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2014 (10) TMI 528 - SC - Indian LawsDishonour of cheque - Compounding of offence - scope of Lok Adalats - The appellant comes in picture only because the parties had approached the Mega Lok Adalat organised by the appellant. The reason for filing the present appeal is the apprehension of the appellant that if the settlement arrived at in the Lok Adalats are not accepted by the Courts, one of the essential function and duty of Legal Services Authority cast upon by the Legal Services Authorities Act, 1987 (hereinafter referred to as the 1987 Act ) would be greatly prejudiced and, therefore, it is necessary to straighten the law on the subject matter. - Held that - No doubt, the manifest objective is to have speedy resolution of the disputes through these Lok Adalats, with added advantage of cutting the cost of litigation and avoiding further appeals. The advent of the 1987 Act gave a statutory status to Lok Adalats, pursuant to the constitutional mandate in Article 39-A of the Constitution of India, contains various provisions of settlement of disputes through Lok Adalat. It is an Act to constitute legal services authorities to provide free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities, and to organize Lok Adalats to secure that the operation of the legal system promotes justice on a basis of equal opportunity. In fact, the concept of Lok Adalat is an innovative Indian contribution to the world jurisprudence. It is a new form of the justice dispensation system and has largely succeeded in providing a supplementary forum to the victims for settlement of their disputes. This system is based on Gandhian principles. Court could have passed the order itself, instead of relegating the matter to the Lok Adalat. We have ourselves highlighted the importance and significance of the Institution of Lok Adalat. We would be failing in our duty if we do not mention that, of late, there is some criticism as well which, inter alia, relates to the manner in which cases are posted before the Lok Adalats. We have to devise the methods to ensure that faith in the system is maintained as in the holistic terms access to justice is achieved through this system. We, therefore, deprecate this tendency of referring even those matters to the Lok Adalat which have already been settled. This tendency of sending settled matters to the Lok Adalats just to inflate the figures of decision/settlement therein for statistical purposes is not a healthy practice. Even when a case is decided in Lok Adalat, the requirement of following the guidelines contained in Damodar S. Prabhu (2010 (5) TMI 380 - SUPREME COURT OF INDIA) should normally not be dispensed with. However, if there is a special/specific reason to deviate therefrom, the Court is not remediless as Damodar S. Prabhu (2010 (5) TMI 380 - SUPREME COURT OF INDIA) itself has given discretion to the concerned Court to reduce the costs with regard to specific facts and circumstances of the case, while recording reasons in writing about such variance. Therefore, in those matters where the case has to be decided/settled in the Lok Adalat, if the Court finds that it is a result of positive attitude of the parties, in such appropriate cases, the Court can always reduce the costs by imposing minimal costs or even waive the same. For that, it would be for the parties, particularly the accused person, to make out a plausible case for the waiver/reduction of costs and to convince the concerned Court about the same. This course of action, according to us, would strike a balance between the two competing but equally important interests, namely, achieving the objectives delineated in Damodar S. Prabhu (2010 (5) TMI 380 - SUPREME COURT OF INDIA) on the one hand and the public interest which is sought to be achieved by encouraging settlements/resolution of case through Lok Adalats - Decided against the appellants.
Issues Involved:
1. Propriety of the High Court's order dismissing the writ petition. 2. Application of guidelines from Damodar S. Prabhu v. Sayed Babalal H. in cases resolved in Lok Adalats. 3. The role and function of Lok Adalats under the Legal Services Authorities Act, 1987. 4. Whether costs for compounding offences should apply to settlements in Lok Adalats. Detailed Analysis: 1. Propriety of the High Court's Order Dismissing the Writ Petition: The appellant, Madhya Pradesh State Legal Services Authority, challenged the High Court's order which dismissed a writ petition filed by respondent No.2. The High Court upheld the decision of the Additional Sessions Judge and Lok Adalat, which refused to act on a settlement due to non-deposit of 15% of the cheque amount as per the guidelines in Damodar S. Prabhu v. Sayed Babalal H. The Supreme Court affirmed the High Court's decision, emphasizing the importance of adhering to the guidelines for compounding offences under Section 138 of the Negotiable Instruments Act. 2. Application of Guidelines from Damodar S. Prabhu v. Sayed Babalal H. in Cases Resolved in Lok Adalats: The core issue was whether the guidelines requiring the deposit of 15% of the cheque amount for compounding offences should apply to settlements reached in Lok Adalats. The Supreme Court held that these guidelines should generally apply even in Lok Adalats to prevent misuse and ensure timely resolution of disputes. However, the Court acknowledged that in specific cases, the costs could be reduced or waived if justified by the circumstances and reasons are recorded in writing. 3. The Role and Function of Lok Adalats under the Legal Services Authorities Act, 1987: The Court highlighted the purpose of Lok Adalats as per the 1987 Act, which aims to provide speedy, cost-effective resolution of disputes and reduce the burden on regular courts. Lok Adalats promote amicable settlements and are empowered to pass awards that are deemed decrees of civil courts. The Supreme Court emphasized that Lok Adalats serve an important public purpose by providing an alternative dispute resolution mechanism. 4. Whether Costs for Compounding Offences Should Apply to Settlements in Lok Adalats: The Supreme Court examined whether imposing costs for compounding offences under Section 138 of the Negotiable Instruments Act should be mandatory in settlements reached in Lok Adalats. The Court concluded that while the guidelines from Damodar S. Prabhu should generally be followed, there is discretion to reduce or waive costs in specific cases where justified. This approach balances the objectives of the guidelines with the public interest in promoting settlements through Lok Adalats. Conclusion: The Supreme Court upheld the High Court's dismissal of the writ petition, affirming the necessity of following the guidelines for compounding offences under Section 138 of the Negotiable Instruments Act, even in Lok Adalats. However, the Court allowed for discretion in reducing or waiving costs in appropriate cases, provided reasons are documented. This decision reinforces the role of Lok Adalats in the justice system while ensuring that the guidelines serve their intended purpose of timely and fair dispute resolution.
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