Mediation Cells**

Establishment of Mediation Cells (Section 74)

Recognizing the importance of alternative dispute resolution (ADR) methods for faster and more amicable settlement of consumer disputes, the Consumer Protection Act, 2019, has introduced the concept of **Mediation Cells** as an integral part of the consumer dispute redressal framework.

As per **Section 74(1)** of the Consumer Protection Act, 2019, the State Government shall establish, by notification, a **consumer mediation cell** to be attached to each of the District Commissions and the State Commissions of that State.

Similarly, as per **Section 74(2)**, the Central Government shall establish, by notification, a **consumer mediation cell** to be attached to the National Commission.

Attached to District Commission, State Commission, National Commission

This means that each of the three tiers of the consumer dispute redressal agencies will have a dedicated mediation cell attached to it. This ensures that mediation as an option is available to consumers regardless of the level at which their complaint is filed, provided the case is deemed suitable for mediation.

• A mediation cell will operate within the premises of the District Commission or in a designated location nearby.
• Similarly, there will be mediation cells attached to the State Commissions in each State and to the National Commission in Delhi.

The mediation cells are staffed by qualified mediators empanelled by the respective Commissions in accordance with the rules.

The establishment of these mediation cells provides a statutory basis for incorporating mediation into the formal consumer dispute resolution process, offering a structured avenue for parties to attempt settlement outside of the adversarial litigation process.

Purpose of Mediation

Mediation is a process where a neutral third party (the mediator) facilitates communication and negotiation between disputing parties to help them reach a mutually acceptable agreement. In the context of consumer disputes, mediation serves specific purposes aimed at improving the efficiency and effectiveness of the redressal system.

Simplifying the process of settlement

Litigation before the consumer forums, although simpler than civil courts, can still involve legal complexities, paperwork, and time delays. Mediation offers a relatively **simplified process** for settling disputes:

• It is less formal and more flexible than court proceedings.
• Parties can directly communicate with each other, assisted by the mediator, without strict adherence to legal procedures and rules of evidence.
• It can lead to a quicker resolution compared to going through the full adjudication process, which saves time, effort, and cost for both the consumer and the business.

Exploring amicable solutions

The primary purpose of mediation is to help parties **explore amicable solutions** that meet their respective needs and interests. Unlike adjudication where a third party imposes a binding decision, in mediation, the parties themselves work towards finding a resolution. This can lead to:

• **Mutually beneficial outcomes:** Parties have control over the outcome and can arrive at creative solutions that a court might not be able to order.
• **Preservation of relationships:** Mediation is less adversarial than litigation, which can help preserve business relationships where desired.
• **Confidentiality:** The mediation process is confidential, allowing parties to discuss their positions and concerns freely without fear of it being used against them in other proceedings.

Mediation is particularly suitable for cases where the parties are willing to negotiate and compromise, and where the dispute involves more than just a claim for monetary compensation (e.g., issues involving ongoing service, reputational concerns, desire for continued business relationship).

By promoting mediation, the Act aims to reduce the burden on consumer forums, provide consumers and businesses with an alternative, potentially faster and less confrontational way to resolve disputes, and encourage settlements that are satisfactory to both sides.

Process of Mediation

The Consumer Protection Act, 2019, provides for specific stages and principles governing the mediation process in consumer disputes. The process is initiated by the consumer forum when a complaint is filed before it.

Reference to Mediation (Section 37):

After a complaint has been admitted by the District Commission (or State/National Commission), the Commission can, on the request of the parties or if it deems fit, refer the complaint for mediation. This can be done if the Commission is of the opinion that there exists a possibility of settlement. However, certain types of cases are generally **not suitable for mediation**, such as those involving serious allegations, large public interest issues, or cases where one party is unwilling to participate genuinely.

If the Commission decides to refer the case for mediation, it sends the complaint, along with relevant documents, to the mediation cell attached to that Commission.

Voluntary participation

Although the Commission may refer a case for mediation, participation in the mediation process is essentially **voluntary** for the parties. While parties are encouraged to participate, they cannot be forced to reach a settlement. The mediator facilitates the discussion, but the decision to settle rests solely with the parties. If either party is unwilling to participate or continue with the mediation, or if the mediator feels that settlement is not possible, the case is returned to the Commission for adjudication.

Confidentiality

The mediation process is strictly **confidential** (Section 80). Anything discussed, said, or documents produced during the mediation sessions cannot be disclosed by the mediator or the parties in any subsequent legal or other proceedings, unless required by law or for the purpose of enforcement of a settlement agreement. This confidentiality encourages parties to speak freely and explore options without prejudice to their legal position if mediation fails.

Role of the Mediator:

The mediator is a neutral third party who assists the parties in reaching a settlement. The mediator does not decide the case but facilitates communication, helps parties identify issues, explores options, and assists in drafting the settlement agreement if reached. Mediators are appointed from a panel of qualified persons maintained by the Commissions.

Timeline for Mediation:

The mediation process is generally expected to be completed within a specific timeframe, usually **thirty days** from the date of reference to the mediation cell, and can be extended by another **fifteen days** by the Commission on sufficient cause (Section 76). If mediation is successful, a settlement agreement is signed. If unsuccessful, the case is returned to the Commission.

The mediation process provides a structured, confidential, and facilitated environment for parties to attempt resolving their disputes by mutual agreement.

Mediation Settlement Agreement

If the mediation process is successful, the parties reach an agreement resolving their dispute. This agreement is then formalised into a written document called the **Mediation Settlement Agreement**.

Binding nature of mediated settlement

Once a settlement is reached in mediation and documented in the Mediation Settlement Agreement, it becomes **binding** on the parties (Section 78). Key aspects of the settlement agreement:

• The agreement is drafted by the mediator in consultation with the parties.
• It must be signed by both the complainant and the opposite party.
• The mediator also signs and authenticates the agreement.
• The signed agreement is then forwarded by the mediation cell to the concerned Commission (which referred the case) within seven days of signing.

Confirmation and Enforcement by the Commission (Section 81):

Upon receiving the settlement agreement, the Commission is required to pass an order **recording the settlement** within **seven days** of receipt of the agreement. This order makes the settlement agreement legally binding and enforceable as if it were an order passed by the Commission after adjudication.

If a party fails to comply with the terms of the settlement agreement recorded by the Commission, the other party can seek its **enforcement** by filing an application with the same Commission. The Commission has powers to enforce its orders, including powers of execution (Section 71), which would apply to the settlement agreement recorded as an order.

If the mediation is not successful within the stipulated time, the mediator reports the failure to the Commission, and the Commission proceeds with the adjudication of the complaint based on the evidence and arguments presented by the parties, as if no mediation had taken place (Section 77). The information shared or offers made during mediation cannot be used by the parties during the subsequent adjudication.

The provision for mediation and the binding nature of the settlement agreement provide a robust mechanism for voluntary resolution of disputes within the consumer protection framework, offering an alternative to the formal litigation process before the forums.