MA Schedule : Amendment to Companies Act, 2013
Act
Summary
The Eighth Schedule of the Mediation Act, 2023, amends Section 442 of the Companies Act, 2013, introducing mediation as a mechanism in legal proceedings. Parties involved in proceedings before the Central Government, Tribunal, or Appellate Tribunal can apply for mediation. The section also allows these bodies to refer matters to mediation suo motu . Mediated settlements are to be filed and incorporated into judgments, with mediator fees prescribed by law.
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Explanation using Example
Example 1: Dispute Between Shareholders
Introduction: ABC Pvt. Ltd., a company registered in India, is facing a dispute between two major shareholders, Mr. Sharma and Ms. Gupta, regarding the allocation of profits. The dispute has escalated to the National Company Law Tribunal (NCLT).
Application: Under Section 442(1) of the Companies Act, 2013, as amended by the Mediation Act, 2023, either party can apply to the NCLT to refer the matter to mediation. Mr. Sharma decides to file an application with the prescribed form and fee, requesting mediation.
Outcome: The NCLT, upon receiving the application, refers the matter to mediation as per the provisions of the Mediation Act, 2023. A mediator is appointed, and both parties engage in mediation sessions. They reach a mutually agreeable settlement, which the mediator files with the NCLT as per Section 442(3).
Conclusion: The NCLT incorporates the mediated settlement agreement into its order, resolving the dispute amicably. This avoids prolonged litigation and fosters a cooperative environment within the company.
Example 2: Government-Initiated Mediation
Introduction: XYZ Ltd. is involved in a complex legal proceeding with the Central Government concerning environmental compliance issues. The case is pending before the Appellate Tribunal.
Application: According to Section 442(2) of the Companies Act, 2013, the Appellate Tribunal can refer the matter to mediation suo motu if it deems fit. Observing the poten...
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