An Attempt To Statutorily Mediate The Operational Creditor Dues

The Insolvency and Bankruptcy Board of India ('IBBI') has recently come up with a proposal for the parties involved in an operational creditor application to explore mediation under the provisions of the Mediation Act, 2023. This is aimed as a precursor to the filing of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ('Code').

This is indeed a welcome move aligned with the scheme that governs commercial disputes, i.e., pre-suit mediation with just the difference being, mediation proposed under the Code is voluntary, whereas it is mandatory under Commercial Courts Act, 2015.

The proposal to mediate over operational debts was suggested by the Expert Committee on the 'Framework for Use of Mediation under the Insolvency and Bankruptcy Code, 2016' in the background of statistical data as of 30 April 2024 which demonstrated that out of 21,466 cases filed under Section 9 of the Code only 3818 cases were admitted. As per the draft