Mediation under the Consumer Protection Act, 2019: Complete Notes on Chapter V

The 2019 Act is the first Indian consumer statute to build mediation into the forum itself: a consensual settlement track, run through consumer mediation cells attached to every Commission, into which an admitted complaint may be referred with the parties' written consent, and out of which comes either a settlement the Commission records, appeal-proof, or the file back for adjudication. Chapter V (Sections 74 to 81) with Section 37 and the Consumer Protection (Mediation) Rules, 2020 supply the scheme; this note covers all of it: the cells, the reference, the excluded matters, the procedure, settlement and its effect, and failure.

1. Why Mediation, and the Machinery of Cells

Most consumer disputes are, in substance, negotiations that failed, over a refund, a repair, a delayed flat, and adjudication is a slow way to finish a negotiation. Mediation offers speed, cheapness, privacy and a settlement the parties own; for the docket, every mediated case is a case the bench need not try. Section 74 therefore requires a consumer mediation cell to be attached to each District Commission and State Commission (established by the State Government) and to the National Commission and its regional benches (established by the Central Government). Each cell maintains a list of empanelled mediators, records of proceedings and settlements, and reports to its Commission. Empanelment (Section 75): mediators are empanelled on the recommendation of a selection committee consisting of the President and a member of the Commission, on qualifications the 2020 Rules prescribe, training and experience in mediation, standing at the Bar or relevant professional experience, and disqualifications screened; the panel is revised as prescribed, and Section 76 requires the Commission to nominate, for each reference, a mediator considered suitable, with the mediator bound (Section 77) to disclose any interest, relationship or circumstance bearing on independence, and replacement (Section 78) where the disclosure or other facts warrant it.

2. Reference to Mediation — Section 37

• When: at the first hearing after admission, or at any later stage, where it appears to the Commission that there exist elements of a settlement which may be acceptable to the parties.
• Consent is the hinge: the Commission directs the parties to give, within five days, written consent to mediation; only on both parties' written consent is the dispute referred, mediation under the Act is never compulsory.
• Where: to the consumer mediation cell attached to that Commission, with the nominated mediator; the reference suspends adjudication of the referred issues while mediation runs.
• Part reference: the reference may cover the whole dispute or such issues as admit of settlement, with the rest retained for hearing.

3. Matters Not Suitable for Mediation

The 2020 Mediation Rules exclude categories where private settlement would be wrong in principle, and the Commission is to keep them on the adjudication track:

• Serious medical negligence: cases involving allegations of medical negligence resulting in grievous injury or death, public accountability outweighs private compromise;
• Serious fraud and allied wrongs: cases involving serious and specific allegations of fraud, fabrication of documents, forgery, impersonation or coercion, which need findings, not compromises;
• Criminal and non-compoundable matters: defaults and offences for which applications for compounding are not permitted by law, and cases relating to prosecution for criminal and non-compoundable offences;
• Public-interest matters: cases which involve public interest or the interest of numerous consumers who are not parties before the Commission, a class's rights are not settled by two signatures.

Even outside the excluded list, reference remains the Commission's judgment: the statutory question is always whether elements of an acceptable settlement exist.

4. The Procedure — Section 79 and the Rules

• Venue and conduct: mediation is held within the mediation cell attached to the Commission; the mediator conducts it with regard to the circumstances, the parties' wishes and the need for a speedy settlement, guided by principles of natural justice and fairness, and not bound by the Civil Procedure Code or the Evidence Act.
• Role of the mediator: a facilitator, not an adjudicator: assisting the parties to identify issues, explore options and reach their own agreement, meeting them jointly and separately, with the duty of impartiality and the continuing duty of disclosure.
• Duties of the parties: attendance in person (or by authorised representatives empowered to settle), good-faith participation, and the prescribed conduct; failure to attend without cause is reported to the Commission.
• Time: the Rules require mediation to be completed within the prescribed period (three months from the first appearance being the working frame), speed being the track's whole advantage.
• Confidentiality: statements, proposals, admissions and documents made or produced in the mediation are confidential: they are not to be disclosed or relied upon in the Commission or elsewhere, and the mediator cannot be called to testify about them, the shield that lets parties negotiate candidly without arming their opponent for the trial that may follow.

5. Settlement, Its Effect, and Failure — Sections 80 and 81

Where agreement is reached on all or some issues, it is reduced to writing and signed by the parties (or their authorised representatives), and the mediator submits the settlement report, with the agreement, to the Commission. Within seven days of receiving the report, the Commission passes suitable orders recording the settlement and disposes of the matter accordingly; where the settlement covers only some issues, the Commission records it to that extent and continues to hear the remaining issues. The recorded settlement takes effect as an order of the Commission, executable like any other, and, being an order passed with the consent of both parties, no appeal lies against it. Where mediation fails, no settlement within the time, or the mediator's report that settlement is not possible, the mediator reports to the Commission, and the Commission resumes hearing and adjudicates the dispute under the ordinary procedure; the failed mediation costs the complaint nothing, its confidentiality holding, and the clock of adjudication simply restarts where it paused.

6. Related Topics and Provisions

• Admission and procedure after admission (Topic 45): where the reference decision sits
• Appeals, review, revision and enforcement (Topic 50): why consent orders are final
• Filing and adjudication complete notes (Topic 42): the adjudication track mediation relieves
• Consumer Commissions complete notes (Topic 41): the forums the cells are attached to