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Parina Muchhala on MEDIATION OF CONSUMER DISPUTES IN INDIA: AN AID TO THE INDIAN LEGAL SYSTEM?

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Introduction

The Consumer Protection Bill, 2018, was recently passed in the Indian Lok Sabha. Interestingly, Section 37 of the Bill gives District Commissions the power to refer suitable consumer disputes to mediation. This emulates the belief of the Law Commission of India in its 129thReport, and that of the Supreme Court in Afcons Infrastructure Ltd. and Anr. v. Cherian Varkey Construction Co. Pvt. Ltd. and Ors.,that mediation can lead to settlement of claims for aggrieved consumers. A closer examination of the bill further reveals its intention to institutionalise the mediation framework across the country.[1]It remains to be seen, however, while the bill still remains pending before the Rajya Sabha, whether the formal incorporation of court-annexed mediation into consumer protection law would indeed prove to be fruitful in the Indian setup.

The emergence of an advantageous alternative

Although India lacks an ‘Indian Mediation Act,’ or comprehensive law governing mediation proceedings, it has long been preferred by Indian Courts. Today, mediation extends to matrimonial disputes, commerce contracts, trade and tortious liability, etc. Having specific advantages for both buyers and sellers, mediation can serve as a new alternative to resolve consumer disputes quickly and efficiently.

Mediation contributes immensely to the legal system by reducing judicial backlog. Often, frivolous cases are instituted by consumers. Through mediation, these can be filtered out easily and divert the time of the judiciary to other pressing matters. Section 41 of the Bill bars appeals from the order of settlement passed in a mediation proceeding. Thus, these measures will be able to collectively act as a deterrent for other frivolous complainants and protect the interests of sellers.

Mediation is also extremely beneficial for disputing parties, especially complainants. Mediation helps reduce the overall time, effort and money required to settle a dispute. In India, a large number of complainants are unable to afford litigation and advocate fees, which leads to many meritorious claims not reaching consumer courts. Recognising this unwanted anomaly, Section 16 of the Court Fees Act, 1870 provides for a full refund of any court fee paid by the complainant if his grievance is settled by mediation. This acts as a boost for poorer complainants and helps instil faith in the legal system.

The Consumer Protection Bill requires mediators to be qualified and make specific disclosure requirements to both parties as to any affiliations (with either party) before the commencement of proceedings.[2]This is significant because it ensures independence and impartiality of the proceedings and increases party faith in the process. Further, the qualifications and experience of mediators can help them identify larger public interest concerns that may exist within the dispute and bring them to the notice of the Court. For instance, during a mediation instituted for an unhygienic cold drink bottle, it may be come to light during the proceedings that the facility where that particular batch of cold drinks was produced had suffered a gas leak during production, owing to which all bottles in that batch were not ideal for human consumption. This is an important fact that affects the rights and obligations of third parties that are not involved in or related to the dispute. An experienced mediator will, however, be able to catch this and report such matter to the District Commission, thus saving various other consumers from potentially harmful implications.

Lastly, in consumer disputes, it is generally the complainant with the lower bargaining power. Thus, by creating an informal atmosphere away from the formalities of Court proceedings, mediation attempts to bridge the gap between the bargaining powers of the two parties and ensures overall harmony of proceedings.

Some caveats

While extending mediation to consumer disputes can potentially benefit consumers a lot more than sellers, it may, on the other hand, in fact contribute to excessive litigation. Normally, before complainants approach consumer courts with their grievances, they tend to generally exhaust every other alternative to gain the seller’s attention towards resolving the grievance – which may include anything from calling the customer service helpline, reaching out to the Ombudsman, to repeatedly sending emails to the quality department. A seller’s lack of response or inadequate response is itself indicative of the lack of any intention to settle and/or entertain the grievance. In such cases, even though any District Commission would suggest the parties to go for mediation, it would only add an extra layer of proceedings and lead to wastage of time for the complainant. Furthermore, in the event that the seller refuses to settle, the proceeding moves back to Court, which is an even more expensive and time-consuming exercise that defeats the purpose of instituting mediation in the first place.

Another important factor to be considered is that although ADR in principle advocates equal bargaining power of parties, it is not possible to often adhere to the same practically. The principle of contra proferentum does not apply to mediation disputes. If the seller is a large company, it is easier for it to induce the complainant into settling the mediation easily by paying them off with a large sum of money. Although a qualified mediator may subtly be able to bring this point to the attention of the complainant, he cannot enforce or influence his opinion on them, and thus the outcome of the mediation still lies in the hands of complainants. Since a large number of Indian complainants are not financially sound, they tend to have less qualified legal counsel to represent them, and are often successfully lured into such traps by bigger firms.

However, such a situation can be avoided through effective mediation by a mediator. An experienced mediator would be able to decipher when the scales are tipping in favour of the corporation solely due to the consumer’s incapacity or inability to understand the proceedings satisfactorily. The mediator must then use the art of effective questioning and ask such questions which provoke thoughts in the mind of the consumer and his counsel, or aids them understand their present position in the dispute.  Or, the mediator may try to direct the mediation to a situation where a private caucus is deemed necessary and the consumer explains his position and interests to him. After understanding this, the mediator would be able to better analyse the consumer’s position. It may also help him understand whether the consumer’s complaint is frivolous. A similar exercise can be repeated for the seller or large corporation. The only thing that the mediator must be wary of during such situations is to ensure that he does not appear biased to either of the parties.

Conclusion

The mediation of consumer disputes is a step towards reduction of judicial backlog and the overall time and money spent in litigation. By bringing the parties on the same table harmoniously, mediation can help complainants obtain their well-deserved justice. Qualified mediators can also identify potential public concerns embedded within individual consumer disputes and benefit the consumer fora at large. However, the presence of unequal bargaining power and threat of failure of proceedings shall continue to loom over consumer mediation.

[1]Section 74, Consumer Protection Bill, 2018.

[2]Section 77, Consumer Protection Bill, 2018.

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