Title of the Paper

COMPARATIVE ANALYSIS OF ADR TECHNIQUES:

BEST METHOD SUITABLE FOR CONSUMER DISPUTES.
Author
Abhinav Pisharody
Co-Author
Megha Pillai
Email ID
abhinav.pisharody@slsh.edu.in
megha.pillai@slsh.edu.in
Institution
Symbiosis Law School, Hyderabad
Contact No.
9847119737, 9959481541
 COMPARATIVE ANALYSIS OF ADR TECHNIQUES:
BEST METHOD SUITABLE FOR CONSUMER DISPUTES.

Abstract:-
The snowballing trend of globalization and entry of various MNC’s into the Indian
market the consumers are placed in a diverse position to take decision on how the
disputes will be fixed. As there is ambiguity in the international consumer protection laws
and also the increase of the international companies doing business in the domestic
market the need for a rigid rules and regulations for dispute resolution is becoming
inevitable. The litigations are costly and time consuming process in the country is known
fact and also in the consumer disputes the litigants are normal citizens of the country
who need a better and speedy way of justice. The Consumer Protection act is a way in
which the government proposed the importance of speedy redresal to the consumer
disputes through ADR mechanisms which the normal courts cannot do. The Act
accommodates three-level fora, that is, District Forum, State Commission and the
National Commission for redressal of grievances of consumers. Extensive quantities of
consumers are drawing nearer these fora to look for speedy redressal of their grievances.
The Arbitration and Conciliation Act was passed subsequently which led to many
changes in the Mediation in the country and increased the use of ADR mechanisms
among the masses. The courts including Supreme Court of India in several occasions
have given the importance of ADR mechanisms in the consumer disputes. Even under Sec
3 of the consumer Protection act the consumers are not barred from using another
methods of redressal. The researchers in this paper will be analyzing various ADR
techniques as a mode for consumer redressal. The authors take into consideration the
setup provided by the act and its nature of mediation. The authors will also analyse the
scope of arbitrability of the matter in question, while providing analysis of the cases by
the courts in various instances. The authors intend to discover a unsurpassed method
available in the ADR technique suitable for the consumer disputes.

Keywords: - Globalization, Consumer Disputes, International Consumer Protection,

ADR, Mediation, Arbitration
 COMPARATIVE ANALYSIS OF ADR TECHNIQUES:
BEST METHOD SUITABLE FOR CONSUMER DISPUTES.

INTRODUCTION:-

The equity needs to be delivered to the people with no delay and the same is of
utmost importance. The consumer protection act was framed and passed in the parliament
nearly 30 years ago to provide speedy justice to the consumers in a cost effective way.
The consumer protection act by using the Consumer forum though they have created the
judicial forum other than the courts the same is still under the influence of the court
system.

The Consumer protection act in in itself is the ADR technique available to the
consumers in the dispute. The matters related to the consumer forum are like a forced
litigation through the forums by the act. The consumers are left with no other option than
to accept the mechanism followed by the act. Though it is through forums and not
through normal court process it does not carve out the way for the Private settlement in
the matter and judicial support for such settlements. The author is of the strong belief that
the consumer disputes need to be referred to ADR mechanism by the court and this
would leave the consumers with lot of the options to approach for justice than restricting
the same to only the consumer forum. Thus the as there are lot of consumer disputes
arising out of the many transaction in the country and in such a scenario the set-up of
limited consumer dispute settlement forums won’t be enough to hear all the matters. The
ADR techniques become a last resort and best alternative for resolving the consumer
disputes. The consumer protection act is drafted in providing the equity to the people and
hence the act needs to envisage the ADR techniques into the boundaries of dispute
resolution techniques through the act. The consumer disputes are of private nature and
thus the consumer disputes can be resolved through private settlement as in ADR. The
paper here will be analyzing various ADR techniques to find the most suitable technique
for the consumer dispute.

NUANCES OF THE CONSUMER PROTECTION LEGISLATION:-

The consumer protection act was incubated into the Indian legal system as a
redressal for the delay of justice to the consumer disputes. The people affected by the
unfair trade practices can approach the consumer forum setup under the act to resolve the
dispute and get an order passed. The process needs to be concluded within 90 days of the
receipt of a complaint according to the act, but to the dismay of the large the cases are
pending before the forum for more than decades. The forum takes years to conclude with
a case and then the case moves to the next level of forum in an appeal and then it takes
another decade to receive an order. The consumer protection act does not mention any
relevant restriction on the adjournments that can be sought by the parties to the case. In
such a scenario the parties use the delay tactics to delay the judgment and thus the entire
purpose of the act is botched. The consumer protection act was enacted to provide speedy
justice to the consumers and also to drive the consumers away from the cumbersome
procedures of the civil and criminal courts. The consumer forums were supposed to
provide justices to the consumers in a prompter manner and thus avoiding the delay in
justice. The delay tactics used by the parties and the absence of strong legislation with
regard to the adjournment of the matter the consumer forum will not be in a position to
meet the requirements it was invested with.

The forum is also supposed to accept the complaints in any form. In the beginning
during the dates of inception of the act, even complaints in the form of letters were
accepted by the forums. But in the contemporary times the trend has shifted towards
more formal complaints in petition formats and the forums ask for the cumbersome
formats from the public. This has left the procedure of filing a case in the Consumer
Forum to be more challenging and the purpose of the consumer forum is left unattended.
The judges and the officials of the forum has insisted on the formats and the other court
procedures even in the consumer forums has left the complainants with no option other
than to depend upon the lawyers which again increases the cost of the litigation. Statistics
from the National Consumer Disputes Redressal Commissions states that around
1,15,578 cases are pending in the State Consumer Redressal Forum1. The same is the
case with the National Level Consumer Dispute Redressal Forum too, and this shows the
pathetic condition of the consumer Dispute Redressal agencies.

Thus delay in the justice granting through forum is a very debatable topic as it
leads to failure of the setup of Consumer Protection. The nuances of the consumer
protection is in relation to the time taken to dispose of the cases and also the cumbersome
procedure insisted upon the complainants by the Forum. Thus it needs to be curbed as the
Justice Delayed is Justice Denied hence the ADR techniques should resorted to as a
measure for providing justice to the people in a better way.

COMPARATIVE ANALYSIS OF ADR TECHNIQUES:-

The ADR techniques are mainly of three types which include the Arbitration,
Conciliation and Mediation. The consumer disputes mainly being the private matters
which do not include any public law involved in it the same can be resolved through a
private settlement using any of the above techniques. The paper further analyses the
various techniques from the point of view of suitability for consumer disputes.

Arbitration:-

The Arbitration conciliation act2, deals with the process of arbitration in the
country with all the procedure following the same rules. The act is instituted in the Indian
legal system as a model of UNCITRAL. The courts in India at several instances have
discussed the matter of arbitrability of consumer cases. There still exist a plethora of

1
National Consumer Redressal Forum, Statistics, (retrieved on 12/03/2019), http://ncdrc.nic.in/stats.html
2
Arbitration and Conciliation act 1996.
cases where the arbitration has been considered to be an additional remedy rather than a
complete ban on the process of arbitration in consumer disputes.3 The question of
arbitration in the consumer disputes has arrived before the hon’ble court at several
instances, mainly in three landmark cases which will discussed in the following
paragraphs.

The first time when the matter of mandatory reference of consumer matters to
arbitration by the court came up before the Supreme Court in the case of Fair Air
Engineers Pvt. Ltd. and Anr. v. N.K. Modi4 in which the court took a pro consumer
stand and decided that the decision is the discretion of the person/ consumer and there
cannot be any reference by the court. The court in this case came up with the reasoning
that the legislation of consumer protection was a pro-consumer legislation and the set-up
of consumer forums under it is a dispute resolution method. In India the later law will
always be given more value than the former one as the idea is that the legislature while
drafting the new legislation will try to resolve the problems in the former law. In this case
the court gave the consumer the liberty to go about with arbitration if he feels so also the
consumer may file a case in the consumer forum instead. The court facilitated the same
on the grounds of a twofold reasoning, first, the legislature intentionally provided such
remedy, based on the fact that the consumer legislation came at a later date in time i.e. it
succeeded the Arbitration Act, 1940, and second, the remedy provided under the
COPRA, is an additional remedy available to the consumers.5 Further, the fact that the
COPRA is a special law (lex specialis6) gives it precedence as the Arbitration Act merely
deals with arbitration proceedings in general (lex generalis7).8 In the case while providing
the judgment the court gave emphasis on the section 39 of the Consumer Protection act. It

3
Vl.7, Kashish Sinha & Manisha Gupta, Arbitrability of Consumer Disputes: Excavating the Hinterland
(Issue 1, IJAL).
4
Fair Air Engineers Pvt. Ltd. v. N.K. Modi, (1996) 6 SCC 385
5
Id.
6
Lex Specialis: A Law with Specialist application, Merriam Webster, Retrieved on 12/03/2019.
7
Lex generalis: A law of general application as contrasted with one applicable to a particular person,
Merriam Webster, Retrieved on 12/03/2019
8
CTO Rajasthan v. M/S Binani Cement Ltd., (2014) 8 SCC 319
9
Act not in derogation of any other law.—the provisions of this Act shall be in addition to and not in
derogation of the provisions of any other law for the time being in force.
said that the remedies provided under the COPRA is in addition to other remedies and not
in derogation to any of the other measures.

The next time when the Supreme Court provided important views on this topic is
in the case of Secy., Thirumurugan Cooperative Agricultural Credit Society v. M.
Lalitha10in which the court declared that the presence of an arbitration clause is not a bar
to the Consumer Forum in trying the matter. In Indian scenario the COPRA is an act
which was specifically drafted to provide justice to the consumers and also to avoid the
exploitation of the consumers in the dispute resolution process. This view about the
consumer protection act was upheld in the above case. Purposive reading of the statute
evidently hints that unlike other legislations that create dispute resolution mechanisms
between level players, this legislation establishes a level-playing field between unequal
players i.e. consumers and large corporations.11 This though of legal jurisprudence
received the entire acceptance when the same was referred in the M. Lalitha Case12.

In the case of A. Ayyasamy v. A. Paramasivam and Ors13 the court came to the
finality on the matter of arbitration in consumer disputes. The case made the consumer
disputes completely Non-arbitrable by explicitly holding the matter in the purview of
Non-arbitrable matter under the Indian Arbitration Act. The court in this case referred the
cases of National Seeds Corporation Ltd. v. M. Madhusudhan Reddy [“National Seeds
Corporation”]14 and Skypak Courier15 to come to the conclusion. The important matter to
be noted is the view of the court in the case of NSC16 which provided a balance between
the matters of arbitration and the consumer forums. The court though provided that
section 8 of the arbitration act cannot be a bar on the use of consumer forums the court
provided a safety firewall by putting a ban on use of reference to arbitration. The stand
point in the case was that if the consumer opts for a particular mode of dispute resolution

10
Secy., Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha, (2004) 1 SCC 305
11
Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243
12
Id at 9
13
Civil Appeal No. 8245 and 8245 of 2019
14
National Seeds Corporation, (2012) 2 SCC 506
15
Skypak Couriers, AIR 2000 SC 2008
16
Id at ft. no. 13
then he will have to follow the same and there cannot be further reference to other mode
in any manner.17

The author holds the view that the court has delivered in the NSC case18, as
a matter of option the arbitration should be available to the consumers. The
bar on use of arbitration as a mode of dispute resolution will delay the justice
to the consumers and also the corporation which in turn will affect the
economy of the country. According to the author the option of dispute
resolution should be kept open to the people and restriction of unwanted
nature will reduce the justice being given to the public which is the final aim
of the judicial set-up in a country is.

Mediation:-

The second ADR technique in the discussion is Mediation which is considered to

be a relevant mode of dispute resolution for the consumer disputes. The Consumer
Protection act which was enacted to provide speedy justice to the consumers deal with the
mediation technique in the consumer forums. The consumer forums act as a mediator
where the consumer as well as the producer comes across a platform for the successful
completion of a negotiation under the guidance of the mediator being the judge to come
to a settlement. The previous section has already dealt with the problems in the three
level set-ups of the forums in consumer protection act and how they have failed in
delivering speedy justice to the people. The introduction of LPG and the entry of internet
shopping the number of consumers have increased drastically in the country. The online
consumers have increased the case load on the forums which they would not be able to
keep up with. The Online Consumer Mediation centers are a giant step towards the
successful provisions of speedy justice to the consumer disputes. The Online Mediation
which had a recent start is slow in the instance due to the lack of co-operation form the
vendors due to the nonbinding nature of such mediation as a relevant dispute resolving

17
National Seeds Corporation, (2012) 2 SCC 506, ¶ 31
18
Id
mechanism under Indian law.19 India as a nation needs to institutionalize the process of
mediation for consumer disputes on the wake of increase in the e-commerce in the
country. The transition to online dispute resolution is necessary to avoid a situation
wherein the consumers are left without any real remedy, which is worth its weight in
gold, even if it is a leap of faith.20

The author is of the belief that the consumer needs to get the opportunity to
resolve the dispute in a way which would best suit his interest and thus
reducing the burden on the consumer forums. The Mediation when both the
parties are benefitted out of the decision is a better option for consumer
disputes. The consumer’s main intention in such cases is to get the
compensation for the loss he has suffered and the company would have to
maintain the reputation and good will thus the mediation as a private mode of
settlement becomes the best alternative. The mediation is less costly compare
with arbitration and this provides for a WIN-WIN situation for both the
parties. As the arbitration is statutorily barred from consumer disputes the next
best alternative would be Mediation.

Conciliation:-
The conciliation is in close call with the ADR technique mediation but for the
deep understanding both are not the same. In today’s globalized market where there is no
place for geographical boundaries the concept of ADR forms a main part in the dispute
resolution in consumer matters. The multi-national conglomerate organizations in the
world thrive to achieve the goodwill and brand image. In such a situation the ADR
techniques form to be a better solution to the company. From the point of view of the
customer they are not on the same level footing as that of the Corporations and hence the
COPRA has been enacted which is considered to be a pro-consumer legislation. But in
today’s scenario the ability of the act to achieve the expected benefit is a question. The

19
Vl.7, Kashish Sinha & Manisha Gupta, Arbitrability of Consumer Disputes: Excavating the Hinterland
(Issue 1, IJAL).
20
Gabrielle Kaufmann-Kohler, Online Dispute Resolution and its Significance for International
Commercial Arbitration (Ed.1, Gerald Aksen, 2009)
consumer forums though were instituted for speedy redressal of consumer disputes it is
way behind in achieving it. Mediator and conciliator have a lot of changes in the process
and role he has to play in the process. According to the survey conducted by the Indian
Institute of Public Administration though the consumer protection act has been in force
for the last 25 years the same has a lot of deficiencies and shortcoming in respect of its
effective implementation and operation. The purpose of the three tier quasi-judicial
structure was to give quick and inexpensive justice to the consumers; however, the
machinery is riddled with many problems making it difficult for the complainant to get
justice in the prescribed time. The problem is further aggravated by the low level of
awareness among the consumers. Even after 25 years of the consumer movement,
concerns are being raised regarding the level of awareness of the consumers’ in spite of
many steps taken at the central and state government level to generate awareness among
the masses.21 In consumer disputes the one party that is the consumer is always in the
vulnerable situation and there is a chance of corporation utilizing this benefit. The
Conciliation would be a best alternative taking into consideration of this situation as the
conciliator has a major role to play in the decision making process than the Mediator or
the Arbitrator. The conciliator has the option of providing the valuable suggestion in the
process to help the parties to reach a conclusion under part III of the Arbitration and
Conciliation Act. The conciliator would formulate settlement terms and reformulate it so
that the parties may reach a settlement as soon as possible. The difference of conciliator
with that of a mediator is that the mediator would only encourage the parties to come to a
settlement but would not take an active part in process.

The conciliation is considered to be an option suitable for the consumer

disputes as the corporations having interest in maintaining their social repute
intact and the consumers having the interest in keeping the cost of litigation
low are benefitted by the process. Conciliation is an option available to the
consumers to attain speedy justice than going through the cumbersome
process of arbitration or judicial process. The conciliation has an upper hand

21
Vol. 04, Krishna Bharadwaj , International Journal of Advanced Scientific Research & Development,
(Spl. Iss. 02, Ver. I, Feb’ 2017)
when considered to mediation as it provides for a third party support to the
customer in the form of conciliator who helps in coming up with a settlement
to the parties.
CONCLUSION:-

The author after the comparative analysis of the three ADR techniques available is
of the opinion that the consumer need to get a better option in resolving the disputes as
the consumer forums setup under the Consumer Protection Act has failed the entire
purpose for which the act was enacted. The speedy justice to the consumers is a fairy tale
that has no relevance in today’s scenario. The author beliefs that the restriction of ADR
techniques like arbitration needs to be removed by the judiciary and the discretion of
choosing method should be vested on the parties. Thus after the deliberation of the
techniques the author comes to a conclusion that the preference is given to arbitration
over all the ADR techniques due to its binding nature as a judicial proceeding. The
second preference is of conciliation as the technique provides for the third party
assistance in the decision making process, and the consumers are given an opportunity to
come up with a better settlement terms. The conciliation is also very cost effective in
comparison with any other mode of ADR. The last preference would be for mediation as
the process though provides for a WIN-WIN situation it also requires both the parties to
unleash certain desires and thus coming to a settlement. This would at the end lead to the
corporation who is with at a upper hand making decision which would lead to
miscarriage of justice. The absence of active role played by the mediator as in case of
conciliation is another reason which makes the mediation a less preferred mode of
settlement in consumer disputes.

RECOMMENDATIONS:-

The courts in different instances has provided various ideas in association with the
true test of arbitrability and such incoherent reading of the Booz Allen test has led the
commentators in a state of confusion on what is the real test of arbitrability. The judiciary
should take active role in coming up with a rigid rule of test of arbitrability and avoid
such confusion. The court should also. Indian legislature should turn the focus towards
the ODR techniques used in other parts of the world like USA and EU which would help
in speedy disposal of the low value cases. The Law commission has also mentioned the
need for the courts to direct the parties for out of court settlement as mentioned under
section 89 of the Code of Civil Procedure. Workshops, seminars and other awareness
campaign should be conducted to increase the understanding of the importance of the
ADR techniques. The Bar Council should also think about making the ADR a
compulsory subject and there could also be separate examination for ADR mechanism
and institutionalization of the ADR in consumer disputes should be promoted to achieve
the expected result of providing speedy justice to the needy.