Introduction

The history of cases of consumer dispute goes way back. In fact, one can most probably find traces of the same from a time when the concepts of trading and market were only evolving. Till quite recently, people were quite ignorant to the laws protecting their rights as consumers. Now, while they are much more aware as to what law entails regarding their rights as consumers, they still find the whole procedure of redressal complex, lengthy and costly. In most likelihood, many of us may have faced such situations where the products we bought were not par with our expectations, be it the quality of the product, weight or size of the product or any other issue with standards. We, consumers tend to turn a blind eye towards it as the damage is very negligible to us. However, we overlook the damage this would do to society at large.

To address this issue, the legislature has included many other forms of redressal which are much simpler than the traditional civil suits under consumers’ courts. One of the options provided is going for mediation. The Consumer Protection Act, 2019 (hereon known as CPA, 2019) speaks of mediation as a form of redressal which is the involvement of a third neutral party to a conflict in an attempt to facilitate problem-solving. This method does not empower a third party to decide the issue but rather guides and empowers the parties to dispute communicate and work in a more efficient manner to sort out the issue. Due to the informal nature of this method, it is much simpler to follow.

This article throws light on how mediation as a method of redressing consumer conflict can be equally effective as any civil suit. It also dives into the theory of how mediation shall work in accordance with legislation and the handbook provided by the government.

Mediation in a consumer dispute

There has been a steady increase within the business community in using mediation as a way to resolve commercial disputes. It is only to be expected that consumers’ conflicts would follow the suit.

Mediation can be thought of as assisted negotiation. It is an informal process where a trained mediator, a neutral third party, assists parties in the resolution of a dispute.[1] As described by the Mediation and Conciliation Project Committee of the Supreme Court of India, ‘Mediation’ is a voluntary, binding process in which an impartial and neutral mediator facilitates disputing parties in reaching a settlement. A mediator does not impose a solution but creates a conducive environment in which disputing parties can resolve all their disputes[2]. As such mediation resolves any dispute with the least amount of losses possible.

Mediation to both parties is quite advantageous. For instance, unlike the complex court procedure, mediation is informal. The lack of technical formalities and long-drawn processes reduce both the time and money consumption. If the civil suit has been filed, then also the mediation process can be initiated, depending on the consent of both parties. If a settlement is reached then the court fees are refunded if a settlement is not reached the civil procedure continues.  

Another benefit of mediation is the confidentiality of the whole process. The companies involved in consumer conflicts are generally very conscious of privacy and confidentiality. They want to avoid public attention on matters. Adjudication through traditional means would mean that the details of the dispute will be made available in public domains which can lead to reputational damage to the companies.

Mediation as previously mentioned is of informal nature. As such, both parties can avoid the complexities of a civil procedure and take decisions together. This means that both parties have equal say and they can discuss the issue on equal and fair terms. The procedure itself is flexible and simple which allows room for both parties to settle on their own terms. Mediation is not bound by civil procedure or evidence act.[3]  

Since mediation provides flexibility, it allows for agreements to be more customised in accordance with the needs of both parties. It could cover all the underlying issues. The agreement may involve both legal and related matters and since a dispute settled under this method is considered to be final and binding with no scope of further appeal, it has to be comprehensive enough to cover the interests of both the parties in the long term.

Mediation is based on cooperation and amicably settles the dispute. Since the parties communicate directly, mediation allows the party to preserve their relations. The cooperation to minimise losses allows both parties to come to interest-based solutions. This is much better than traditional suits as such procedure often leads to drawn-out conflicts which end with a party losing and the other winning which destroys any relationship they once had.

The mediation process involves active participation and control from both parties. Hence, the solution is always tailor-made to their interests and needs. This means that the resolution of the dispute concludes with a win-win situation, where both the parties are able to amicably come to a compromise of sorts. Both parties win while able to successfully and therefore, this method of redressal sees high rates of compliance. Also, since the settlement is binding and final to the parties, there would be no further appeals drawing out the issue unnecessarily.

Mediation in Consumer Protection Act, 2019[4]

CPA, 2019 sections 74-80 deal with the concept of mediation as a redressal method for consumer disputes. Under section 74, the State government and Central government have to establish consumer mediation cells attached to the district commission, state commission and national commission. The cell must maintain a list of empanelled mediators; a list of cases handled by the cell; a record of proceedings; and any other information as may be specified by regulations. Also, quarterly reports have to be submitted to the respective commissions.

Section 75 speaks of the Empanelment of mediators according to which mediation cells have to maintain a panel of mediators as recommended by the selection committee and their tenure shall be of five years after which they may be entitled to re-empanelment for another term, subject to conditions mentioned in regulations. Section 76 further directs that the nomination of a mediator must depend on his/her suitability to dispute an issue.  

The mediator must disclose certain facts before the process of mediation begins under section 78 of CPA, 2019. These facts include any personal, professional or financial interest that the mediator may have in the outcome of the dispute. Any circumstances which may lead to questioning of his/her impartiality or independence must also be disclosed. Lastly, any other fact that regulations require disclosure. The commission may replace the mediator if the information received gives rise to justifiable doubt for the commission. This information could be from the mediator or third party.  

Section 79 specifies that the process of mediation has to take place in the mediation cell. The mediator knowing all the factors necessary may carry out mediation in accordance with principles of natural justice. The mediation must be carried out in the manner and within the time specified in the regulations.

Lastly, under section 80, if the parties come to a settlement then the mediator must reduce it into a written agreement which has to be signed by all the parties to the dispute or their authorised representatives. The mediator then shall prepare a report regarding the settlement and forward the same with the agreement to the concerned commission. If there is no consensus within the prescribed time period (three months)[5], the mediator then has to report the same to the commission. 

Consumer disputes appropriate for mediation[6]

Rule 4 of Consumer Protection (Mediation) Rules, 2020 states that the following matters cannot be resolved through mediation-

  • Matters relating o medical negligence leading to grievous hurt or death
  • Any such offences or defaults for which application for compounding the same has been submitted by one or many parties.
  • Matters involving serious and specific allegations such as fraud, coercion, impersonation, forgery or fabrication of documents
  • Matters involving criminal and non-compoundable offences
  • Matters where the public interest is also at stake and there is the interest of many who are not parties in front of the commission
  • In matters where the commission feels that there is no scope for settlement and mediation would be redundant

 Supporting litigations

The Consumer Protection Act, 2019 is supported by Consumer Protection (Mediation) Rules, 2020 and Consumer Protection (Mediation) Regulations, 2020. Protection (Mediation) Rules, 2020 deals with the following issues-

  • Members of mediation cell
  • Matters that cannot be referred to mediation
  • Refund of fee
  • The subject of ongoing mediation cannot be filed for adjudication through judicial proceedings or arbitration
  • Enforceability of settlement after the death of one of the parties

Consumer Protection (Mediation) Regulations, 2020 deals with the following issues-

  • Eligibility of mediation
  • Criteria for disqualification of the mediator
  • Procedure for empanelment of mediator
  • Removal of the mediator from the panel
  • Who can be re-empanelled
  • Fee for mediator
  • Mandatory training for mediators
  • Code of conduct for mediators
  • Details on mediation procedure (prescribed time, information to be given to mediator, the requirement of active participation, guidance from natural justice etc.
  • Role of mediator during the course of mediation
  • Confidentiality, communications and immunity
  • Lastly, reports that the mediator is required to submit to the concerned commission

 Conclusion

‘Consumer is the King’, this phrase is considered a golden rule by many business holders. It is the choices of the consumers which sway the market in any given direction. This is especially true today when most of us look over reviews before buying any product or service. But despite the internet making consumers more aware of any product or service, there are times when we have to go for lesser evils. This means that we compromise the quality to save time and headaches. This is, however, clearly an unfair trade as we pay but the product or the services are not on par with consumers' expectations.

Including mediation as a means of redressal in such conditions are very effective. It allows many benefits to both parties of the dispute. It provides a solution which is acceptable to both parties within the prescribed time period. Also, since this method depends heavily on the interests of both parties, it is a win-win situation for all. When settlement is reached, the court grants a decree which is binding and final. The most important part perhaps is that the settlement can be said to be justice in the true sense.

References

[1] Madabhushi Sridhar, Alternative dispute resolution Negotiation and Mediation

[2] Prof. (Ashok) R. Patil, CONSUMER HANDBOOK ON MEDIATION (FAQ)

[3] Regulation 11(4) of Consumer Protection (Mediation) Regulations, 2020

[4] The Consumer Protection Act, 2019, Digital copy

[5] Regulation 11(2) of Consumer Protection (Mediation) Regulations, 2020

[6] Consumer Protection (Mediation) Rules, 2020, MINISTRY OF CONSUMER AFFAIRS, FOOD AND PUBLIC DISTRIBUTION

About the Author: This post is prepared by Aakriti Jaipuria, Law student at Amity Law School, Amity University, Noida. She can be reached at aakritijaipuriar@gmail.com 

 

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