Section 49 of Mediation Act 2023 - Mediated Settlement Where Government Is a Party
Section 49 of the Mediation Act, 2023 provides a special approval requirement for a mediated settlement agreement in a dispute, including a commercial dispute, where the Central Government, a State Government, or specified Government agencies, public bodies, corporations, local bodies or Government-controlled or Government-owned entities are parties.
Section 49 - Mediated settlement agreement where Government or its agency is a party
49. Notwithstanding anything contained in this Act, no dispute including a commercial dispute, wherein the Central Government or State Government or any of its agencies, public bodies, corporations and local bodies including entities controlled or owned by them is a party, the settlement agreement arrived at shall be signed only after obtaining the prior written consent of the competent authority of such Government or any of its entity or agencies, public bodies, corporations and local bodies, as the case may be.
What Section 49 provides
Section 49 imposes an additional statutory approval step before a mediated settlement agreement involving specified Government parties may be signed. The settlement agreement can be signed only after prior written consent has been obtained from the competent authority of the relevant Government, entity, agency, public body, corporation or local body.
The provision therefore addresses authority to approve a settlement on behalf of a Government-related party. It is relevant at the stage when parties have arrived at settlement terms and the agreement is to be formally signed.
Which Government parties are covered?
The statutory language extends to disputes in which any of the following is a party:
- the Central Government;
- a State Government;
- an agency of the Central Government or State Government;
- a public body;
- a corporation;
- a local body; or
- an entity controlled or owned by any such Government or body.
Commercial disputes are expressly included
Section 49 expressly refers to "no dispute including a commercial dispute". The approval requirement is therefore not confined to ordinary civil disputes and is drafted to extend to commercial disputes involving the specified Government or public-sector parties.
The Mediation Act also interacts with the Commercial Courts Act, 2015 in relation to pre-institution mediation for commercial disputes. The precise statutory framework applicable to a particular commercial dispute should be determined from the provisions in force on the relevant date.
Prior written consent is required before signing
The central requirement of Section 49 is that the mediated settlement agreement shall be signed only after obtaining prior written consent of the competent authority. The words "prior" and "written" are important: the statutory text contemplates approval before execution of the settlement agreement and requires that approval to be documented in writing.
Who is the competent authority?
Section 49 uses the expression "competent authority" but does not provide a separate general definition of that expression for every Government, agency or public body. The competent authority would therefore have to be identified under the applicable legal, administrative, delegation or organisational framework governing the particular Government or public entity.
For practical purposes, parties dealing with a Government-related settlement should identify the authority legally empowered to approve the settlement before the agreement is signed.
Meaning of the non-obstante clause
Section 49 begins with the words "Notwithstanding anything contained in this Act". A non-obstante clause is a legislative device indicating that the provision is intended to prevail over inconsistent provisions within the stated statutory field.
Accordingly, once Section 49 is brought into force and applies to a dispute, its requirement of prior written consent is intended to operate despite anything inconsistent elsewhere in the Mediation Act concerning the signing of a mediated settlement agreement.
Relationship with Section 19
Section 19 deals generally with a mediated settlement agreement. It provides the statutory framework for a written agreement resulting from mediation and signed by the parties, and for authentication by the mediator in the manner contemplated by that provision.
Section 49 adds a special approval requirement for the Government-related parties identified in that section. In such a case, the agreement is not merely to be signed in the ordinary manner; prior written consent of the competent authority is required before signature.
Relationship with Section 48
Section 48 enables the Central Government, State Government, or their entity or agency to frame schemes or guidelines for resolving disputes through mediation or conciliation where such Government, entity or agency is one of the parties.
Section 49 deals with a different stage: the signing of the settlement agreement. It requires prior written consent of the competent authority where the specified Government or public-sector party is involved. Sections 48 and 49 were both omitted from the first commencement notification dated 9 October 2023.
Relationship with enforcement provisions
The Mediation Act contains provisions concerning the finality, binding effect, enforcement and challenge of mediated settlement agreements. Section 49 is specifically concerned with the authority required before a Government-related settlement agreement is signed. Its operation must therefore be considered at the execution stage before questions concerning the later legal effect or enforcement of the agreement arise.
Section 1(3) and phased commencement
Section 1(3) provides that the Mediation Act comes into force on such date as the Central Government may appoint by notification and permits different dates to be appointed for different provisions. The Act therefore follows a phased commencement model.
Notification S.O. 4384(E) dated 9 October 2023 brought Sections 1, 3, 26, 31 to 38, 45 to 47, 50 to 54 and 56 to 57 into force. Section 49 was not included. The latest commencement notification should be checked before relying on Section 49 in a live dispute.
Key legal points under Section 49
- The provision covers disputes including commercial disputes.
- It applies where the Central Government, a State Government or specified Government-related bodies or entities are parties.
- A settlement agreement may be signed only after prior written consent of the competent authority.
- The approval must precede signature of the settlement agreement.
- The competent authority depends on the applicable Governmental or institutional framework.
- Section 49 contains a non-obstante clause giving its special approval requirement overriding effect within the Act where applicable.
- Section 49 was not brought into force by the commencement notification dated 9 October 2023.
Official legal sources
e-Gazette - Mediation Act, 2023
e-Gazette of India - official notifications