LOK ADALAT AWARD CANNOT BE REVERSED OR SET ASIDE

[Mr. M. GOVINDARAJAN]

Lok Adalat

 Chapter VI of the Legal Services Authorities Act, 1987 (‘Act’ for short) provides the establishment of Lok Adalat.  Section 19(1) of the Act provides that every State Authority or District Authority or the Supreme Court Legal Services Committee or every High Court Legal Services Committee or, as the case may be, Taluk Legal Services Committee may organize Lok Adalats at such intervals and places and for exercising such jurisdiction and for such areas as it thinks fit.  Section 19(5) of the Act provides that a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or 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 organized.  The Lok Adalat shall have no jurisdiction in respect of any case or matter relating to an offence not compoundable under any law.

Once the matter is referred to Lok Adalat it shall proceed to dispose of the case and arrive at a compromise or settlement between the parties.  While determining any reference act with utmost expedition to arrive at a compromise or settlement between the parties and shall be guided by the principles of justice, equity, fair play and other legal principles.

Award of Lok Adalat

Section 21 provides that every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the case may be, an order of any other court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it the court-fee paid in such case shall be refunded in the manner provided under the Court-fees Act, 1870.

Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award.

Issue

This issue to be discussed is as to whether the award passed by the Lok Adalat may be set aside by the High Court or Supreme Court.  Section 21 provides that no appeal shall lie to any court against the award.  The Supreme Court in K. SRINIVASAPPA & ORS. VERSUS M. MALLAMMA & ORS. [2022 (6) TMI 373 - SUPREME COURT] held that the Lok Adalat award cannot be reversed or set aside.

Case law

The facts of the above said Supreme Court judgment runs as follows-

In the original civil case in OS 876/2004, the plaintiffs 1, 4, 5, 6 and defendants 2 to 5 are children of M. Krishnappa.  Mallamma is the defendant No. 1.  Devaraj is plaintiff No. 1.  Plaintiff Nos. 2 and 3 are the sons of Devaraj.   The civil suit is for partition and separate possession. 

The suit property is acquired and was in possession of M. Krishnappa.  The suit property is jointly enjoyed by the plaintiffs and defendants till the death of Krishnappa.  After his demise defendant no. 1 Mallamma was in the possession of property.  She acted in a manner detrimental to the interests of the plaintiffs and attempted to alienate the properties without effecting partition so as to crystallize the rights of each of the parties of the suit.  The request for the partition was rejected and they were threatened.  Therefore the plaintiffs filed the present civil suit for proper partition.

During the proceedings the parties to the suit proposed a settlement on 30.06.2012 on the intervention of relatives and well wishers of the parties.  There was mediation and on the outcome of the mediation the suit properties the following settlement was reached-

• The plaintiffs would relinquish their rights for which they have to be paid-

• Devaraj, Plaintiff No. 1 – Rs.1.10 crore;
• K. Sugunamma, Plaintiff No. 4 – Rs. 30 lakhs;
• K. Shanthamma, Plaintiff NO. 5 – Rs.30 lakhs;
• K. Geetha, Plaintiff No. 6 – Rs.30 lakhs;
• Mallamma, Defendant No. 1 – Rs. 4 lakhs.

• The defendants would be entitled, jointly and severally, to enjoy absolute right, title and interest over the suit schedule properties.
• The defendant nos. 2 to 5 would be entitled to get the khata,  mutation and record of rights transferred in their names, in respect of the suit schedule properties.
• The suit schedule properties would be retained by defendant nos. 2 to 5, who shall hold the same as joint owners.
• The plaintiffs or their successors would not take any legal action on the scheduled properties.

In view of the compromise entered between the parties to the suit the suit was referred to Lok Adalat by the Trial Court.  After hearing the parties, the Lok Adalat passed an order dated 07.07.2012 decreeing the suit for partition and separate possession, in terms of the memo of compromise presented before it.  The Lok Adalat recorded the following findings-

• all the parties to the dispute had agreed to amicably settle the dispute as regards the partition of the suit schedule;
• property, in terms of the memo of compromise;
• the terms of compromise had been read over and explained to the parties in a language known and understood by them, in the presence of their Advocates and the parties had admitted the same to be true and correct;
• since the compromise was in favor of the minor children of plaintiff no. 1, he was permitted to enter into the compromise on their behalf.

The Lok Adalat allowed the application in terms of settlement arrived at between the parties.

Plaintiff Nos. 4 to 6 filed an affidavit before the Lok Adalat two days after the decree by Lok Adalat complaining that the defendants defraud them to obtain their consent for compromise.  They prayed to set aside the order of Lok Adalat.  The Lok Adalat observed that the order of recording compromise was duly passed after recording the consent of all parties to the compromise.  Therefore Lok Adalat held that the prayer to set aside the compromise could not be entertained.

Being aggrieved against the order of Lok Adalat the Plaintiff no.4 filed a writ petition before the High Court.  She contended before the High Court that she had signed the compromise petition submitted before the Trial Court but she did not sign the compromise submitted before the Lok Adalat.  The High Court remanded the matter to the Trial Court with directions to refer the matter to Lok Adalat to hold an enquiry and record a finding on the allegations of fraud. 

The Trial Court, in compliance with the order of High Court, referred the matter to the Lok Adalat.  The plaintiff nos. 4 to 6 filed their objections stating that their signatures were obtained fraudulently obtained by the defendants.  It was informed that one property which is to be included in the compromise was sold before the reaching of settlement.  On the sale date several papers were signed by plaintiff Nos. 4 to 6 under the guise that they were required to file before tax authorities.  The Advocate informed them that they would appear before the tax authorities on 23.06.2012.  But on the said date they appeared before Lok Adalat for compromise settlement deed.  Plaintiff 4 refused to sign the compromise petition.

The Lok Adalat rejected the objections raised by the Plaintiff Nos. 4 to 6. Aggrieved by this order of Lok Adalat, the Plaintiff Nos. 4 to 6 filed writ petition before High Court.  The High Court recalled the order of Lok Adalat on 17.04.2015.  The High Court remanded the case to the Civil Judge with directions to dispose the case as if no compromise has been made.  Against this order the Defendant Nos. 2 to 5 filed appeal before the Supreme Court.

The appellants contended the following before the Supreme Court-

• The High Court was not right in setting aside the order of Lok Adalat in which the compromises of the parties have been recorded.
• The Lok Adalat in their second round order dated 27.04.2013 upheld the validity of the compromise between the parties after considering the objections raised by plaintiff Nos. 4 to 6.
• In the absence of reasoning the High Court reversed the order of Lok Adalat in a casual and cryptic manner.
• Every order passed by the Lok Adalat is a decree of a Civil Court and therefore the same cannot be set aside.
• The plaintiff Nos. 4 to 6 accepted their part in the settlement and they did not return the said money.  Instead they proceeded the legal action.
• The Plaintiff Nos. 4 to 6 did not make any effort to explain why they did not state before the Lok Adalat in the second round that their signatures were obtained by fraud.
• The High Court did not consider the above aspect while deciding the writ petition.

It was prayed to set aside the order of High Court and restore the compromise between the parties.  The respondents submitted the following before the Supreme Court-

• The alleged amount received by them is not related to the compromise settlement but related to the earlier sale of one common property.
• The respondents were clearly misguided into signing both the compromise petition as well as the order sheet dated 07.07.2012.
• The Lok Adalat passed its order on 07.07.2012 and the defendants took immediate action on knowing the frauds brought to the notice of Lok Adalat on 09.07.2012.

Therefore it was prayed that the appeal may be dismissed.

The Supreme Court considered the submissions by the parties to the present appeal.  The Supreme Court did not find any reason from the judgment of the High Court while setting aside the order of Lok Adalat in which the terms of compromises were recorded.  Strong reasons are to be adduced in recalling the compromise.   Every award passed by the Lok Adalat is a decree and such award shall be binding on the parties.  No appeal shall lie against the award. 

The Supreme Court observed that the High Court cannot set aside the award in a casual manner.  The award of Lok Adalat cannot be reversed or set aside without setting aside the facts recorded in such award as fraudulent arrived at.  The Supreme Court further observed that if the signatures of the Plaintiff Nos. 4 to 6 had been obtained by fraud, they ought to have returned the amount of Rs.30 lakhs each paid to them in accordance with the compromise.  Since they did not do so they failed to establish that any fraud was practiced upon them. Having received their monetary shares the plaintiff relinquished their rights, title in respect of all such items.  The High Court did not consider the above.

Therefore the Supreme Court allowed the appeal.  The Supreme Court set aside the order passed by the High Court and restored the compromise between the parties.