Mediation Act 2023: Guide for Kolkata Litigants

What Is the Mediation Act 2023?

The Mediation Act, 2023 (Act 32 of 2023) is a central legislation that consolidates and codifies the law relating to mediation in India. Before this Act, mediation in India existed mainly as a court-referred process under Section 89 of the Code of Civil Procedure, 1908, as conciliation under Part III of the Arbitration and Conciliation Act, 1996, and as pre-institution mediation for commercial disputes under Section 12A of the Commercial Courts Act, 2015. There was no single statute governing the conduct of mediation, the qualification of mediators, or the enforceability of mediated settlement agreements.

The Act changes that. Its long title states that it is an Act to promote and facilitate mediation, especially institutional mediation, for resolution of disputes, commercial or otherwise, to enforce mediated settlement agreements, to provide for a body for registration of mediators, to encourage community mediation and to make online mediation an acceptable and cost-effective process.

The Act extends to the whole of India. It contains 65 sections arranged in 11 chapters and 10 schedules. Sections 1, 3, 26, 31 to 38, 45 to 47, 50 to 54 and 56 to 57 were brought into force on 9 October 2023 by notification. Other provisions are to be notified in phases.

When Does the Mediation Act Apply?

Section 2 sets out the application of the Act. It applies where mediation is conducted in India and any one of the following conditions is satisfied:

• All or both parties habitually reside in, are incorporated in, or have their place of business in India;
• The mediation agreement provides that any dispute shall be resolved in accordance with the provisions of the Act;
• The mediation is an international mediation — that is, a commercial dispute where at least one party is a foreign national, a body corporate with its place of business outside India, an association whose place of business is outside India, or a foreign government;
• One of the parties is the Central Government, a State Government or a government agency, public body, corporation or local body, and the matter is a commercial dispute;
• Any other kind of dispute notified by the Central or State Government where a government entity is a party.

The definition of mediation in Section 3 is deliberately broad. It includes pre-litigation mediation, online mediation, community mediation, conciliation and any expression of similar import, where parties attempt to reach an amicable settlement with the assistance of a third person who has no authority to impose a settlement. This means the Act covers facilitative mediation, not adjudication.

The Mediation Agreement

Section 4 requires a mediation agreement to be in writing. It may be a mediation clause inside a commercial contract or a separate standalone agreement. The agreement may be recorded in a document signed by the parties, in an exchange of communications or letters including in electronic form under the Information Technology Act, 2000, or in pleadings where one party alleges its existence and the other does not deny it.

This matters for Kolkata businesses. A well-drafted mediation clause in a supply contract, shareholder agreement, lease or construction contract gives the parties a ready route to mediation before litigation. It also signals to the other side that a dispute will be handled through a structured process rather than an immediate court filing.

Pre-Litigation Mediation Under Section 5

Section 5 allows parties to a civil or commercial dispute to voluntarily and with mutual consent attempt to settle the dispute through pre-litigation mediation before filing a suit or proceeding. The Act does not make pre-litigation mediation mandatory for all civil disputes. The choice remains with the parties.

There is an important exception. For commercial disputes of specified value, pre-litigation mediation is governed by Section 12A of the Commercial Courts Act, 2015 and the rules made under it. Section 12A already requires a plaintiff in a commercial suit of specified value to exhaust pre-institution mediation, unless the suit contemplates urgent interim relief. The Mediation Act does not replace that regime; it preserves it. A Kolkata commercial litigant must therefore check the value and urgency of the claim before deciding whether to file or to mediate first.

The mediator for pre-litigation mediation must be registered with the Mediation Council of India, empanelled by a court-annexed mediation centre, empanelled by an authority under the Legal Services Authorities Act, 1987, or empanelled by a recognised mediation service provider.

Court-Referred Mediation Under Section 7

Section 7 empowers a court or tribunal to refer parties to mediation at any stage of a proceeding, even if an earlier attempt at pre-litigation mediation did not result in settlement. The court may also pass suitable interim orders to protect the interest of any party. Parties are not obliged to reach a settlement through court-referred mediation.

In practice, this is the provision most litigants in Kolkata will encounter. Calcutta High Court and city civil court judges frequently refer pending civil, matrimonial and commercial matters to the court-annexed mediation centre. Under the Act, the referral process acquires a statutory framework, including confidentiality and enforcement of any resulting settlement.

Disputes That Cannot Be Mediated

Section 6 read with the First Schedule lists disputes and matters that are not fit for mediation. The indicative list includes:

• Disputes that by law may not be submitted for mediation;
• Disputes relating to claims against minors, deities, persons with intellectual disabilities, persons with mental illness and persons of unsound mind, and suits for declaration of title against the Government or declarations having the effect of a right in rem;
• Disputes involving prosecution for criminal offences;
• Complaints or proceedings before a statutory authority relating to registration, discipline or misconduct of a practitioner or registered professional;
• Disputes affecting the rights of third parties who are not parties to the mediation, except matrimonial disputes where the interest of a child is involved;
• Proceedings within the jurisdiction of the National Green Tribunal;
• Disputes relating to levy, collection, penalties or offences under direct or indirect tax laws;
• Investigations, inquiries or proceedings under the Competition Act, 2002, before the Telecom Regulatory Authority of India or the Telecom Disputes Settlement and Appellate Tribunal;
• Proceedings before the electricity regulatory commissions and the Appellate Tribunal for Electricity;
• Proceedings before the Petroleum and Natural Gas Regulatory Board;
• Proceedings before SEBI and the Securities Appellate Tribunal;
• Land acquisition and determination of compensation under land acquisition laws.

A proviso to Section 6 allows a court, if it deems appropriate, to refer compoundable offences — including compoundable matrimonial offences pending between the parties — to mediation. However, the outcome of such mediation is not treated as a judgment or decree under Section 27 and must be considered by the court in accordance with law.

The 120-Day Timeline Under Section 18

Section 18 fixes a strict timeline. Mediation under the Act must be completed within 120 days from the date fixed for the first appearance before the mediator. The period may be extended by a further period agreed by the parties, but the extension cannot exceed 60 days. The outer limit is therefore 180 days.

This is one of the Act's practical advantages. Litigation in Kolkata can take years. A statutory outer limit of 180 days gives parties a realistic date by which the process will conclude, one way or the other. For a business, that certainty is often as valuable as the settlement itself.

Enforcement of the Mediated Settlement Agreement

Section 19 defines a mediated settlement agreement as an agreement in writing between some or all of the parties, resulting from mediation, settling some or all of the disputes, and authenticated by the mediator. The terms may extend beyond the disputes referred to mediation. An agreement that is void under the Indian Contract Act, 1872 is not a lawful settlement agreement.

Section 27 is the heart of the Act. A mediated settlement agreement signed by the parties and authenticated by the mediator is final and binding on the parties and persons claiming under them. It is enforceable in accordance with the Code of Civil Procedure, 1908 in the same manner as if it were a judgment or decree passed by a court. A party may rely on it by way of defence, set-off or otherwise in any legal proceeding.

Before this Act, a mediated settlement was essentially a contract. If the other side broke it, the aggrieved party had to file a fresh suit for specific performance or damages. Now the settlement itself is enforceable as a decree. This is a fundamental shift in the value of mediation and the reason commercial parties should take mediated settlements seriously.

Challenging a Mediated Settlement Agreement

Section 28 allows a party to challenge a mediated settlement agreement before a court or tribunal of competent jurisdiction. The grounds are limited:

• Fraud;
• Corruption;
• Impersonation;
• Where the mediation was conducted in disputes or matters not fit for mediation under Section 6.

An application to challenge must be made within 90 days from the date the party received a copy of the mediated settlement agreement. The court or tribunal may entertain an application within a further period of 90 days if it is satisfied that the applicant was prevented by sufficient cause from applying within time. The grounds are deliberately narrow — the Act protects the finality of settlements.

Online Mediation Under Section 30

Section 30 expressly permits online mediation, including pre-litigation mediation, at any stage with the written consent of the parties. The Act contemplates the use of electronic form and computer networks, including encrypted email, secure chat rooms and video or audio conferencing. The process must maintain the integrity of proceedings and confidentiality at all times.

For Kolkata parties with disputes against counterparties in other cities or countries, this is a major convenience. An online mediation conducted under the Act produces a settlement that is enforceable in the same way as an in-person mediation.

The Mediation Council of India

Section 31 establishes the Mediation Council of India as a body corporate with perpetual succession. Its head office is at Delhi, and it may establish offices elsewhere in India and abroad. The Council is responsible for registering mediators, recognising and regulating mediation service providers and mediation institutes, maintaining an electronic depository of mediated settlement agreements, setting standards of conduct for mediators, and developing India as a hub for international commercial mediation.

Section 40 recognises mediation service providers. These include bodies recognised by the Council, authorities constituted under the Legal Services Authorities Act, 1987, court-annexed mediation centres and any other body notified by the Central Government. Section 41 sets out their functions, including accrediting mediators, maintaining panels, providing facilities and promoting professional and ethical conduct.

Why the Mediation Act Matters for Kolkata

Kolkata's civil courts and the Calcutta High Court carry a heavy pendency of civil, commercial, matrimonial and property disputes. Mediation offers a structured route to resolution without the delay and cost of a full trial. The Act makes that route more reliable in three ways.

• Enforceability: A settlement is no longer just a contract. It is enforceable as a decree under Section 27.
• Certainty: The 120-day timeline, extendable to 180 days, gives parties a defined window.
• Institutional quality: Registered mediators and recognised mediation service providers bring standards and accountability.

For family disputes, the Act interacts with the Family Courts Act, 1984 and the Legal Services Authorities Act, 1987. For commercial disputes, it interacts with the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act, 2015. A Kolkata litigant should consider mediation as a parallel or preliminary step, not as an admission of weakness.

Practical Steps for Parties in Kolkata

1. Identify whether the dispute is legally capable of mediation under Section 6 and the First Schedule. Criminal prosecutions, tax disputes and rights in rem are excluded.
2. Check whether a mediation clause already exists in the contract. If it does, follow the clause.
3. For commercial disputes of specified value, confirm whether Section 12A of the Commercial Courts Act requires pre-institution mediation.
4. Choose a registered mediator or a recognised mediation service provider. Court-annexed mediation centres are an accessible option.
5. Sign a written mediation agreement or record the reference in the court order.
6. Attend the first appearance and note the date. The 120-day clock runs from that date.
7. If a settlement is reached, reduce it to writing, sign it and have the mediator authenticate it.
8. If the other side defaults, enforce the settlement under Section 27 through the civil court, treating it as a decree.
9. If you wish to challenge the settlement, file within 90 days on one of the limited grounds in Section 28.

Conclusion

The Mediation Act, 2023 gives mediation in India a statutory foundation. It recognises institutional and online mediation, fixes a time limit, establishes a regulator and — most significantly — makes mediated settlement agreements enforceable as decrees. For litigants in Kolkata, it is a genuine alternative to years of litigation, provided the dispute is one that the law allows to be mediated and the settlement is properly documented and authenticated. Parties should take advice before signing a mediated settlement, because its enforceability now cuts both ways.

Disclaimer: This article provides general legal information and does not constitute legal advice. For advice on your specific dispute, consult a qualified advocate.