Case BriefsHigh Courts

Karnataka High Court: Suraj Govindaraj, J., allowed the petition and quashed the compromise decree in the original suit filed before Principal Senior Civil Judge at Hubballi in the Lok-Adalat proceedings.

The facts of the case are such that a compromise petition was filed before Principal Senior Civil Judge at Hubballi in the Lok-Adalat proceedings by a person claiming to be the power of attorney holder of the petitioner and as such the petitioner’s interest in the suit schedule property therein was compromised without the knowledge of the petitioner and therefore a fraud was committed on the petitioner by resorting to an abuse of the process of the Court and filing of a compromise petition in the Lok-Adalat. Thus instant petition was filed under Articles 226 and 227 of the Constitution of India praying to quash the compromise decree and restore the original suit before Principal Senior Civil Judge at Huballi on merits.

Counsel for petitioner Mr Mahesh Wodeyar submitted that the petitioner not having executed any power of attorney in favour of respondent 1, the power of attorney claimed by respondent 1 is fabricated one and as such neither the agreement of sale could be executed by respondent 1 in favour of respondent 2 nor could a compromise be entered into by the respondent 1 with respondent 2 for the Lok-Adalat to record. Thus, the petition needs to be allowed and the compromise recorded by the Lok-Adalat be set aside.

Counsel for the respondent Mr Padmanabha Mahale submitted that respondent 1 is the power of attorney holder of the petitioner and respondent 1 has entered into a compromise with the knowledge and consent of the petitioner with respondent 2. The compromise having been filed before the Court and the Court having forwarded the matter to the Lok- Adalat the compromise is one which is filed before the Court and as such the present petition is not maintainable since the trial Court having taken the compromise on record, only a suit challenging the compromise is maintainable.

The Court after perusing all the material facts observed that the plaintiff in a suit cannot array a defendant to be represented by power of attorney showing the address of the said power of attorney without even showing the address of the defendant. It was also observed that the net result of the entire proceedings and procedure followed is that the plaintiff who was not aware of the said proceedings, a compromise decree has been passed against the petitioner who though arrayed as a party to the preceding was never served with the notice nor did the defendant contest the said the proceedings. There is a procedural irregularity inasmuch as the compromise petition was filed before the Court and thereafter the matter referred to Lok-Adalat for recordal of the compromise.

The Court relied on Akkubai v. Venkatrao, 2014 SCC OnLine Kar 10110  and deprecated the said practice of recording compromise before the Court and thereafter referring to Lok-Adalat, as it is not contemplated in the Legal Services Authorities Act, 1987 and such compromise if recorded before the Lok Adalat is required to be set aside.

The Court also issued general directions in matters relating to compromise before the Lok Adalat which are challenged by way of writ petitions

(i) When a compromise is filed before the Court in terms of the decision in Akkubai v. Shri Venkatrao, 2014 SCC OnLine Kar 10110  it is for the Court to record the compromise and not refer the matter to the Lok- Adalat.

(ii) It is only if there is no settlement arrived at before the Court and the parties request for the matter to be referred to Lok-Adalat to enable a settlement then in such event the parties are to be referred to the Lok-Adalat and in the event of a compromise being arrived at before the Lok- Adalat, the same could be recorded by the lok- Adalat.

(iii) When the matter is referred to Lok-Adalat, separate order sheets would have to be opened and maintained by the said Lok-Adalat and the order sheet of the Court in the suit cannot be used by the Lok-Adalat.

(iv) The trial Court and or the Lok-Adalat while recording compromise is required to ascertain if the parties are present personally as also to ascertain and verify their identities by production of suitable documentary proof.

(v) In the event of a power of attorney appearing, it would be the bounden duty of the Court or the Lok-Adalat to ascertain if the concerned party has been served with notice.

(vi) The Court as also the Lok-Adalat would always have to be suspicious if the party were to enter appearance even before service of notice which is a red flag that there is something that is fishy in the matter.

(vii) When recording a compromise being entered into by a power of attorney, the original of the power of attorney is required to be examined by the Court and the Lok-Adalat and necessary endorsement made in the order to that effect and the original power of attorney returned to the parties.

(viii) As far as possible the trial Court and or the Lok- Adalat to secure the presence of the party and obtain signature of such party rather than the power of attorney.

(ix) The Trial Courts shall ensure that proper and acceptable proof of identity of the parties to proceedings as mandated by the Government for various purposes (such as Aadhar Card, Driving Licence, Passport Copy, Election Identity card, etc.,) are obtained as a matter of rule.

The Court allowed the petition and quashed the compromise decree dated 26-07-2014 in O.S. No.246/2014. [Renuka v. Ramanand, Writ Petition No. 103766 of 2018, decided on 31-03-2022]


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of KM Joseph* and PS Narsimha, JJ was called upon to decide whether the Award passed by a Lok Adalat under 0 can form the basis for redetermination of compensation as contemplated under Section 28A of the Land Acquisition Act, 1894. The Court held that an application under Section 28A of the LA Act cannot be maintained on the basis of an award passed by the Lok Adalat under Section 20 of LSA Act.

Scheme of Section 20 of the LSA Act

The jurisdiction of the Lok Adalat under Section 20 is to facilitate a settlement of disputes between the parties in a case. It has no adjudicatory role. It cannot decide a lis. All that it can do is to bring about a genuine compromise or settlement. Sub-Section (4) of Section 20 is important insofar as the law giver has set out the guiding principles for a Lok Adalat. The principles are justice, equality, fair play and other legal principles. The significance of this provision looms large when the Court bears in mind the scheme of Section 28A of the Act.

Scheme of Section 28A of LA Act

Section 28A contemplates a redetermination of compensation under an award passed under Part III. Section 23 deals with the matters to be taken into consideration. Various aspects including the market value on the date of the notification under Section 4(1) are indicated. The elements of Section 23 are not in consonance as such with the guiding principles set out in Section 19(4) of the LSA Act which are to guide a Lok Adalat. When the Court deals with the matter under Section 18, in other words, it is bound to look into the evidence and arrive at findings based on the evidence applying the legal principles which have been enunciated and arrive at the compensation. While it may be true that there is reference to ‘other legal principles’ in Section 19(4) of the LSA Act, the Lok Adalat also can seek light from the principles of justice, equity, and fair play. The Lok Adalat by virtue of the express provisions is only a facilitator of settlement and compromise in regard to matters which are referred to it. It has no adjudicatory role.

Analysis

A plea founded on estoppel arising out of a consent decree or from an Award passed by a Lok Adalat which can perhaps be even likened to a consent decision cannot be the basis for redetermination of the compensation. What Section 28A indeed insists is on decision by a Civil Court as defined in Section 2(l). In other words what is made the only basis for invoking Section 28A of the Act is an adjudication by the Court as defined in the Act. The plea of estoppel which, ordinarily, arises from a consent decree or Award passed by the Lok Adalat which, does not involve any adjudication by a Court, would hardly suffice. The estoppel which is referred to by this Court applies as between the parties to the consent decree.

An Award passed by the Lok Adalat under LSA Act is the culmination of a non-adjudicatory process. The parties are persuaded even by members of the Lok Adalat to arrive at mutually agreeable compromise. The Award sets out the terms. The provisions contained in Section 21 by which the Award is treated as if it were a decree is intended only to clothe the Award with enforceability. In view of the provisions of Section 21 by which it is to be treated as a decree which cannot be challenged, undoubtedly, by way of an appeal in view of the express provisions forbidding it, unless it is set aside in other appropriate proceedings, it becomes enforceable. The purport of the law giver is only to confer it with enforceability in like manner as if it were a decree.

On the argument that by virtue of this legislative device, the award of the Lok Adalat passed in these cases by the Reference Court under Section 18 executing the Lok Adalat must be treated as an order passed by the Court under Section 28A of the Act, the Court said,

“Can the Court be oblivious to the plain language of the statute? Can we ignore the voice of the legislature when it is clear and unambiguous? Section 28A figures in Part III of the Act. It has a heading. The heading reads as ‘Redetermination of the amount of compensation on the basis of the award of the Court’. The very opening words in our view deal a fatal blow to the very premise of the respondent’s contention. An award under Part III of the Act commences with a reference under Section 18. The Court proceeds to adjudicate the reference in particular by bearing in mind the matters which are to be considered under Section 23 of the Act.”

The award which is passed by the Lok Adalat cannot be said to be an award passed under Part III. It is the compromise arrived at between the parties before the Lok Adalat which culminates in the award by the Lok Adalat. In fact, an award under Part III of the Act contemplates grounds or reasons and therefore, adjudication is contemplated and Section 26(2) of the Act is self-explanatory.

“The Award passed by the Lok Adalat in itself without anything more is to be treated by the deeming fiction to be a decree. It is not a case where a compromise is arrived at under Order XXIII of the Code of Civil Procedure, 1908, between the parties and the court is expected to look into the compromise and satisfy itself that it is lawful before it assumes efficacy by virtue of Section 21. Without anything more, the award passed by Lok Adalat becomes a decree. The enhancement of the compensation is determined purely on the basis of compromise which is arrived at and not as a result of any decision of a ‘Court’ as defined in the Act.”

Hence, an Award passed under Section 19 of the 1987 Act is a product of compromise. Sans compromise, the Lok Adalat loses jurisdiction. The matter goes back to the Court for adjudication. Pursuant to the compromise and the terms being reduced to writing with the approval of the parties it assumes the garb of an Award which in turn is again deemed to be a decree without anything more.

[NOIDA v. Yunus, 2022 SCC OnLine SC 138, 03.02.2022]


*Judgment by: Justice KM Joseph


Counsels

For appellant: Anil Kaushik, learned counsel for the appellant.

For respondents: Senior Advocates Dhruv Mehta and V. K. Shukla

Case BriefsSupreme Court

Supreme Court: In a case where the members of the Lok Adalat, Madhya Pradesh High Court had entered into the merits of the writ petition and had dismissed it on merits, the bench of MR Shah* and AS Bopanna, JJ has set aside the order and has held that it was not open for the members of the Lok Adalat to enter into the merits of the writ petition and to dismiss the same on merits, in absence of any settlement arrived at between the parties.

Relevant provisions under the Legal Services Authorities Act, 1987 explained

As per sub-section (5) of Section 19, a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or a settlement between the parties to a dispute in respect of

  • any case pending before; or
  • any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organised.

As per sub-section (1) of Section 20 where in any case referred to in clause (i) of sub-section (5) of Section 19- (i) (a) the parties thereof agree; or (i) (b) one of the parties thereof makes an application to the court, for referring the case to the Lok Adalat for settlement and if such court is prima facie satisfied that there are chances of such settlement or (ii) the court is satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat, the court shall refer the case to the Lok Adalat.

It further provides that no case shall be referred to the Lok Adalat under sub-clause (b) of clause (i) or clause (ii) by such court except after giving a reasonable opportunity of being heard to the parties.

As per sub-section (3) of Section 20 where any case is referred to a Lok Adalat under sub-section (1) or where a reference is made to it under sub-section (2), the Lok Adalat shall proceed to dispose of the case or matter and arrive at a compromise or settlement between the parties. Sub-section (5) of Section 20 further provides that where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, the record of the case shall be returned by it to the court, from which the reference has been received under sub-section (1) for disposal in accordance with law.

Analysis of the provisions

The provisions make clear that,

  • the jurisdiction of the Lok Adalat would be to determine and to arrive at a compromise or a settlement between the parties to a dispute and once the aforesaid settlement / compromise fails and no compromise or settlement could be arrived at between the parties,
  • the Lok Adalat has to return the case to the Court from which the reference has been received for disposal in accordance with law and in any case,
  • the Lok Adalat has no jurisdiction at all to decide the matter on meris once it is found that compromise or settlement could not be arrived at between the parties

Conclusion

The impugned order passed by the Lok Adalat dismissing the writ petition on merits was found to be unsustainable and deserves to be quashed and set aside.

In the present case, the consent to place the matter before the Lok Adalat was to arrive at a settlement and or a compromise between the parties and not for placing the matter before the Lok Adalat for deciding the matter on merits.

“Once there is no compromise and/or a settlement between the parties before the Lok Adalat, as provided in sub-section (5) of Section 20, the matter has to be returned to the Court from where the matter was referred to Lok Adalat for deciding the matter on merits by the concerned court.”

[Estate Officer v. Colonel H.V. Mankotia, 2021 SCC OnLine SC 898, decided on 07.10.2021]
____________________________________________________________________________________________________________

Counsels:

For appellant: Vikramjit Banerjee, ASG


*Judgment by: Justice MR Shah

Know Thy Judge | Justice M. R. Shah

Case BriefsHigh Courts

Sikkim High Court: Jitendra Kumar Maheshwari, CJ. allowed a writ petition which was filed assailing the updated Award passed by the Lok Adalat though signed on 26-06-2015.

The facts were that petitioner 1 was the wife of Defendant 1 in the suit and petitioners 2 and 3 were his sons. It was their grievance that they were deserted by defendant 1 and the suit property in which they were residing had been partitioned without joining, noticing them and affording opportunity in violation of the principle of natural justice.

In the said partition suit, a compromise deed dated 22-06-2015 was filed and the respondents only had entered into the compromise partitioning the entire property by collusion and fraud, which originally belonged to Late Kashi Nath Prasad. It was urged by the counsel of respondent that the suit was filed merely to partition of the property which is recorded in the joint name, however, in such a case the claim of the petitioner is through defendant no.1, which is clearly protected by virtue of settlement arrived between the parties of the suit. The Award of the Lok Adalat does not warrant any interference in this petition, therefore, maintaining the Award, the Writ Petition may be dismissed.

The Court after perusing the records and hearing the parties concluded that the issue involved in the present case was squarely decided by the judgment of the Bhargavi constructions v. Kothakapu Murthyam Reddy, Civil appeal no.11345 of 2017 decided on 07-09-2017 and State of Punjab v. Jalour Singh, (2008) 2 SCC 660 the petition under Articles 226 and/or 227 of Constitution of India challenging the Award of the Lok Adalat was tenable. The Court observed that there is no cable of doubt that the Award of the Lok Adalat can be assailed by way of petition under Articles 226 and/or 227 of the Constitution of India.

The Court held that in place of accepting the plea that the compromise by virtue of collusion and fraud and the Award so passed in the same fashion; but in view of the observation so made it is suffice to observe the Award so passed by the Lok Adalat in view of the pleadings of the suit without joining all the parties and without affording an opportunity is not proper. Writ Petition was allowed, the Award passed by the Lok Adalat was set aside.[Munni Devi v. Dul Dul Prasad, 2021 SCC OnLine Sikk 82, decided on 02-07-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


Appearance:

For Petitioners: Mr Nayan Nepal

For Respondents: Mr J.B. Pradhan, Sr. Advocate Mr D.K. Siwakoti, Ms Prarthana Ghataney, Ms Ranjeeta Kumar

Case BriefsHigh Courts

Chhattisgarh High Court: Rajendra Chandra Singh Samant, J., while addressing a petition made an observation with regard to matrimonial disputes that,

“…in a matrimonial dispute, the cause of action can arise again and again, even if the dispute is settled and compromised before the court and the case has been withdrawn.”

Present matter pertained to the quashing of an order passed by the Family Court, Bilaspur in a Civil Suit.

Petitioners’ counsel submits that respondent had filed a civil suit under Section 9 of the Hindu Marriage Act, 1955 and during the pendency, it was placed before the National Lok Adalat and as the respondent did not want to press on the said proceedings, it was disposed of.

Respondent in the present matter has filed a repeat application under Section 9 of the Hindu Marriage Act. Petitioner challenged the maintainability of the civil suit under Order 7 Rule 11 read with Section 23 Rule 4 of CPC on the ground that the previous application filed by the respondent had been disposed of by award.

Order 23 Rule 4 of CPC specifically provides about the abandonment of a suit under sub-rule 1 without permission of Court.

Further, it has been submitted that Section 21 of the Legal Services Authorities Act, 1987 provides that any award passed in the Lok Adalat shall be final and binding on all the parties and no appeal shall lie to any court against the award, hence in view fo the said the repeat application filed by the respondent stands unsustainable.

Respondent’s Counsel submitted that since the petitioner did not honour the ut of court compromise, respondent was compelled to file an application under Section 9 of the HMA, 1955.

Bench on perusal of the submissions and facts stated that under Section 21 of the Legal Services Authorities Act, 1987, an award of Lok Adalat shall be deemed to be a decree of a civil court which includes the order on compromise or settlement between the parties before the Lok Adalat.

Court stated that Lok Adalat has no authority to exercise the power under Order 23 Rule 1 of CPC. The Lok Adalat on taking cognizance in any matter referred to it from a court, can act only in accordance with Section 20 sub-section 4, 5 & 6 of the Act, 1955 and there is no mention that the Lok Adalat can allow the withdrawal of the civil suit.

Hence the Lok Adalat’s order having lo legality is not an order at all.

“the case of the respondent against the petitioner was terminated on the basis of the statement made by the respondent side, that some agreement has taken place between the parties out of the court.”

Court added that, in a matrimonial dispute, the cause of action can arise again and again, even if the dispute is settled and compromised before the court and the case has been withdrawn.

Therefore,

When a dispute crops up again at any subsequent stage on account of differences between the parties to the matrimony, that would be a separate cause of action, on which the party aggrieved, has an entitlement to maintain legal proceeding under the provision of the Hindu Marriage Act, 1955.

In view of the above, the petition was dismissed. [Harsha Dewani v. Ashutosh Gupta, 2020 SCC OnLine Chh 149, decided on 10-08-2020]

Case BriefsHigh Courts

High Court of Judicature at Madras: The Bench of V. M. Velumani, J. recently addressed a civil revision petition filed under Article 227 of the Constitution which challenged the decree order of the Small Causes Court, dated 28/10/2010.

The petitioner, also the claimant, had filed a case in the Motor Accident Claims Tribunal claiming compensation of Rs. 3,00,000 for the injuries sustained due to an accident. During the pendency of the case before the Lok Adalat, the petitioner and the second respondent, i.e., the insurance company came to a settlement wherein it was agreed upon that the second respondent would pay an amount of Rs. 1,55,000, in view of which the Lok Adalat passed an award directing the said amount to be paid for full withdrawal of the petitioner’s claim. The second respondent had deposited the amount. This was followed by the first respondent challenging the award and to stop issuance of the cheque and instead conducting the trial on merits. This was based on the contention of the first respondent, i.e., the owner of the vehicle that her vehicle was not the offending vehicle in the first place.

The counsel for the petitioner contended that an award of the Lok Adalat can be challenged only by initiating proceedings under Article 226 or 227 of the Constitution. He contended that the Tribunal failed to see that the matter was referred to the Lok Adalat on the application filed by the petitioner under Section 19 of the Legal Services Authorities Act and it was not correct to state that no notice was served on the first respondent. Despite the notice having been served, there had been no representation on behalf of the first respondent.

The Court held that the relief that was being seeked by the petitioner would not stand since it was already well settled in law by way of the judgment in Bharvagi Constructions v. Kothakapu Muthyam Reddy, 2017 (5) CTC 775 that an award of the Lok Adalat could only be challenged by initiating proceedings under Article 226 or 227 of the Constitution of India and that too only on limited grounds. Hence, it held that the Tribunal had committed an error and irregularity by allowing the petition filed by the first respondent. [N. Prabhuraj v. Josephine, 2017 SCC OnLine Mad 12290, order dated 6/12/2017]

Case BriefsHigh Courts

Kerala High Court: Deciding upon the validity of the awards passed by the Lok Adalat under Section 21 of the Legal Services Authorities Act, 1987 on a reference, the Court observed that the function of a Lok Adalat organised under Section 19 of the Legal Services Authority Act, 1987 is only to help the parties to the dispute arrive at a compromise or settlement, which is seen from Section 20(3) of the Act. The Adalat cannot enter a finding. It can only record the compromise or settlement between the parties.

The dispute between the parties to a partition suit was referred to the Lok Adalat which were settled and awards passed. However, the petitioner contended that the awards passed were not in terms of the settlement entered into.

Finding several shortcomings in the awards, the Bench of K. Abraham Mathew, J. observed that “When the award cannot be challenged in a suit or execution proceedings or even in appeal the Lok Adalat should make sure that its proceedings are transparent and not vitiated by procedural illegalities or irregularities. Its proceedings should inspire confidence in the public, failing which the very existence of the institution will be at peril. To ensure its credibility, the Lok Adalat shall comply with the procedure prescribed by the statues scrupulously.”

Regulation 17 of the National Legal Services Authority (Lok Adalats) Regulations, 2009 contains the procedure to be followed while drawing up an award. The Court observed that the impugned award neither contained the names and addresses of the parties to the proceedings, signature of the counsel or the settlement entered into and held that the impugned orders were not awards passed by the Lok Adalat in the eye of law since there was no means to ascertain whether the petitioner agreed to the terms recorded in it, which is the result of violation of mandatory provisions in the relevant statutes. The trial court was directed to proceed with the trial but to comply with the request of the parties if they wanted to refer the dispute to Lok Adalat again. [K.S. Sunil v. Sherly, 2016 SCC OnLine Ker 12168, decided on August 18, 2016]

High Courts

Punjab and Haryana High Court: While deciding an issue related to the validity of the award and jurisdiction of Permanent Lok Adalat, the Court observed that the working of the Permanent Lok Adalats differ from the Lok Adalats constituted by the State/ District Legal Services Authority as the Permanent Lok Adalats can record evidences and adjudicate any case on basis of it’s merits incase of non- consensus between the parties.

In the instant case the petitioner bank raised a question on the validity of an award given by the Permanent Lok Adalat on the matter of upholding the claim on a Fixed Deposit Receipt. The counsel for the petitioner R.S. Bhatia put forth the argument that Permanent Lok Adalat did not have the jurisdiction to decide the issue as the power to directly decide the case would run counter to the scheme of the Lok Adalat which promotes decision on mutual settlement between the parties.

The Court however terming the suit of the petitioner bank as vexatious and an attempt to thwart the course of justice observed that under Section 22C of Legal Services Authority Act 1987, the Lok Adalats are guided by the principles of natural justice and the Permanent Lok Adalat made every effort to settle the matter but since the settlement did not take place the Permanent Lok Adalat had to adjudicate the dispute. In this light the Court held that there was no error in the exercise of jurisdiction by the Permanent Lok Adalat.

Punjab National Bank v. Suresh Kumar Nagpal, CWP No. 14697 of 2014 (O&M), decided on 01.08.2014  

To read the full judgment, refer SCCOnline