[By Abeer Sharma]
The author is a a second-year law student at Rajiv Gandhi National University of Law, Punjab.
Introduction
The Consumer Protection Act of 2019, surfaced through minor amendments with the passing of the Mediation Act, 2023. Section 65, read in coherence with the Tenth Schedule of the Mediation Act, proposed various changes related to mediation, with the main difference seen under Section 37 of the Consumer Protection Act, in the form of Sections 37A and 37B, which comprehensively address the procedural aspects of the mediation process during consumer disputes. The rationale behind these sections is to ease the process for both consumers and courts, where a growing pendency of cases with prolonged adjournments is observed. However, there are still some persistent limitations under these newly notified sections, that need to be addressed.
The Sections 37A and 37B with Their Limitations
Earlier Section 37 and Chapter 5 of the Consumer Protection Act described the mediation process, where the power to refer any dispute to mediation was vested in the court with the parties’ consent. However, time limitations emerged under it and to overcome these, changes were made to Section 37, and Sections 37A and 37B were introduced.
Section 37A addresses settlement through mediation, where if an agreement is fully, partially or not reached among the parties, the outcome is communicated to the commission through a report by the mediator. Based on this report, the future course of action is taken. Section 37B covers the recording of the settlement and passing order. In which within seven days of receipt of the settlement report, the Commission is bound to pass a suitable order and dispose of the matter. Where if the agreement is reached only partially, the settled terms are recorded by the commission and other unresolved disputes are posted for further hearing. However, if no terms are reached, the commission continues to hear all the terms involved.
The mediation process provided under Sections 37A and 37B is comprehensive and provides a clear procedure, but still, the existence of some pertinent limitations under it cannot be ignored, which are as follows:
The Creation of Fragmented Hearing
Section 37(A)(1) and Section 37(B)(2) of the Consumer Protection Act address disputes settled only in part, where the resolved issues are reduced to writing and signed by the parties, while unresolved issues continue to be heard by the commission. The division of settled and unsettled disputes causes a fragmentation of hearings, where parties are obliged to first, follow the process of mediation, moulding their whole mindset in context to it and if any of the parties disregard the process and adopt the status quo path of litigation in consumer court, it causes a drastic change once again. Similar observations were made in the cases of K. Srinivas Rao v. D.A. Deepa and B.S. Krishnamurthy v. B.S. Nagaraj, where the Supreme Court recognized the importance of mediation in matrimonial disputes but also highlighted the limitations, such as the risk of prolonged proceedings if mediation fails, which affects the overall efficiency of dispute resolution when transitioning back to litigation.
Compulsion Upon the Commission
The changes made under Section 37 include statements like “District Commission or State Commission or the National Commission, as the case may be, shall either on an application by the parties at any stage of proceedings refer the disputes for settlement by mediation”. The use of words like “shall either” implies that it becomes binding upon the commission to pursue the application when moved by the parties. In contrast, the older Section 37 used phrases like “it may direct the parties to give in writing, within five days, consent to have their dispute settled by mediation” where use of words like “may” provided discretionary powers to the commissions to adopt mediation process after examining all elements of the dispute. The current mandate for the commission to refer to a mediation process can result in the wrong usage of proceedings by a party through prolonging of process, thereby forcing the other party into a less advantageous position and derailing justice.
The Completion of the Process Under the Specified Time
Section 37(A)(3) of the Consumer Protection Act addresses the situation where no agreement is reached between the parties within a specific time. If the mediator believes that settlement is not possible, he shall submit the report and end the mediation process. In contrast, older provisions like Section 77(3) of Chapter 5 of the Consumer Protection Act specified that the mediation process should be conducted within a time frame set by rules and as per Consumer Protection (Mediation) Rules, 2020, Section 11(2) mandated the completion of the mediation process under 3 months from the first hearing with the mediator. This period could only to extended with the permission of the commission.
The flaw in the present provisions is the broad scope of power given to the mediator, as ‘Specific time’ is not defined under the act, leaving it to the mediator’s discretion to end the proceedings, even against the wishes of the parties. This contrasts with earlier provisions where a three-month fixed time was provided for mediation, with a possibility of the extension only on the commission’s permission, thereby ensuring fair justice for the parties.
The Solution from Mediation and Alternative Dispute Resolution (ADR) Practices Adopted in Other Countries
As demonstrated above there are pertinent limitations in new mediation provisions under the Consumer Protection Act and solutions to the same will be explored under this head, through analysis of mediation and ADR provisions adopted in the consumer laws of other countries:
The Solution to Fragmented and Specific Time Hearing Through the European Union and Canada
European Union has evolved solutions to the issue of fragmented and prolonged hearings in its Directive 2013/11/EU on Consumer ADR. This directive incorporates provisions like Article 8, which prescribes ADR process to be streamlined and parallel to the consumer dispute process, with a direction for the resolution of the ADR dispute within a 90-day time frame from receipt of the complaint by the ADR entity.
Similarly, in Canada, under its Consumer Protection Act of 2002, Section 118 is incorporated, which mandates upon the completion of the ADR process under a reasonable period which is to be decided by the Consumer Authorities.
These solutions can be incorporated under the Indian Consumer Protection Act, where the mediation process can be made more streamlined and parallel to the consumer dispute process, making it less fragmented and complex. Additionally, incorporating a fixed period of mediation proceedings as per commissions can help in making the mediation process less prolonged, specific, and outside the influence of the mediator.
The Counter of Compulsion Through the Cases of Japan and Singapore
The compulsion upon the consumer authorities to accept references for mediation is efficiently controlled by Japan and Singapore through their respective laws. For Instance, in Japan, the National Consumer Affairs Centre of Japan, in its judgements has highlighted its jurisdictional discretion in taking up cases for meditation after a detailed analysis of the circumstances of the case.
Similarly, in Singapore, the Ministry of Trade and Industry had clarified the role of the Consumer Association of Singapore (CASE), which is empowered under the aegis of the Consumer Protection (Fair Trading) Act (CPFTA) to asses and determine whether mediation is considerable and appropriate for each consumer dispute after its detailed analysis.
The same mechanism can be adopted in India, where commissions may be empowered to refer cases to meditation only after thorough analysis, where they can segregate the case for regular proceedings and mediation.
Conclusion
The amalgamation of Sections 37A and 37B into the Consumer Protection Act, 2019 works to streamline the mediation process for consumer disputes, by addressing the pending backlog of cases and ensuring timely resolutions. However, their enforcement reveals various limitations such as fragmented hearings, compulsory mediation referrals, and confusing timelines, which can potentially lead to hindrances in the efficiency of the dispute resolution process.
Examining the global practices, notably from the EU, Canada, Japan, and Singapore can help in the emergence of solutions that can enhance India’s mediation framework, such as the adoption of specific timelines, allowance of discretionary referral by commissions, and ensuring streamlined processes can mitigate current issues, propagating a more efficient and just consumer dispute resolution system. The adoption of this approach underscores the need for continuous refinement in consumer protection laws to balance expedient justice with procedural fairness.