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Critical Analysis Of Reference To Mediation U/S 37 Of Consumer Protection Act, 2019

With the advent of globalisation, the protection and promotion of consumer rights have become an important obligation for governments as markets have become considerably complex.
In this article, the first section will deal with the limitations of the Consumer Protection Act, 1986[1] (1986 Act) and the reasons for the introduction of mediation in the Consumer Protection Act, 2019[2] (2019 Act).

The second section will analyse Section 37 of CPA, 2019 along with its brief comparison with models of other jurisdictions. The third section will discuss the effectiveness of mediation along with its potential in India.

Limitations Of Cpa, 1986 And Other Concerns

When 1986 Act was enacted it was seen as a major achievement of the Consumer movement in India. Markets have changed since then with the introduction of e-commerce, digital marketing, and misleading advertisement which were not an issue of concern in 1986.[3]

In Anita Kushwaha v. Pushpa Sudan[4], Supreme Court held that 'Access to Justice' is a fundamental right and laid down four facets to achieve it which included access to 'speedy and effective justice'. The 1986 Act in clause 4 under 'Statement of object and reasons' clearly states that it aims to provide 'speedy and simple redressal to consumer disputes' but statistics speak contrary to it.[5] According to the Department of Consumer Affairs, Annual Report 2020-21 the total number of pending cases in National, State and District Commissions amounts to 524661[6] (refer Annexure 1).

In its landmark judgement of Afcons Infra Ltd v M/S Cherian Varkey Constructions[7], the Supreme Court divided cases into categories 'suitable' (includes consumer disputes) and 'unsuitable' for ADR methods. The court observed the potential of ADR methods to provide speedy and effective redressal to litigants, and its further impact in reducing the pendency of cases in courts. Thus, the introduction of mediation under 2019 Act should be considered as a welcome step as it could act as a tool to tackle backlog in consumer cases.

Analysis Of Section 37 Of CPA, 2019

The 2019 Act includes various new provisions like mediation. The title of Section 37 is 'Reference to meditation'.[8] In 2002, an amendment was made in Civil Procedure Code (CPC) to include ADR as a method for dispute redressal. Section 89 of CPC deals with the ways using which disputes can be settled outside the Court. Section 89 (1) empowers the court to refer a dispute for "arbitration, conciliation, judicial settlement or mediation" if the court is of the view that a 'settlement can be reached which may be acceptable to the parties'.[9]

In Jagdish Chander v. Ramesh Chander[10], it was held that a dispute can be referred for ADR only if both the parties to a case have agreed to it. The 2019 Act took this under consideration. Section 37 (1) states that if District Commission is of the view that 'a mutual settlement can be reached, it can refer a case for mediation only after taking written consent of both the parties'.[11]

In Hussainara khatoon vs the State of Bihar[12], the court talked about the rights of an accused and constitutional obligation of the State to ensure speedy justice and fair trial. Section 37 (2) of 2019 Act obligates the District Commission to refer a case for mediation within five days of receiving consent from parties.[13] This clause will ensure the removal of lacuna for administrative delay which often results in delay of justice.

Further, regulation 11 of Consumer Protection (Mediation) Regulations, 2020[14] (CPMR, 2020) specifies that "if a settlement is not reached through mediation within three months from the first date of mediation proceedings it shall get terminated". The Consumer Commission has the power to extend these three months. This regulation ensures a speedy mechanism as, if there is no visible chance of reaching a mutual settlement it is better to explore other methods like litigation instead of delaying it unnecessarily.

The 2019 Act affords consumers the right to choose whether they want to opt into the mediation process. Contrary to this, certain jurisdictions have taken away this choice from consumers. For example, recently in 2020, Turkey made some changes in its Consumer Protection Law and introduced compulsory mediation for certain categories of consumer disputes.[15]

The researcher is of the view that the consumers should have the right to choose which mechanism i.e. litigation or mediation is best for them. This was also stated by the Supreme Court in Jagdish Chander v. Ramesh Chander[16]. That being said, the 2019 Act upholds this by leaving it to the parties in a dispute as stated under Section 37.

Is Mediation Effective For Consumer Disputes Redressal Mechanism?

India has a long history of dispute resolution through mediation. The Panchayat system was followed in Ancient India and is still followed to an extent in villages whereby an impartial village elderly will assist to solve disputes.[17] The modern practice of Lok Adalats also includes the use of ADR mechanism to settle disputes.

Mediation is seen as a simple, faster and cost-effective method where the final decision-making powers lie with parties instead of courts.[18] It also ensures confidentiality so it is beneficial for manufactures/sellers to settle a dispute at the earliest through mediation as it does not upset their market image.

The confidentiality of mediation proceedings is ensured by Regulation 13 of CPMR, 2020.[19] Admittedly, Rule 7 of Consumer Protection (Mediation) Rules, 2020[20] make settlement agreements reached by parties binding and enforceable which provides it with legal teeth.

Further, it is necessary to explore the potential of Online Dispute Resolution (ODR) in India. ODR is an emerging field with considerable advantages. Its significance can be understood after the advent of Covid-19 pandemic. It provides flexibility to the parties and they can connect to solve their disputes from places of their comfort with the use of internet and technology.[21] The Online Consumer Mediation Centre (OCMC) established at NLSIU, Bengaluru is contributing considerably towards promotion of ODR.

Through this paper, the researcher analysed Section 37 of Act 2019 using various case laws. The introduction of mediation for consumer dispute redressal is a welcome step. Now, the focus should be on effective implementation of law. The central and state governments should take steps to fill vacancies and improve infrastructure of commissions.

There is also need of increasing awareness about consumer rights and mediation among citizens. Perhaps, a good starting point would be to bring a law on mediation. This will help to increase trust of citizens in mediation as a dispute redressal mechanism.

  1. Consumer Protection Act, 1986 (CPA, 1986
  2. Consumer Protection Act, 2019 (CPA, 2019).
  3. Sheetal Kapoor, 'Mediation and Consumer Protection' [2019] 7 IJCLP 74, 84.
  4. (2016) 8 SCC 509.
  5. CPA, 1986.
  6. Department of Consumer Affairs, 'Annual Report' [2020-21].
  7. (2010) 8 SCC 24.
  8. CPA, 2019, S. 37
  9. Code of Civil Procedure 1908, S. 89(1)
  10. (2007) 5 SCC 719.
  11. CPA, 2019, S. 37(1).
  12. (1979) AIR 1369.
  13. CPA, 2019, S. 37(2).
  14. Consumer Protection (Mediation) Regulations, 2020 (CPMR, 2020), R. 11.
  15. Zeynep Derya, 'Introduction of Mandatory Mediation Process for Certain Consumer Disputes in Turkey' (CF, 15 September 2020) <> accessed 20 March 2021.
  16. (2007) 5 SCC 719.
  17. Anil Xavier, 'Mediation: Its Origin and Growth in India' 27 HJPLP 1, 5.
  18. Sheetal, (n 3).
  19. CPMR, 2020, R. 13.
  20. Consumer Protection (Mediation) Rules, 2020, R. 7.
  21. Ashok R. Patil, 'Consumer Protection in Electronic Commerce and Online Dispute Resolution Through Mediation' [2020] Innovation and the Transformation of Consumer Law 184, 189.

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