INDIAN INSTITUTE OF CORPORATE AFFAIRS,

GURGRAM, HARYANA

COURSE
9 MONTH CERTIFICATE COURSE ON BUSNINESS AND FINANCILA LAW

PROJECT ON

CRITICAL ANALYSIS OF ROLE AND DEVELOPMENT OF

MEDIATION AND CONCILIATION IN VAROUS LAWS AND IN
PARTICULAR UNDER COMPANIES ACT, 2013

SUBMITTED BY:-

ANKUR MISHRA

YEAR 2020-21
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 TABLE OF CONTENT

S.N PARTICULARS PAGES

O
1. Introduction 03
2. Current scenario of Mediation under statutory provisions 04
3. Success of the mediation-conciliation mechanism prescribed 05
under several laws
4. Measures for effective implementation and growth of Mediation 07
in India
5. Qualification of Mediator for empanelment 10
6. Disqualifications for Empanelment 10
7. Ethics of mediator 11
8. Communication between mediator/conciliator and the Central 12
Government or the Tribunal or the Appellate Tribunal.
9. Settlement Agreement 13
10. Procedure of mediation/conciliation. 14
11. Conclusion 17
12. Bibliography 18

Introduction:-

The Companies Act, 2013 attempts to modernise the way companies in India are
owned and operated, in sync with the practices across the world. In the same

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spirit, the CA 2013 makes it possible for parties in a dispute before government
administrators (such as Regional Director, Registrar of Companies, etc.) or the
tribunals formed under the CA 2013, i.e. National Company Law Tribunal or the
National Company Law Appellate Tribunal, to request for the dispute to be
referred to mediation or conciliation. The process of mediation and conciliation is
to be conducted before experts empanelled with the mediation and conciliation
panel under the CA 2013.

The government has now commenced the process for the constitution of the

Panel, and invited individuals with specified experience to apply for their

Empanelment and published the Companies (Mediation and Conciliation) Rules,

2016 on September 9, 2016 in such regard. Once constituted, the Panel is

expected to assist in expeditious disposal of several shareholder and creditor
disputes.

 The Rules however specify that the following disputes cannot be referred
to mediation and conciliation:
 Matters in respect of inspection, investigation or inquiry under CA 2013;
 Matters relating to defaults or offences for which applications for
 compounding have been made by one or more parties;
 Cases involving serious and specific allegations of fraud, fabrication of
 Cases involving prosecution for criminal and non-compoundable
 offences; or
 Cases that involve public interest or interest of numerous persons who are
 not parties before the government administrator or tribunal as the case
May be.

Current scenario of Mediation under statutory provisions

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1. Conciliators appointed under Section 4 the Industrial Disputes Act,
1947 are assigned with the duty to mediate and promote settlement of industrial
disputes with detailed prescribed procedures for conciliation proceedings. If
used appropriately, it’s a cheap and quick process. However, only a few cases
have been resolved and the very intent of having such provision has been
frustrated. Unfortunately, large numbers of matters which ought to have been
resolved by this provision are still pending in courts and new matters are filed
every day.
2. In 2002, an amendment to the Code of Civil Procedure, 1908 (CPC) was
brought in. Section 89 read with Order X Rule 1A provided for reference of
cases pending in the courts to ADR. In addition, Order XXXIIA of the CPC
recommends mediation for familial/personal relationships, as the ordinary
judicial procedure is not ideally suited to the sensitive area of personal
relationships. Though many courts in India now have mediation centres, there is
no accurate data available to show that this provision has been utilised
successfully.
3. Even Section 442 of the Companies Act, 2013, read with the Companies
(Mediation and Conciliation) Rules, 2016, provides for referral of disputes to
mediation by the National Company Law Tribunal and Appellate Tribunal.
4. The Micro, Small and Medium Enterprises (MSME) Development Act,
2006 mandates conciliation when disputes arise on payments to MSMEs.
5. More particularly, family and personal laws including the Hindu
Marriage Act, 1955 and the Special Marriages Act, 1954 require the court in
the first instance to attempt mediation between parties.
6. Section 32(g) of the Real Estate (Regulation and Development) Act,
2016 provides for amicable conciliation of disputes between the promoters and
allottees through dispute settlement forum, set up by consumer or promoter
associations.

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 Success of the mediation-conciliation mechanism prescribed under several
laws

Despite having the above stated statutory recognition, mediation has not been
able to achieve great success in India. The Mediation and Conciliation Project
Committee (MCPC) was established by the Supreme Court in April 2005 to
oversee the effective implementation of mediation. The endeavour of the MCPC
was to give a boost to court-annexed mediation and to help mediation in
growing not as an ‘alternative resolution mechanism’, but as ‘another effective
mode of dispute resolution’.

From the websites of several High Courts, it can be ascertained that most High
Courts have their separate set of rules governing Mediation and Conciliation.
Barring for a few High Courts, there is no data available to show the status of
mediation cases referred, successes/failure of matters, and number of
settlements arrived at and effectively implemented.

If the object of the MCPC was to reduce backlog, more attention is required
towards framing of a national policy with an appropriate legal framework. The
success and popularity of mediation is restricted and there is a need for urgent
measures to promote and support its effective implementation.

The following are the important developments of in the field of mediation:

1. The 129th Law Commission of India Report recommends courts to refer

disputes for mediation compulsorily.
2. In the landmark case of Afcons Infrastructure Ltd v. Cherian Varkey
Construction Co. (P) Ltd, the Supreme Court observed that that all cases
relating to trade, commerce, contracts, consumer disputes and even tortious
liability could normally be mediated.

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3. The 2018 amendment to the Commercial Courts Act 2015 (Section 12A),
made it mandatory for parties to exhaust the remedy of pre-institution mediation
under the Act before instituting a suit. The Commercial Courts (Pre-Institution
Mediation and Settlement) Rules 2018 (the PIMS Rules) have been framed by
the government. Settlements arrived at in this process are enforceable by law.
The period of mediation would not be computed for the purposes of limitation
under India’s Limitation Act. Effective implementation of this provision can be
major boost for economic growth.
4. In the matter of MR Krishna Murthi v. New India Assurance Co. Ltd., the
Supreme Court, asked the government to consider the feasibility of enacting an
Indian Mediation Act to take care of various aspects of mediation in general.
The Court further directed the government to examine the feasibility of setting
up a Motor Accidents Mediation Authority (MAMA) by making necessary
amendments in the Motor Vehicles Act. In the interregnum, NALSA was
directed to set up Motor Accident Mediation Cells, which can function
independently under the aegis of NALSA or can be handed over to MCPC.
5. The new Consumer Protection Act, 2019, under Section 37-38 and
Chapter V, provide for disputes to be first referred to mediation and the
procedure to be followed as per Section 74(3) of the Act read with Section
101(2)(zf) and Section 102(2)(p) of the Act. The Central government and the
state government, respectively, have been empowered to make rules for
providing for the persons in the consumer mediation cell.

6. As regards international disputes, India is a signatory to the United Nations

Convention on Mediation (the Singapore Convention), which gives mediation
settlements the force of law.

Measures for effective implementation and growth of Mediation in India

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 There is an urgent need for a uniform statue exclusively governing the
mediation process in India. Mediation legislation exists in more than 18 other
jurisdictions, including Singapore, Malaysia, and Ireland (plays regulatory role).
The Singapore International Arbitration Centre (SIAC) and the Singapore
International Mediation Centre (SIMC) have framed SIAC-SIMC Arb-Med-Arb
Protocol (AMA Protocol) to mange disputes in accordance with an “Arb-Med-
Arb” clause for commercial contracts.

In India, parties mainly opt for court annexed-mediation, for which the
respective High Courts have their own set of Rules. Private mediation is less
preferred due to lack of recognition.

As the above provided enactments have been introduced or are being introduced
in our country, what we simultaneously need is a quick evolution of the
mediation mechanism. For this, the mediation process, be it private or court-
annexed, would require practical recognition by the legislature and the
judiciary.

The judiciary mostly deals with matters that require adjudication, but there are
situations where mediation techniques would be more appropriate and
beneficial to the parties. Therefore, identification of such matters and situations
by parties, lawyers and judges becomes extremely crucial and important in the
promotion of mechanism.

The following steps may be taken:

1. Grassroots level awareness of public at large (particularly parties,

lawyers, judges and other stakeholders) and easy access to the Mediation.
2. Legislative framework on Mediation and its practice (many other
countries have already adopted this and India is now signatory to the United
Nations Convention on International Settlement Agreements).

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3. Mediation Centres need good infrastructure and a standard pattern to
make parties comfortable.
4. Mediation must develop into a full-time profession (efforts by senior
lawyers, members of the judiciary and all state bar councils will be required for
promotion of this mechanism) as it gives lawyers an excellent opportunity to
demonstrate their legal, analytical and professional skills.
5. Incentives and recognitions to lawyers to educate parties about the inner
workings of the mediation process in order to make such informed choices.
6. High ethical standards (code of ethics and conduct) to be followed.
7. Theoretical as well as practical training in mediation to be included in
syllabi of law colleges and introduction to mediation course to be conducted for
all practicing lawyers. Structured mediation training with accreditation for
specialising in mediation should be provided in a cost effective manner all over
India. Continued skill enhancing courses should be conducted from time to time
for lawyers and other professionals who wish to take up mediation as a
profession,
8. Multiple Mediation drives should be conducted by courts on various
levels, be it at the district level or the national level. These drives can prove to
be extremely successful and can help in clearing a large backlog of cases
pending before various courts. During the recently conducted Family Courts
Mediation Drive conducted by the Delhi High Court, out of the 2,884 cases
referred to mediation by the Family Courts, 2,171 cases were successfully
disposed of, which resulted in the disposal rate of 75.27%. This clearly indicates
that the judicial system requires heavy promotion of the process of mediation.
9. The selection process of mediators and adequate training standards for the
mediators should be developed. There is a need to ensure standardised training
programmes for potential mediators and details about the professional and
educational background of the mediators, including previous mediations

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 conducted, areas covering the issues involvement in prior mediations, expertise
in other discipline(s), if any, etc. need to be maintained.
10. For mediation to develop as a significant practise area, mediators shall be
required to be attached with extremely transparent and eminent professional
bodies under the active surveillance of the government and the judiciary.

One of the reasons for the sluggish growth of Mediation is that there are hardly
any national and international mediation centres that are providing affordable
and quality training. Unfortunately, mediators can currently exaggerate their
skills and experiences in ways that cannot be contradicted, as mediations are
conducted in closed rooms and in confidentiality. Thus evaluating the
competency of a mediator is challenging. Therefore, there is an urgent need to
create a regulatory framework for fostering confidence and ensuring that ethical
practices are followed in the mediation process.

Qualification of Mediator for empanelment

A person shall not be qualified for being empanelled as mediator or conciliator

unless:

1. he has been a Judge of the Supreme Court of India,

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 2. he has been a Judge of the High Court,
3. he has been a District or Sessions Judge,
4. he has been a Member or Registrar of a Tribunal constituted at the
National level,
5. he has been am officer in the Indian Corporate Law Service or Indian
Legal Service with 15 years of experience,
6. he is a qualified legal practitioner for at least 10 years,
7. he is a professional in continuous practice for at least 15 years (CA, CS,
or CWA),
8. he has been a Member or President of any State Consumer Forum,
9. he is an expert in mediation and conciliation & has successfully
undergone training in mediation and conciliation

Disqualifications for Empanelment:

A person shall be disqualified for being empanelled as mediator or conciliator if

he:

1. is an undercharged insolvent or has applied to be adjudicated as an

insolvent and his application is pending,
2. has been convicted of any offence involving moral turpitude,
3. has been removed or dismissed from the Government service or any
Corporation owned or controlled by the Government,
4. has been punished in any disciplinary proceeding,
5. has, in the opinion of the Central Government, such financial or other
interest In the subject matter of dispute which is likely to affect his
functions as a mediator or conciliator.

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Ethics of mediator:-

a. The mediator/conciliator shall:

i. Follow and observe these Rules strictly and with due diligence;
ii. not carry on any activity or conduct which could reasonably be considered
as conduct unbecoming of a mediator/conciliator;
iii. uphold the integrity and fairness of the mediation/conciliation process;
iv. ensure that the parties involved in the mediation/conciliation are fairly
informed and have an adequate understanding of the procedural aspects of
the process;
v. satisfy himself/herself that he/she is qualified to undertake and complete
the assignment in a professional manner;
vi. disclose any interest or relationship likely to affect impartiality or which
might seek an appearance of partiality or bias;
vii. avoid, while communicating with the parties, any impropriety or
appearance of impropriety; (h) be faithful to the relationship of trust and
confidentiality imposed in the office of mediator/conciliator;
viii. conduct all proceedings related to the resolutions of a dispute, in
accordance with the applicable law;
ix. recognize that the mediation/conciliation is based on principles of self-
determination by the parties and that the mediation/conciliation process
relies upon the ability of parties to reach a voluntary, undisclosed
agreement;
x. Maintain the reasonable expectations of the parties as to confidentiality
and refrain from promises or guarantees of results.

Fee of mediator/conciliator and costs.

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(a) At the time of referring the dispute(s) to the mediation/conciliation, the
Central Government or the Tribunal or the Appellate Tribunal may, fix the fee
of the mediator/conciliator.
(b) As far as possible, a consolidated sum may be fixed rather than for each
session or meeting.
(c) Where the Tribunal has nominated or appointed mediators or conciliators
under sub-rule (b) of Rule 28.1, the Tribunal shall fix the fee payable to the
mediators/conciliators, which shall be shared equally by the two sets of parties.
(d) The expense of the mediation/conciliation including the fee of the
mediator/conciliator, costs of administrative assistance, and other ancillary
expenses concerned, shall be borne equally by the various contesting parties or
as may be otherwise directed by the Tribunal.
(e) Each party shall bear the costs for production of witnesses on his side
including experts, or for production of documents.
(f) The mediator/conciliator may, before the commencement of the
mediation/conciliation, direct the parties to deposit equal sums, 100% of the
probable costs of the mediation/conciliation.
(g) If any party or parties do not pay the amount referred to sub-rule (f), the
Central Government, the Tribunal or the Appellate Tribunal, shall, on the
application of the mediator/conciliator, or any party, issue appropriate directions
to the concerned parties.
(h) If the expense of the mediation/conciliation including fee, is not paid by the
parties, the Central Government, the Tribunal or the Appellate Tribunal, shall,
on the application of the mediator/conciliator or the parties, direct the concerned
parties to pay, and if they do not pay, the Tribunal shall recover the said
amounts as if there was a decree for the said amount.

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Communication between mediator/conciliator and the Central Government
or the Tribunal or the Appellate Tribunal.
(a) In order to preserve the confidence of parties in the Central Government or
the Tribunal or the Appellate Tribunal and the neutrality of the
mediator/conciliator, there should be no communication between the
mediator/conciliator and the Central Government or the Tribunal or the
Appellate Tribunal except as stated in sub-rules (b) and (c) of this Rule.
(b) If any communication between the mediator/conciliator and the Central
Government or the Tribunal or the Appellate Tribunal is necessary, it shall be in
writing and copies of the same shall be given to the parties or the authorised
representative.
(c) Communication between the mediator/conciliator and the Central
Government or the Tribunal or the Appellate Tribunal shall be limited to
communication by the mediator/conciliator: (i) with the Central Government or
the Tribunal or the Appellate Tribunal about the failure of the party to attend;
(ii) with the Central Government or the Tribunal or the Appellate Tribunal
about the consent of the parties; (iii) regarding his assessment that the case is
not suited for settlement through the mediation/conciliation; (iv) that the parties
have settled the dispute(s).

Settlement Agreement.
(a) Where an agreement is reached between the parties in regard to all the issues
in the suit or proceeding or some of the issues, the same shall be reduced to
writing and signed by the parties. If any counsel has represented the parties, the
conciliator/mediator may also obtain his signature on the settlement agreement.
(b) The agreement of the parties so signed shall be submitted to the
mediator/conciliator who shall, with a covering letter signed by him, forward
the same to the Central Government or the Tribunal or the Appellate Tribunal.

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(c) Where no agreement is arrived at between the parties, before the time limit
stated in Rule 28.16 or where, the mediator/conciliator is of the view that no
settlement is possible, he shall report the same to the Central Government or the
Tribunal or the Appellate Tribunal in writing.

Procedure of mediation/conciliation.
For the purposes of sub-section (5) of section 442 of the Act,
(a) The parties may agree on the procedure to be followed by the
mediator/conciliator in the conduct of the mediation/conciliation proceedings.
(b) Where the parties do not agree on any particular procedure to be followed by
the mediator/conciliator, the mediator/conciliator shall follow the procedure
hereinafter mentioned, namely: (i) he shall fix, in consultation with the parties, a
time schedule, the dates and the time of each mediation/conciliation session,
where all parties have to be present;
(ii) he shall hold the mediation/conciliation at the place decided by the Central
Government, the Tribunal or the Appellate Tribunal or the place where the
parties and the mediator/conciliator jointly agree;
(iii) he may conduct joint or separate meetings with the parties;
(iv) each party shall, ten days before a session, provide to the
mediator/conciliator a brief memorandum setting forth the issues, which
according to it, need to be resolved, and its position in respect to those issues
and all information reasonably required for the mediator/conciliator to
understand the issue:
memorandum shall also be mutually exchanged between the parties. However,
in suitable/appropriate cases, the period of ten days may be curtailed at the
discretion of the mediator/conciliator;
(v) each party shall furnish to the mediator/conciliator such other information
as may be required by him in connection with the issues to be resolved.

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(c) Where there is more than one mediator/conciliator, the mediator/conciliator
nominated by each party may first concur with the party that agreed to nominate
him and thereafter interact with the other mediator/conciliator, with a view to
resolve the dispute(s).

. Mediator/conciliator not bound by Indian Evidence Act, 1872 or Code of Civil

Procedure, 1908. The mediator/conciliator shall not be bound by the Code of
Civil Procedure, 1908 or the Indian Evidence Act, 1872, but shall be guided by
the principles of fairness and justice, having regard to the rights and obligations
of the parties, usages of trade, if any, and the circumstances of the dispute(s).

Representation of parties.
The parties shall ordinarily be present personally or through authorised attorney
at the sessions or meetings notified by the mediator/conciliator. However, they
may be represented by the counsel with permission of the mediator/conciliator
in such sessions or meetings. The party not residing in India may, with the
permission of the mediator/conciliator, be represented by his or her authorised
representative at the sessions or meetings.
Consequences of non-attendance of parties at sessions or meetings on due
dates.
If a party fails to attend a session or a meeting notified by the mediator/
conciliator on account of deliberate or willful act, the other party or the
mediator/conciliator can apply to the Central Government or the Tribunal or the
Appellate Tribunal for issuance of necessary direction in the matter having
regard to the facts and circumstances of the case.

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Administrative assistance.
In order to facilitate the conduct of mediation/conciliation proceedings, the
parties, or the mediator/conciliator with the consent of the parties, may arrange
for administrative assistance by a suitable institution or person
Offer of settlement by parties.
(a) Any party to the application may, ‘without prejudice’, offer a settlement to
the other party at any stage of the proceedings, with a notice to the
mediator/conciliator.
(b) Any party to the application may make a, ‘with prejudice’ offer, to the other
party at any stage of the proceedings, with a notice to the mediator/conciliator.

Conclusions:-

The formal inclusion of the mediation/conciliation process in CA 2013 is a

welcome initiative, especially in India where the alternative dispute resolution
mechanism holds greater hope for speedy resolution of disputes as compared to
the formal process of adjudication on merits by courts/tribunals, etc.

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However, it must be ensured that the mediation/conciliation process under the
CA 2013 remains voluntary. While the mediation/conciliation process ensures
speedy resolution/settlement of disputes, any judicial system should be capable
of expeditiously adjudicating disputes on merits by itself de hors settlement
through mediation/conciliation. As such, the option of the parties to voluntarily
opt for mediation/conciliation should remain an option and not an obligation
either imposed by the courts or opted for by the parties in view of the
impossibility to have the subject dispute adjudicated expeditiously on merits.

Though settlement through mediation/conciliation improves the case disposal

status of any particular court, the party/ies willing to having its dispute
adjudicated on merits should also be given full opportunity to have their
disputes so adjudicated on merits. Adjudication of disputes on merits is also
vital for evolution and development of judicial precedents and goes on to
strengthen the legal and judicial system of the country.

Bibliography
1.Bare Act- Taxman Company law.
2.Avtar Singh, Company law,5th Edition,2018.
3. https://blog.ipleaders.in/companies-dispute-resolution/
4. https://legaldesk.com/business/companies-mediation-and-conciliation-rules-
2016.

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5. https://www.powershow.com/view0/85879f-
NjhhY/Mediation_and_Conciliation_and_Companies_Acts_2013_-
_NCLT_1_powerpoint_ppt_presentation.
6. https://www.barandbench.com/columns/effective-implementation-of-
mediation-in-india-the-way-forward.

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