MEDIATION AND CONSUMER PROTECTION

—Sheetal Kapoor*

Abstract  The Consumer Protection Act, 1986 whose sole pur-

pose was to protect the rights of the consumers and to provide
speedy redressal to them has become archaic and does not con-
sider modern day consumer market challenges, especially those
dealing with online, teleshopping, product recall, unsafe con-
tracts and misleading advertisements. Further consumer courts
in India, are burdened with more than 4.3 lakh pending cases
and for petty amounts consumers have to wait for years to get
justice. In order to strengthen and empower consumer rights in
India The Consumer Protection Bill, 2019 which is considered
as a milestone in protecting the rights of the consumers has
been passed by the parliament. The New Consumer Protection
law repeals and replaces the CPA, 1986 and seeks establishment
of Central Consumer Protection Authority, mediation, product
liability, and faster redressal by the consumer commissions. The
author identifies important questions stemming from the discon-
tinuities in the Consumer Protection Act, 1986, the backlog and
pendency of consumer cases and discusses how mediation as
proposed in the new law can be a game changer in consumer
protection.

I.  INTRODUCTION

With the advent of digital technologies, increasing penetration of e-com-

merce, smart phones, cloud and internet, global supply chains, have pro-
vided new opportunities for consumers by providing easy access of products
and services. But on the other hand, today’s consumer is vulnerable to new
forms of challenges such as, online fraud, ATM data leak, getting defective,
substandard, duplicate, poor quality and unsafe products, predatory prices,
Author is Associate Professor and Convener Consumer Club, Department of Commerce,
*

Kamala Nehru College, University of Delhi. Author can be contacted at sheetal_kpr@hot-

mail.com.
2019 MEDIATION AND CONSUMER PROTECTION 75

exploitative and unfair trade and unethical business practices. Further, mis-
leading advertisements especially digital, tele-marketing, multi-level mar-
keting, direct selling and e-tailing are some other challenges which never
existed in 1986.

Since the consumer cannot check or verify the claimed features of the
product or service by the website it relies on the representations made on
the e-portals and many times makes advance payments before receiving or
opening the product. Lack of knowledge about the address or location of the
website and how and where to file a complaint if the seller dupes them are
other problems faced by consumers.

The absence of effective and efficient consumer dispute redressal system

can result in lack of consumer confidence in the Justice Delivery System.
Consumers find it difficult and expensive to have their disputes settled
because most of their claims are of small value and some consumers are
low-income earners. The Consumer Protection Bill, 2019 seeks to empower
consumers against above mentioned challenges and replaces the three-dec-
ade old legislature.

In a developing country like India, Alternative Dispute Resolution

Mechanism can be one of the best strategies for quicker resolution of con-
sumer disputes and to lessen the burden on the consumer forums and to
provide suitable mechanism for expeditious resolution of consumer disputes.
The Consumer Protection Bill, 2019 envisages introducing the process of
mediation for speedy disposal of consumer disputes.

The objectives of the study are as follows:

1. To understand the shortcomings in the Consumer Protection Act,
1986, especially delay in consumer dispute redressal and the chal-
lenges faced by consumers especially while buying online.
2. To study innovative methods such as mediation in consumer dispute
resolution.
3. To examine the skills, constraints and dynamics of the negotiation
process in relation to consumer protection.
4. To discuss the provisions of Consumer Protection Bill, 2019 on medi-
ation and its acceptance by aggrieved consumers.
76  INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE VOL. 7

II.  SHORTCOMINGS OF THE CONSUMER

PROTECTION ACT, 1986

After more than 30 years of implementing the Consumer Protection Act,

it is time to reconsider and rethink whether Consumer courts have been able
to deliver as promised. Are the consumers getting speedy redressal? Delay
in disposal of consumer cases, non-disposal of cases, lack of manpower
and poor infrastructural facilities, are other problems related to Consumer
courts. There have been allegations that the lawyers have taken over the
consumer forums as the consumer is unaware of the legal procedures and
processes and hesitates to plead its case in the consumer courts. The three-
tier judiciary is totally dependent on the Department of Consumer Affairs
for each and everything including appointment of members and financial
support. In disputes between consumers and businesses. Alternative Dispute
Redressal (ADR) is emerging as a faster, cheaper and cost-effective method
for timely disposal of consumer complaints. Since justice delayed is justice
denied, the consumer courts these days are facing the problems of huge
pendency and delays in disposal of cases. The consumer courts have been
established with the twin objective for speedy redressal of consumer com-
plaints and to establish quasi-judicial authorities unlike civil courts to pro-
vide compensation to consumers. But over the years there have been heavy
pendency of cases in various consumer courts. Some of the lacuna of the
Consumer Protection Act, 1986 are:
a) The Consumer Protection Act, 1986 although a benevolent legislature
whose sole purpose was to protect the rights of the consumers has
become outdated and does not consider rapid changes in consumer
marketplaces, especially those dealing with online, teleshopping,
product recall, unsafe contracts and misleading advertisements.
b) Section 13 (3A) of CPA, 1986 states that “every complaint shall be
heard expeditiously as possible and endeavour made to dispose of
complaint within a period of three months from the date of notice by
the opposite party and five months if it requires testing of commodi-
ties.” But it is seen that due to heavy pendency of cases and frequent
adjournments delay in getting justice takes place (The Consumer
Protection Act, 1986).
c) The consumer courts have been overburdened with pending cases
and the buyer-seller contract is tilted in favour of the seller. Further
the procedures are becoming expensive and time consuming.
2019 MEDIATION AND CONSUMER PROTECTION 77

Therefore, it is time that ADR and mediation process are being

adopted.1
d) The Presidents and Members of the consumer courts constitute the
backbone of the consumer dispute redressal system. They play a
major role in enhancing the faith of the consumers in the redres-
sal mechanism. But it has been seen that there are more than 400
posts of President and members in various consumer forums which
are lying vacant. The State governments do not show any interest in
immediately filling up the vacant posts and the issue of consumer
protection is not a part of any political parties agenda.
e) Consumer courts are functioning with staff deputed from other
departments who do not have any experience in judicial practices.
It is necessary to provide intensive training to the members of the
Consumer courts before putting them on the job. The present prac-
tice is to provide training after assuming charge as a member.
f) Many times, it is seen that the award given by consumer courts is
very meagre and petty and the consumer has to run from pillar to
post to get the orders implemented.
g) There has been lack of proper coordination among the President and
members of the consumer court, for timely adjudication of cases and
many times around ten or fifteen adjournments are allowed.
h) The President of the National Commission or State Commission are
not empowered to take up suo motu action in consideration of the
damages affecting a sizable number of populations e.g. misleading
advertisements.

III.  ANALYSIS OF THE CASES DISPOSED

BY CONSUMER COURTS

According to the data available from the Department of Consumer

Affairs more than 4.3 lakh cases are pending in the various consumer
courts, which is an alarming figure. When the consumer courts were formed
their main purpose was to provide inexpensive and speedy redressal to con-
sumers, where a consumer could itself plead its case in the consumer courts
(Aggarwal V.K., 2015).2 Since the law was complex in nature, many con-

1
Sheetal Kapoor, Consumer Affairs and Customer Care (Galgotia Publishing Company, 2nd
edn., 2019).
2
V.K. Aggarwal, Consumer Protection: Law & Practice (Bharat Law House 2015).
78  INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE VOL. 7

sumers started hiring lawyers and there were frequent adjournments which
were given by these consumer courts which started delaying the entire adju-
dicatory process.

Table 1.1: Total number of Cases Disposed by Consumer Forums Since Inception (Update on 5-7-2018)

Sl. Cases filed since Cases disposed of % of total

Name of Agency Cases Pending
No. inception since inception Disposal

National
1 122042 103520 18522 84.82%
Commission
2 State Commissions 788463 678124 110339 86.01%
3 District Forums 3903706 3605673 298033 92.37%
TOTAL 4814211 4387317 426894 91.13%

Source: www.ncdrc.nic.in

Analysis of data regarding number of cases disposed by consumer courts

shows that on 5th July 2018, at National, State and District level, a total
number of 48,14,211 cases were registered out of which 43,87,317cases have
been disposed. Thus, there is an astounding figure of 4.3 lakh cases which
are still pending in various consumer foras and the disposal rate is 91.13%.
Table 1.1 depicts that 1,22,042 cases were registered since inception up to
5th July 2018 with the National Commission out of which 84.82% cases were
disposed of, while 11% were still pending with the National Commission. In
case of State Commission 7,88,463 cases were registered since inception up
to July 2018 and 86.01 percent cases were disposed of. A staggering num-
ber of 39,03,706 cases were registered throughout the District Consumer
Forums in the country and performance of District Consumer Forums was
better as 92.37 % cases were disposed of. Justice delayed is justice denied,
therefore the huge number of pending cases in the various consumer forums
is a major drawback of the CPA, 1986. For petty amounts such as getting
compensation in case of defective products, deficiency in service consumers
have to wait for years to get justice.

IV.  NEED TO IMPROVE: MEDIATION AN

INNOVATIVE AND PRACTICAL METHOD

As mentioned in earlier section, the growing number of pending cases

in consumer courts and delays in getting redressal requires some fast track
alternatives so that justice reaches to the aggrieved consumers immediately.
2019 MEDIATION AND CONSUMER PROTECTION 79

There are huge challenges faced by online buyers such as breach of data pri-
vacy and security, substandard and duplicate products, phishing, territorial
jurisdiction.

In Indian Legal System, appropriate methods of disputes resolution such

as, arbitration, conciliation, mediation and Lok Adalat can be used for easy
consumer dispute resolution. These methods are less formal, encourage dis-
putants to communicate and participate in the search for solutions, focus
better on the root causes of the conflict, salvage relationships and have sig-
nificant savings in time and cost.3

Thus, innovative methods such as alternative dispute resolution (ADR)

provides procedural flexibility, saves valuable time and money and avoids
the stress of a trial and a three-tier hierarchy structure should be used.
ADR is a mechanism of resolution of disputes of conflicting parties without
resorting to adjudicatory process. ADR can be one of the best strategies for
quicker disposal of disputes to lessen the burden on the consumer forums
and to provide suitable mechanism for expeditious resolution of disputes.
Mediation, one of the tools to resolve a dispute by direct negotiation by the
opposite party has now been brought under the Consumer Protection Bill,
2019.

Mahatma Gandhi also described his experience at amicable dispute res-

olution as an exercise in uniting parties riven asunder in his autobiography
which is the essence of mediation4. Mediation is a negotiation process in
which a neutral third party assists the disputing parties in resolving their
disputes. A Mediator uses special negotiation and communication tech-
niques to help the parties to come to a settlement. The parties can appoint
a Mediator with their mutual consent or a mediator can be appointed by the
Court in a pending litigation. Mediation always leaves the decision-making
power with the parties. A Mediator does not decide what is fair or right,
does not apportion blame, nor renders any opinion on the merits or chances
of success if the case is litigated. Rather, a mediator acts as a catalyst to
bring the two disputing parties together by defining issues and limiting
obstacles to communication and settlement. The Mediation Process consists
of:

3
Omkar Anuroop and Krishnamurthy Kritika, The Art of Negotiation and Mediation
(LexisNexis 2015).
4
www.delhimediationcentre.gov.in.
80  INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE VOL. 7

1. Structured Process
2. Neutral third party
3. Facilitates resolution of disputes
4. Mutually acceptable to parties
5. Specified negotiation and communication techniques

V.  NEED FOR MEDIATION IN CONSUMER CASES

The concept of mediation is ancient and deep rooted in our country. In

olden days disputes used to be resolved in a panchayat at the community
level. Panch used to be called Panch Parmeshwar i.e. were equated to God.
Our judicial system is one of the best in the world and is highly respected,
but there is lot of criticism on account of long delays in the resolution of
disputes in civil court and consumer forums. Many times, consumers are
wary of approaching the consumer forums or civil courts for a decision of
their dispute.

Mediation in comparison to a lawsuit is quick, private, fair and inexpen-

sive. It is a different paradigm and path from litigation which focuses on the
past, establishing blame and liability and a win-lose results. In mediation the
emphasis is on the future cooperation and direct communication with objec-
tive of sustainable solutions with win-win situation for all parties. It is a
voluntary and flexible process where the parties participate in decision-mak-
ing process and are only bound when they enter into a written agreement.
It works in disputes before they are taken to court, to disputes pending in
courts and even after a Court verdict has been given. It is a strong tool in
the hands of the parties to devise solutions which could be more effective
than judicial verdict.

In Western countries the response to mediation is very successful. Courts

of law have set up Court Annexed Mediation Programmes. Lawyers have
found that mediation is a new skill, which aids their clients. Clients have
realised that mediation is a cost and time effective process and prefer law-
yers who can suggest mediation before going to court. In USA ADR has
been practiced for about 30 years and 90% cases settled through ADR in
USA whereas in UK, Australia and other countries ADR has been practiced
for about 20 years with huge success rate (Panchu Sriram 2015).5

Panchu Sriram, Mediation Practice and Law: The Path to Successful Dispute Resolution
5

(LexisNexis 2015).
2019 MEDIATION AND CONSUMER PROTECTION 81

In India, after the incorporation of Sec 89 in Code of Civil Procedure,

1908, mediation in the legal way was first introduced and became operative
w.e.f. 1-7-2002. Before that the utility and application of mediation in dis-
pute resolution was not known. In 2002, mediation, was stated to be a new
concept for the justice delivery system and for the resolution of disputes
outside the traditional court mechanism. When Section 89 was introduced,
concept of mediation was not known and trained mediators were neither
available nor mediation centres were established in the judicial districts
(Karachiwala Kassam Firdosh, 2010).6 In Afcons Infrastructure Ltd. case
also it was argued that if one party agrees to go for mediation then the court
can consider it and this method of resolving dispute can be adopted7.

The process of adjudication of consumer disputes is adversarial in nature

and is characterised with numerous and complex rules of form and proce-
dures. Filing a consumer complaint comprises of many rules and procedures
where the process of the issuance of legal notice to the opposite party and
adjudication through a three-tier consumer courts is very time consuming.
Many times, consumers face the situation of David and Goliath where the
consumers have to fight against big players such as MNC’s who engage a
battery of lawyers and are ready to fight the case for years.

The mediator through its expertise, thinking power and maturity gener-
ates solutions for the parties to resolve disputes amicably. A good media-
tor possesses active listening, communication skills, option generation,
reframing the case by avoiding harsh language used by one party, transpos-
ing, reality testing and maintain confidentiality. Delhi Mediation Project is
a unique model. It is a pilot project and is running under the guidance of
the Supreme Court of India since 2005. The first batch of Senior Additional
District Judges were imparted Mediation Training of 40 hours duration. A
permanent Mediation Centre was established at Tis Hazari court complex
(Central Hall, 3rd Floor, Room No. 325) in October, 2005 and other medi-
ation centre are working at Karkardooma Court Complex, Rohini, Dwarka,
Saket and Patiala House Courts Complex.

Some other innovative ADR methods available to consumers before

going for judicial mediation or going to consumer courts include National
Consumer Helpline (NCH) and Online Consumer Mediation Centre at
NLU established by Government of India. NCH with its toll-free number

6
Firdosh S. Kassam (Karachiwala), Conflict Resolution through Mediation (Snow White
Publications Pvt. Ltd. 2010).
7
Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24.
82  INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE VOL. 7

1800-11-4000 or 14404 provides advice, information and guidance to

empower consumers and persuade businesses to reorient their policy and
management systems to address consumer concerns and grievances adopt-
ing global standards. The NCH Project recognizes the need of consum-
ers for a Telephone Helpline to deal with multitude of problems arising in
their day-to-day dealings with business and service providers. A consumer
can call NCH to seek information, advice or guidance for its queries and
complaints8.

The Online Consumer Mediation Centre, established at the National

Law School of India University, Bengaluru under the aegis of Ministry of
Consumer Affairs, Government of India aims to provide for a state-of-the-
art infrastructure for resolving consumer disputes both through physical as
well as online mediation through its platform. The center provides innova-
tive technology for consumers and organisations to manage and resolve con-
flicts and to propel online mediation as a first choice to resolving consumer
disputes9.

VI.  MEDIATION AS THE NEW TOOL (THE

CONSUMER PROTECTION BILL, 2019)

In SpiceJet Ltd. v. Ranju Aery10 the consumer had to fight its case from
the district forum to State Commission to National Commission and then
finally to the Supreme Court regarding the contract of service entered
through internet and the cause of action of the complaint. In order to accel-
erate the process of adjudication, The Consumer Protection Bill, 2019 envis-
ages establishment of Central Consumer Protection Authority, mediation,
product liability, and faster redressal by the consumer commissions. Since
the adjudication process in consumer courts is slow, setting up of mediation
centres at District, State and National Commissions annexed to the con-
sumer courts can play an important role in delivering justice.

Clause 74-80 added in the New Consumer Protection Bill, 2019 contain
provisions for “Mediation” as an Alternate Dispute Resolution (ADR) mech-
anism. It aims to provide legislative basis to resolution of consumer disputes
through mediation thus, making the process less cumbersome, simple and

8
<http://www.nationalconsumerhelpline.in/>.
9
<https://www.nls.ac.in>.
10
SLP(C) No. 25206 of 2017, decided on 4-8-2017 (SC) available at <https://www.dailypio-
neer.com/2017/page1/online-buyers-can-sue-sellers-anywhere-sc.html>
2019 MEDIATION AND CONSUMER PROTECTION 83

quicker. The mediation centres would work under the aegis of the Consumer
Commissions and the State Government and the Central Government would
decide the composition of the mediation cell.

Sec 74 of the New Consumer Protection law mentions that the State
Government would establish a consumer mediation cell which would be
attached to the consumer courts and each of the regional benches. Every
consumer mediation cell would submit a quarterly report to the District
Commission, State Commission or the National Commission to which it
would be attached. Thus, every consumer mediation cell would maintain:
(a) a list of empanelled mediators;
(b) a list of cases handled by the cell;
(c) record of proceeding; and
(d) any other information as may be specified by regulations.

The tenure of the panel of mediators would be valid for a period of five
years, and the empanelled mediators shall be eligible to be considered for
re-empanelment for another term, subject to such conditions as may be
specified by regulations. The mediation shall be held in the consumer medi-
ation cell attached to the various consumer Courts (Clause 75).

Clause 76 provides that it shall be the duty of the mediators to disclose

certain facts which may likely to give rise to a justifiable doubt as to his
independence or

Impartiality whereas Clause 78 provides for replacement of a media-

tor by the consumer courts on the information furnished by the mediator
or on the information received from any other person including parties to
the complaint and after hearing the mediator. Further procedure of media-
tion is discussed in Clause 79 and Clause 80 discusses provisions relating to
settlement through mediation and the role of mediator when an agreement
is reached between the parties with respect to all of the issues involved in
the consumer dispute or with respect to only some of the issues, and in the
event where no agreement is reached between the parties.

VII.  CONCLUSION

Growing backlog and delay in resolution of consumer disputes can

erode the consumers trust in the legal system where the claims are of small
value. Mediation can play an important role in consumer dispute resolution,
84  INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE VOL. 7

especially in cases which are pending for more than five years in the con-
sumer courts. In comparison to a complaint filed in a consumer court, medi-
ation can take away a lot of burden from the consumer courts and can be
quick, private, fair and inexpensive. Thus, increasing and strengthening con-
sensual alternatives through mediation would help in reducing backlog and
improve the chances for the resolution of consumer disputes, by providing
justice in time and hence can play a vital role in the economic growth of
India.