Mediation as a Mechanism for Resolving Consumer Disputes

Every year, millions of consumer complaints are filed across India – from defective appliances and delayed deliveries to misleading advertisements and poor service. Yet, for decades, the primary recourse for an aggrieved consumer was to drag the matter through the formal commission process, which could stretch on for years. The Consumer Protection Act, 2019 changed this significantly by introducing mediation as a structured, voluntary alternative – a faster, less adversarial route to resolve disputes without the burden of prolonged litigation.

Why mediation was needed 🔗

The older Consumer Protection Act of 1986 relied entirely on a three-tier redressal commission system at the district, state, and national levels. While this framework gave consumers a dedicated forum, it also meant backlogs, delays, and high costs – problems that disproportionately favoured larger companies over individual consumers with limited resources. The average civil suit in India can take years to resolve, which is far longer than most consumers can realistically pursue.

Mediation addresses this gap. It is defined under Section 2(25) of the Consumer Protection Act, 2019 as a process where a neutral third party – the mediator – facilitates negotiation between the parties to help them reach a mutually acceptable settlement. The mediator does not decide the outcome; they create the conditions for the parties to resolve the matter themselves. The entire framework is governed by Chapter V (Sections 74-81) of the Act, along with the Consumer Protection (Mediation) Rules, 2020 and the Consumer Protection (Mediation) Regulations, 2020, both of which came into force on 20 July 2020.

Consumer Mediation Cells: the institutional backbone 🔗

Section 74 of the Act mandates the establishment of Consumer Mediation Cells at all three levels of the commission structure. The State Government is responsible for setting up mediation cells attached to each District Commission and State Commission. The Central Government establishes a mediation cell attached to the National Commission and each of its regional benches.

Each Consumer Mediation Cell is required to maintain and make available the following records:

• A panel of empanelled mediators along with their qualifications and experience
• A list of all cases handled by the cell
• A record of proceedings in each case
• Any other information specified by regulations

The cell is also required to submit a quarterly report to the respective commission. This report covers the number of cases referred, cases disposed of, the success rate of mediations, and the fee paid to each mediator – ensuring a degree of accountability and transparency in the cell’s functioning.

Empanelment of mediators 🔗

The quality and credibility of mediation depends heavily on who conducts it. Section 75 of the Act provides that each Consumer Commission shall prepare a panel of mediators on the recommendation of a Selection Committee consisting of the President and a member of that Commission.

Who is eligible? 🔗

The Consumer Protection (Mediation) Regulations, 2020 set out clear eligibility criteria. Persons eligible for empanelment include retired judges of the Supreme Court and High Courts, retired members of a Consumer Commission, retired District and Session Judges, advocates with a minimum of ten years of experience at the bar, persons with at least five years of experience in mediation or conciliation, and experts or senior professionals with at least fifteen years of experience in their respective fields, including retired senior bureaucrats.

The panel, once constituted, remains valid for a period of five years, after which mediators may be considered for re-empanelment subject to the conditions specified in the regulations.

Disqualifications 🔗

A person is disqualified from empanelment if they have been convicted of an offence involving moral turpitude, have pending criminal charges of a similar nature, or are facing disciplinary proceedings. Importantly, a mediator cannot be nominated for a case if they have any professional or personal connection to the parties or to the subject matter of the dispute – a safeguard to protect the neutrality of the process.

Training requirement 🔗

Empanelled mediators are not simply appointed and put to work. Under the Mediation Regulations, all mediators must undergo a minimum of 40 hours of training to receive a certificate of accreditation. This training is conducted by experts nominated by the Mediation Cell and is designed to ensure that mediators have the skills to facilitate fair and effective proceedings.

How a consumer dispute goes to mediation 🔗

Mediation under the Act is not automatic – it is triggered either by the Commission’s assessment or by the parties themselves.

Referral by the Commission 🔗

Under Section 37 of the Act, after a complaint is admitted and at the first hearing, if the District Commission finds that there are elements of a possible settlement, it may direct the parties to provide written consent for mediation within five days. If both parties consent, the Commission refers the dispute to the Consumer Mediation Cell. Similar powers are available to the State Commission and the National Commission under Sections 49 and 59 respectively.

Party-initiated referral 🔗

Parties can also approach the Commission themselves with a written request for mediation, even after the complaint has been filed. This request must be consented to by all parties and must be accompanied by a fee of Rs. 500. The request must also identify a proposed mediator and specify any preferred language, skills, or experience relevant to the dispute. Once a dispute is referred to mediation, any fee previously paid to the Commission for redressal is refunded to the parties.

The mediation procedure step by step 🔗

Once a dispute is referred, the actual mediation process follows a structured sequence under Section 79 and the Consumer Protection (Mediation) Regulations, 2020.

The Commission nominates a mediator from the empanelled panel, keeping in mind the nature of the dispute and the qualifications of the mediator. The mediator is required under Section 77 to disclose, before accepting the nomination, any circumstances that might give rise to doubt about their independence or impartiality. If such a conflict exists, a replacement mediator may be appointed under Section 78.

The mediation is held within the Consumer Mediation Cell. Both parties must be present – either physically or online – and all proceedings remain strictly confidential under Regulation 12 of the Mediation Regulations. The mediator begins by explaining the process, establishing ground rules, and building rapport with the parties. The mediator is guided by the principles of natural justice and fair play, but is not bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.

Each party is expected to provide all relevant documents and information to the mediator. The mediator considers the rights and obligations of the parties, the trade practices involved, and the circumstances giving rise to the dispute before attempting to bridge the gap between them.

The entire mediation process must be completed within 30 days from the date of referral, though this period may be extended if both parties and the Commission agree.

Settlement, failure, and what follows 🔗

When mediation succeeds 🔗

If the parties reach an agreement – either on all issues or only some of them – Section 80 of the Act requires that the terms be reduced to writing and signed by all parties or their authorised representatives. This settlement report is then sent to the Commission. Under Section 81, the Commission is required to pass an order based on the settlement within seven days of receiving the report. Once an order is passed, the settlement becomes enforceable, and it continues to be binding even in the event of the death of a party.

It is also worth noting that once a dispute has gone through mediation, it cannot be taken to other proceedings such as arbitration or fresh litigation on the same matter under Rule 6 of the Consumer Protection (Mediation) Rules, 2020.

When mediation fails 🔗

If the parties are unable to agree, the mediator communicates this to the Commission through a report of proceedings – simply stating that the matter was “not settled.” No reasons are provided, and no party is penalised for the failure. The Commission then takes up the case and proceeds to hear and decide it under the normal provisions of the Act. Mediation, in this sense, is a non-binding, voluntary process – parties are free to walk away at any stage.

Disputes that cannot go to mediation 🔗

Rule 4 of the Consumer Protection (Mediation) Rules, 2020 lists specific categories of disputes that are excluded from mediation. These include cases involving serious medical negligence resulting in death or grievous injury, fraud, forgery, or coercion, matters involving criminal offences, and disputes that affect a larger section of the public or raise issues of public interest. The rationale is that such matters require a formal adjudicatory process with full procedural safeguards – not a negotiated settlement.

Fees and costs 🔗

The cost structure for consumer mediation is kept accessible. The mediator’s fee is fixed by the President of the respective Consumer Commission on a case-by-case basis, keeping in mind the nature of the dispute. If mediation is unsuccessful, only half the fee is payable to the mediator. The fee is shared equally by both parties. Costs related to producing witnesses, experts, or documents are borne by the respective party that calls them.

Mediation and the broader legal landscape 🔗

The mediation framework under the Consumer Protection Act, 2019 does not stand alone. The Mediation Act, 2023, which provides a comprehensive legislative framework for mediation across sectors in India, has an overriding effect over several laws including the Consumer Protection Act, 2019 – meaning it now sets the broader legal standard within which consumer mediation also operates. This development signals a clear legislative intent to mainstream mediation as a preferred mode of dispute resolution across the Indian legal system.

A practical illustration of how mediation works can be seen in the case of Mr. Ashish Saraff v. Hitachi Home & Life Solutions (India) Ltd., where a consumer dispute over a faulty air conditioner was referred to the Consumer Affairs Department’s Mediation Cell in Kolkata. After two mediation sessions, the company agreed to replace the defective unit – a resolution that would likely have taken years through the formal commission route.

Mediation under the Consumer Protection Act, 2019 reflects a pragmatic shift in how India approaches consumer justice – moving from a purely adversarial model to one that values speed, cost efficiency, and mutual resolution. By building institutional infrastructure through Mediation Cells, ensuring qualified mediators through a structured empanelment process, and laying down a clear step-by-step procedure, the law has created a credible alternative dispute resolution mechanism that works alongside – and not instead of – the formal commission system.

What do you think? Given that mediation relies entirely on the consent of both parties, do you think businesses will genuinely engage with the process or treat it as a procedural hurdle to delay resolution? And should mediation in consumer disputes be made mandatory at least for lower-value claims before the formal commission process is triggered?

References

1. https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/ConsumerHandbook_Mediation.pdf
2. https://adrc.nliu.ac.in/2022/08/03/mediation-of-consumer-disputes/
3. https://nyaaya.org/legal-explainer/mediation-as-a-mode-of-consumer-dispute-settlement/
4. https://www.consumerprotection.in/chapter-v-mediation/
5. https://ibclaw.in/consumer-protection-mediation-regulations-2020/
6. https://www.consumerprotection.in/section-75-empanelment-of-mediators/
7. https://www.mondaq.com/india/dodd-frank-consumer-protection-act/975302/mediation-a-resolution-to-complaints-under-the-consumer-protection-act-2019
8. https://taxguru.in/corporate-law/consumer-dispute-resolution-mediation-consumer-protection-act-2019.html
9. https://pkpandya.com/2022/02/07/mediation-under-the-consumer-protection-act-2019/
10. https://mediate.com/mediation-of-consumer-disputes-through-new-mechanism-in-india-a-ray-of-hope-for-an-overburdened-judicial-system/
11. https://www.cag.org.in/blogs/understanding-mediation-consumer-disputes-simple-guide