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2023 (6) TMI 55 - HC - Indian LawsDishonour of Cheque - matter settled in National Lok Adalat - Validity of Award passed in Lok Adalat - the case of the petitioner is that when the matter had already been settled between the parties before the National Lok Adalat in terms of a Memorandum of Understanding/Settlement Agreement entered into between the parties, the learned Trial Court could not have proceeded with the trial by allowing the applications filed by the respondents - HELD THAT - As far as challenge to an award passed by Lok Adalat is concerned, the Hon ble Apex Court in Bhargavi Constructions v. Kothakapu Muthyam Reddy 2017 (9) TMI 1731 - SUPREME COURT , while following the decision rendered by its Three-judge Bench in SSTATE OF PUNJAB ANR. VERSUS JALOUR SINGH ORS. 2008 (1) TMI 960 - SUPREME COURT , held that an award of Lok Adalat can only be challenged by a party to it by filing a writ petition and that too, on very limited grounds. As far as contentions of learned counsels with respect to applicability of Section 21 of Legal Services Authority Act to an award passed in respect of Section 138 of Negotiable Instruments Act is concerned, the Hon ble Apex Court in K.N. GOVINDAN KUTTY MENON VERSUS C.D. SHAJI 2011 (11) TMI 783 - SUPREME COURT has categorically held that an award of Lok Adalat in respect of Section 138 of Negotiable Instruments Act is to be treated as a decree under Section 21 of Legal Services Authority Act. In the present case, it is noteworthy that vide order dated 29.08.2017 in CC No. 541812/2016, the learned Trial Court had referred the matter to National Lok Adalat which was to be held on 09.09.2017 for settlement proceedings - Prior to appearing before the National Lok Adalat on 09.09.2017, presumably to save their time, the parties had entered into a Memorandum of Understanding/Settlement Agreement a day prior i.e. on 08.09.2017. Thereafter, the matter was listed before the National Lok Adalat on 09.09.2017 and the settlement agreement dated 08.09.2017 was placed before the learned Presiding Judge, National Lok Adalat (Central), Delhi. It is not disputed that the learned Judge who was preceding over the National Lok Adalat had recorded the statements of both the parties on oath on 09.09.2017 and accordingly, in view of their own unequivocal statements on oath before the National Lok Adalat that they had entered into Memorandum of Understanding out of their own free will, the Memorandum of Settlement was exhibited. The parties had not only entered into an agreement, but had also acted upon it since some payment, as per settlement arrived at before the National Lok Adalat, was also made. This will lead to only one conclusion that the learned Judge, National Lok Adalat had no reason to record incorrect statements of the parties who appeared before him, made their statements on oath, signed their statements and thereafter also acted upon it. Had the settlement been involuntary or on the basis of fraud, there was no occasion of acting upon such settlement by making payments according to the Memorandum of Understanding signed by both the parties. Had that been so, the concerned parties would have made submission before the learned Trial Court either before the date of hearing fixed before the learned Trial Court that their signature have been obtained by fraud, or on the date fixed before the learned Trial Court. This Court is of the opinion that as per Section 21 of Legal Services Authority Act, the award of Lok Adalat which is deemed to be a decree of civil court and is binding on the parties and no appeal against the same is maintainable, as well as the judicial precedents which lay down that a settlement in case of Section 138 Negotiable Instruments Act and the award of Lok Adalat in connection with the same has to be treated as a decree capable of execution by Civil Court, the parties were bound by such decree. The contention of learned counsel for the respondents that the award of Lok Adalat is deemed to be a civil decree and cannot be enforced in respect of Negotiable Instruments Act is no more res integra and has been settled in the judgment of K.N. Govindan Kutty Menon by the Hon ble Apex Court. This Court is of the opinion that the learned Trial Court erred in allowing the applications filed by the respondents, after the matters had been settled between the parties before National Lok Adalat and the same had also been acted upon by the parties. The impugned orders are set aside - Petition allowed.
Issues Involved:
1. Setting aside of orders passed by the Metropolitan Magistrate in Complaint Cases under Section 145(2) of the Negotiable Instruments Act. 2. Applicability and binding nature of Lok Adalat awards in cases under Section 138 of the Negotiable Instruments Act. 3. Challenge to Lok Adalat awards on grounds of fraud or misrepresentation. Summary: Issue 1: Setting aside of orders passed by the Metropolitan Magistrate in Complaint Cases under Section 145(2) of the Negotiable Instruments Act. The petitioner sought to set aside orders dated 27.09.2019, 30.04.2019, and 03.12.2019 passed by the Metropolitan Magistrate, which allowed the respondent's applications under Section 145(2) of the Negotiable Instruments Act. The Magistrate had permitted the respondent to cross-examine the complainant, stating that both versions needed to be contested through a proper trial. Issue 2: Applicability and binding nature of Lok Adalat awards in cases under Section 138 of the Negotiable Instruments Act. The petitioner argued that the respondent was estopped from seeking trial as they had already entered into a settlement agreement before the National Lok Adalat, which is deemed a decree of a civil court under Section 21 of the Legal Services Authorities Act, 1987. The petitioner emphasized that the Lok Adalat award is final and binding, and no appeal against it is maintainable. The court noted that under Section 21 of the Legal Services Authorities Act, every award of Lok Adalat is deemed to be a decree of a civil court and is final and binding on all parties. The court referred to the Supreme Court's observations in P. T Thomas v. Thomas Job and Bhargavi Constructions v. Kothakapu Muthyam Reddy, which established that an award of Lok Adalat can only be challenged by filing a writ petition on very limited grounds. Issue 3: Challenge to Lok Adalat awards on grounds of fraud or misrepresentation. The respondent claimed that the settlement before the National Lok Adalat was obtained through fraud and misrepresentation. The court, however, found that the parties had entered into a Memorandum of Understanding on 08.09.2017, which was placed before the National Lok Adalat on 09.09.2017. The statements of both parties were recorded on oath, and the settlement was acted upon, with the respondent making partial payments as per the agreement. The court held that the respondent's application under Section 145(2) of the Negotiable Instruments Act was filed after a significant delay and without pursuing the appropriate remedy of challenging the Lok Adalat award through a writ petition. The court concluded that the trial court erred in allowing the applications filed by the respondents after the matter had been settled before the National Lok Adalat. Conclusion: The court allowed the present petitions and set aside the impugned orders, emphasizing that the parties were bound by the Lok Adalat award, which is deemed a decree of a civil court and is final and binding. The judgment was ordered to be uploaded on the website forthwith.
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