With the consumer courts of the country being burdened with an excessive workload in terms of pending litigation, the need for other dispute resolution mechanisms was highly felt. The recently implemented Consumer Protection Act, 2019, fulfils that need.

Since quite some time, alternative redressal mechanisms for consumer dispute redressal have been the topic of debates and discussion amongst the legal fraternity of the nation citing the huge swooping pendency of nearly 22,000 cases before the National Consumer Disputes Redressal Commission (NCDRC) alone. The government finally answered this call by way of the highly anticipated Consumer Protection Act, 2019. It received the approval from the Indian President on August 9, 2020, and was prescribed to come into effect from July 20, 2020.

Mediation as a new redressal mechanism

Consumer Protection Act, 2019 (ACT) pioneered the concept of mediation as a redressal mechanism for disposal of consumer disputes. The parties before the consumer courts now have an option of opting for mediation as a redressal mechanism for their disputes, at any time after the admission of the complaint. As per Section 74 of the Act, the State government has been empowered to establish a consumer mediation cell to be attached to each district and state commission of that particular state.

As per Section 37 (2) of the Act, where the parties agree for settlement by mediation and give their consent in writing, the District Commission, within five days of receiving consent, will refer the particular matter for mediation, and in that scenario, the provisions of Chapter V, which relate to mediation, would apply.

Procedure for mediation

The procedure for conducting mediation proceedings by the mediation cell has been laid down in Section 79 of the Consumer Protection Act, 2019. It has been made clear that mediation shall be held in the consumer mediation cell attached to the District Commission, the State Commission or the National Commission, as the case may be. The mediator is also bound to have regard to the rights and obligations of the parties, the usages of trade, if any, the circumstances giving rise to the consumer dispute and such other relevant factors, as he may deem necessary and shall be guided by the principles of natural justice while carrying out mediation.

The mediator is also duty-bound to complete the proceedings within the prescribed time limit of three months by the Consumer Protection (Mediation) Rules, 2020. In case a party does not participate in the proceedings of mediation, then, the Consumer Commission may ask that party to participate in such proceedings.

The mediator will be guided by natural justice, and fair play principles but will not be bound by the provisions of the Indian Evidence Act, 1872 (1 of 1872) or the Code of Civil Procedure, 1908 (5 of 1908). The proceedings record shall be drafted by the mediator on each date and will be signed by the concerned parties or their chosen counsel, attorneys, or authorised representatives. The agreement, which is executed between the concerned parties will be submitted by the mediator, to the Consumer Commission, within a sealed cover, and, along with a forwarding letter.

In case no agreement is executed between the concerned parties, within the prescribed time limit, then, the mediator will intimate the same to the Consumer Commission. However, this will be done, without, in any manner revealing as to what ensued during the proceedings of mediation, what was the stand taken by the concerned parties or why the agreement was not reached.

Under the mediation, in case an agreement is reached between the concerned parties about all of the issues included in the consumer dispute or for only a few of the issues, the terms of such agreement shall be reduced to writing accordingly, and signed by the parties to such dispute or their authorised representatives. The mediator shall draft a settlement report about the settlement and send forward the agreement (signed) alongside with such report to the concerned Commission.

In a scenario where an agreement is not reached between the parties within the specified period, or the mediator believes that a settlement is impossible, then, he/she will make his/her report accordingly and submit that to the relevant Commission.

How will this benefit the real estate sector?

There is nothing that bars home buyers as well as the builders/real estate developers from referring their pending disputes before the consumer courts to mediation. Not only the pending disputes but the one filed fresh by the home buyers (consumers) wherein the buyer is either looking for compensation or refund of a certain sum or any other relief that can be claimed by the consumers, can also be referred to mediation as that is a much faster and simplified way of resolving the disputes between the two of them.

It is a well-known fact that the large majority of cases before various consumer forums in the nation are pertaining to flat buyers, i.e. real estate housing projects. With the introduction of “Unfair Contract Clause” by the 2019 Act, more and more flat buyer/builder-buyer agreements are on the way of being challenged before the relevant consumer forums to take advantage of the newly acquired powers by the consumer courts.

Factoring in the humungous sums of money every buyer invests in purchasing his/her apartment, the languishment that the homebuyers face due to the long-drawn litigation process before the consumer courts, tend to put them in a pickle since their hard-earned monies are stuck in litigation for years together and they are not in a position to let go of their money or to withdraw from the project since that means no roof over their head. This provision of mediation will help home buyers and the builders/developers to arrive at an acceptable settlement amicably. It will be beneficial to both in terms of money for the homebuyers and goodwill for the developers.

All being said, it will be safe to say that the introduction of provisions for mediation, as a settlement process for consumer disputes is sure to bring about some radical changes in the adjudication process of the consumer disputes. The pendency of cases before various consumer commissions of the country will now see a massive dip. It is a well-thought move by the Government of India which is being welcomed with both arms by the legal fraternity as well as the common man of India.