Mediation

Mediation under Companies Act, 2013

Mediation /

Mediation under Companies Act, 2013 Date – 18/09/2020 Author – Sharqa Tabrez Year – 3rd Year Institute –  National Law Institute University, Bhopal Introduction The French philosopher Voltaire once said – ‘I was ruined but twice, once when I won a lawsuit and once when I lost one.’[1] It has been suggested since long that the discontentment with litigation as a means of dispute resolution seems endemic to human society.[2] Hence people look forward to more effective means of solving their conflicts. Mediation is a form of Alternative Dispute Resolution mechanism (hereinafter “ADR”) wherein the contesting parties voluntarily agree to resolve their conflict amicably and reach a settlement with the assistance of a neutral mediator. ADR mechanisms have been recognised by several jurisdictions as an efficient way of settling disputes and India has also moved a step in this direction by enacting a number of laws. These include the Legal Services Authorities Act of 1987, the Arbitration and Conciliation Act of 1996, Section 89 and Order X Rules 1A, 1B and 1C of the Code of Civil Procedure of 1908, Section 442 of the Companies Act, 2013 and the Companies (Mediation and Conciliation) Rules, 2016 (hereinafter “Rules”). Purpose of Section 442, Companies Act, 2013 The erstwhile law dealing with company law disputes was the Companies Act, 1956 which provided for several alternative dispute resolution bodies dealing with different subject matters. Section 442 of the Act of 2013 was enacted to streamline these mechanisms and to form a single forum for mediating and conciliating disputes relating to company law. The 2016 Rules brought about a significant improvement in the mechanism by laying down the procedure to be used. The main object was to reduce the burden on the tribunals and to ensure expeditious disposal of cases. As per the Standing Committee Report, the purpose of creating the Panel was to allow parties to settle their disputes voluntarily and quickly. Key Provisions Some key provisions regarding mediation provided under the Companies Act, 2013 and the Companies (Mediation and Conciliation) Rules, 2016 are: The Mediation and Conciliation Panel: Under Section 442, the Central Government must maintain a Mediation and Conciliation Panel (hereinafter “Panel”) consisting of experts having qualification as provided under Rule 4.[3] Dispute before the Panel: A dispute may be brought before the Panel by either of the parties[4] or may be referred by the Central Government, the National Companies Law Tribunal (hereinafter “NCLT”) or the National Companies Law Appellate Tribunal (hereinafter “NCLAT”) (before which the proceeding is ongoing) suo motu if it deems it fit.[5] These authorities may be referred to as relevant authorities. Cost effectiveness: The total cost of the entire mediation proceeding must be borne equally by the contesting parties.[6] This is to ensure that the process is economical for both. Time limit: The Act specifies a time limit of three months for the completion of the mediation.[7] The Rules further elaborate that, in case of a proceeding before the NCLT or the NCLAT, the parties or the mediator or conciliator may seek an extension of upto three months to complete the mediation or conciliation.[8] Confidentiality: The basic element of any mediation proceeding is the element of confidentiality and privacy which has been provided under Rules 21 and 22. The mediation must be conducted in privacy[9] and the events must not be disclosed outside either by the parties or by the mediator.[10] Facilitative and Voluntary Process: The mediator must facilitate the process and encourage the parties to come an amicable solution voluntarily. He cannot impose any decision on the parties or terms for the settlement; the reins are in the hands of the parties themselves. Good Faith: The contesting parties must act in a bona fide manner throughout the proceeding with the aim of resolving the dispute. Empanelment of Mediator For a person to be selected as a member of the Panel, he must fulfil either of the following conditions i.e. he must have been a Judge of the Supreme Court of India, or a High Court, or a District and Sessions Court, or a Member or Registrar of a Tribunal constituted at the National level, or an officer in the Indian Corporate Law Service or Indian Legal Service with fifteen years of experience, or a qualified legal practitioner for not less than ten years, or a Chartered Accountant or Cost Accountant or Company Secretary with at least fifteen years of continuous practice, or a Member or President of any State Consumer Forum, or an expert who has successfully undergone training in mediation or conciliation. Rule 5 pertains to the conditions of disqualification of person from becoming a member of the Panel. It includes, among others, a person who is financially or otherwise interested in the matter or is related to either of the parties such that his neutrality might be compromised. This rule ensures that the mediation proceeding is conducted by an unbiased mediator with no specific interest in the matter or with the parties. Role of the Mediator The mediator’s job is simply facilitative in nature. He must encourage the parties to reach a settlement on their own accord and must not induce any settlement terms upon them unless the parties themselves consent to it. He must identify issues for the parties, facilitate communication, clarify their concerns, explore areas of conciliation and assist them in resolving their dispute. The Rules also provide for ethics which must be followed by the mediator. These include, among others, observance of due diligence, upholding the impartiality and neutrality of the mediation proceeding, ensuring that parties make informed decisions by making them aware of all procedural aspects, disclosing his interest or relationship with either of the parties (if any) to prevent any kind of bias, maintaining confidentiality, conducting proceeding according to the relevant laws, etc. Procedure under the Rules A company law dispute may be brought for mediation in the following two ways: By the parties on their own accord under Section 442(2) while the proceeding is ongoing before the Central Government, NCLT or NCLAT by filing an application; or By the suo motu referring of the matter by the Central

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Chess Clock Method – Alley to the Due Process and Oral Hearing

Dispute Resolution, Mediation /

Chess Clock Method – Alley to the Due Process and Oral Hearing Date: 10/05/2021 Authors: Simran Kaplish Institute of Authors: Institute of Law, Nirma University, Allahabad. Year: 4th Arbitration in India is significantly thriving, as one of the most effective procedure of dispute resolution. The disputes being solved with the help of arbitration process have undoubtedly witnessed accession.  The working mechanism of the judiciary has always been criticised for various black holes which includes a tedious procedure, along with incredibly long proceedings. As per a report, there were 3.4 crore cases in the district court pending between February 1 – August 31, 2020.  The condition of High Court and Supreme Court seems to be miserable, subjected to lots of work. At this point of time, the arbitration tribunals come into Play. The main objective of the arbitral tribunal was speedy redressal along with relaxation of procedural complexities to cut short the time of proceedings and make it cost-effective. Besides, it is seen that arbitration proceedings have baffled the objective of the act by bringing in procedural complexities where parties are involved in long proceedings. The whole process of gathering evidence and examination of witnesses has disrespected the objective of the act. Not only this, the consistent interference of the judiciary by granting interim relief and setting aside applications of greater concern. Initially, India had greater scope for arbitration as people preferred it to be a redressal with a speedy procedure and flexible procedure. In today’s time, the courts and tribunals have ended up at the same level, creating lots of chaos and discrepancies.  Introduction Arbitration as defined by the American Bar Association is a private process where disputing parties agree that one or several individuals can decide the dispute after receiving evidence and hearing arguments[1]. As per the black’s law dictionary, arbitration is a dispute resolution process in which the disputing parties uses one or more neutral third parties to make a final and binding decision resolving the dispute. Relying on both these definitions, we can bring arbitration to a crux of three major elements, including a speedy redressal, amicable procedure and cost-saving proceedings. Focusing stress upon the flexible procedure has created a juggle in the functioning of these tribunals. The Due Process It is essential to follow a due process of law, for a free and fair trial. These rules of due process protect the rights of people. The term due process of law can be understood from two perspectives. A procedural due process includes following the concept of natural justice whereas the substantive due process is subjected to the restrictions imposed by the Constitution, for the protection of rights. Being particular, in the case of Maneka Gandhi versus the Union of India[2], the concept of due process was elaborated to control the excessive and arbitrary powers of authorities. Similar to the Constitution of the USA, the due process includes a fair trial along with “Audi alteram partem”. Examination of witnesses along with close examination forms to be a very essential element of Indian proceedings. The drawback here is that these procedures are time consuming and tiresome. Hitting on the point, most of the High Court judges act as arbitrators, having the mentality of the functioning of a court[3]. This is a huge reason, due to which the objective of the arbitration act is being violated in India. When we have Arbitral tribunals it becomes a necessity to keep a balance between following the due procedure of law and giving autonomy to the arbitrator and parties to decide for their own. The UNICITRAL Model Law[4] defines a boundary line for the judiciary to intervene, which has not been adopted by the Indian judiciary for dispute resolution. It is necessary to have bars and waiver of some procedural formalities, to keep intact the essence of the arbitration act in India. The Indian evidence act has a cumbersome procedure to follow methods of recording evidence and checking that admissibility. The arbitration tribunal acts as an exception, for speedy redressal. Justifying this statement, in the year 2015 the amendment brought in a limitation of 12 months, which made the tribunal bound to finish off and pass the award[5]. If the parties mutually agree, the time period can extend by not more than six months at the last and hence becomes mandatory to pass the award unless court extends the application[6] Whether to follow or not? The question that arises here is whether the arbitral tribunal has the right to not conduct cross-examination or deny oral hearing from the party, just to achieve the objective of the act. In this case, we can rely on the Chess clock method. This method has not been implemented in India but has shown its positive existence in Singapore and London. As per this, when the parties entered into an arbitration agreement, the tribunal should allow a particular time limit for recording evidence and cross-examination. This should not be based upon the concept of quality but should be equitable. Parties have the superior ability to justify claims and relieve their burdens, within a sleep-related time. This is a sole solution to the two basic problems of arbitration in India, including the proper follow-up of law along with Speedy redressal. The chess-clock system prohibits one party from devouring an undue amount of time. Using a chess clock to center parties’ attention on the benefits and shortcomings of their respective positions motivates them to seek commercial settlement sooner than they would otherwise. Moreover, in this time where video conferencing has become the new normal, the concept of fast redressal seems to be paved out totally.  In the case of RateGain Travel Technologies Private Limited v. Ujjwal Suri[7], the Delhi HC gave power to arbitral tribunals to conduct the recording of evidence and oral hearing by way of video conferencing[8]. Calcutta High Court in the case of Saraf Agencies Private Limited v. Federal Agencies for State Property Management[9],   allowed witnesses for cross-examination, through videoconferencing who was present in

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Family Disputes and the Importance Of Mediation

Mediation /

The ordinary human inculcates a nature of social dependency. People have always had the tendency to group themselves into families to nourish and support each other emotionally and physically and communal cooperation as well, from the very beginning of human life. Marriage and family are perhaps the society’s oldest and most resilient institutions. These families form the heart and soul of the human society.

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