(1) The system provider shall make provision in its rules or regulations for creation of panel consisting of not less than three system participants other than the system participants who are parties to the dispute to decide the disputes between system participants in respect of any matter connected with the operation of the payment system.
(2) Where any dispute in respect of any matter connected with the operation of the payment system arises between two or more system participants, the system provider shall refer the dispute to the panel referred to in sub-section (1).
(3) Where any dispute arises between any system participant and the system provider or between system providers or where any of the system participants is not satisfied with the decision of the panel referred to in sub-section (1), the dispute shall be referred to the Reserve Bank.
(4) The dispute referred to the Reserve Bank for adjudication under sub-section (3) shall be disposed of by an officer of the Reserve Bank generally or specially authorised in this behalf and the decision of the Reserve Bank shall be final and binding.
(5) Where a dispute arises between the Reserve Bank, while acting in its capacity as system provider or as system participant, and another system provider or system participant, the matter shall be referred to the Central Government which may authorise an officer not below the rank of Joint Secretary for settlement of the dispute and the decision of such officer shall be final.
Simplified Explanation
Section 24 of the Payment and Settlement Systems Act, 2007 provides a structured mechanism for resolving disputes related to the operation of payment systems. It lays down clear procedures for how disputes should be handled between system participants, system providers, and the Reserve Bank, ensuring that conflicts are resolved efficiently and fairly.
Key Provisions of Section 24:
- Dispute Resolution Panel (Subsection 1):
- Panel Creation: The system provider is required to make provisions in its rules or regulations for the creation of a dispute resolution panel.
- Composition of Panel: The panel must consist of at least three system participants, but not including those system participants who are parties to the dispute.
- Purpose: The panel’s responsibility is to decide disputes between system participants regarding any matters connected with the operation of the payment system.
- Referral of Dispute to the Panel (Subsection 2):
- If a dispute arises between two or more system participants concerning any matter related to the operation of the payment system, the system provider must refer the dispute to the panel created under subsection (1) for resolution.
- Referral to the Reserve Bank (Subsection 3):
- In cases where:
- A dispute arises between a system participant and the system provider.
- A dispute arises between system providers.
- A system participant is dissatisfied with the decision of the panel.
- In such cases, the dispute must be referred to the Reserve Bank for resolution.
- In cases where:
- Adjudication by the Reserve Bank (Subsection 4):
- The Reserve Bank will handle disputes referred under subsection (3).
- The dispute will be disposed of by an officer of the Reserve Bank who is authorised for this purpose, either generally or specially.
- The decision of the Reserve Bank on the matter will be final and binding on the parties involved.
- Dispute Involving the Reserve Bank (Subsection 5):
- If a dispute arises between the Reserve Bank, acting in its capacity as a system provider or system participant, and another system provider or system participant, the matter shall be referred to the Central Government.
- The Central Government may then authorize an officer not below the rank of Joint Secretary to settle the dispute.
- The decision of the officer authorised by the Central Government will be final.
Summary of the Dispute Settlement Process:
- Internal Resolution (Panel):
- System providers must establish a dispute resolution panel composed of system participants who are not involved in the dispute. This panel handles conflicts between system participants.
- Referral to Reserve Bank:
- If a dispute arises between a system participant and the system provider or between system providers, or if a system participant is unhappy with the panel’s decision, the matter is referred to the Reserve Bank for resolution. The Reserve Bank’s decision is final and binding.
- Disputes Involving the Reserve Bank:
- If the dispute involves the Reserve Bank itself (acting as a system provider or participant), the dispute is referred to the Central Government for settlement. The decision of an officer authorized by the Central Government is final.
Purpose of Section 24:
- Clear Dispute Resolution Mechanism: This section provides a well-structured and tiered approach to resolving disputes, starting from the internal panel and escalating to the Reserve Bank or the Central Government if necessary.
- Impartial Adjudication: The Reserve Bank and the Central Government (in cases involving the Reserve Bank) serve as impartial authorities for final adjudication, ensuring that disputes are settled in a fair and transparent manner.
- Legal Certainty: By establishing a clear hierarchy for dispute resolution, this section ensures that the parties involved have a clear understanding of the process and that there is legal certainty in resolving conflicts within the payment systems.
Practical Implications for System Providers and Participants:
- Internal Dispute Mechanism: System providers are required to establish an internal mechanism for resolving disputes through the dispute resolution panel.
- Appeals Process: If the parties are not satisfied with the panel’s decision, they can appeal to the Reserve Bank. The decision of the Reserve Bank is final, making the process more streamlined and conclusive.
- Protection of Interests: This structured dispute resolution process helps protect the interests of system participants and system providers, ensuring that conflicts do not derail the functioning of the payment system and that disputes are resolved efficiently.
In conclusion, Section 24 provides a detailed process for the resolution of disputes related to payment systems. It ensures that conflicts are resolved through established panels and, if necessary, through the Reserve Bank or Central Government, with final decisions being binding, thus maintaining the smooth operation of payment systems.
