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This article is written by Mehek Arora, pursuing a Diploma in General Corporate Practice: Transactions, Governance, and Disputes from Lawsikho. The article has been edited by Tanmaya Sharma (Associate, LawSikho) and Zigishu Singh (Associate, LawSikho).


After India gained independence, the parliament enacted laws for dispute settlement through alternate disputes resolution mechanisms as provided by the Legal Services Authorities Act, 1987, and the Arbitration and Conciliation Act, 1996. The inclusion of such dispute resolution mechanisms under Section 89 read with Order X Rules 1A, 1B, and 1C of the Code of Civil Procedure, 1908 was a crucial step for their promotion as an alternative to litigation which is a time consuming and exhausting process.

The Companies Act, 2013 under its Section 442 provides for mediation and conciliation as viable options for dispute resolution to which the concerned parties can resort to at any stage of the proceedings between them. The Companies (Mediation and Conciliation Rules), 2016 have been notified by the Central Government for this purpose. 

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Part II of the Civil Procedure Alternative Dispute Resolution and Mediation Rules, 2003 prescribes the procedure for mediation. Mediation is defined under these rules as the process by which a mediator, who is either appointed by a court or by the parties, facilitates discussion between the parties, assists the parties in identifying issues in dispute, reducing misunderstandings, clarification of priorities, generation of options in an attempt to solve the dispute and emphasizes that it is the parties’ responsibility for making decisions which affect them. A mediator helps the parties to reach a negotiable agreement. This negotiable agreement is further signed by the parties and is called a “settlement”. The court passes a decree based on settlement.


Provisions laid down under Part III of Arbitration and Conciliation Act, 1996 are applicable for conciliation proceedings. The conciliator who is either appointed by parties or by the Court, applies these provisions, makes proposals for dispute settlement and formulates or re-formulates the terms of a possible settlement. The conciliator provides his inputs by making proposals. A conciliator assists the parties to reach an agreement through negotiation. This agreement is called an “award” and is executable like a decree.

Role of mediator or conciliator

The role of a mediator or conciliator as provided by the Companies (Mediation and Conciliation Rules), 2016 includes facilitation attempts for resolution of the dispute by the parties voluntarily, communication of each party’s views to the other, assisting the parties in the identification of issues, reduction of misunderstandings, clarification of priorities, exploration of areas of compromise and the generation of options for dispute resolution and emphasizing the fact that it is the parties’ responsibility to take decisions which would affect them and he shall not impose any terms of settlement on the parties. The mediator or conciliator may also impose such terms and conditions as he may deem fit on the parties with their consent for early settlement of the dispute. 

Section 442 : key highlights

The Companies Act, 2013 recognises the alternate dispute resolution mechanisms by providing for a Mediation and Conciliation Panel under its Section 442. The Companies (Mediation and Conciliation Rules), 2016 notified by the Central Government in this regard are broadly based on existing provisions for mediation and conciliation in India but are also unique from them in many ways.  Notable features of Section 442 are :

1. Panel of experts

An expert panel called as Mediation and Conciliation Panel is maintained by Central Government for conducting mediation between the parties in course of pendency of any proceedings before the Central Government or NCLT or NCLAT. Rule 3 of the (Mediation and Conciliation Rules), 2016 provides that this panel is prepared by the Regional Director who appoints eligible mediators and conciliators as experts in the respective regions. The Regional Director invites applications in Form MDC-1 for an appointment every year during February. A person must possess one of the following qualifications to be impaneled as mediator or conciliator:

A. was a former Judge of the Supreme Court of India,

B. was a former Judge of a High Court,

C. has been a District and Sessions Judge,

D. has been a Member or Registrar of a  National level Tribunal constituted level under any law for the time being in force, 

E. was a former officer with fifteen years of experience in the Indian corporate law service or Indian legal service, 

F. is a qualified legal practitioner with at least  ten years of experience, 

G. is or has been a professional Chartered Accountant or Cost Accountant or Company Secretary for at least fifteen years of continuous practice, 

H. has been a Member or President of any State Consumer Forum,

I. have successfully undergone training in mediation or conciliation and is an expert in mediation or conciliation. 

2. Referring the matter to the Mediation and Conciliation Panel

A matter may be referred to the Mediation and Conciliation Panel by the Central Government or NCLT or NCLAT in the following ways-

On application made by any of the parties to proceed to the Central Government or NCLT or NCLAT any time during such proceedings to refer the matter to the panel. One or more experts from the panel shall be appointed by the Central Government or NCLT or NCLAT for resolution of the matter.

Central Government or NCLT or NCLAT, suo moto, may refer any matter to such a number of experts as they may deem fit from the Mediation and Conciliation Panel in case any proceeding is pending before them.

3. Terms and conditions of experts

The experts of the Mediation and Conciliation Panel have to follow the terms and conditions laid down under (Mediation and Conciliation Rules), 2016 which include:

  1. Duty to disclose facts affecting impartiality and independence

The mediator or conciliator shall disclose any information about any of the circumstances which may cause reasonable doubt as to his impartiality or independence in conducting his functions to the Central Government or NCLT or NCLAT and to parties.

  1. Duty to complete the mediation or conciliation within the time limit

Any mediation or conciliation process shall be completed within three months from the date of appointment of experts. On the expiry of the aforesaid period, the mediation or conciliation process shall be considered terminated. NCLT or NCLAT may further extend the time limit by a period not exceeding three months on the application made by mediator or conciliator or party to the proceedings, in case the mediation or conciliation process could not be completed within three months.

  1. Duty to maintain confidentiality

A mediator or conciliator on receipt of factual information concerning the dispute from any party must disclose the substance of that information to the other party in dispute so that it has an opportunity to present the case. However, if a party gives him any information subject to the condition that it may be kept confidential, then he shall not disclose that information to the other party.

The mediator or conciliator while serving in his capacity, shall also maintain confidentiality regarding receipt, perusal or preparation of any records, reports or other documents by him.

He shall not be compelled to divulge information regarding such documents and as to what happened in the course of mediation or conciliation before the Central Government or NCLT or NCLAT any authority or any person or group of persons.

  1. Duty to follow ethics

The mediator or conciliator shall observe ethical behaviour while conducting the proceedings. He cannot carry on any activity or conduct which is considered improper for a mediator or conciliator, he must maintain the integrity and fairness of the mediation or conciliation process, he must ensure that the concerned parties are fairly informed and they have an adequate understanding of the procedural aspects of the process, etc.

4. Procedure to be followed by the Mediation and Conciliation Panel

The Mediation and Conciliation Panel is required to follow the procedure prescribed under Rule 11 of the (Mediation and Conciliation Rules), 2016 for disposal of matters according to which 

  1. The dates and the time of each mediation or conciliation session must be fixed by the mediator or conciliator in consultation with the parties in presence of all the parties.
  2. The mediator or conciliator shall hold mediation or conciliation process at the place chosen by the Central Government or NCLT or NCLAT or at such other place jointly agreed by parties and the mediator or conciliator.
  3. Joint or separate meetings may be conducted by the mediator or conciliator with the parties.
  4. Each party shall, within ten days before the session, provide a brief memorandum to the mediator or conciliator which shall contain—
  • the issues required to be resolved
  • his position in respect of those issues
  • all information reasonably required for the mediator or conciliator to understand the issue 

The aforesaid period of ten days may be reduced by the mediator or conciliator at his discretion.

  1. A copy of  the memorandum shall also be given to the opposite party.
  1. Each party shall furnish such other information to the mediator or conciliator required by him  for resolving the issues in dispute.
  1. In case of appointment of more than mediator or conciliator, then the mediator or conciliator may first concur with the party by whom he is nominated before discussing any view for dispute resolution with the other mediator or conciliator, 

Indian Evidence Act, 1872 or the Code of Civil Procedure, 1908 shall not bind the mediator or conciliator for disposal of the matter. However, he must dispose of the matter following the principles of fairness and natural justice.

Settlement agreement 

When the parties reach an agreement, it shall be reduced in writing and signed by the parties, and the conciliator or mediator shall obtain the signature of counsel in case he has represented the parties. Thereafter, the agreement must be submitted to the mediator or conciliator who shall forward it along with a cover letter signed by him, to the Central Government or NCLT or NCLAT.

5. Objections to Recommendations made by the Mediation and Conciliation Panel

After the disposal of the matter, the Mediation and Conciliation Panel shall forward its recommendations to the Central Government or NCLT or NCLAT. Any party aggrieved by such recommendations may file objections to the Central Government or NCLT or NCLAT.


Alternate dispute resolution processes are cost-efficient and less time-consuming in comparison to litigation proceedings. Parties who wish to opt for resolution of their dispute through mediation or conciliation proceedings may refer their case to the Mediation and Conciliation Panel established under Section 442 of the Companies Act, 2013. The implementation of the Draft Mediation Bill, 2021 introduced by the legislature will give further impetus to the resolution of disputes through mediation in India and would broaden the scope of mediation.


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