[The system in Bharat]
In today's world where courts are flooded with lakhs of cases leading in long
delay in resolving conflicts, these dispute resolution methods serve as a light
of hope for the people waiting to get their disputes resolved.
INDIA that is Bharat has an old tradition of settling disputes by using these
dispute resolution methods. It is deeply embedded in rural India, as during
older times the disputes were resolved at the village level through village
There were group of senior members who headed the panchayat and they worked
independently without coming under any legal authority. They reached at a
certain decision that was accepted by the parties involved in the dispute. ADR
is the name of the different types of methods used to decide disputes between
the parties outside the courtroom.
Negotiation in a way so that the parties involved in the process can resolve
their conflicts. Every ADR method have a common feature to help the parties in
reaching on a solution to their conflicts in the best way suitable to them,
outside legal proceedings and these ADR methods have some rules which must have
to be followed by everyone involved in this process. These processes are faster,
cost effective and are more efficient.
The meaning of word mediate is to divide in two equal parts. Mediation refers to
a process of settling disputes in which the parties involved accepts the
decision of the person who acts a mediator. The mediator who acts as
intermediary helps the conflicting parties by removing the conflicts which are
between the parties and in reaching at a decision on which both the parties
agree and is acceptable to the parties.
- There is no winner or looser in this dispute resolution method as both
the parties reach at a decision on which on which the parties get satisfied.
- Both parties accept the decision at the end because the mediator is
selected by the mutual acceptance of the parties. So there is no partiality
and the decision is neutral.
- The cost involved in this process of mediation is less than that is in
litigation. So it�s a cost effective way to settle disputes.
Insolvency & Bankruptcy
Insolvency, means a state or situation when a person, a company or government is
not having enough money in order to pay their debts. The debtor is unable to pay
back the debt to the creditor. It becomes problematic when the creditor asks for
money from debtor and the debtor is not a that financial state to repay the
Insolvency is a financial state whereas bankruptcy is a legal procedure.In India
, bankruptcy and insolvency are regulated by the Insolvency and Bankruptcy Code
2016. Bankruptcy refers to the state when the person is legally insolvent. It is
a legal term used when a person or a business becomes bankrupt and have to pay
something which is of same value in order to get his debt clear.
Legal Provision And Framework In India
The insolvency and bankruptcy board of India was established on 1st October 2016
under Insolvency and Bankruptcy Code 2016. The IBBI (Insolvency and Bankruptcy
Board Of India) supervises the working and looks over the resolution, individual
insolvency resolution and individual bankruptcy under the code. This code helps
the creditor to recover their money from the debtors.
The Ministry Of Corporate
Affairs constituted the NCLT, which was established as per Section 408 of
Companies Act 2013 and NCLAT, which was established as per Section 410 of
Companies Act 2013.
The cases does not directly go to NCLAT, first the cases come to NCLT and then
further to NCLAT. These bodies work to provide an alternative to court of law.
They also help in reducing the burden of High Court by the speedy disposal of
cases. NCLT & NCLAT, they both deal with company law matters and help the
companies in reaching on a final solution.
Interplay Of Mediation, Insolvency And Bankruptcy
- The role of mediation in insolvency which further leads to bankruptcy.
In this growing world where companies are flourishing there also comes a
concept of defaulters. This concept brings into picture the role of
mediation. In healthy economies there is a need of credit flow which comes
from investments and generation of new capital. Then there comes the concept
of defaulters who are not able to pay their loans/debts.
- In 2016, when there were so many cases of insolvency piled up in huge
number and then there was a need of a mechanism so that the defaulters can
be settled in a systematic manner.
- Mediation plays a significant role as it helps the parties to get money
back in some or other manner. It helps to get some way in which the debtor
can repay the debt. During the state of Insolvency the mediator saves the
insolvent party in going to the state of bankruptcy, or to be known as
As in insolvency is just a state on being insolvent but bankruptcy is a
legal state, and a party is known as bankrupt only after it is decided by
court. Insolvency and Bankruptcy 2016 helped to transform the mediation
process in India. If the process of mediation does not satisfy the parties
and the disagreement between them continuous then it moves to bankruptcy
proceedings , increasing the process of the dispute resolution.
Before IBC 2016 , the Sick Industrial Companies (Special Provisions) Act
1985 (SICA), a legislation which was primarily referred to in matters of
industrial insolvency and bankruptcy.
- Moreover, mediation can essentially upgrade the proficiency and
viability of the insolvency and bankruptcy forms. Conventional case can be
time-consuming and expensive, regularly compounding monetary strain on the
bothered substance and its partners.
Mediation, be that as it may, is ordinarily speedier and more
cost-effective. It speeds up debate determination, empowering a faster
return to trade commonality. Consolidating mediation into insolvency and
bankruptcy procedures can too empower imaginative and custom-made
arrangements. Each case is one of a kind, and a one-size-fits-all approach
may not continuously be appropriate.
- Mediation permits parties to plan arrangements that adjust with their
particular circumstances and needs. This adaptability regularly leads to
more feasible and long-term resolutions.
- Moreover, mediation can be a important device to address passionate and
psychological angles frequently related with bankruptcy and liquidation.
Budgetary trouble can be candidly depleting for all parties included.
Intercession offers a steady environment, permitting parties to precise
their concerns, fears, and yearnings transparently. This passionate
catharsis can lead to a more helpful discourse and eventually result in more
Be that as it may, it's essential to recognize that intervention isn't a
nostrum and may confront challenges inside insolvency and bankruptcy
settings. The deliberate nature of intercession may cruel parties are not
compelled to take part, possibly coming about within the prohibition of
basic partners or resistance to the method. In addition, control awkward
nature between parties can influence the arrangement elements, requiring the
mediator's expertise to level the playing field.
Challenges And Limitations Of Insolvency & Bankruptcy
During the proceedings of a mediation case, every step is decided by the IBC
2016 .Under IBC 2016 , according to its timeline the process has a fixed time
period in which it has to be completed but now these processes take a long time
due to which the companies get out of the mediation process. Not only the
processes are time taking other than this the banks claim a amount during the
process of mediation but they are not able to recover the full amount which was
In conclusion, the integration of mediation within insolvency and bankruptcy
frameworks holds immense promise in enhancing the resolution of financial
disputes. Its ability to preserve relationships, improve efficiency, foster
creative solutions, and address emotional aspects makes mediation a powerful
tool in this arena.
Efforts to promote the understanding and utilization of
mediation within insolvency and bankruptcy systems can ultimately contribute to
a more effective and humane approach to managing financial distress.