Breaking: Dire need to enact Indian Mediation Act, Supreme Court [Read Judgment]

Breaking: Dire need to enact Indian Mediation Act, Supreme Court [Read Judgment]

Shruti Mahajan

The Supreme Court today said that there is a dire need to enact Indian Mediation Act. The observation came in a judgment passed by Bench of Justices AK Sikri and S Abdul Nazeer giving a slew of directions for the benefit of victims of motor vehicle accidents.

Facts of the case

The judgment was rendered in the appeal filed by MR Krishna Murthi (appellant), who is a practising advocate who suffered forty percent disability after he met with an accident at the age of 18. After the accident, the appellant had to undergo three surgeries and his treatment lasted for six years. He ended up with 40 percent disability pursuant to which he procured a disability certificate from the District government hospital, Muzaffarnagar.

The Motor Accidents Claim Tribunal (MACT) at the Patiala House in Delhi which was dealing with the appellant’s claim, awarded compensation to the appellant and the liability of the same was fastened to the driver of the car and the Insurance company.

The appellant filed an appeal before the High Court on the ground that the MACT had failed to consider the permanent disability that had been caused to the appellant while awarding compensation. This submission was, however, rejected by the High Court.

Submissions by parties

In the Supreme Court, Senior Counsel Arun Mohan, appearing for the appellant, argued on the aspect of the quantum of compensation. It was contended that the Courts below erred in computing the future earnings lost by the appellant. The appellant’s accident took place when he was a student and the Courts below did not take into account the family background as well as the institute in which the appellant was studying while deciding the compensation amount.

The second aspect that Mohan argued was for the reformation of the system touching upon issues of road safety and speedy disbursement of compensation to victims. He also argued on the need for a fast-track disposal mechanism by the MACT.

Detailed submissions were also made regarding the framing of schemes in this regard and for making available annuity certificates in consultation with the Pension Fund Regulatory and Development Authority and the commercial Banks/insurance companies.

A compulsory reference of motor accident cases by the MACT to the District Mediation Authority was also argued by the Counsel for the appellant. The judgment sums up Mohan’s arguments in this regard as,

“Speaking with an optimist tone, Mr. Mohan submitted that there is a hope that with a provision for MAMA: (1) access to justice will substantially increase; (2) the court costs will reduce; (3) insurance sector costs (as payout) will reduce; (4) Annuity Certificates of the payout will nearly eliminate the ‘slicing away’; and (5) the actual benefit to the recipients will be far more (with Annuity Certificates) than it is at present”

Advocate Salil Paul appearing for the Insurance Company submitted that on the larger argument of reformation of the system, he had no objection if the Court wishes to pass any orders as the issue is in the larger public interest. However, as regards the quantum of compensation in the instant case, he said no interference was needed.


The Court after considering the submissions, awarded an additional sum of Rs 6,54,000 to the appellant along with interest as stipulated by the lower Courts.

Taking note of the need for reform in the system of disbursing compensation to the victims as well as to ensure speedy disposal of claims, the Court proceeded to issue directions and recommendations on the larger issue of reformation of the system. This included

  • Direction to the Government to consider the feasibility of bringing in an Indian Mediation Act to deal with all the aspects of mediation in general.
  • Direction to the Government to consider the feasibility of setting up a Motor Accidents Mediation Authority (MAMA) through an amendment to the Motor Vehicles Act
  • In the meantime, the Court has directed NALSA to set up a mediation cell for cases of Motor accidents within a period of two months. This Cell can function independently under the aegis of NALSA.
  • The Government has also been directed to look into the feasibility of framing necessary schemes and annuity certificates within six months. A decision in this regard can be taken after examining the feasibility of this option.
  • Lastly, the Court directed that sensitization programs to be held for the benefit of Presiding officers of Claims Tribunals, Senior Police officers of the State Police and Insurance Company officers.

The judgment highlights the significance of mediation in particular. It states,

“Having regard to the fact that large number of accidents are giving rise to phenomenal quantum jump in such cases, methods need to be adopted for quick resolution. Here, mediation as a concept of dispute resolution, even before dispute becomes part of adversarial adjudicatory process, would be of great significance. Advantages of mediation are manifold. This stands recognised by the Legislature as well as policy makers and need no elaboration. Mediation is here to stay. It is here to evolve. It is because of the advantages of mediation as a method here to find new grounds. It is here to prosper, as its time has come.”

The Court also noted that the importance of mediation is highlighted by the fact that it is being introduced in various statutes.

It is now finding statutory recognition and has been introduced in few Statutes as well. Examples are the Companies Act, Insolvency and Bankruptcy Code, Commercial Courts Act etc. In these enactments provisions are made even for pre-litigation mediation by making this process mandatory.

The Court, therefore, said that there is a dire need to enact ‘Indian Mediation Act’.

Read the judgment below.

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