2011 (11) TMI 783 - SC - Indian Laws

Offense under NI Act - whether Criminal case filed u/s 138 of the Negotiable Instruments Act, 1881 referred to by the Magistrate Court to Lok Adalat is settled by the parties and an award is passed recording the settlement, can it be considered as a decree of a civil court and thus executable? Held that - 1) In view of the unambiguous language of Section 21 of the Act, every award of the Lok Adalat shall be deemed to be a decree of a civil court and as such it is executable by that Court. 2) The Act does not make out any such distinction between the reference made by a civil court and criminal court. 3) There is no restriction on the power of the Lok Adalat to pass an award based on the compromise arrived at between the parties in respect of cases referred to by various Courts (both civil and criminal), Tribunals, Family court, Rent Control Court, Consumer Redressal Forum, Motor Accidents Claims Tribunal and other Forums of similar nature. 4) Even if a matter is referred by a criminal court under Section 138 of the Negotiable Instruments Act, 1881 and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court. In view of the above discussion and ultimate conclusion, we set aside the order dated 23.09.2009 passed by the Principal Munsiff Judge in an unnumbered execution petition and the order of the High Court dated 24.11.2009.

Issues Involved:
1. Interpretation of Section 21 of the Legal Services Authorities Act, 1987.
2. Executability of Lok Adalat awards in criminal cases under Section 138 of the Negotiable Instruments Act, 1881.
3. Distinction between awards passed by Lok Adalat based on references from civil courts and criminal courts.

Issue-wise Detailed Analysis:

1. Interpretation of Section 21 of the Legal Services Authorities Act, 1987:
The primary question raised was whether an award passed by the Lok Adalat in a criminal case referred under Section 138 of the Negotiable Instruments Act, 1881 can be considered a decree of a civil court and thus executable. Section 21 of the Act states that every award of Lok Adalat shall be deemed to be a decree of a civil court or an order of any other court. This section also stipulates that such awards are final and binding on all parties and no appeal shall lie against them.

2. Executability of Lok Adalat awards in criminal cases under Section 138 of the Negotiable Instruments Act, 1881:
The appellant filed a complaint under Section 138 of the N.I. Act, which was referred to the Lok Adalat by the Magistrate. The parties settled, and an award was passed. However, the respondent failed to comply with the payment terms, leading the appellant to file an execution petition. The Principal Munsiff Judge dismissed the petition, holding that the award could not be construed as a "decree" executable by a civil court. The High Court upheld this view, concluding that such awards in criminal cases are to be treated as orders of the criminal court, not as decrees of a civil court.

3. Distinction between awards passed by Lok Adalat based on references from civil courts and criminal courts:
The Supreme Court analyzed the Statement of Objects and Reasons of the Act, which emphasizes providing free legal aid and reducing the burden on regular courts. The Court noted that the Act does not distinguish between references made by civil and criminal courts. The Court referenced several judgments, including Subhash Narasappa Mangrule vs. Sidramappa Jagdevappa Unnad and M/s Valarmathi Oil Industries vs. M/s Saradhi Ginning Factory, which supported the view that awards passed by Lok Adalat in cases referred by criminal courts under Section 138 of the N.I. Act should be treated as decrees executable by civil courts. The Court emphasized that the purpose of the deeming provision in Section 21 is to ensure that such awards are enforceable as civil court decrees.

Conclusion:
The Supreme Court set aside the orders of the Principal Munsiff Judge and the High Court, holding that the interpretation adopted by the High Court was erroneous. The Court concluded that:
1. Every award of the Lok Adalat shall be deemed to be a decree of a civil court and is executable by that court.
2. The Act does not distinguish between references made by civil and criminal courts.
3. Lok Adalat has the power to pass awards based on compromises in cases referred by various courts, including criminal courts under Section 138 of the N.I. Act.
4. Such awards are to be treated as decrees capable of execution by civil courts.

The execution court was directed to restore the execution petition and proceed further in accordance with the law. The civil appeal was allowed with no order as to costs.

← Previous Next →