Sections 45-47 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 45 creates the Mediation Fund, administered by the Council, and lists what is credited to it and what it pays for. Section 46 requires proper accounts and an audit by the Comptroller and Auditor-General of India (CAG), and section 47 makes the Council bound by the Central Government's written directions on questions of policy.
The Mediation Fund is for promotion, facilitation and encouragement of mediation, and is administered by the Council. It receives Government money, fees and charges from providers, institutes and others, donations and grants, contributions, other receipts and interest. It is applied to salaries and allowances of Members, the CEO, officers and employees and to the Council's expenses. The Council keeps accounts, and the CAG audits them. The Council is bound by written policy directions of the Central Government, after its views are considered, and the Government's decision on whether a matter is policy is final. The Act comes into force by notification, and the date is not in the text consulted.
Section 45(1): the Mediation Fund
Section 45(1) says "There shall be a fund to be called 'Mediation Fund' (hereinafter referred to as the 'Fund') for the purposes of promotion, facilitation and encouragement of mediation under this Act, which shall be administered by the Council." The purpose clause is broad: promotion, facilitation and encouragement of mediation under the Act. The Council administers the Fund; the sub-section does not say where the money is kept.
Section 45(2): what is credited to the Fund
Section 45(2) lists seven credits.
| Clause | Credit |
|---|---|
| (a) | All monies provided by the Central Government |
| (b) | All fees and other charges received from mediation service providers, mediation institutes or bodies or persons |
| (c) | All monies received by the Council as donations, grants, contributions and income from other sources |
| (d) | Grants made by the Central Government or the State Government for the purposes of the Fund |
| (e) | Amounts deposited by persons as contributions to the Fund |
| (f) | Amounts received in the Fund from any other source |
| (g) | Interest on the above or other income received out of the investment made from the Fund |
Clause (b) is the one of interest to providers and institutes: fees and other charges "received from mediation service provider, mediation institutes or bodies or persons" go into the Fund. The Act does not say what those fees are or how much; any fee is for regulations, and none are in the text consulted. Section 20(2) provides for a fee "as may be specified" for late registration of a settlement, but the Act does not say that this fee goes into the Fund, and this article does not infer that it does.
If you run a mediation institution and want to understand your likely dealings with the Council, our legal consultation team can help you read the Act.
Section 45(3): how the Fund is applied
Section 45(3) says "The Fund shall be applied towards meeting the salaries and other allowances of Member, Chief Executive Officer, Officers and employees and the expenses of the Council including expenses incurred in the exercise of its powers and discharge of its duties under this Act." So the Fund pays for people and for the Council's running costs. Salaries and allowances of Members are as may be prescribed (section 32(3) and (4)), and the terms of the CEO, officers and employees are as may be specified (section 37). See our article on sections 31 and 32 and our article on sections 33 to 37. The sub-section does not mention grants or payments to mediation centres, though the stated purpose in sub-section (1) is promotion and encouragement of mediation.
Section 46: accounts and audit
Section 46(1). The Council "shall maintain proper accounts and other relevant records and prepare an annual statement of accounts, including the balance sheet, in such form and manner as may be prescribed in consultation with the Comptroller and Auditor-General of India." The form and manner are for rules of the Central Government (section 51(2)(c) also lists them); none are in the text consulted.
Section 46(2). The accounts "shall be audited by the Comptroller and Auditor-General of India", and any expenditure incurred by him in connection with the audit is payable by the Council to him.
Section 46(3). The CAG, and any person he appoints for the audit, "shall have the same rights, privileges and authority in connection with such audit as the Comptroller and Auditor-General of India has in connection with the audit of the Government accounts". In particular, they have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect the offices of the Council.
Section 46(4). The accounts as certified by the CAG or a person he appoints, with the audit report, "shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament."
| Step | Provision | Who |
|---|---|---|
| Keep accounts and records; annual statement including balance sheet | 46(1) | Council |
| Audit | 46(2) | CAG |
| Audit powers and inspection | 46(3) | CAG or appointee |
| Forward certified accounts and report annually; laying before Parliament | 46(4) | Council forwards; Central Government lays |
Two observations. The audit is by the CAG and not by a private auditor named by the Council. And the accounts and the report are laid before each House of Parliament, so they become public through that route, though the Act does not say they are otherwise published.
Section 47: directions on policy
Section 47(1). "Without prejudice to the foregoing provisions of this Act, the Council shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time."
Proviso. "The views of the Council shall be taken into consideration before any direction is given under this sub-section."
Section 47(2). "The decision of the Central Government whether a question is one of policy or not shall be final."
In plain terms: directions must be on questions of policy and in writing; the Council must be consulted in the sense that its views are taken into consideration first; and the Government decides what is policy, with its decision "final". The text consulted does not say what a "question of policy" is, or whether a direction can reach the content of regulations the Council makes under section 52 with the previous approval of the Central Government. Section 52(1) requires that approval separately; see our article on sections 51 to 54. Section 39(2) also lets the Government take additional measures to supplement the Council's functioning; see our article on sections 38 and 39.
What the three sections do not say
The Act does not give the size of the Fund, say how fees are fixed, or say what happens to a surplus. It does not say how the Fund is used to promote mediation beyond the purposes stated. There is no provision here for a deficit. If you are a provider or an institute, check the Gazette for regulations or rules that fix any fees or charges payable to the Council. For any tax treatment of receipts or payments, see our income-tax guides.
An example
Joshi Mediation Centre is a recognised provider. Section 45(2)(b) contemplates fees and charges received from providers going into the Fund, in the amount and manner settled by regulations. The Council spends the Fund under section 45(3) on salaries and expenses. At year end it prepares the annual statement of accounts, the CAG audits it, and the Central Government lays the certified accounts and the audit report before Parliament. Meanwhile the Central Government gives a written direction on a policy question after taking the Council's views into account. The names are invented for illustration.
Need help understanding the Council's finances and obligations?
If your institution will deal with the Council, it is worth knowing how it is funded, audited and directed. We can walk you through the Act and track the rules through our legal consultation service.
Key takeaways
- The Mediation Fund is for promotion, facilitation and encouragement of mediation and is administered by the Council (section 45(1)).
- It is credited with seven kinds of receipts, including Government money, provider and institute fees and charges, donations and grants (section 45(2)).
- It is applied to salaries, allowances and the Council's expenses (section 45(3)).
- The CAG audits the Council's accounts, and the certified accounts and audit report are laid before each House of Parliament (section 46).
- The Council is bound by written policy directions of the Central Government after its views are considered; the Government's decision on what is policy is final (section 47).
Read next
- Sections 31-32 of the Mediation Act, 2023: Mediation Council of India
- Sections 38-39 of the Mediation Act, 2023: duties and functions of the Council
- Sections 51-54: rules, regulations, laying and removal of difficulties
- The Mediation Act 2023 for commercial and trade disputes
Disclaimer: Based on the Mediation Act, 2023 as enacted and published in the Gazette of India on 15 September 2023, as consulted on 2 October 2026. The Act comes into force by notification; the commencement of each provision, the rules and the regulations should be checked. This article is general information, not legal advice; check the official text before acting.