ADR & consumer

In one minute

Alternative dispute resolution (ADR) means settling a dispute without a full trial. The Consumer Protection Act, 2019 builds one ADR method into the Commissions: mediation. A Commission can send the parties to mediation if a settlement looks possible, and the parties must agree in writing.

In exams, this topic is asked as a short note on ADR and consumer disputes, or on mediation under the Act. The usual trap is to think that mediation is compulsory. It needs the written consent of both parties.

Legal provision

• Section 37: at the first hearing or later, if elements of a settlement acceptable to the parties appear, the District Commission may ask the parties to give written consent within five days to mediation under Chapter V. On consent, it refers the matter within five days. prescribed cases are excluded.
• Section 74: a consumer mediation cell is set up with each District and State Commission by the State Government, and with the National Commission and its regional Benches by the Central Government.
• Section 75: each Commission prepares a panel of mediators on the recommendation of a selection committee of its President and a member. The panel is valid for five years.
• Section 79: mediation is held in the cell, and the mediator is guided by the principles of natural justice.
• Section 80: a settlement is written down and signed by the parties, and the mediator sends it with a report to the Commission.
• Section 81: the Commission passes an order recording the settlement within seven days.
• Section 100: the Act is in addition to, and not in derogation of, any other law in force.

Meaning and definition

ADR covers methods such as negotiation, mediation, conciliation, arbitration and Lok Adalats. In these methods, the parties, with the help of a neutral person or body, reach a result outside the ordinary court process. In the Consumer Protection Act, 2019, the method given a place inside the Act is mediation. A mediator helps the parties reach their own agreement and does not decide the dispute.

Detailed explanation

Step 1: Why ADR for consumers

• Consumer disputes are often small in money and urgent in time.
• Mediation is cheaper and quicker than a full hearing, and it keeps the relationship between the parties intact.

Step 2: Reference by the Commission (section 37)

• The District Commission may suggest mediation at the first hearing after admission or at any later stage.
• It does so only when it appears that a settlement acceptable to the parties may exist.
• The parties give written consent within five days. After consent, the Commission refers the matter within five days.
• No party can be forced into mediation, and some prescribed cases are excluded.

Step 3: The mediation set-up (sections 74 to 78)

• A consumer mediation cell is attached to each Commission, keeping the list of empanelled mediators, the list of cases, and the record of proceedings.
• The cell sends a quarterly report to its Commission.
• The Commission nominates a mediator from the panel, with regard to his suitability for the dispute (section 76).
• The mediator must disclose any interest in the outcome and any circumstance that raises doubt about his independence (section 77).
• The Commission must replace a mediator when satisfied that a replacement is called for (section 78).

Step 4: Conducting the mediation (section 79)

• It takes place in the consumer mediation cell.
• The mediator has regard to the rights and obligations of the parties, usages of trade and the circumstances of the dispute.
• The mediator is guided by the principles of natural justice.

Step 5: Outcome (sections 80 and 81)

• If the parties agree on all or some issues, the terms are written down and signed.
• The mediator sends the signed agreement with a settlement report to the Commission.
• If no agreement is reached, the mediator reports that, and the Commission continues to hear all issues.
• The Commission passes an order recording the settlement within seven days.
• If the settlement is partial, the Commission records the settled issues and goes on to hear the rest.

Step 6: Other ADR and section 100

• Section 100 says the Act adds to other laws and does not take away from them.
• The Act does not itself contain provisions on arbitration or Lok Adalats. Their place in a consumer dispute depends on the other law in question.
• Mediation under this Act is the settlement method inside the consumer forum, with the Commission's order recording the result.

1. 1. Settlement looks possibleThe Commission sees elements of a settlement and asks the parties for consent (section 37).
2. 2. Written consentParties consent in writing within five days. The Commission refers the matter within five days.
3. 3. Mediator nominatedFrom the panel of the consumer mediation cell (sections 75 and 76).
4. 4. Mediation heldIn the cell, guided by natural justice (section 79).
5. 5. Report to the CommissionSigned agreement with settlement report, or a report of failure (section 80).
6. 6. Order within seven daysThe Commission records the settlement. If it fails, the hearing continues (section 81).

Don't confuse: mediation and adjudication

Point	Mediation	Adjudication by Commission
Who decides	The parties, by agreement	The Commission, by order
Consent	Written consent of both parties needed	Not needed
Role of the third person	Helps the parties settle	Decides the dispute
Result	Signed settlement recorded by the Commission	Order under section 39

Common mistakes

• Saying that mediation is compulsory. It needs written consent.
• Saying that the mediator decides the dispute. The parties decide by agreement.
• Forgetting that the Commission must record the settlement by order within seven days.
• Forgetting that a failed mediation sends the case back for a full hearing.
• Saying that the Act contains rules on arbitration. It does not, and section 100 keeps other laws in force.

Apply it

Leading case laws

This topic rests on the text of the Act. No judgment in this collection is relied on for it.

How to write this answer in the exam

Key points to remember

• Mediation needs written consent of the parties within five days (section 37).
• A consumer mediation cell is attached to each Commission (section 74).
• The panel of mediators is valid for five years (section 75).
• The Commission records a settlement within seven days (section 81).
• If mediation fails, the Commission hears all issues.

Quick self-test

Related topics

• Mediation: Empanelment of Mediators, appointment, duties and settlement of disputes
• Procedure for filing a consumer dispute
• Civil & Criminal liability