Mediation under the Consumer Protection Act, 2019

Chapter V of the Consumer Protection Act, 2019: the mediation cell, the panel of mediators, their duties and how a settlement becomes an order

In one minute

Chapter V of the Consumer Protection Act, 2019 (sections 74 to 81) sets up mediation inside the consumer forums. Each Commission has a consumer mediation cell with a panel of mediators valid for five years. A mediator must disclose any interest, and the Commission records the settlement within seven days.

In exams, this topic is asked as a long answer on the empanelment, appointment and duties of mediators and the settlement of disputes. The usual trap is to confuse empanelment, which creates the panel, with nomination, which picks one mediator for one dispute.

Exam focus

Frequency: No data
Usually asked as: No data

Legal provision

Section 37: reference to mediation by the District Commission, with written consent of the parties within five days.
Section 74: establishment of the consumer mediation cell.
Section 75: empanelment of mediators.
Section 76: nomination of mediators from the panel.
Section 77: duty of the mediator to disclose certain facts.
Section 78: replacement of a mediator.
Section 79: procedure for mediation.
Section 80: settlement through mediation.
Section 81: recording of the settlement and passing of the order.

Meaning and definition

Mediation is a way of settling a dispute in which a neutral mediator helps the parties reach an agreement. Empanelment means putting a person on the approved panel of mediators. Nomination means choosing a mediator from that panel for a particular dispute.

Detailed explanation

Step 1: Consumer mediation cell (section 74)

The State Government establishes by notification a consumer mediation cell attached to each District Commission and the State Commission.
The Central Government establishes by notification a cell attached to the National Commission and each of its regional Benches.
The cell consists of the persons who may be prescribed.
Each cell maintains a list of empanelled mediators, a list of cases it handled, a record of proceedings, and any other information specified by regulations.
Each cell sends a quarterly report to the Commission to which it is attached.

Step 2: Empanelment of mediators (section 75)

Each Commission prepares a panel of mediators, maintained by the cell attached to it.
The panel is prepared on the recommendation of a selection committee of the President and a member of that Commission.
Regulations specify the qualifications and experience, the procedure, training, fee, terms and conditions, code of conduct, and the grounds and manner of removal or cancellation of empanelment.
The panel is valid for five years. The mediators can be considered for re-empanelment for another term, on the conditions specified by regulations.

Step 3: Nomination and appointment (section 76)

When the Commission nominates a mediator from the panel for a dispute, it must consider his suitability for resolving the consumer dispute involved.

Step 4: Duties of the mediator (section 77 and section 79)

Disclose any personal, professional or financial interest in the outcome.
Disclose circumstances that may give rise to justifiable doubt about his independence or impartiality.
Disclose other facts specified by regulations.
Have regard to the rights and obligations of the parties, the usages of trade, and the circumstances of the dispute.
Be guided by the principles of natural justice.
Conduct the mediation within the time and in the manner specified by regulations.

Step 5: Replacement (section 78)

The Commission must replace the mediator by another if it is satisfied, on information from the mediator or from any other person including the parties, and after hearing the mediator.

Step 6: Procedure (section 79)

The mediation is held in the consumer mediation cell attached to the Commission that referred the dispute.

Step 7: Settlement (section 80)

If the parties agree on all issues or only some, the terms are written down and signed by the parties or their authorised representatives.
The mediator prepares a settlement report and forwards the signed agreement with it to the Commission.
If no agreement is reached in the specified time, or the mediator thinks settlement is not possible, he reports that to the Commission.

Step 8: Order of the Commission (section 81)

Within seven days of receiving the settlement report, the Commission passes a suitable order recording the settlement and disposes of the matter.
For a partial settlement, it records the settled issues and goes on to hear the rest.
If mediation fails, it continues to hear all the issues.

Timeline of a reference to mediationHow to read: from top to bottom, in the order things happen.

HearingThe Commission sees elements of settlement and asks for written consent within five days (section 37(1)).
Within 5 days of consentThe Commission refers the matter to mediation (section 37(2)).
NominationA suitable mediator is nominated from the five-year panel (sections 75 and 76).
MediationHeld in the cell, with the mediator's duty of disclosure (sections 77 and 79).
Within 7 days of the reportThe Commission passes an order recording the settlement (section 81).

Don't confuse: empanelment and nomination

Point	Empanelment (section 75)	Nomination (section 76)
What it does	Creates the panel of mediators	Picks one mediator for one dispute
Who acts	Commission, on the recommendation of a selection committee	The Commission
Test	Qualifications and experience set by regulations	Suitability for the dispute
Duration	Five years, with re-empanelment	For that dispute

Empanelment. The District Commission at Guntur prepares a panel of ten mediators for five years.

Nomination. In a dispute about a delayed flat, the Commission picks from the panel the mediator with real-estate experience.

Common mistakes

Confusing empanelment with nomination.
Forgetting that the panel is valid for five years and that re-empanelment is possible.
Forgetting the mediator's duty to disclose interests and doubts about independence.
Forgetting that the Commission passes the order recording the settlement within seven days.
Forgetting that a partial settlement is recorded and the rest is heard.

Apply it

Problem

A mediator nominated in a consumer dispute holds shares in the opposite party's company. He does not tell anyone. The buyer learns of it during the mediation.

Question. What is the position?

Rule. A mediator must disclose any personal, professional or financial interest in the outcome (section 77). The Commission replaces a mediator on information received from any person, after hearing the mediator (section 78).

Application. The mediator had a financial interest and did not disclose it.

Conclusion. The buyer can inform the Commission, which, after hearing the mediator, replaces him by another mediator.

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

5-mark answer

Consumer mediation cell (section 74).
Empanelment of mediators (section 75).
Duty to disclose (section 77).
Settlement recorded within seven days (section 81).

10-mark answer

Reference to mediation, section 37.
Cell and panel, sections 74 and 75.
Nomination, section 76.
Duties and replacement, sections 77 and 78.
Procedure, section 79.
Settlement and order, sections 80 and 81.
Comparison with adjudication.

Key points to remember

A mediation cell is attached to every Commission (section 74).
The panel is valid for five years, on the recommendation of a selection committee (section 75).
The mediator must disclose any interest or doubt about independence (section 77).
The mediator is guided by natural justice (section 79).
The Commission records the settlement within seven days (section 81).

Quick self-test

1. For how long is the panel of mediators valid?

Five years, with re-empanelment possible (section 75(3)).

2. Who recommends the panel of mediators?

A selection committee of the President and a member of the Commission (section 75(1)).

3. What does a mediator send to the Commission after a settlement?

The signed agreement with a settlement report (section 80(2)).

Mediation: Empanelment of Mediators, appointment, duties and settlement of disputes