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Practical aspects of Mediation and Conciliation under Companies act, 2013
How are costs borne in such situations? Is there a legal provision governing this?
Rule 27 lays down that the Central Government, Tribunal or Appellate Tribunal under this Act is empowered to fix the fees of the mediator/conciliator to be borne by both the parties. It is suggested that a consolidated amount shall be deposited rather than a sum for each session or meeting and shall be divided equally if there are more than two mediators/conciliators. All other expenses including administrative and ancillary cost, production of witnesses or experts shall be borne by the contesting parties. The mediator/conciliator can direct the parties to pay a probable cost of the mediation before its commencement. If at any stage, either party refuses or abstains from depositing such costs, the mediator/conciliator can make an application to the Central Government, Tribunal or Appellate Tribunal under this Act which shall direct the parties to pay, failing which the mediation/conciliation shall be deemed to be terminated.
What options does a party have if he or she is not satisfied with the proceedings? How should the process be terminated?
As per Section 442(6), a party aggrieved from the decision of the mediation panel may file the objections to the Central Government, Tribunal or Appellate Tribunal. However, under Rule 14, if a party wilfully fails to attend a session or a meeting for two consecutive times, the mediation/conciliation shall be deemed to be failed and the matter shall be reported to the Central Government, the Tribunal or the Appellate Tribunal under the Act.
Can a party refuse to sign the settlement agreement after having participated in the discussions that lead up to it?
If a party fails to sign the settlement agreement, the process of mediation and conciliation is considered to have failed as, under Rule 25, a settlement agreement needs to be signed by the parties before submitting it to the Central Government or the Tribunal or the Appellate Tribunal.
How can a signed settlement agreement be challenged by a party?
Under the rules, there is no provision of appeal or challenge to the settlement agreement. The signed settlement agreement, forwarded with a letter of the mediator/conciliator is the basis of the order to be passed by the Central Government, Tribunal or Appellate Tribunal. Therefore, the grounds on which it can be challenged would be the normal grounds on which a contract can be challenged i.e. fraud, not free consent etc.
How is a settlement agreement under the Rules enforced? Does it become a decree of a court (compromise) or is it a contract?
Under Rule 26, the Central Government or the Tribunal or the Appellate Tribunal shall, within fourteen days from the date of receipt of such a report of mediator/conciliator, pass such order as per the agreed terms after receiving the signed settlement agreement by the parties. Thus, the settlement agreement would have the force of the authority’s order under the statute. However, if there are only certain disputes that are settled between the parties, the Central Government or the Tribunal or the Appellate Tribunal shall decide the remaining issues itself.
What happens if parties are not satisfied with the way the proceedings are going? How can the process be terminated? What happens then? Is an appeal possible?
If a party is not satisfied, they need not sign a settlement agreement and the mediation fails. Further, as per Rule 14, if a party deliberately and wilfully absents itself (which it would do if it were not satisfied with the proceedings) from attending two consecutive meetings, the process of the mediation and conciliation shall fail and a report shall be submitted by the mediator to Central Government, Tribunal or Appellate Tribunal. This outcome could arise before the stipulated 90-day period as well. Absence is probably the fastest way out if proceedings are not acceptable. The rules are silent on the provisions of an appeal, but as per Section 442(6) of Companies Act, 2016 a party aggrieved from the decision of the mediation panel may file the objections to the Central Government, Tribunal or Appellate Tribunal. The grounds on which the objections can be filed have not been specified. The Central Government, Tribunal or Appellate Tribunal will then adjudicate the matter by itself.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
- Practical aspects of Mediation and Conciliation under Companies act, 2013
- What options does a party have if he or she is not satisfied with the proceedings? How should the process be terminated?
- How are costs borne in such situations? Is there a legal provision governing this?
