Mediation under the Act
Chapter Eighty-Four
Syllabus topic 4.4, "Consumer Disputes Redressal Agencies: District Commission, State Commission & National Commission, Judicial Review."
Pages 335 to 338 of 434
In one line
A Commission may send a consumer dispute to a mediator attached to it, and if the parties settle, the Commission records the settlement and disposes of the case.
In the wording a student can write in an exam: section 37 empowers a Commission, at the first hearing after admission or at any later stage, where it appears that there exist elements of a settlement which may be acceptable to the parties, to direct them to give their written consent within five days to have the dispute settled by mediation, and to refer the matter within five days of receiving that consent; Chapter V, sections 74 to 81, provides for consumer mediation cells attached to each Commission, the empanelment and nomination of mediators, their duty to disclose conflicts, the procedure, the settlement and the recording of it.
The reference: section 37
When. At the first hearing of the complaint after its admission, or at any later stage.
On what footing. Where it appears to the Commission that there exist elements of a settlement which may be acceptable to the parties, except in such cases as may be prescribed.
How. It directs the parties to give in writing, within five days, their consent to have the dispute settled by mediation.
Then. Where the parties agree and give written consent, the Commission shall within five days of receipt of that consent refer the matter for mediation, and Chapter V applies.
Mediation is consensual. The Commission may propose it; it cannot compel a settlement, and if consent is not given the complaint proceeds under section 38.
The machinery: Chapter V
Section 74: consumer mediation cells. The State Government shall establish a consumer mediation cell attached to each District Commission and to the State Commission of that State, and the Central Government shall establish one attached to the National Commission and to each of its regional Benches.
Section 75: empanelment of mediators. The National Commission or the State Commission shall prepare a panel of mediators, and the qualifications, experience, procedure for empanelment, the term and the fees are as prescribed.
Section 76: nomination from the panel. The Commission nominates a mediator from the panel.
Section 77: the mediator's duty to disclose. He must disclose any personal, professional or financial interest in the outcome, any circumstance giving rise to a justifiable doubt as to his independence or impartiality, and any other fact likely to create a doubt.
Section 78: replacement. Where such facts appear, or a party objects on that ground, the Commission replaces the mediator.
Section 79: the procedure. Mediation is held in the consumer mediation cell attached to the Commission, and the mediator conducts it in the prescribed manner, hearing the parties, examining the issues, and communicating his view.
Mediation under the Act
The outcome: sections 80 and 81
Section 80: settlement. If an agreement is reached on all the issues, or on only some of them, the terms are reduced to writing and signed by the parties or their authorised representatives. The mediator prepares a settlement report and forwards the signed agreement with it to the Commission. Where no agreement is reached within the specified time, or the mediator is of opinion that settlement is not possible, he prepares his report accordingly and submits it.
Section 81: recording the settlement. Within seven days of receipt of the settlement report, the Commission passes a suitable order recording the settlement and disposes of the matter. Where the dispute is settled only in part, it records the settlement of the issues settled and continues to hear the rest.
And the consequence that matters most. The third proviso to section 41 provides that no appeal shall lie from an order passed under section 81(1) pursuant to a settlement by mediation under section 80. A settlement recorded by the Commission therefore ends the case.
Why it was put in
Three reasons, and an examiner likes them.
Speed. Section 38(7) sets a target of three months for a complaint; a mediated settlement can end it in weeks.
Suitability. Most consumer disputes are about money and performance, and both are negotiable.
Finality. Because an order recording the settlement is not appealable, mediation removes the second and third rounds of litigation, which is where the delay in consumer cases actually lies.
A worked example
A buyer complains that a car dealer delivered a vehicle with a defective gearbox and refuses to replace it.
At the first hearing the Commission sees that the dealer is willing to repair and the buyer is willing to accept a repair with an extended warranty. Elements of a settlement exist, so it directs the parties to give written consent within five days.
They consent. Within five days of receiving the consent the Commission refers the matter to the consumer mediation cell attached to it and nominates a mediator from the panel.
The mediator discloses that he has done work for the dealer's group in the past; the buyer objects; the Commission replaces him under section 78.
They settle on a replacement gearbox, an extended warranty and Rs. 20,000 towards costs. The terms are reduced to writing and signed, and the mediator sends the agreement with his report.
Within seven days the Commission passes an order recording the settlement and disposes of the complaint.
The dealer later regrets the bargain. No appeal lies, by the third proviso to section 41.
And if they had settled only the gearbox and not the costs? Section 81(2): the Commission records the settlement on that issue and continues to hear the rest.
Mediation under the Act
What it does NOT mean
Mediation is not compulsory. Consent in writing is required.
The mediator does not decide. He assists the parties to agree.
A failed mediation does not end the complaint. The mediator reports the failure and the Commission proceeds under section 38.
A recorded settlement is not appealable. That is the point of it.
Quick revision
- Section 37: reference to mediation at the first hearing or later, where elements of a settlement exist; written consent within five days; reference within five days of consent.
- Section 74: consumer mediation cells attached to the District, State and National Commissions and the regional Benches.
- Section 75: panels of mediators prepared by the National or State Commission. Section 76: nomination from the panel.
- Section 77: the mediator's duty to disclose interests and circumstances raising justifiable doubts. Section 78: replacement.
- Section 79: mediation is held in the cell attached to the Commission.
- Section 80: settlement in whole or in part reduced to writing and signed; the mediator's report; a report of failure where no agreement is reached.
- Section 81: the Commission records the settlement within seven days and disposes of the matter; a partial settlement is recorded and the rest heard.
- Third proviso to section 41: no appeal lies from an order recording a mediation settlement.
Test yourself
1. How does a consumer dispute go to mediation, and what happens afterwards? Under section 37, at the first hearing after admission or at any later stage, if it appears to the Commission that there exist elements of a settlement which may be acceptable to the parties, and the case is not one excepted by the rules, it may direct them to give their consent in writing within five days to have the dispute settled by mediation; where they consent, it refers the matter within five days of receiving the consent, and Chapter V applies. The mediation is held in the consumer mediation cell attached to the Commission under section 79, before a mediator nominated from a panel under sections 75 and 76, who must disclose any interest or circumstance raising a justifiable doubt about his impartiality under section 77 and may be replaced under section 78. If the parties agree, wholly or partly, section 80 requires the terms to be reduced to writing and signed and the mediator to send the agreement with a settlement report; section 81 requires the Commission, within seven days, to pass an order recording the settlement and dispose of the matter, or, where only part is settled, to record that part and continue hearing the rest. If no agreement is reached the mediator reports the failure and the complaint proceeds under section 38.
Mediation under the Act
2. Why is an order recording a mediation settlement not appealable? Because the third proviso to section 41 says so in terms: no appeal lies from an order passed under section 81(1) by a District Commission pursuant to a settlement by mediation under section 80. The reason is that the order does not decide anything; it records what the parties themselves agreed, so there is no adjudication to appeal against, and permitting an appeal would destroy the value of mediation by adding the very rounds of litigation it was meant to remove. It follows that a party should be as careful in mediation as at a hearing, and that the mediator's duty of disclosure under section 77, and the power of replacement under section 78, are the safeguards that make the finality acceptable.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.