NATIONAL LAW UNIVERSITY ODISHA CUTTACK

PROJECT REPORT ON

(CONSUMER LAW)
“MEDIATION & C ONSUMER PROTECTION ”

SUBMITTED TO
MS. SUDATTA BARIK
(ASST. PROFESSOR OF LAW)
SUBMITTED BY
ANAMIKA (16BA017)
DEEPSHIKHA (16BA033)

DATE: 20/04/2020
(SEMESTER – VIII, CLUSTER – II)
 TABLE OF CONTENTS

I. INTRODUCTION..............................................................................................................2

II. RESEARCH METHODOLOGY....................................................................................3

a) OBJECTIVES.................................................................................................................3

b) RESEARCH QUESTIONS.........................................................................................3

c) IMPORTANCE OF RESEARCH...................................................................................3

d) MODE OF CITATION...............................................................................................3

III. SHORTCOMINGS OF THE CONSUMER PROTECTION ACT 1986.......................4

IV. ANALYSIS OF THE CASES DISPOSED BY CONSUMER COURTS......................5

V. MEDIATION: AN INNOVATIVE AND PRACTICAL METHOD.............................6

VI. NEED FOR MEDIATION IN CONSUMER CASES....................................................7

VII. MEDIATION AS THE NEW TOOL...........................................................................10

VIII. CONCLUSION.........................................................................................................11

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 I. INTRODUCTION

With the advent of digital technologies, increasing penetration of e-commerce, smart phones,
cloud and internet, the global supply chains have provided 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,
exploitative and unfair trade and unethical business practices. Further, misleading
advertisements especially digital, tele-marketing, multi-level marketing, 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 Act, 2019 seeks to empower
consumers against above mentioned challenges and replaces the three-decade old legislature.

In a developing country like India, Alternative Dispute Resolution Mechanism can be one of
the best strategies for quicker resolution of consumer disputes and to lessen the burden on the
consumer forums and to provide suitable mechanism for expeditious resolution of consumer
disputes. The Consumer Protection Act 2019 envisages introducing the process of mediation
for speedy disposal of consumer disputes.

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 II. RESEARCH METHODOLOGY

a) OBJECTIVES
1. To understand the shortcomings in the Consumer Protection Act, 1986, especially
delay in consumer dispute redressal and the challenges 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 Act 2019 on mediation and its
acceptance by aggrieved consumers.

b) RESEARCH QUESTIONS
1. What are the shortcomings in the Consumer Protection Act 1986, especially with regards
to the consumer dispute redressal?
2. Can mediation serve as an appropriate mechanism in consume dispute redressal?
3. What new provisions have been added to the Consumer Protection Act 2019 with regards
to meditation?

c) IMPORTANCE OF RESEARCH
The research conducted during the course of writing this paper have allowed us to better
understand the various issues that were plaguing the redressal mechanism with regards to
consumer protection in India and how the legislators have attempted to fix these glitches.
This understanding helped us to better articulate on whether the solutions offered by the
legislators actually help to mitigate the situation or make it worse. The researchers have tried
to factor in the practicalities of such proceedings rather than focusing on mere theory.

d) MODE OF CITATION
The mode of citation in this project is OSCOLA.

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 III. 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 complaints and to establish quasi-judicial authorities unlike civil courts to provide
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 (CPA) 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.1

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 commodities.”
But it is seen that due to heavy pendency of cases and frequent adjournments leads to
considerable delay in getting justice.2

1
India: The Consumer Protection Act, 2019: An Overview <https://www.mondaq.com/india/dodd-frank-
consumer-protection-act/876600/the-consumer-protection-act-2019-an-overview> accessed 13 March 2020.
2
India: Limitation Vis-A-Vis Consumer Protection Act – An Analysis Of The Judgement Of The Hon'ble
Supreme Court Of India In The Matter Of National Insurance Co. Ltd. Vs. Hindustan Safety Glass Works Ltd.
And Ors. <https://www.mondaq.com/india/dodd-frank-consumer-protection-act/697368/limitation-vis-a-vis-
consumer-protection-act-an-analysis-of-the-judgement-of-the-hon39ble-supreme-court-of-india-in-the-matter-
of-national-insurance-co-ltd-vs-hindustan-safety-glass-works-ltd-and-ors> accessed 14 March 2020.

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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.

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 redressal 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 practice 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.

Therefore, it is time that ADR and mediation process are being adopted.3

IV. 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 consumers, where a consumer could itself could plead its case in the consumer
courts. Since the law was complex in nature, many consumers started hiring lawyers and

3
Sheetal Kapoor, Consumer Affairs and Customer Care (Galgotia Publishing Company, 2nd edn, 2019).

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there were frequent adjournments which were given by these consumer courts which started
delaying the entire adjudicatory process.

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 43,87,317 cases 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%. 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 number 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.4 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.5

V. 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.

There are huge challenges faced by online buyers such as breach of data privacy 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 disputants to communicate and participate in the
search for solutions, focus better on the root causes of the conflict, salvage relationships and
have significant savings in time and cost.6

4
V.K. Aggarwal, Consumer Protection: Law & Practice (Bharat Law House 2015).
5
Prof Prakash N Choudhary, Evaluation of Efficacy of the Consumer Disputes Redressal Agencies in
India <http://www.nevillewadia.com/images/Cronicle2015/Prof.-Prakash-N.-Chaudhary15.pdf> accessed 10
March 2020.
6
Omkar Anuroop and Krishnamurthy Kritika, Art of Negotiation and Mediation (LexisNexis 2015).

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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 Act, 2019.

Mahatma Gandhi also described his experience at amicable dispute resolution as an exercise
in uniting parties riven asunder in his autobiography which is the essence of mediation.
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
techniques 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:

1. Structured Process

2. Neutral third party

3. Facilitates resolution of disputes

4. Mutually acceptable to parties

5. Specified negotiation and communication techniques

VI. 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

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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 inexpensive. 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 objective of sustainable solutions with win- win situation for all parties.
It is a voluntary and flexible process where the parties participate in decision-making 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.7 It is a strong tool in the hands of the parties to devise solutions which could be more
effective than judicial verdict.8

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 lawyers 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.9

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 dispute 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. In Afcons Infrastructure Ltd. case 10 also it was

7
Firdosh S. Kassam (Karachiwala), Conflict Resolution through Mediation (Snow White Publications Pvt Ltd
2010).
8
India: Highlights Of The Draft Consumer Protection (Mediation) Regulations, 2019
<https://www.mondaq.com/india/arbitration-dispute-resolution/876164/highlights-of-the-draft-consumer-
protection-mediation-regulations-2019> accessed 10 March 2020.
9
Panchu Sriram, Mediation Practice and Law: The Path to Successful Dispute Resolution (LexisNexis 2015).
10
(2010) 8 SCC 24.

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argued that if one party agrees to go for mediation then the court can consider it and this
method of resolving dispute can be adopted.

The process of adjudication of consumer disputes is adversarial in nature and is characterised

with numerous and complex rules of form and procedures. 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.11

The mediator through its expertise, thinking power and maturity generates solutions for the
parties to resolve disputes amicably. A good mediator possesses active listening,
communication skills, option generation, reframing the case by avoiding harsh language
used by one party, transposing, 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 in October, 2005 and other mediation centre are
working at Karkardooma Court Complex, Rohini, Dwarka, Saket and Patiala House Courts
Complex.12

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 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 adopting global standards. The NCH
Project recognizes the need of consumers for a Telephone Helpline to deal with the 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
complaints.13

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

11
Effective implementation of Mediation in India: The way forward
<https://www.barandbench.com/columns/effective-implementation-of-mediation-in-india-the-way-forward>
accessed 10 March 2020.
12
<http://www.delhimediationcentre.gov.in> accessed 13 March 2020.
13
<http://www.nationalconsumerhelpline.in/> accessed 13 March 2020.

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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
innovative technology for consumers and organisations to manage and resolve conflicts and
to propel online mediation as a first choice to resolving consumer disputes.

VII. MEDIATION AS THE NEW TOOL

In SpiceJet Ltd. v. Ranju Aery14 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 accelerate the process of adjudication, The Consumer Protection Act, 2019 envisages
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 consumer courts can play an important role in delivering justice.

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

14
SLP(C) No. 25206 of 2017, decided on 4-8-2017 (SC) available
at
<https://www.dailypioneer.com/2017/page1/online-buyers-can-sue-sellers-anywhere-sc.html> accessed 13
March 2020.

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(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 mediation 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 mediator 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 mediation 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.15

VIII. 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, especially in cases which are pending for more than five
years in the consumer courts. In comparison to a complaint filed in a consumer court,
mediation can take away a lot of burden from the consumer courts and can be quick, private,
fair and inexpensive. Thus, increasing and strengthening consensual 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.

15
Murali Krishna, ‘Limitation provisions in Consumer Protection Act cannot be strictly construed to the
disadvantage of Consumer’ <https://www.barandbench.com/news/limitation-consumer-supreme-court>
accessed 14 March 2020.

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