In recent years, there has been a notable increase in conflicts between consumers and producers, resulting in a substantial backlog in the court system. To address this growing issue, mediation has emerged as an effective alternative for resolving disputes outside traditional court settings. According to the National Legal Service Authority (NALSA), over 50,000 cases were settled through mediation in India from April 2021 to March 2022. This figure has since risen dramatically, with approximately 110,000 cases resolved between April 2022 and June 2023. Such statistics clearly illustrate that mediation is becoming a viable and efficient method of alternative dispute resolution.
This blog will explore the concept of mediation as defined under the Consumer Protection Act- 2019, its operational framework, and the reasons it may serve as an advantageous option for consumers facing disputes.
What is Mediation?
According to the Consumer Protection Act, 2019, "mediation" is defined as the process where a neutral third party, known as a mediator, facilitates negotiation between parties involved in a consumer dispute to help them reach a mutually acceptable settlement. In other words, mediation is a way to resolve disagreements between two parties in an efficient manner and in a less hostile setting, through the agency of a third party. This approach aims to create a “win-win” situation rather than sticking to the traditional “winner takes all” mindset often found in court battles.
One key reason mediation was introduced under the Consumer Protection Act, 2019, was to ease the burden on the judicial system. By choosing mediation, one can often resolve issues quickly and at a lower cost, making justice more accessible and timely for everyone.
Eligibility criteria for mediation
According to the Consumer Protection Act 2019, all consumer disputes are eligible for mediation, except:
- Issues related to defaults or offences with pending compounding applications.
- Complaints involving serious allegations of fraud, forgery, or coercion.
- Matters concerning the prosecution of non-compoundable criminal offences.
- Cases affecting public interest or involving multiple individuals not directly part of the proceedings.
The Commission can also refuse mediation if no viable settlement options exist or if mediation is deemed unsuitable based on the circumstances of the complaint.
Understanding the Functionality and Procedure of Mediation
A pictorial representation of the mediation process | CAG
Mediation under the Consumer Protection Act, 2019 is accessible at all three tiers of Consumer Commissions: District (DCDRC), State (SCDRC), and National (NCDRC). Upon accepting a complaint, the Commission may refer the case to mediation, contingent upon the written consent of both parties within five days, along with payment of the requisite fees.
Subsequently, an empanelled mediator is assigned, and both parties receive notification regarding the date of the initial appearance. The mediation process, grounded in the principles of natural justice, can occur either in person or online. The mediator initiates the session by explaining the process, ensuring neutrality, and building rapport with all parties involved. Following this, the agenda is established, which includes clarifying the pertinent issues and finalising the date and venue for proceedings.
Both joint and individual sessions are conducted to explore potential settlement options. In the event that a mutual agreement is reached, whether in full or in part, it shall be documented, signed by the parties, and submitted to the Commission, along with a sealed settlement report. Should the parties fail to achieve an agreement, the mediator will refer the matter to the Commission without disclosing any confidential details from the discussions.
Mediators are obligated to adhere to a stringent Code of Conduct, ensuring impartiality, confidentiality, and the avoidance of any conflicts of interest. The entire mediation process is mandated to conclude within three months from the date of the first appearance, with extensions permitted solely through a written request by the involved parties and at the discretion of the Commission. All outcomes, along with the performance of mediators, are compiled into quarterly reports submitted by the Mediation Cell to the Commission for review.
A Real-Life Example: Mediation in Consumer Disputes: The Case of Mr. Ashish Saraff v. Hitachi Home & Life Solutions (India) Ltd.
To provide a practical illustration of mediation, we can examine the case of Mr. Ashish Saraff, who purchased a Hitachi 1.5-ton split air conditioner for Rs. 41,500 on October 27, 2013. After the installation, the air conditioner failed to deliver adequate cooling. He reported the issue on April 14, 2014. Despite the company's multiple inspections and part replacements, a satisfactory resolution was not reached.
In pursuit of an amicable settlement for this consumer dispute, the complainant approached the Consumer Affairs Department's Mediation Cell at the Kolkata Central Regional Office. Two mediation meetings were convened on October 16, 2014, and November 5, 2014, where both parties were present. During these meetings, the opposing party's representative agreed to replace the malfunctioning air conditioner with a new unit. However, when the replacement was arranged, Mr. Saraff discovered that the replacement unit was an approximately two-year old machine, which he refused to accept due to concerns about potential new issues arising from this unit.
As a result, the case was allowed ex parte against the Original Petition (OP), with directives for the company to pay the complainant Rs. 41,500, alongside compensation of Rs. 3,000 for harassment and mental agony, as well as litigation costs of Rs. 2,000. This payment was to be made within 30 days of communicating the order, with an interest rate of 10% per annum accruing on the total amount until full payment was realised.
Open and constructive communication is often compromised during prolonged legal battles. Mediation offers a transformative approach by enabling parties to work towards mutually favourable solutions, ensuring just and amicable settlements while alleviating the burden on courts and litigants. Unlike confrontational legal battles, mediation focuses on finding a mutually beneficial solution. It allows all parties to maintain control over their issues and how they are resolved.
The nature of mediation preserves autonomy, ensuring that no party is bound against its will. Furthermore, it is cost and time-efficient, significantly reducing legal expenses and the strain on public resources, particularly concerning legal aid for economically disadvantaged individuals. Mediation facilitates the restoration of strained relationships and encourages future cooperation by focusing on long-term interests rather than past conflicts. Mediation represents a progressive approach to achieving accessible, efficient, and conciliatory justice, resolving disputes and fostering future collaboration.
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