Mediation Process under Consumer Protection Act 2019
Corporate India Blog - Mediation Process under Consumer Protection Act 2019
Today in our quick read blog (No. 06/2020-21), we
continue to present an outlook on the Consumer Protection Act, 2019 (‘Act’ or ‘Act
2019’) which has come into force from July 20, 2020 (except the sections yet to
be notified) thereby repealing the erstwhile Consumer Protection Act 1986. Our quick
blog will feature this Act in phased manner for next few days.
We have covered some portions of this Act in our previous blogs and today our emphasis is on the new established concept of “mediation” under this Act:
Mediation: It means “the process by which a mediator mediates the consumer disputes”.
As short as it is, the definition, being introduced for the first time in the Act 2019 (as against Consumer Protection Act 1986) does not dwell into the depth of what the term stands for. It simply specifies it to be a process to resolve consumer disputes. Section 79 though seem to describe this process as it states that a mediator shall have regard to the rights and obligations of the parties, the usages of trade, if any, the circumstances giving rise to the consumer dispute and such other relevant factors, as he may deem necessary and shall be guided by the principles of natural justice while carrying out mediation. This means that the mediator shall have very selected powers and can operate in the above-mentioned boundary lines except for the situations, wherein he can, for the purpose of securing natural justice follow the constitutional provisions too (Article 14 and 21 primarily).
Mediation processes in general has always been regarded to as a method for settlement of disputes in an amicable manner, without following the legal procedure for the same. Mediation as the term goes, aims to arrive at a middle way, where both parties to dispute agree to put down their guard against each other and agree to some common terms, thereby calling it a win-win situation. While every consumer dispute may be referred to mediation by the respective Commission at the first hearing or thereafter at any stage, certain restricted matters for mediation have been listed in Mediation Rules[1] under the Act 2019, which are:
- the matters relating to proceedings in respect of medical negligence resulting in grievous injury or death;
- matters which relate to defaults or offences for which applications for compounding of offences have been made by one or more parties;
- cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion;
- cases relating to prosecution for criminal and non-compoundable offences;
- cases which involve public interest or the interest of numerous persons who are not parties before the Commission
Apart from the above matters, the respective Commission has its discretionary power to disallow any other matter from being referred to mediation process, if the respective Commission is of the opinion that the dispute is of such nature, which cannot be resolved through mediation due to absence of elements of settlement or where due to the circumstances or position of the parties, mediation looks inappropriate.
Under the Act 2019, inclusion of mediation process can be a double headed sword, which we shall have to wait and see, whether slices the dispute numbers or bites back at the system itself, as set-up under the Act. The reasons to be unpredictable about the results of this method are simple, first of which is the developing Arbitration and Conciliation Act, 1996 (A&C Act). The A&C Act, despite being enacted in 1996 can easily be placed to be in its nascent stage with its major amendments coming in 2015 and 2019 respectively, after which it has gained some muscle. It is quite broadly observed that arbitral awards often end up being challenged in the courts, thereby making the entire process a mockery. Mediation is not much different from arbitration, and in fact is one step below than arbitration, in my opinion. Under mediation, the mediator is only acting as a facilitator for resolving the dispute between parties, whereas under arbitration, the arbitrator presides the dispute proceedings unlike a judge of any court, having powers to investigate and examine the records and accordingly pass award in favor of either party. If the arbitration law is still developing in India, why would one not have reasonable doubts on the success of mediation process under the Consumer Protection Act 2019. Secondly, the need to incorporate the process under the Act 2019 seems to be unclear when the A&C Act is already in force. Thirdly, the appointment process of mediators under the Act 2019 is designed to be of such kind that if nothing problematic, then it does appear to be lengthy process. To put it down, a mediator is to be appointed from the ‘panel of mediators’ of the respective District, State or National Commission’s ‘mediation cell’, which in turn shall be ‘based on the recommendation’ of a ‘selection committee’ consisting of the President and member of such respective Commission. Given the strong determination India Inc. has shown, in accepting the amendments to A&C Act in 2015 and 2019, it is a split chance for the mediation process under the Act 2019 to succeed or fail.
The government is yet to publish detailed regulations for eligibility conditions for mediators, their trainings, pay structures, empanelment procedure and its terms, code of conduct, re-empanelment, etc. However, from the provisions of section 77 of the Act 2019, it is abundantly clear that the mediators shall be required to disclose in each case about their independence.
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