categories of disputes, especially civil, commercial, industrial and family disputes. These techniques have been shown to work across the full range of business disputes like banking, contract performance, construction contracts, intellectual property rights, insurance, joint ventures, partnership differences etc. ADR offers the best solution in respect of commercial disputes. However, ADR is not intended to supplant altogether the traditional means of resolving disputes by means of litigation. It only offers alternatives to litigation. There are a large number of areas like constitutional law and criminal law where ADR cannot substitute courts. In those situations one has to take recourse of the existing traditional modes of dispute resolution.

II. The Premier Mode Of ADR 

Arbitration is the supreme method for resolving and adjudicating commercial disputes[1]. It is a procedure in which the dispute is submitted to one or more arbitrators, for adjudication, who resolve the dispute. The decision is given in the form of an award. The main objects of arbitration are speed, economy, convenience and simplicity of procedures. It encourages healthy relationship between the parties. The Arbitration and Conciliation Act, 1996 governs the “arbitration procedures” in India. Section 5 of the Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I (Sections 2 to 43), no judicial authority shall intervene except where so provided in the said part. This clearly indicates the legislative intent to minimise supervisory role of courts to ensure that the intervention of the court is minimal. Section 4 is a deeming provision, which lays down that where a party proceeds with the arbitration without stating his objection to non-compliance of any provision of Part I from which the parties may derogate or any requirement under arbitration agreement, it shall be deemed that he has waived his right to so object. Section 7 provides that the arbitration agreement shall be in writing and such an agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. Sub-section (4) of Section 7 provides the conditions under which a document or exchange of letter or exchange of statement of claim and defence may amount to an arbitration agreement. Section 11 of the Act provides for appointment of arbitrators and sub-section (6) thereof empowers the Chief Justice of the High Court or any person or institution designated by him to make such an appointment on the happening of certain conditions enumerated in clauses (a), (b) or (c). Section 16 of the Act is important and it provides that the arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or authority of the arbitration agreement[2]. Thus, the base provided by the Act is sufficient to accommodate the mandates of ODRM. It must be noted that a court of law cannot render justice unless the ultimate decision is based on the contemporary law as prevailing in the society. A decision based on an old law, which does not satisfy the requirements of the present situation, and environment should be avoided. In such a situation the efforts of the courts should be to give the law a “purposive, updating and an ongoing interpretation”. This position makes the interface of justice delivery system with the information technology inevitable and unavoidable. We cannot allow the dead hand of the past to stifle the growth of the living present. Law cannot stand still; it must change with the changing social concepts and values. If the bark that protects the tree fails to grow and expand along with the tree, it will either choke the tree or if it is a living tree, it will shed that bark and grow a new living bark for itself. Similarly, if the law fails to respond to the needs of changing society, then either it will stifle the growth of the society and choke its progress or if the society is vigorous enough, it will cast away the law, which stands in the way of its growth. Law must therefore constantly keep on adapting itself to the fast changing society and not lag behind[3]. Justice is supreme and justice ought to be beneficial for the society so that the society is placed in a better-off situation. Law courts exist for the society and ought to rise up to the occasion to do the needful in the matter, and as such ought to act in a manner so as to sub serve the basic requirement of the society. It is a requirement of the society and the law must respond to its need. The greatest virtue of the law is its flexibility and its adaptability; it must change from time to time so that it answers the cry of the people, the need of the hour and the order of the day. Thus, the justice delivery system cannot afford to take the information technology revolution lightly[4]. The judiciary in India has not only recognised this need but has also utilised the information technology to do complete justice. The Supreme Court has on various occasions encouraged the use of information technology for meeting the ends of justice and to do complete justice. There is nothing that shows that the courts in India will not encourage the concept of ODRM in India. The Supreme Court has encouraged the use of ADR techniques in India and very soon the same will be extended to ODRM as well.

III. E-Justice System In India 

The judicial response vis-à-vis information technology is positive and technology friendly.

In M/S SIL Import, USA v M/S Exim Aides Silk Exporters[5] the words “notice in writing”, in Section 138 of the Negotiable Instruments Act, were construed to include a notice by fax. The Supreme Court observed: “A notice envisaged u/s 138 can be sent by fax. Nowhere is it said that such notice must be sent by registered post or that it should be dispatched through a messenger. Chapter XVII of the Act, containing sections 138 to 142 was inserted in the Act as per Banking Public Financial Institution and Negotiable Instruments Laws (Amendment) Act, 1988.Technologiacl advancements like Fax, Internet, E-mail, etc were on swift progress even before the Bill for the Amendment Act was discussed by the Parliament. When the legislature contemplated that notice in writing should be given to the drawer of the cheque, the legislature must be presumed to have been aware of the modern devices and equipments already in vogue and also in store for future. If the court were to interpret the words “giving notice in writing” in the section as restricted to the customary mode of sending notice through postal service or even by personal delivery, the interpretative process will fail to cope up with the change of time. So if the notice envisaged in clause (b) of the proviso to section 138 was transmitted by Fax, it would be compliance with the legal requirement”.

Thus the requirement of a written notice will be satisfied if the same is given in the form of a fax, e-mail etc, using the information technology. It must be noted that a notice by e-mail can be send instantaneously and its delivery is assured and acknowledged by a report showing the due delivery of the same to the recipient. This method is more safe, accurate, economical and lesser time consuming as compared to its traditional counterpart, popularly known as “Registered A.D”.

In Basavaraj R. Patil v State of Karnataka[6] the question was whether an accused need to be physically present in court to answer the questions put to him by the court whilst recording his statement under section 313. The majority held that the section had to be considered in the light of the revolutionary changes in technology of communication and transmission and the marked improvement in the facilities of legal aid in the country. It was held that it was not necessary that in all cases the accused must answer by personally remaining present in the court. Once again, the importance of information technology is apparent. If a person residing in a remote area of South India is required to appear in the court for giving evidence, then he should not be called from that place, instead the medium of “video conferencing” should be used. In that case the requirements of justice are practically harmonised with the ease and comfort of the witnesses, which can drastically improve the justice delivery system.

In State of Maharashtra v Dr.Praful.B.Desai[7] the Supreme Court observed: “The evidence can be both oral and documentary and electronic records can be produced as evidence. This means that evidence, even in criminal matters, can also be by way of electronic records. This would include video conferencing. Video conferencing is an advancement in science and technology which permits one to see, hear and talk with someone far away, with the same facility and ease as if he is present before you i.e. in your presence. Thus, it is clear that so long as the accused and/or his pleader are present when evidence is recorded by video conferencing that evidence is recorded in the “presence” of the accused and would thus fully meet the requirements of section 273, Criminal Procedure Code. Recording of such evidence would be as per “procedure established by law”. The advancement of science and technology is such that now it is possible to set up video conferencing equipments in the court itself. In that case evidence would be recorded by the magistrate or under his dictation in the open court. To this method there is however a drawback. As the witness is not in the court there may be difficulties if commits contempt of court or perjures himself. Therefore as a matter of prudence evidence by video conferencing in open court should be only if the witness is in a country which has an extradition treaty with India and under whose laws contempt of court and perjury are also punishable”.

This judgment of the Supreme Court is a landmark judgment as it has the potential to seek help of those witnesses who are crucial for rendering the complete justice but who cannot come due to “territorial distances” or even due to fear, expenses, old age, etc. The Courts in India have the power to maintain anonymity of the witnesses to protect them from threats and harm and the use of information technology is the safest bet for the same. The testimony of a witness can be recorded electronically the access to which can be legitimately and lawfully denied by the Courts to meet the ends of justice.

The above discussion shows that the judiciary in India is not only aware of the advantages of information technology but is actively and positively using it in the administration of justice, particularly the criminal justice. Thus, it can be safely concluded that the “E-justice system” has found its existence in India. It is not at all absurd to suggest that ODRM will also fine its place in the Indian legal system very soon.

IV. Online Dispute Resolution

The ADR mechanism can be effectively used to settle online disputes by modifying it as per the need. It is time effective and cost efficient. It can also overcome the geographical hurdles. However, there are certain issues revolving around ADR mechanism like need for personnel with knowledge of IT, ADR and law; technical concerns; legal sanctity of proceedings; industry support etc. But these hurdles are just a passing phase. The use of ADR mechanisms for resolving online disputes is increasing day by day. A number of web-sites provide for some type of online dispute resolution method like arbitration, negotiation, mediation etc. and also certain conflict management services. These services fall into the general categories of complaint handling, negotiation, mediation and arbitration. These services will be in great demand in the future since the 1996 Act has given paramount importance to “party autonomy” by accepting the intention of parties as a platform for dispute resolution. Thus, what law will be applicable will depend on the intention of parties. If the parties have adopted the mechanism of ODRM then it will definitely apply with necessary minor modifications. The language used in various sections of the Arbitration Act give options to the parties to opt for the procedure as per their agreement during the arbitral proceedings before the arbitrator. So if there is an agreement between the parties with regard to the procedure to be followed by the arbitrator, the arbitrator is required to follow the said procedure. However, this would not mean that in appeal parties can contend that the appellate procedure should be as per their agreement. The appellate procedure would be governed as per the statutory provisions and parties have no right to change the same[8]. It must be noted that party autonomy presupposes the existence of an arbitration agreement. There may be a situation where the parties had not entered into an arbitration agreement. To meet such situations Section 89 of CPC can be invoked. The reason for inserting Sec.89 has been to try and see that all the cases which are filed in the court need not necessarily be decided by the court itself. Keeping in mind the law delays and the limited number of judges, which are available, it has now become imperative to resort to ADR Mechanism as contemplated by Sec.89. There is a requirement that the parties to the suit must indicate the form of ADR, which they would like to resort to during the pendency of the trial of the suit. If the parties agree to arbitration, then the provisions of the Arbitration and Conciliation Act 1996 will apply and that will go outside the stream of the court[9].

V. Conclusion

The need and necessity of ODRM is going to be felt very soon and we must be prepared for the same. A sound techno-legal base must be established in advance. There is a possibility that we may get BPO services in arbitration matters in the distant future. In any case it is also a mandate of Article 21 of the Constitution of India. Art.21 confers a Fundamental Right on every person not to be deprived of his life or liberty, except according to procedure established by law. Such procedure is not some semblance of a procedure but the procedure should be “reasonable, fair and just”, and therefrom flows the right to speedy trial[10]. It cannot be doubted that if the State is encouraging ODRM it is thereby assisting in the attainment of a speedier, economical and convenient justice system. Thus, the sooner ODRM is adopted the better it will be for the nation in general and the justice seeker in particular.

[1] The other methods like conciliation, mediation, etc are also available but arbitration is generally used to resolve the disputes.
[2] Shree Subhlaxmi Fabrics Pvt. Ltd. v Chand Mal Baradia, Civil appeal no: 7653 of 2004.
[3] Justice Bhagwati in National Textile Worker’s Union v P.R.Ramakrishnan, (1983) 1 SCC 228, at p. 256.
[4] Praveen Dalal, “Justice through electronic governance”,
[5] AIR 1999 SC 1609.
[6] (2000) 8 SCC 740.
[7] 2003 (3) SCALE 554.
[8] N S Nayak v State of Goa, 2003 (6) SCC 56.
[9] Salem Advocate Bar Association v U.O.I, Writ Petition No.496 of 2002 decided on 25.10.2002.
[10] Hussainara Khatoon (1) v Home Secretary, State of Bihar [(1980)1SCC 81]

Source: Electronic Courts In India