Mediation Under Consumer Protection Act, 2019

Coverage of this Article

Key Takeaways

-Importance of Mediation in reducing over-burden on the judiciary.

Introduction

-A mediator is a neutral third party who assists the parties in a disagreement in coming to a mutually accepted resolution.

Need for Mediation

-Since the 1986 Consumer Protection Act was passed, there has been a significant shift in the consumer market for products and services. Many things have changed, including the manner that marketing is done, technology, customer preferences, the accessibility of goods and services, and of course the emergence of "E-Commerce Operators" on the global market.

PROVISIONS

-"Reference to meditation" is in the title of Section 37 of the 2019 Act. The Civil Procedure Code (CPC) was amended in 2002 to allow ADR as a means of conflict resolution.

Steps for Mediation

-If the Online Consumer Mediation Centre (OCMC) decides to mediate the dispute, it designates a neutral third party to serve as the mediator.

Understanding the concept with relevant case laws

-In Jagdish Chander v. Ramesh Chander ((2007) 5 SCC 719), it was decided that only when both parties to a case have consented can a conflict be referred for ADR. The 2019 Act took this into account. According to Section 37 (1), the District Commission may only send a case for mediation with both parties' written assent if it believes that "a mutual solution can be reached."

Importance of Mediation

-Quick and Cost-Effective: Mediation can be a faster and less expensive way to resolve disputes than going to court. It is often less formal and less adversarial, which can help the parties to reach a mutually agreeable solution without spending a lot of time and money on litigation.

Demerits

-Non-binding: Mediation is a non-binding process, which means that the parties are not legally bound to accept the mediator's recommendations or reach an agreement. This can result in situations where one or both parties may not agree to the terms proposed, leading to a lack of closure to the dispute.

Conclusion

-If the parties were unable to come to an agreement, the case would be returned to the referral body with the simple notation "not settled."

Key Takeaways

Need of Mediation for consumer protection.

Importance of Mediation in reducing over-burden on the judiciary.

Provisions and case laws related to mediation.

Process for Mediation under the Consumer Protection Act,2019.

Introduction

A mediator is a neutral third party who assists the parties in a disagreement in coming to a mutually accepted resolution. Mediation is a method of resolving disputes. The Consumer Protection Act of 2019 encourages mediation as a quick, easy, and affordable way to settle consumer disputes.The Consumer Protection Act specifies mediation as a dispute resolution method. An application for mediation can be made by either a consumer or a business, and the concerned Consumer Commission or Authority will submit the case to a Mediation Cell formed in accordance with the Act.Within three months of the application's receipt, the Mediation Cell must try to mediate a resolution to the conflict. A settlement agreement must be written, signed by all parties, and presented to the relevant Commission or Authority if the matter is settled by mediation. The settlement agreement will function in the same way as a Commission or Authority order.

The dispute will be sent back to the relevant Commission or Authority for resolution in line with the Act's provisions if the parties are unable to resolve it through mediation.The parties can leave mediation at any point because it is a voluntary process. The mediator must maintain secrecy regarding the proceedings, be objective, and help the parties come to a resolution.After Section 89 of the Code of Civil Procedure, 1908 was added, mediation in India was first made available and went into effect on July 1, 2002. Prior to it, the benefits and uses of mediation in conflict resolution were unknown. In 2002, it was claimed that mediation was a novel idea for the administration of justice and for resolving conflicts outside of the conventional court system.

In SpiceJet Ltd. v. Ranju Aery, the customer had to battle their case over the service contract filed through the internet and the complaint's cause of action from the district forum to the State Commission to the National Commission and then eventually to the Supreme Court.

The Consumer Protection Bill, 2019 calls for the creation of a Central Consumer Protection Authority (CCPA), mediation, product liability, and quicker resolution by consumer commissioners in order to speed up the adjudication process. The establishment of mediation centers at District, State, and National Commissions annexed to consumer courts can play a significant role in providing justice because the adjudication procedure in consumer courts is slow.

Need for Mediation

Since the 1986 Consumer Protection Act was passed, there has been a significant shift in the consumer market for products and services. Many things have changed, including the manner that marketing is done, technology, customer preferences, the accessibility of goods and services, and of course the emergence of "E-Commerce Operators" on the global market.

As a result of the growth in international trade, the formation of a global supply chain, and the quick development of e-commerce, customers now have more alternatives and opportunities. Many kinds of unfair, immoral, dishonest, and deceptive, etc. commercial activities have been brought about by these advancements. With ineffective advertising and the marketing of fake goods and services with subpar quality, buyers are duped.

The buyer-seller contract is biased in favor of the seller and the consumer courts are overworked with pending cases. Also, the operations are taking longer and costing more money. It is therefore time for ADR and the mediation procedure to be embraced.

PROVISIONS

"Reference to meditation" is in the title of Section 37 of the 2019 Act. The Civil Procedure Code (CPC) was amended in 2002 to allow ADR as a means of conflict resolution. The methods for resolving disputes outside of court are covered by Section 89 of the CPC.

If the court believes that a "solution can be reached which may be acceptable to the parties," it may submit the dispute for "arbitration, conciliation, judicial settlement, or mediation" under Section 89(1) of the Civil Procedure Rules.

The State Government would establish a consumer mediation cell that would be affiliated to the consumer courts and each of the regional benches, according to Section 74 of the New Consumer Protection statute. A quarterly report would be submitted by each consumer mediation cell to the district commission, state commission, or national commission to which it would be affiliated. Thus, every consumer mediation cell would maintain:

(a) A list of impaneled mediators;

(b) A list of cases handled by the cell;

(c) Record of proceedings; and

(d) Any other information as may be specified by regulations.

The impaneled mediators will be eligible to be considered for reappointment for another term, subject to any criteria that may be outlined by rules. The panel of mediators' tenure will be effective for a duration of five years. The consumer mediation cell associated with the various consumer Courts is where the mediation will take place (Clause 75).

While Clause 78 allows the consumer courts to replace a mediator based on information provided by the mediator or on information received from any other person, including parties to the complaint, and after hearing the mediator, Clause 76 requires mediators to disclose certain facts that may be likely to give rise to justifiable doubt as to their independence or impartiality.

Additional mediation procedures are covered in Clauses 79 and 80, which also cover provisions relating to mediation settlements and the role of the mediator in the event that the parties cannot come to an agreement on any of the issues in the consumer dispute, whether it be on all of them or just some of them.

Steps for Mediation

1. If the Online Consumer Mediation Centre (OCMC) decides to mediate the dispute, it designates a neutral third party to serve as the mediator.
2. Mediation is an optional, party-centered, structured procedure where a mediator, who is a neutral third party, helps the parties to a mutually agreeable resolution of their conflict using specialized communication and negotiation methods.
3. In general, you have 30 days to use this platform to resolve your issue from the time the parties began the negotiation process. The process may be given a single, 15-day extension if both parties agree to it.
4. Terms can be confirmed by a formal Settlement Agreement if both parties agree to them.

Understanding the concept with relevant case laws

In Jagdish Chander v. Ramesh Chander ((2007) 5 SCC 719), it was decided that only when both parties to a case have consented can a conflict be referred for ADR. The 2019 Act took this into account. According to Section 37 (1), the District Commission may only send a case for mediation with both parties' written assent if it believes that "a mutual solution can be reached."

The court discussed the rights of an accused person and the State's constitutional duty to provide swift justice and a fair trial in Hussainara Khatoon v. the State of Bihar (1979) AIR 1369. The District Commission is required by Section 37 (2) of the 2019 Act to refer a case for mediation within five days of receiving the party’s assent. This section will make sure that administrative delays, which frequently cause delays in justice, are eliminated.

These judgments demonstrate the importance of mediation in resolving consumer disputes under the Act. Mediation is a cost-effective and expeditious method of resolving disputes, and it is encouraged by the courts as an alternative to formal litigation.

Importance of Mediation

• Quick and Cost-Effective: Mediation can be a faster and less expensive way to resolve disputes than going to court. It is often less formal and less adversarial, which can help the parties to reach a mutually agreeable solution without spending a lot of time and money on litigation.
• Informal and Flexible: Mediation is a more informal and flexible process than going to court, which can be beneficial in consumer disputes. It allows parties to express their grievances, propose solutions, and negotiate terms without the constraints of formal legal procedures.
• Confidentiality: Mediation proceedings are confidential and cannot be used as evidence in court, which can help parties to speak more freely and negotiate without fear of negative consequences.
• Win-Win Outcome: Mediation aims to find a mutually acceptable solution to the dispute that satisfies the interests and needs of both parties. It can help maintain relationships and avoid the acrimony that can arise from litigation.

Demerits

• Non-binding: Mediation is a non-binding process, which means that the parties are not legally bound to accept the mediator's recommendations or reach an agreement. This can result in situations where one or both parties may not agree to the terms proposed, leading to a lack of closure to the dispute.
• Unequal Bargaining Power: Consumer disputes often involve a power imbalance, with consumers being at a disadvantage vis-à-vis large corporations. Mediation can exacerbate this power imbalance if the mediator is not sufficiently trained or does not have the necessary expertise to level the playing field.
• Limited Remedies: Mediation may not always result in the full range of remedies that may be available in court, such as punitive damages, injunctions, or court orders. This may result in situations where consumers may feel that they have not received full justice or adequate compensation.
• Lack of Transparency: Mediation proceedings are confidential, which can limit transparency and public scrutiny of the dispute resolution process. This can be a concern in cases where the dispute involves a public interest issue or where the parties may not be acting in good faith.

Conclusion

If the parties were unable to come to an agreement, the case would be returned to the referral body with the simple notation "not settled." No explanation for the non-settlement will be given in the report, and no one will be held accountable.The Consumer Protection Act, of 2019, is a social act that was passed for the welfare of the consumer community as a whole. It has changed the manner that customer complaints are handled. The Act offers an alternative dispute resolution mechanism in addition to a three-tiered dispute resolution process for consumers.These DCDRC/SCDRC/NCDRC Forums include Consumer Mediation Commissions Cells, allowing for rapid and cost-effective resolution. Overall, the government made a wise decision to replace the 1986 Act with the 2019 Act in order to address the problems posed by technological advancement and the advent of e-commerce platforms for marketing.

In conclusion, mediation is an effective mechanism for resolving consumer disputes and should be considered by parties before resorting to formal legal proceedings.