Categories
Knowledge Centre

Mediation of Consumer Disputes

Ibban Javed

3rd Year, National Law Institute University, Bhopal

Introduction

Litigation is often a resource-intensive endeavor that involves the investment of large amounts of money, time, and other resources that consumers have limited access to. Most consumer disputes that lead to litigation are tilted in favor of the relatively dominant producers by default, stemming from the disparity in access to these resources. Litigation is neither a cost-effective solution to consumer disputes nor does it save time – India Today reports that the average pendency of a civil suit in India is about six years[1], which is much longer than what most consumers can dedicate themselves to. This is an issue that has been deliberated upon since the introduction of the three-tier consumer dispute redressal mechanism of The Consumer Protection Act, 1986 until it was finally addressed in The Consumer Protection Act, 2019 which introduced mediation as an effective means to resolve consumer disputes.

Mediation is an alternative dispute resolution (ADR) mechanism whose purpose is to settle disputes between parties amicably and efficiently through the mutual understanding of all parties involved. As part of the process, the parties discuss their disputes while an impartial third-party – the mediator — facilitates communication between them until a mutually agreeable settlement is reached.

The Consumer Protection Act, 2019 makes provisions for mediation in cases of consumer disputes under Chapter V. Further, the Draft Consumer Protection (Mediation) Regulations, 2019 issued by the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution, Government of India proposes the framework for the mediation procedure to be employed in the settlement of consumer disputes, as per the provisions of the Consumer Protection Act, 2019.

 

Sections 37 and 38 of The Consumer Protection Act, 2019

With a change in how consumers and producers transact and the evolution of e-commerce, multi-level marketing schemes, and other nouveau approaches to do business, The Consumer Protection Act, 1986 required an overhaul that would encompass situations such as those listed above to better protect the interests of consumers. The Consumer Protection Act, 2019 was passed to address these concerns and to better protect consumers at a time when producers could take advantage of the legal grey area that the lack of relevant legislation gave rise to. The revamped Act envisaged the establishment of a Central Consumer Protection Authority that would seek to protect the interests of consumers and enforce their rights while making interventions as may be necessary to prevent unfair trade practices.

 

Sections 37 and 38 of the Act make provisions to simplify the adjudication process of consumer disputes by employing mediation, an alternative dispute resolution mechanism. This addressed the primary shortcoming of the erstwhile Consumer Protection Act of 1986, which was the long delay in the disposal of cases presented by the three-tier redressal system.

 

Section 37 provides that post-admission of the complaint and at the first hearing if the District Commission believes that has elements of a settlement that may be acceptable to the parties, it may direct the parties to give it consent to have the dispute settled by mediation within five days and if such consent is given, the District Commission may then refer the dispute for resolution through mediation as per the provisions of Chapter V.[2]

 

Section 38 details the procedure on the admission of a complaint and allows the District Commission to:

 

  1. Refer the copy of the admitted complaint to the opposite party and seek their version of the case within thirty days
  2. Examine the evidence and seek its analysis by a designated laboratory
  3. Provide a reasonable opportunity for parties of both sides to represent their cases
  4. Decide the case on the merit of the affidavit and documentary evidence on record
  5. Pass interim orders as per the situation
  6. Have the same powers as those vested in civil courts as per the Code of Civil Procedure, 1908, insofar as this section is concerned.

Chapter V of the Consumer Protection Act, 2019

The provisions mentioned herein are subject to the Draft Consumer Protection (Mediation) Regulation, 2019.

§74 Establishment of consumer mediation cell[3]

This section allows the State Government to establish consumer mediation cells that shall be attached to the State and District Commissions of each state. Likewise, it allows the Central Government to establish such consumer mediation cells that shall be attached to the National Commission as well as each of the regional benches.

Further, it provides that the consumer mediation cell must maintain lists of the empaneled mediators, cases handled by the cell, record of proceedings, and any other information that might be required as per regulations.

 

§75 Empanelment of mediators[4]

Section 75 details the process by which mediators may be empaneled, that is, by recommendation of a selection committee consisting of the President and a member of either the National, State, or District Commission as the case may be.

The panel of mediators as nominated by the selection committee mentioned above is valid for five years and can be considered for re-empanelment for a maximum of two terms.

The specifics of the qualifications of the mediators, fees payable to them, training to be undergone, and other terms and conditions of empanelment are subject to the Draft Consumer Protection (Mediation) Regulations, 2019.

 

§76 Nomination of mediators from panel[5]

Section 76 provides that the District, State, or National commissions must consider the suitability of a mediator for the present case before nominating to resolve a dispute.

 

§77 Duty of mediator to disclose certain facts[6]

As per the provisions of Section 77, the mediator is dutybound to disclose any personal, professional, or financial interest that he may have in the outcome of the dispute. He is also required to furnish the circumstances that may raise doubt on his impartiality as a mediator.

 

§78 Replacement of mediator in certain cases[7]

Based on what is disclosed by the mediator, the District, State, or National Commissions are vested with the power to replace such a mediator if a conflict of interest is likely.

 

§79 Procedure for mediation[8]

According to Section 79, the mediation must be held in the consumer mediation cells attached to the commissions. When a consumer dispute is referred to mediation, the mediator must have regard to the rights and obligations of the parties and shall be guided by the principles of natural justice.

The mediation is to be conducted within the time and manner as per the Draft Consumer Protection (Mediation) Regulations, 2019.

 

§80 Settlement through mediation[9]

If the parties arrive at a settlement for some or all of the issues deliberated within the specified time, the parties shall

 

§81 Recording settlement and passing of order[10]

As per the provisions of Section 81, the District, State, or National Commissions must pass an order recording the settlement of the dispute and dispose of the matter within seven days from the receipt of the report. It must also keep a record of which issues have been settled if the dispute has only been settled partially. Further, if mediation is unsuccessful, the Commission must continue to hear the issues.

 

Draft Consumer Protection (Mediation) Regulations, 2019

The Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Public Distribution framed the Draft Consumer Protection (Mediation) Regulations, 2019 in furtherance introducing mediation as an alternative means to resolve disputes as per the provisions established by Chapter V of the Consumer Protection Act, 2019. The draft lays down the procedure by which consumer disputes are to be resolved by mediation. The features of the draft are given below:

 

Empanelment of mediators

The National, State, or District Commissions may invite applications from those who would want to be empaneled as a mediator, provided that they meet the pre-requisite qualifications.

 

Initiation of mediation

Mediation proceedings may be initiated if the Commission is of the opinion that there are elements of a settlement or if the parties wish to settle the matter by mediation.

The parties may give the Commission a written request along with a fee of Rs. 500 to initiate mediation proceedings with details including an explanation of the dispute, its value, and the outcome that is expected by the party. The parties may also propose the appointment of a mediator whose background suits the nature of the dispute. A copy of such a request must also be sent to the other party.

The parties may mutually agree on the appointment of a mediator and if the parties are unable to come to agree on a mediator, the Commission may appoint a qualified mediator as it may deem fit.

 

Procedure of mediation

While it is left to the parties to mutually agree on the procedure the mediator must follow during the conduct of the mediation sessions, the mediator must follow the following procedure in case the parties are not able to agree on the procedure:

  • The mediator shall decide on a schedule to conduct the mediation sessions in consultation with the parties, where all parties must be present
  • The mediation sessions shall be conducted at the Mediation Cell attached to the Mediation Commission at either the National, State, or District level.
  • The mediator can conduct joint and separate meetings with the parties as may be required.
  • The parties shall provide the mediator with a memorandum of issues to be resolved within ten days before a scheduled mediation session. This period may be relaxed at the discretion of the mediator.
  • The parties can make an offer of settlement to the other party by notifying the mediator.
  • The maximum time limit for the completion of mediation is 30 days.
  • The role of the mediator is to facilitate the resolution of the issues of conflict between the parties by enabling communication between them. He must identify the issues that persist and attempt to sort out any misunderstanding that may have arisen between the parties. He must make it clear to the parties that the parties are responsible to come to a decision and that they are under no compulsion of the mediator.
  • When the parties come to a settlement, the same must be recorded in writing and signed by the parties or their representatives. The agreement must be submitted to the mediator, who will forward it to the Commission along with a letter from himself. In case no settlement is reached within the stipulated time of 30 days, the mediator must report it to the Commission.
  • The States must bear the costs for the conduction of the mediation session including the fee of the mediator which may not exceed an amount of Rs. 2000 per case. However, the parties shall be responsible for the costs incurred in producing witnesses on their side or any documents that may be required.

[1] Narasappa, H. (2016, May 02). The long, expensive road to justice. Retrieved August 19, 2020, from https://www.indiatoday.in/magazine/cover-story/story/20160509-judicial-system-judiciary-cji-law-cases-the-long-expensive-road-to-justice-828810-2016-04-27

 

[2] §37, Reference to mediation, Chapter IV, Consumer Protection Act, 2019.

[3] §74 Establishment of consumer mediation cell, Chapter V, Consumer Protection Act, 2019

[4] §75 Empanelment of mediators, Chapter V, Consumer Protection Act, 2019

 

[5] §76 Nomination of mediators from panel, Chapter V, Consumer Protection Act, 2019

 

[6] §77 Duty of mediator to disclose certain facts, Chapter V, Consumer Protection Act, 2019

 

[7] §78 Replacement of mediator in certain cases, Chapter V, Consumer Protection Act, 2019

[8] §79 Procedure for mediation, Chapter V, Consumer Protection Act, 2019

[9] §80 Settlement through mediation, Chapter V, Consumer Protection Act, 2019

[10] §81 Recording settlement and passing of order, Chapter V, Consumer Protection Act, 2019

6 replies on “Mediation of Consumer Disputes”

Magnificent web site. A lot of helpful information here. I am sending it to a few friends ans also sharing in delicious. And obviously, thank you for your sweat! Pegeen Bone Marika

Excellent read, I just passed this onto a colleague who was doing a little research on that. And he actually bought me lunch because I found it for him smile So let me rephrase that.| Danell Alfie Haldi

Having read this I believed it was really informative. I appreciate you taking the time and energy to put this information together. I once again find myself spending way too much time both reading and leaving comments. But so what, it was still worth it! Kary Derrik Shum

Leave a Reply

Your email address will not be published. Required fields are marked *