Research Study Report

On

What Are Process

And
Stages of Mediation
 The meaning of mediation is an informal process for helping people who have a dispute
to sort it out for themselves without going to court and it is a process in which the parties to a
dispute, with the assistance of a neutral third party (the mediator), identify the disputed issues,
consider alternatives and endeavour to rear an agreement.
The mediator has no advisory or determinative role in regard to the content of the dispute
or the outcome of its resolution, but may advise on or determine the process of mediation
whereby resolution is attempted. Mediation can either be private or mandated by court. In both
types, the initial stage or pre-mediation phase, may involve mediator informing parties about the
mediation process. This may also involve mediator dealing with queries of disputants, making
them understand about the particular models and approaches, checking the suitability of
mediation, and helping parties reach the stage of readiness to commit themselves to signing up to
the process."

Why Mediation is Advantageous Over Other Modes of Dispute Resolution

Mediation has long been practiced a method of dispute resolution whether in an organised
capacity or unorganised capacity. Owing to the reason behind this perpetuity are the following
reasons. However, it is important to note that just like any other procedure for dispute resolution,
there is no assurances of specific outcomes.
Confidentiality:
When one looks at the parties and cases generally associated with mediations, it is observed that
usually these are conflicts between married couples over divorce or custody matters, disputes
arising between family members, business partners, neighbours, corporations and unions, etc.
These cases often have matters which both parties would prefer being unknown to public ears. In
the mediation process, the environment itself plays a huge role in achieving an amicable
outcome. Parties and a mediator converge to mutually talk out the conflict and negotiate a
solution which is equitable for the parties involved. Any matter discussed between parties and
the mediator are not disclosed to any member of the public or press unless both parties expressly
request for the same.
Convenience:
Mediation as a method of dispute resolution by its very nature one which seeks to constructively
adjudicate the matter. It is above all, a voluntary process which can be set in a nominal amount
of time due to the absence of requirements such as filing court documents in order to get a date.
This is of particular importance, once again in conjunction with the particular types of cases
opting for this method of dispute resolution, time is of essence. Furthermore, as a technique of
dispute resolution, mediation represents a system without any procedural complications and no
compliance requirement with regards to rules of evidence.

Collaborative:
Mediation truly encapsulates one of the most important concepts of law, resolution. Since the
parties are in a position where they do not seek to punish the other rather come to a middle
ground in order to pacify matters furthermore. This results in an adjudication which is much
more suitable and agreeable than other forms of dispute resolution. This flexibility is a major
contributor to the popularity of mediation in the first place.
 From the concept of three Cs, we begin to look into the more practical aspects of mediation.
The very first thing that has to be understood is that mediation is often portrayed as the best form
for dispute resolution. However, it is imperative to understand, that statement doesn't stay true
for all applications. For conflicts between parties where the concern is a civil suit and there has
been no claim for damages or none of the parties are seeking punitive damages, mediation is
slowly but surely turning out to be one of the most favourable options.
This is due in parts thanks to the immense use of mediation across all stages in the
corporate domain. As a matter of fact, Business Mediation is the most rapidly growing approach
for resolving business disputes. The swiftness of adjudication coupled with the positive outcome
is a massive attractor for business executives.

Scope of Mediation
Mediation has been in practice since ages. It is a process where an impartial outsider
helps the parties to a suit to determine their disputes and contrast of opinion resulting into a
meeting of minds. In mediation, an unbiased mediator works with discussion between the parties
permits the parties to think twice about resolve their dispute and misunderstandings by arriving
at an arranged settlement.
The choices of the mediator, notwithstanding, are not binding on the parties and this is
one of the significant constraints of mediation. Mediation permits the threatening parties to
discuss their issues with one another through the mediator which in any case wouldn't occur in
the typical litigation process. Mediation is one of the most adaptable alternatives of dispute
resolution as it doesn't follow any of the courtroom conventions and there is extension for the
parties to haggle with one another.
Other than this, it likewise maintains the privacy of the subtleties given by the parties
consequently making it a more dependable alternative. The arranged settlement showed up at are
more pleasing to the parties than the judgment conveyed by the court.
In mediation, the parties retain the right to choose for themselves whether to resolve a
dispute and furthermore the particulars of any settlement and moreover, any party might pull out
from the mediation proceedings at any stage before its termination and without assigning any
explanation. As it is exceptionally apparent that court proceedings are extended as well as costly
and that makes it unreasonably expensive for certain segments of society.
Mediation, then again, is a straightforward and inexpensive recommendation. Mediation
doesn't generally bring about a settlement agreement and it is exceptionally subjective depending
upon the idea of cases and parties involved in the equivalent subsequently making it difficult to
start legal precedents and trends.
The Courts at different level refer cases for mediation in the respective legal services
authorities that fall within their jurisdiction. The cases are alluded during the pendency of the
judgment and keeping in mind that the proceeding is as yet going on in that specific court.
Mediation focuses at different legal services authorities add generally in reducing the weight of
courts.
 The process of mediation for settlement of disputes in Legal Services Authorities is
embraced with the sole reason for relieving the High Courts of the cases that can be settled
external the court. Courts are overburdened with many such cases that have a chance of being
settled external the courts, so why not essentially endeavour to determine such cases through
mediation.

In Afcons infrastructure Limited and another v. Cherian Varkey Construction

Company Private Limited and others, the Honourable Supreme Court observed as follows:
"Resort to alternative disputes resolution processes is necessary to give speedy and effective
relief to the litigants and to reduce the pendency in and burden upon the courts."

The cases pertaining to matrimonial disputes, property disputes, business transactions,

tenders etc. are referred for mediation by the courts. NALSA is bound to promote all forms of
dispute settlement mechanisms. Accordingly, NALSA has taken steps for the setting up of
Mediation Centres in all States.
The Mediation and Conciliation Project Committee of the Supreme Court of India
(MCPC) conducts training programmes on mediation for lawyers and judicial officers, in
furtherance of the newly added Section 89 of the Code of Civil Procedure. Furthermore, Legal
Services Authorities are supposed to organize training programmes for mediators as well as
referral judges to make the mediation process more efficient.
More than 1 lakh 7,000 cases have been settled through mediations by State Legal
Services Authority in India from April, 2017 to March, 2018 when contrasted with approx. 22
thousand cases that were gotten comfortable 2016-17. According to the information accessible
on National Judicial Data Grid, the all out number pending cases in India till date is more than
two crores 87 lakhs. It is extremely apparent from these measurable records that there is a critical
requirement for the reception of alternative dispute resolution procedures in India.
Judges, leading lawyers, and policymakers talk in an exceptional light with regards to
mediation. Notwithstanding this, mediation is yet to get on significantly in the private field. With
the achievement of court-adjoined mediation in India, consideration is currently being centered
around private business mediation. Pioneer business associations and industrial pioneers are
getting involved for something similar. In this manner, the extent of mediation in India is
exceptionally high since the ordinary court techniques require a very long time to determine a
case and there are lakhs of cases pending in Indian courts.
Mediation has risen above limits and has crossed different fields identified with law.
Presently, mediation is utilized to settle various disputes in the national and international level
which include conjugal, corporate, business, insurance-related, disputes identified with sea
issues, issues of partners in a working environment.
Culture and language recently represented an issue in the process of mediation. Through
research and the utilization of different contemporary advances, the extent of mediation has
augmented to the degree that the mediation is liked as a method for resolution of disputes over
some other technique.
 The extent of mediation has been additionally increased by the complex associations
providing mediation offices at the national just as the international level. At the national level,
the ADR cells in the respective region courts fill in as an effectively open wellspring of
mediation to the country populace. At the international level the associations like PCA, WIPO,
ICC give cutting edge mediation services.
As rightfully said, mediation is the past the present and absolutely the future of amicable
dispute settlement.

Role of Mediators
"The role of the mediator is to remove obstacles in communication, assist in the
identification of issues and the exploration of options and facilitate mutually acceptable
agreements to resolve the dispute. However, the ultimate decision rests solely with the parties. A
mediator cannot force or compel a party to make a particular decision or in any other way impair
or interfere with the party's right of self-determination."

Functions of a Mediator
The functions of a mediator are to:
i. Facilitate the process of mediation; and
ii. Assist the parties to evaluate the case to arrive at a settlement.

Facilitative Role:
A mediator facilitates the process of mediation by:
 Creating a conducive environment for the mediation process.
 Explaining the process and its ground rules.
 Facilitating communication between the parties using the various communication
techniques.
 Identifying the obstacles to communication between the parties and removing them.
 Gathering information about the dispute.
 Identifying the underlying interests.
 Maintaining control over the process and guiding focused discussion.
 Managing the interaction between parties.

Evaluative Role
A Mediator Performs An Evaluative Role By: Helping and guiding the parties to evaluate
their case through reality – testing. Assisting the parties to evaluate the options for settlement.
The facilitative and evaluative roles of the mediator have been already explained. The evaluative
role of mediator is limited to the function of helping and guiding the parties to evaluate their case
through reality testing and assisting the parties to evaluate the options for settlement.

But in the process of a conciliation, the conciliator himself can evaluate the cases of the
parties and the options for settlement for the purpose of suggesting the terms of settlement. The
role of a mediator is not to give judgment on the merits of the case or to give advice to the parties
or to suggest solutions to the parties. A mediator is not an adjudicator. Adjudicators like judges,
arbitrators and presiding officers of tribunals make the decision on the basis of pleadings and
evidence.
The adjudicator follows the formal and strict rules of substantive and procedural laws.
The decision of the adjudicator is binding on the parties subject to appeal or revision. In
adjudication, the decision is taken by the adjudicator alone and the parties have no role in it. In
mediation the mediator is only a facilitator and he does not suggest or make any decision.

The decision is taken by the parties themselves. The settlement agreement reached in
mediation is binding on the parties. In court referred mediation there cannot be any appeal, or
revision against the decree passed on the basis of such settlement agreement. In private
mediation, the parties can agree to treat such settlement agreement as a conciliation agreement
which then will be governed by the provisions of the Arbitration and Conciliation Act, 1996.

Qualities of a Mediator:
It is necessary that a mediator must possess certain basic qualities which include:

i. Complete, genuine and unconditional faith in the process of mediation and its efficacy.
ii. Ability and commitment to strive for excellence in the art of mediation by constantly
updating skills and knowledge.

Ethics and Code of Conduct of a Mediator:

1. Avoid conflict of interest A mediator must avoid mediating in cases where they have
direct personal, professional or financial interest in the outcome of the dispute. If the
mediator has any indirect interest (e.g., he works in a firm with someone who has an
interest in the outcome or he is related to someone who has such an interest) he is bound
to disclose to the parties such indirect interest at the earliest opportunity and he shall not
mediate in the case unless the parties specifically agree to accept him as mediator despite
such indirect interest.
2. Where the mediator is an advocate, he shall not appear for any of the parties in respect of
the dispute which he had mediated. A mediator should not establish or seek to establish a
professional relationship with any of the parties to the dispute until the expiry of a
 reasonable period after the conclusion of the mediation proceedings.

3. Awareness about competence and professional role boundaries Mediators have a duty to
know the limits of their competence and ability in order to avoid taking on assignments
which they are not equipped to handle and to communicate candidly with the parties
about their background and experience. Mediators must avoid providing other types of
professional service to the parties to mediation, even if they are licensed to provide it.

Communication in Mediation
1. Communication is the act of conveying intended meanings from one entity or group to
another through the use. Communication is sending and receiving information between
two or more people. The persons sending the message are referred to the sender, while
the person receiving the information is called the receiver. The information conveyed can
include facts ideas, concepts, opinions, beliefs attitude intimation and even emotion.

2. Communication is initiated by a thought or feeling or idea or emotion which is

transformed into words/ gestures/ acts/ expressions. Then, it is converted into a message.
This message is transmitted to the receiver. The receiver understands the message by
assigning reasons and attributing thoughts, feelings/ideas to the message. It evokes a
response in the Receiver who conveys the same to the sender through words/ gestures/
acts/ expressions.

Verbal and Non-Verbal Communication

Verbal Communication is transmission of information or message through spoken words.
Non-verbal communication refers to the transmission of information or message from sender to
receiver without the use of spoken words. It includes written communication, body language,
tone, demeanour, attitude and other modes of non-verbal expression. It is often more
spontaneous than verbal communication and takes place under less conscious control.

Therefore, it can provide more accurate information. It is important for a mediator to pay
adequate attention to nonverbal communications that take place throughout the mediation. It is
also important for a mediator to analyse the message sent by the parties through such nonverbal
communication.

Stages of Mediation
Introduction and Opening Statement: Mediator enters a dispute by court referral or by direct
choice of the participants. The commencement of the mediation is typically marked by an
'opening statement' of the mediator. This introductory stage is vital to the establishment of a
relationship that will facilitate the rest of the mediation process. The mediator must provide
initial structuring; gain the participant's trust and cooperation in the process by highlighting the
advantages of mediation.
 Even if the parties have participated in mediations before, it is not advisable to skip the
opening statement. The mediator's opening statement should be clear and concise." A mediator
should try to avoid using 'jargon' or technical words that the disputants are unlikely to understand
(e.g., plaintiff, defendant, claimant, respondent, perse, or other difficult legal terms).
Even if the parties are represented by advocates the advocates are present, it is a good
idea for the mediator to focus the opening statement on the parties, to talk directly to them, and
to ensure their understanding of the process. Although delivering an opening statement should
not consume a lot of time, a mediator should not rush through it. The mediator's opening
statement is important- it must be long enough to cover all of the elements clearly and
completely, and short enough not to lose the interest of the parties.

Disputant's Opening Statement

The stage is also called 'ventilation' as the parties, locked in bitter dispute, is likely to
furiously air his/her grievances. The mediator should calm things down and request parties not to
lose their composure while making the opening statement. The parties and/or their
representatives should be able to ventilate their views of the case or dispute.
The opening statement stage provides a time for parties to fully express and explain to the
mediator, and more importantly, to each other, how they view the dispute in their own words.
The mediator must listen carefully the statements of the parties, the manner in which the
information is shared, and the order of presentation is all important pieces of information. The
mediator should usually let each disputant take as much time as needed without interruption from
the other party or the mediator.
When the first party is finished, the mediator should not ask the other to 'respond', but
rather should invite a description or explanation of that party's issues and concerns. The second
person to speak often feels defensive- the mediator's job is to put the parties at ease enough to
share what is important to them. After each party has spoken, the parties often will look to the
mediator to identify the next step in the process.
The mediator could then identify and summarize the issues as the parties have put them
forth. To perform that important task requires a mediator to organize the information accurately
and constructively. For this purpose, mediator may take 'notes' after letting parties know about
the purpose of such note-taking. Parties should re-assured that such notes will remain and cannot
be used as evidence in formal proceeding."

Joint Session
After all participants and/or their representatives have presented their views through their
opening statement, at this point, the mediator may try to lead the disputants to joint discussion
and get them talking directly with each other in his presence. This phase may come before or
after the separate meeting between a party and mediator.
Generally, the mediator has a tough time during this phase as parties are likely to engage
in bitter accusation and counter accusations. He has to ensure that parties engage in constructive
talks. To this purpose, he has to try to get the parties away from their stated positions to the ones
which are workable and future-oriented.
Separate Session
"A caucus is a common step or procedure in mediation. It is a private meeting that each
party holds with the mediator during the mediation. These private meetings give participants a
chance to talk to the mediator freely, without the pressure of the other party being there. Anyone
participating in a mediation may request a caucus, including the mediator." Other names for
caucus include "individual meeting", private meeting" or "time out".
Typically, a caucus is a "confidential process, however, a party may want the mediator to
relay some or all of the caucus discussions to the other party. As such, it is important to confirm
expectations at the beginning of a caucus. During the caucus, the mediator may seek clarification
on issues of concern, and explore creative ways of resolving the conflict. The need for caucus or
separate meeting between the mediator and a party (accompanied with or without advocate) may
arise in certain situation. It involves private discussions about issues, interests, and options for
resolution.
The call for caucus has to come from the mediator in a scenario when parties have
reached an impasse. Speaking privately to the parties will allow the mediator to discuss issues
that the parties may be uncomfortable talking about in front of each other. The separate session
can alleviate such concerns and, at the same time, give the mediator an understanding of what is
really driving the dispute.
Another important use for separate sessions is the discovery of the best alternative to a
negotiated settlement BATNA and/or the worse alternative to a negotiated settlement (WATNA).
BATNAs are a vital piece of information for the mediator as they disclose when a settlement is
better or worse than the parties' best alternative to a negotiated settlement. If the options being
proposed as a settlement are worse than a party's BATNA, then the chances are that the party
will not settle i.e., he or she would be better off walking away from mediation and 4 living with
his or her BATNA.
The converse is also true, in that if the options being proposed as a settlement are better
than a party's BATNA, then the chances are the party will agree to accept the settlement.
Once the mediator has had one or more separate sessions with one party to settle the
issues and interests and to generate the first set of options, he or she may conduct the next
separate session with the other party and follow the same process of option generation with that
party. This repeat exercise depends on the situation, and may see mediator going back and forth,
shuffling between the parties, seeking agreement on the various options being suggested by the
parties."

Final Negotiation
Final negotiation stage involves activities initiated by both the parties and the mediator to
reduce the scope of substantive and procedural differences between parties, so to move toward a
formal agreement leading to the termination of conflict. This is the final joint meeting between
the parties in the presence of mediator before the closure of mediation. In this round, the results
of the separate meeting are carefully considered.
 If there remains any miscommunication or misunderstanding, then those are discussed
and removed, before parties reach the resolution of the disputes. If deadlock worsens, then they
may, however, take a realistic decision to discontinue mediation and settle their dispute in other
forum like court.

Closure
It is important that a process initiated, must end finally. Closure is the last process in
mediation. Mediation may terminate in a number of circumstances. It terminates when the parties
have resolved all their issues, or when they have resolved some issues and decided to take the
others into a different forum such as arbitration or litigation.
It may come to an end when one party simply walks out of it saying that he/she does not
want to continue with mediation; or when the mediator decides that it is inappropriate to
continue with mediation as there is no reasonable prospect of resolution, or otherwise, unethical
to continue with mediation. Hence, closure envisages both, successful and unsuccessful outcome.
In case of successful outcome, settlement terms are reduced to writing leading to a formal
agreement between the parties. In order that this mediated agreement becomes legally
enforceable, it must be duly signed by the parties and mediator." The settlement may also contain
an implementing or monitoring mechanisms for the current as well as future differences or
conflicts that may arise.

Negotiation

One of the most calculated definitions of this technique has been given by the Authors Roger
Fisher and William Ury in their book 'Getting to Yes' as follows:
"…back-and-forth communication designed to reach an agreement when you and the other side
have some interests that are shared and others that are opposed."
Others have also given their own definitions on the same lines, authors such as Leigh Thompson
talks about negotiation as an 'interpersonal decision-making process" which is "necessary
whenever we cannot achieve our objectives single-handedly.". A definition was also provided by
the author of the book 'Judgement in managerial Decision Making' where Max and Don write,
"When two or more parties need to reach a joint decision but have different preferences, they
negotiate".

Thus, in the process of mediation, negotiation is one of the most important steps. It is the act of
talking amongst each other to arrive at an amicable middle ground. In itself however, negotiation
can be carved up into seven distinct elements as enumerated below:

1. Interests:
This has often been described as "the fundamental drivers of negotiation," it refers to the
basic needs of each party, their wants, and often unsaid desires. Negotiators must be
aware of each party's individual requirements by problem the parties to better understand
their underlying motivation and thus steer the process in a way that benefits both parties
 involved.

2. Equitability:
Mediation on account of being a constructive method of adjudication requires that the
procedure and the end result be one where both parties feel like and are indeed treated
with fairness and adjudicated in an equitable manner. This means not developing bias on
any party involved and maintaining an objective stance throughout the affair.

3. Constructability:
Once again, the mediator must understand and put into practice the principle that
mediation as a process is built around finding a resolution which preserves the interest of
both the parties involved. One of the most crucial aspect of this is preservation of
relationship between parties. For instances in cases involving corporations, it is of prime
importance that the two parties be able to carry out business later down the line.

4. Commitments:
In the process of negotiations, it is of importance that the commitments that will result in
an amicable resolution is aimed for and steered in the direction of. Commitment can
come in the form of an agreement, offer, demand, promise to perform or abstain, etc.
Only after the commitments are in place that the amicable solution be reached.

5. BATNA (Best Alternative to a Negotiated Agreement): Although negotiations would

be the most vital part of any mediation, it is important to understand that negotiations do
not always produce a result. In the cases where neither of the parties are able to come to
an agreement. In such cases, it is important that the mediator tries to put in negotiations
terms of contingency.

Mediation

The titular technique in the process of mediation, mediating refers to the stage wherein the
mediator will try to bring the parties to an amicable solution. This is arguably where the
mediation is successful or a failure. There are three important pre-requisites in the mediation
technique process:
1. There must be willingness and cooperation between the parties and their associates to
come together in solving the problem and remedying the situation;
2. Mediator (neutral) must have subject expertise and conversational rapport with the parties
involved.
3. Pre-established procedural rules such as confidentiality, good faith, oaths, etc.
These requisites are absolutely essential. From a practical perspective it must be noted that in the
process of the mediator's deliberations and efforts to reconcile the parties there will exist critical
issues which don't only require bringing the parties to a middle ground, but also to be aware of
the facts in its contextual objectivity.
In that effort the mediator would have to diplomatically understand the underlying matter and
move on the process of adjudication.

Adjudication

The very term by definition refers to the process through which the conflict is resolved by
various processes. As far as our cause is concerned, in mediation adjudication is the final and
ultimately the most crucial stage of the process. As the process in our case in voluntary by
nature, the adjudication is not enforceable like how arbitration or litigation is.

Thus, the mediator unlike a judge does not possess the authority to award a judgement to the
parties. The mediator in his process of adjudication shall limit his or her function to skilfully
cause a constructive outcome for the parties and satisfactorily resolve the dispute in its entirety.

Annexure - Jurisprudence of Mediation "Discourage litigation. Persuade your neighbors to

compromise whenever you can. Point out to them how the nominal winner is often the real
loser-in fees, and expenses, and waste of time. As a peacemaker the lawyer has a superior
opportunity of being a good man. There will still be business enough."-- Abraham Lincoln

Since the earliest days of civilization, man has been in a constant state of combat upon his fellow
man. Power wars. Political wars. Religious wars. Personal wars. Legal wars. When it comes to
civil legal battles, certain societies, for a variety of rational and logical reasons, have attempted,
with varying degrees of success, to lighten the load of, and take the pressure off, both the
disputing parties and the formal law courts. Of all mankind's adventures in search of peace and
justice, mediation is among the earliest. Long before law was established or courts were
organized, or judges had formulated principles of law, man had resorted to mediation for
resolving disputes.
Mediation is a course of dispute resolution wherein at least one unbiased outsiders intercedes in a
contention or dispute with the assent of the members and helps them in arranging a consensual
and educated agreement. It can likewise be said as a classified course of exchanges and
conversations in which a "nonpartisan" outsider or mediator helps with settling a dispute
between at least two parties. Mediation presents the chance to communicate contrasts and further
develop connections and shared arrangement, regardless of whether an agreement is reached.

It is for the most part viewed as a non-antagonistic way to deal with the resolution of struggles or
disputes. The overall job of the mediator is to work with correspondence between the parties,
help them on zeroing in on the main problems of dispute and to produce alternatives that meet
the particular parties' inclinations or necessities with an end resolution to determine the dispute.

The main component of Mediation is that it gives an answer that the two parties can live with,
rather than a decision forced by a court. The two players are associated with recommending
potential answers for the contention. Mediation depends on the deliberate collaboration and great
confidence interest, everything being equal. The mediator can't constrain the parties to determine
their disparities.
Yet, the mediator can help the parties arrive at an answer pleasant to the two of them. On the off
chance that the parties work out all or a portion of their disparities, the resolution - or agreement
- is explicitly stated and endorsed by both the parties. Mediation may be able to plow beneath the
surface of frequently vexatious litigations by addressing the underlying conflicts. The mediator
acts as a bridge to iron the wrinkles of differences affecting the parties.
Mediation differs from arbitration, in which the third party (arbitrator) acts much like a judge in
an out-of-court, less formal setting but does not actively partake in the discussion. In contrast to
an adjudicator or a judge, a mediator doesn't choose what is right or wrong or make ideas about
approaches to determine an issue. A mediator tries to assist parties with fostering a mutual
perspective of the contention and to pursue fabricating a commonsense and enduring resolution.

Mediation serves to recognize the disputed issues and to produce choices that assist disputants
with coming to a commonly agreeable resolution. It offers generally adaptable cycles; and any
settlement came to ought to host the agreement, everything being equal. This differences with
litigation, which ordinarily resolves the dispute for the party with the most grounded contention.

Mediation is not quite the same as counseling, therapy or advocacy. The mediator doesn't favor
one side or push for any one arrangement. Mediators keep a nonpartisan job. Mediation centers
around the future, not the past, and what will settle the contention. Mediation doesn't trade the
requirement for legal exhortation or directing if your "rights" in a circumstance are the problem.
 CASE LAW STUDY

Mohori Bibi
v.
Dharmodas Ghose, (1903) 30 LA.
114
 INTRODUCTION

The case of **Mohori Bibi v. Dharmodas Ghose** is a foundational judgment in

Indian Contract Law, decided by the Privy Council in 1903. It primarily deals with
the contractual capacity of minors under the Indian Contract Act, 1872. The ruling
in this case established a precedent that contracts entered into by minors are void
ab initio (void from the outset), which has had a lasting impact on how contracts
involving minors are treated under Indian law.

BACKGROUND OF THE CASE

Facts of the Case

Dharmodas Ghose: Dharmodas Ghose was a minor (below the age of 18) at the
time of the events leading to the case. He was the sole owner of certain immovable
properties in Calcutta.

The Mortgage Agreement: Dharmodas, with the assistance of his mother (who
was his legal guardian), entered into a mortgage agreement on July 20, 1895, with
Brahmo Dutt, a moneylender, through his attorney, Kedar Nath. The mortgage
deed involved the mortgaging of Dharmodas' property to secure a loan of ₹20,000.
However, only ₹8,000 was actually advanced.
Guardian’s Notification: Before the mortgage deed was executed, Dharmodas’
mother informed Kedar Nath that Dharmodas was a minor and therefore incapable
of contracting.

Legal Action: After the execution of the deed, Dharmodas filed a suit seeking a
declaration that the mortgage was void and inoperative, as he was a minor at the
time of entering into the agreement.

Procedural History:

Lower Courts: The case initially went through the lower courts in India, where
the courts ruled in favor of Dharmodas, declaring the mortgage deed void due to
his minority.

Appeal to the Privy Council: Dissatisfied with the lower court's ruling, Brahmo
Dutt’s legal representatives appealed the decision to the Privy Council, the highest
court of appeal for British India at the time.

LEGAL ISSUES INVOLVED

Competency to Contract:

The central issue was whether Dharmodas, as a minor, was competent to enter into
a contract under the Indian Contract Act, 1872.

According to **Section 11** of the Indian Contract Act, a person must be of the
age of majority (18 years or 21 years if a guardian is appointed by the court) and of
sound mind to be competent to contract.
Void or Voidable Contract:

The case also questioned whether the contract in question was void ab initio (void
from the beginning) or merely voidable at the option of the minor.

If the contract was voidable, it would mean that the minor could choose to enforce
or void the contract. If void ab initio, the contract would be treated as though it
never existed.

Restitution:

Another significant legal issue was whether the principle of restitution applied.
Restitution typically requires a party to return benefits or money received under a
contract that is later declared void.

ARGUMENTS PRESENTED

Plaintiff’s (Dharmodas Ghose) Arguments:

Minority and Incompetency: Dharmodas’ legal team argued that he was a minor
at the time of entering into the contract and thus incompetent to contract under
Section 11 of the Indian Contract Act, 1872.

Contract is Void Ab Initio: They contended that the mortgage deed was void ab
initio and should be treated as though it never existed. Consequently, Dharmodas
was under no legal obligation to repay any money received or fulfill any
obligations under the deed.
No Requirement for Restitution: Since the contract was void from the beginning,
the principle of restitution should not apply. Dharmodas should not be required to
return any part of the loan received.

Defendant’s (Brahmo Dutt) Arguments:

Misrepresentation by the Minor: The defense argued that Dharmodas had

misrepresented his age, leading Brahmo Dutt to believe he was competent to
contract. This misrepresentation, they argued, should not allow Dharmodas to void
the contract without restitution.

Equity and Restitution: They argued that even if the contract was void, the court
should require Dharmodas to return the money received under the principle of
equity and justice, which aims to prevent unjust enrichment.

JUDGMENT BY THE PRIVY COUNCIL

Ruling:

The Privy Council upheld the lower courts' decisions, ruling in favor of Dharmodas
Ghose. The court declared that a contract entered into by a minor is void ab initio
under Indian law.

Legal Reasoning:

Section 11 of the Indian Contract Act: The Privy Council relied heavily on
Section 11, which categorically states that only persons of majority age and sound
mind are competent to contract. Since Dharmodas was a minor, he lacked the legal
capacity to enter into the mortgage deed.
Void Ab Initio: The Privy Council clarified that contracts involving minors are
not just voidable but are void from the outset. This means such contracts are
treated as though they never existed, and no legal obligations arise from them.

No Restitution: The court also addressed the principle of restitution. It ruled that
since the contract was void ab initio, there was no legal basis for restitution.
Dharmodas was not required to return the money or benefits received under the
void contract.

KEY QUOTATIONS FROM THE JUDGMENT:

A person who by reason of infancy is incompetent to contract, cannot contract at

all; and a contract to which he is a party is void, and not merely voidable."

There is no question of the minor's contract being voidable, nor of the defendant's
having a right to restitution of what he has paid under it."

LEGAL PRINCIPLES ESTABLISHED

Incompetency of Minors to Contract:

The case established the critical legal principle that minors are incompetent to
contract under Indian law. This principle is rooted in Section 11 of the Indian
Contract Act, 1872, which explicitly states that only persons of the age of majority
and sound mind can enter into legally binding contracts.
The ruling clarified that contracts involving minors are void ab initio, providing
legal certainty and protecting minors from being bound by contracts they are
legally incapable of understanding or agreeing to.

Doctrine of Restitution:

The judgment also addressed the doctrine of restitution, concluding that since a
contract involving a minor is void ab initio, the principle of restitution does not
apply. This means that a minor cannot be compelled to return any money or
benefits received under a void contract.

This principle has significant implications for cases where one party seeks to
recover money or property from a minor after a contract is declared void.

Equity and Minor Contracts:

The Privy Council's decision also touches on the role of equity in cases involving
minors. While equity generally aims to prevent unjust enrichment, the court ruled
that in the context of void contracts involving minors, equity does not require
restitution.

This ruling emphasizes the protection of minors in contractual matters, even if it

means the other party may suffer a loss.

IMPACT AND SIGNIFICANCE

Landmark Judgment in Indian Contract Law:

The case of Mohori Bibi v. Dharmodas Ghose is widely regarded as a landmark
judgment in Indian Contract Law. It has been cited in countless cases and legal
commentaries as the definitive authority on the issue of minors' contractual
capacity.

The ruling provides a clear and unambiguous legal precedent that contracts
involving minors are void ab initio, offering protection to minors and ensuring that
they are not bound by legal obligations they cannot fully understand.

Protection of Minors:

The judgment reinforces the legal protection afforded to minors under Indian law.
By declaring that contracts with minors are void ab initio, the ruling ensures that
minors are not held to agreements that they are not competent to enter.

This protection is crucial in a legal system that aims to safeguard the interests of
vulnerable individuals, including minors.

Implications for Moneylenders and Other Parties:

The case serves as a cautionary tale for moneylenders, property dealers, and others
who may seek to enter into contracts with minors. The ruling makes it clear that
such contracts are unenforceable, and parties who enter into agreements with
minors do so at their own risk.

This has led to greater diligence in contractual dealings, with parties ensuring that
individuals they contract with are of legal age and capable of understanding the
terms and conditions of the agreement.

SUBSEQUENT DEVELOPMENTS AND CASE LAW

Citations in Later Cases:

The principles established in Mohori Bibi v. Dharmodas Ghose have been cited
and upheld in numerous subsequent cases. Courts across India have consistently
followed the precedent that contracts with minors are void ab initio.

Some notable cases that have referred to this judgment include **K. Balakrishnan
v. P. Kannammal (1961)** and **Srikakulam Subrahmanyam v. Kurra Subba Rao
(1947)**.

Legislative Reaffirmation:

The Indian Contract Act, 1872, has remained largely unchanged in its treatment of
minors' contractual capacity since the ruling in Mohori Bibi v. Dharmodas Ghose.
The principles established by the Privy Council continue to be the law of the land.

Criticism and Commentary:

While the judgment has been widely accepted, some legal scholars have critiqued
the decision for its rigid approach to restitution. Critics argue that the ruling could
lead to situations where minors unjustly benefit from void contracts.

However, the overwhelming consensus supports the judgment as a necessary

protection for minors within the contractual framework.

Conclusion

The case of **Mohori Bibi v. Dharmodas Ghose** remains a cornerstone of Indian

Contract Law. It established the fundamental principle that contracts involving
minors are void ab initio, offering essential protection to minors in legal
transactions. The ruling has had a profound impact on the legal landscape in India,
shaping the way contracts with minors are treated and ensuring that the law
safeguards the interests of those who are not yet fully capable of managing their
own affairs.

This case continues to be a pivotal reference in legal education and practice,

underlining the importance of contractual capacity and the protections provided to
minors under Indian law.
Bibliography

1. **The Indian Contract Act, 1872.**

2. **Pollock & Mulla, The Indian Contract Act and Specific Relief Acts.**

3. **Cheshire, Fifoot & Furmston's Law of Contract.**

4. **R.K. Bangia, Law of Contract.**

5. **Case Law: Mohori Bibi v. Dharmodas Ghose (1903) 30 I.A. 114.**

6. **Subsequent Case Law: K. Balakrishnan v. P. Kannammal (1961); Srikakulam

Subrahmanyam v. Kurra Subba Rao (1947).**