Model Tenancy Act (2021) – A Missed Opportunity for Mediation in India

Introduction

Though the Union Cabinet has adopted measures in the Model Tenancy Act, 2021 (hereinafter the ‘Act’) which seemingly aim at shrinking delays in resolving landlord-tenant disputes, but most glaring is the omission of an internationally accepted tool of dispute resolution, i.e. mediation.  

The Model Tenancy Act, 2021 was approved by the Union Cabinet on 2 June 2021 for adoption by the states and the Union Territories. The Act provides for a three-tier quasi-judicial dispute resolution mechanism as (1) Rent Authority, (2) Rent Court and (3) Rent Tribunal. As per the Minister of State in the Ministry of Housing and Urban Affairs, the Act aims to provide for speedy dispute resolution through mechanisms such as Rent Court and the Rent Tribunal. As per the Minister of State, the Rent Court and the Rent Tribunal shall “endeavour” to dispose of the cases within 60 days and in cases of delay, the reasons for delay are mandated to be recorded in writing. 

But there is still a sizeable chunk of the population in India that is looking for simple solutions instead of pursuing a legal battle in the Court. Do we really need to create more courts and tribunals amid the rising backlog of cases and our inability to fill the existing vacancies in the roster for judges? The answer to this question is not straightforward. In this article, I will highlight how India missed a golden opportunity to supplement its efforts in creating an ecosystem for the practice of mediation. I present the thesis that there should have been a mandatory mediation clause in the Act as the first-step in the dispute resolution process.

Background

As per the United Nations Population Fund (UNFPA), India has its largest ever adolescent and youth population and India will continue to have one of the youngest populations in the world till 2030. It is projected that India would add 416 million urban dwellers by 2050. As per the National Commission on Population (NCP), 38.6 percent of Indians (600 millions) will live in urban areas by 2036. Most of the youth population in India would be in the formative years of their career and their purchasing power would be limited. With sky rocketing property prices in the urban areas, the demand for rental housing will only increase in the future. With the increase in demand for rental housing, there is a high likelihood that there is an increase in the number of disagreements and disputes.

Even though the Act has its benefits, it might not extinguish the doubts or apprehensions of tenants and landlord’s vis-a-vis the dispute resolution process. Majority of people in India prefer not to take the legal recourse because of the delay in the decision-making process and the litigation costs involved. The number of pending cases in the Courts in India does not present an encouraging picture for tenants and landlords alike in order to pursue a legal action. The Act could have extinguished these apprehensions by providing for straightforward dispute resolution process. I believe this should have been in the form of a mandatory mediation session as the first step of dispute resolution. This would have been in line with the judgment of the Supreme Court in the Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co.. The Supreme Court in Afcons highlighted that there are certain categories of disputes that are suitable for alternative dispute resolution processes which includes disputes between the landlord and the tenant. The Supreme Court of India in Hameed Kunju v. Nazim stated that the object of all rent laws is to provide for speedy resolution of disputes between the landlord and the tenant. The Court recognized the importance of speedy resolution of such disputes. Despite these judgments by the Supreme Court of India, the Act fails to provide for mediation as a mode of dispute resolution. If mediation as the first step would have been provided for the in the Act, the Act would not only be in line with the recommendations of the Supreme Court of India, it would have also lent support to India in its journey of fully realizing the potential of mediation as a mainstream process of dispute resolution. 

Opt-Out Model of Mediation

Italy, Turkey and recently Azerbaijan have implemented the Opt-Out Model. As per the majority view in the study conducted in 2014 at the request of the European Parliament, mandatory mediation might be the only way forward to eventually make mediation happen in the European Union. Using Italy as a case on point, it was noted that when the mediation was not mandatory until 2011, there were no more than 2,000 mediations per year. Whereas when mediation became mandatory, “voluntary mediations climbed to almost 45,000, out of over 2,20,000 proceedings as a whole”.

The Act presented a great opportunity to direct a sizeable number of tenant-landlord cases towards mediation. Mediation as the first step of dispute resolution would have familiarized people with the process of mediation and eased them into the three-tier quasi-judicial process provided for in the Act. This could have been done by following the Opt-Out Model of Mediation. The Act could have provided for a compulsory first session of mediation. After that, it would be at the discretion of the parties to either continue with mediation or to “opt-out”. The Rent Court would then endorse and enforce the mediated settlement agreement between the parties, as per the terms of the Act. 

Missed Opportunity for Mediation Professionals in India

The Chief Justice of India has highlighted the need to make mediation the first step in the process of dispute resolution. The Law Minister of India has urged the judiciary to make use of “pre-institution mechanisms like mediation” to resolve commercial disputes. Despite these calls for making mediation the first step in the dispute resolution process, the Act creates a three-tier dispute resolution procedure which surprisingly does not feature mediation. If mediation would have been the first step in the dispute resolution process, the trained mediation professionals in India would have played a leading role in dealing with cases related to landlords and tenants. This would have been a stepping stone for aspiring mediators in India to get the much-needed experience under their belt. This is a missed opportunity that could have been capitalized upon for creating a large and experienced pool of mediators in India that would have played a pivotal role in making mediation a mainstream process of dispute resolution.

Conclusion

In Debasish Sinha v. Sreejib Sinha, the execution proceedings filed in 2009 by the landlord for the suit of possession dragged on for 12 years. The Supreme Court of India called it a “classic case” of how civil proceedings get dragged on “ad infinitum” causing “grave injustice to the parties”. These are the situations that we need to avoid. The greatest challenge that India currently faces is the mounting pendency of cases in the Courts. In order to deal with this challenge, India needs a multi-faceted plan which contributes in creation of a robust ecosystem for speedy resolution of disputes. 

The changes that we need will not happen overnight. We need to layout a roadmap that not only creates awareness about the practice of mediation but also brings different types of disputes within the purview of mediation with the legislative support. Every small step to empower the practice of mediation in India would be crucial for its growth as a mainstream process of dispute resolution. 

author

Pitamber Yadav

Pitamber Yadav is an India qualified lawyer and is currently based out of New Delhi. He graduated from the Faculty of Law, at the National University of Singapore (NUS) with a Master of Laws degree in International Arbitration & Dispute Resolution (IADR). He previously worked with Singapore International Dispute Resolution… MORE

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