Blog Article

The Ministry of Corporate Affairs (MCA) had notified the Companies (Mediation and Conciliation) Rules, 2016, as an amendment to the Company Rules, 2013. This was done to authorize a panel of experts (to be appointed by the Central Government) for mediation and conciliation between disputing parties. These panel of experts would serve as an additional forum for parties to settle disputes, apart from the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), and also reduce dependency and the burden on the NCLT and NCLAT. These Rules also marked the introduction of form MDC1 (form for application for mediator or conciliator on the panel) and MDC2 (Application for referring the matter to the Panel).

The Companies (Mediation and Conciliation) Rules, 2016, specify the definitions of mediators and conciliators, application and appointment, the process of formation of a panel, requisites, qualifications and experience of the panel members, the scope of work, duties and responsibilities of mediators and conciliators, communication, privacy, etc.

Provisions Under The Act

• Panel of Mediators and Conciliators

A panel of mediators and conciliators shall be appointed by the Regional Director and the same will be published on the Ministry of Corporate Affairs (MCA) website. Any individual that wants to become a mediator must apply in February within 30 days.

• Qualifications for Empanelment

In order to qualify for empanelment, an individual has to have any of the following qualifications:

1. 1. A Supreme Court Judge
   2. A High Court Judge
   3. District or Sessions Judge
   4. Member of registrar or tribunal (national level)
   5. Officer in the Indian Corporate Law Service or Indian Legal Services with a minimum of 15 years of experience
   6. Legal practitioner for 10 years
   7. 15 years of service as a Chartered Accountant (CA) or Company Secretary (CS)
   8. Expert in mediation and conciliation and undergone respective training

• Disqualification for empanelment

An individual can be disqualified if he/she is:

1. 1. Undischarged solvent
   2. Convicted for an offence
   3. Removed or dismissed by the Government
   4. Has been punished in a disciplinary proceeding
   5. Any conflict of interest, financial or otherwise

• Application for Mediator or Conciliator

The parties involved may agree on a sole mediator/conciliator. The Central Government and the Appellate Tribunal can also appoint an individual or multiple individuals as mediator/conciliator. The Form for application of the same can be made in the form MDC2 along with a fee of INR 1,000.

• Duty and Ethics

Any circumstances which give rise to reasonable doubt should be reported by the panel to the Central Government and also the involved parties should be informed of the same. The ethics to be followed are similar to the ethics guidelines laid out in other Government employment roles.

• Procedure for Disposal of Matters

A specific procedure that includes meeting with a mediator 10 days before a session, providing a brief memorandum, dates and time of mediation, furnishing relevant information, joint or individual meetings, etc. are listed in these Rules. It is also important to note that these Rules are not bound by the Indian Evidence Act, 1872 or the Code of Civil Procedure, 1908.

• Duration

The process for any mediation shall be completed within 3 months of the appointment of the panel, post which the process is terminated. This can be further extended by the Tribunal Appellate by 3 months in rare cases on the application by the mediator.

• Settlement Agreement

When the parties come to an agreement with respect to all the issues covered in the proceedings, a settlement agreement is executed with the signatures of the parties and/or counsel that has represented the parties. The parties must act in good faith. The agreement is sent along with a cover letter by the mediator to the Central Government or the Appellate Tribunal.

• Expenses

The cost of expenses for the mediator and administrative expenses shall be borne by the concerned contesting parties equally. A fair amount estimated should be deposited to the mediator before the process can commence. Each party is responsible for bearing the cost of witnesses, experts and procurement of documentation.

• Privacy

The mediation sessions/meetings shall take place in privacy and only the concerned parties or representatives will be allowed to attend.