Consumer Mediation under the Consumer Protection Act, 2019

The Consumer Protection Act, 2019 introduced a statutory mediation regime that the Act of 1986 did not have. Chapter V, comprising Sections 74 to 81, establishes a consumer mediation cell attached to each District, State and National Commission, provides for a panel of mediators, and gives a settlement recorded by the Commission the force of an order against which no appeal lies. Section 37 supplies the power of reference. The regime matters because a consumer cannot be compelled into arbitration by a clause in a standard form contract, so mediation is the settlement route available in this jurisdiction.

The route from reference to order, and the two consequences that follow

1. Reference: Section 37

At the first hearing after admission of a complaint, or at any later stage, where it appears to the District Commission that there exist elements of a settlement which may be acceptable to the parties, it shall direct the parties to give in writing, within five days, consent to have their dispute settled by mediation. Where the parties agree, the Commission refers the matter within five days to the mediation cell attached to it. The same power is exercisable by the State and National Commissions. Two features distinguish this from Section 89 of the Code of Civil Procedure, 1908: written consent is required, and the reference may be of the whole dispute or of some of the issues in it.

2. The Machinery: Sections 74 to 78

Provision	What it provides
Section 74	A consumer mediation cell is to be established and attached to each District Commission, each State Commission and the National Commission, under the supervision of that Commission
Section 75	The State and Central Governments prepare a panel of mediators, empanelled by the Commission on the recommendation of a selection committee; the panel records the names, addresses, qualifications and experience of the mediators
Section 76	The Commission nominates the mediator from the panel for the mediation
Section 77	A mediator so nominated must disclose in writing any personal, professional or financial interest in the outcome, and any circumstance giving rise to a justifiable doubt as to his independence or impartiality
Section 78	The mediation is conducted within the mediation cell, in the manner specified by the regulations, and the mediator submits his report to the Commission

3. Matters Not Suitable for Mediation

The Act itself does not list exclusions, but the rules and regulations framed under it identify the categories that are not to be referred, and they follow the classification in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24.

Cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation or coercion.
Complaints involving prosecution for criminal and non-compoundable offences.
Cases involving medical negligence resulting in grievous injury or death.
Matters concerning the public interest or the interest of numerous persons who are not parties before the Commission.
Cases where the outcome would affect persons who are not parties to the proceeding.

⚠ Why these categories are excluded

Two ideas run through the list, and they are the same two that govern every settlement forum. A dispute cannot be compromised where the law does not permit the parties to compromise it, which covers non-compoundable offences and serious fraud. And it should not be compromised where a settlement would bind or affect persons who are not before the forum, which covers public interest matters and complaints filed on behalf of numerous consumers under Section 35(1)(c).

4. Settlement and Its Effect: Sections 79 to 81

The mediator's report. Where a settlement is reached in respect of all the issues, or some of them, the mediator prepares a settlement report and forwards it to the Commission, signed by the parties. Where no settlement is reached, he records that fact and reports accordingly.
The order of the Commission. Section 80 requires the Commission, within seven days of receiving the settlement report, to pass suitable orders recording the settlement and to dispose of the matter accordingly. Where the settlement covers only some of the issues, the Commission continues to hear the remaining issues.
No appeal. Section 81 provides that notwithstanding anything contained in the Act, no appeal shall lie against an order passed by a Commission under Section 80. The reason is the one that applies to every settlement: the order records what the parties themselves agreed.

The order recording the settlement is an order of the Commission and is enforced in the same manner as any other order under the Act, which includes the machinery of Section 71 for enforcement as a decree of a civil court and, in the case of default, the penal consequence under Section 72 for non-compliance with an order.

5. Why Mediation and Not Arbitration

📖 Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751

Held: A complaint under the consumer protection legislation is not liable to be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 even after the amendment of 2015. The remedy before the consumer fora is a special remedy conferred by a beneficial statute in addition to other remedies, and an arbitration clause in a standard form contract does not oust it.

Significance: The bar operates at the instance of the consumer, who may choose to arbitrate but cannot be compelled. The practical result is that the settlement route in a consumer dispute is the mediation regime in Chapter V, and not a reference to a private tribunal.

6. Assessment

The Chapter answers a real difficulty. Consumer complaints are numerous, individually small and often capable of settlement once the supplier engages, and the commissions carry a heavy pendency. A cell attached to each Commission, with an empanelled mediator and a seven-day timeline for recording the settlement, makes settlement cheap and quick. Two weaknesses are apparent. The reference depends on written consent, so a supplier that prefers delay can simply refuse. And the capacity of the cells varies widely, since empanelment and infrastructure depend on the State concerned. The Mediation Act, 2023 now supplies a general framework for the conduct of mediation, and the consumer cells operate alongside it.

7. Related Topics and Provisions

Topic or provision	Connection
ADR in Consumer Disputes	The wider treatment of settlement in consumer matters
Mediation	The process and its statutory framework
Arbitrability of Disputes	Why a consumer complaint cannot be sent to arbitration
Sections 37 and 74 to 81, Consumer Protection Act, 2019	Reference, the cells, the panel, settlement and its effect
Section 89, Code of Civil Procedure, 1908	The general power of reference, compared with Section 37