Section 442 of Companies Act 2013:  A complimentary statutory provision for  Mediation Bill 2023.

Section 89 of the CPC empowers parties in civil suits to explore alternative avenues for resolving their disputes, emphasizing the importance of voluntary, consensual, and confidential dispute resolution methods as alternatives to traditional litigation. The primary objective of Section 89 is to promote the expeditious and cost-effective resolution of disputes by diverting cases from traditional litigation to various ADR mechanisms like mediation, arbitration, conciliation, or judicial settlement.

Much like Section 89’s significant role within the Code of Civil Procedure for resolving disputes extrajudicially, Section 442 of the Companies Act 2013 also undertakes a comparable function by incorporating mediation as a means of dispute resolution.

Both of these provisions share the common goal of reducing the court’s burden by fostering settlement between the parties involved.

Section 442 of the Companies Act, 2013  provides a mechanism for resolving disputes through mediation and conciliation, promoting a more amicable and efficient resolution process between companies and their creditors or contributors while reducing the burden on the court system.

As per this Section, the Central Government shall establish a Mediation and Conciliation Panel, comprising qualified experts as specified, with the aim of facilitating mediation among parties engaged in ongoing proceedings before the Central Government, the Tribunal, or the Appellate Tribunal under this Act.

Furthermore, in instances where proceedings are ongoing, the Central Government, the Tribunal, or the Appellate Tribunal may, at its own discretion, refer any matter linked to the ongoing proceedings to a suitable number of experts from the Mediation and Conciliation Panel.

Conclusion

Mediation as a method of dispute resolution is not a novel concept; it has deep historical roots and is firmly ingrained within Section 442 of the Companies Act 2013, serving as a means for out-of-court dispute settlement, particularly in specific areas and upon the voluntary choice of the parties involved. Despite its long-standing tradition, mediation hasn’t always received the same level of recognition and credibility as Arbitration and traditional litigation. However, through recent legislation, mediation has been elevated to a comparable status alongside Arbitration and traditional litigation, thus enhancing its standing and importance in the realm of dispute resolution.

The  Mediation Bill, 2023, and Section 442 of the Companies Act 2013 are complimentary to each other and serve critical roles in the realm of corporate dispute resolution in India. The Mediation Bill seeks to establish a comprehensive and standardized framework for mediation, promoting its use across various domains. Section 442, on the other hand, provides an in-house mechanism for dispute resolution for specific corporate disputes, offering specialization and enforceability.

Individuals or entities involved in conflicts should meticulously assess their alternatives, considering the dispute’s characteristics, complexity, readiness for mediation, and intended results. Employing a comprehensive strategy that leverages the benefits of the provisions available under both avenues provided under Sec 442 can facilitate a smooth and effective resolution of the dispute. This approach also plays a vital role in safeguarding business relationships and interests, subject to the specifics of the case and the eventual successful enactment of the Mediation Bill, 2023.