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TMI Blog2022 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... gal Services Authorities Act 19875. The application had been filed against the Respondent and his guarantor, in regard to credit facilities in the value of Rs. 2,40,583 availed by the Respondent from the Appellant. The Appellant alleged that the amount of Rs. 2,40,583 along with interest had become due on 1 October 2012, but the Respondent had not repaid it, in spite of multiple notices and requests. Hence, the Appellant prayed for the recovery of Rs. 2,40,583 with interest at the rate of 15.75 per cent and costs from the Respondent and his guarantor. 3. Notice was issued by the Permanent Lok Adalat to the Respondent on 10 January 2013, which was allegedly not claimed by the Respondent. Hence, on 12 March 2013, the Permanent Lok Adalat held the service to be complete in respect of the Respondent and adjourned the case to 6 June 2013 for reporting of settlement. Thereafter, allegedly on 22 August 2013, a counsel filed a memo of appearance on behalf of the Respondent and matter was adjourned to allow filing of vakalatnama and objections on behalf of the Respondent. On 6 February 2014, another counsel is alleged to have filed a vakalatnama on behalf of the Respondent, and the case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the parties reach at an agreement on the settlement of the dispute they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an award in terms thereof and furnish a copy of the same to each of the parties concerned at the first instance and it is only after where the parties fail to reach at an agreement Under Sub-section (7), the Permanent Lok Adalat can pass an award keeping in view the facts and circumstances of the case. In the present case, no such procedure was followed at all. There was no conciliation proceedings between the parties. As they did not appear, the question of signing the agreement does not arise. The Lok Adalat could not have acted as a regular civil Court in adjudicating the proceedings. Therefore, the learned Single Judge was justified in allowing the writ petition. This Court finds no reason to interfere with the order passed by the learned Single Judge." Thus, the Division Bench dismissed the writ appeal on two grounds: first, that the procedure for conciliation Under Section 22-C of the LSA Act was not followed, and hence, the award Under Section 22-C(8) was a nullity; and second, the Permanent Lok Adalat could not have acted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of which Lok Adalats are to be organised. Specifically, Section 19(5) provides that Lok Adalats shall have the jurisdiction to arrive at a compromise and settlement between the parties in respect of a matter: (i) pending before a court for which the Lok Adalat is organised; or (ii) not pending before a court for which the Lok Adalat is organised but falling within its jurisdiction. The proviso notes that the Lok Adalat shall have no jurisdiction in respect of a matter relating to an offence not compoundable under any law. 12. Section 208 outlines the type of cases whose cognisance can be taken by the Lok Adalats. Section 20(1) provides that when a case is pending before a court (in accordance with Section 19(5)(i)), the court can refer the case to a Lok Adalat for settlement if: (i) the parties agree; (ii) one party makes an application; or (iii) the court is satisfied that the matter is appropriate for a Lok Adalat. The proviso stipulates that in scenario (ii) and (iii), the court shall only make its decision after giving the parties a reasonable opportunity of being heard. Section 20(2) provides that when an Authority or a Committee organising a Lok Adalat receives an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Adalat shall have the requisite powers to specify its own procedure for the determination of any dispute coming before it. (3) All proceedings before the Lok Adalat or Permanent Lok Adalat shall be deemed to be judicial proceedings within the meaning of Sections, 193, 219 and 228 of the Indian Penal Code (45 of 1860) and every Lok Adalat shall be deemed to be a civil court for the purpose of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974)." Sub-section (1) of Section 22 stipulates that Lok Adalats and Permanent Lok Adalats shall have the same power as civil courts under the Code of Civil Procedure 190810 for making their determination under the LSA Act. Sub-section (2), without prejudice to Sub-section (1), provides the Lok Adalats and Permanent Lok Adalats with the power to specify their own procedure. Sub-section (3) states that proceedings before the Lok Adalats and Permanent Lok Adalats shall be deemed to be judicial proceedings. 15. These provisions demonstrate that the power of the Lok Adalat is limited, even though it may have some powers of the civil courts and the proceedings before it have some trappings of a judicial proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d urgently so that people get justice without delay even at pre-litigation stage and thus most of the petty cases which ought not to go in the regular courts would be settled at the pre-litigation stage itself which would result in reducing the workload of the regular courts to a great extent. It is, therefore, proposed to amend the Legal Services Authorities Act, 1987 to set up Permanent Lok Adalats for providing compulsory pre-litigative mechanism for conciliation and settlement of cases relating to public utility services." (emphasis supplied) The Statement of Objects and Reasons indicates that Chapter VI-A was introduced to the LSA Act to primarily create alternative dispute resolution bodies, in the form of Permanent Lok Adalats, to decide disputes on merits if the parties fail to arrive at a compromise or settlement. 17. Section 22-B of the LSA Act provides for the establishment of Permanent Lok Adalats. Section 22-B stipulates thus: "22-B. Establishment of Permanent Lok Adalats.--(1) Notwithstanding anything contained in Section 19, the Central Authority or, as the case may be, every State Authority shall, by notification, establish Permanent Lok Adalats at such places ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er where the value of the property in dispute exceeds ten lakh rupees: Provided also that the Central Government, may, by notification, increase the limit of ten lakh rupees specified in the second proviso in consultation with the Central Authority. (2) After an application is made Under Sub-section (1) to the Permanent Lok Adalat, no party to that application shall invoke jurisdiction of any court in the same dispute. (3) Where an application is made to a Permanent Lok Adalat Under Sub-section (1), it-- (a) shall direct each party to the application to file before it a written statement, stating therein the facts and nature of dispute under the application, points or issues in such dispute and grounds relied in support of, or in opposition to, such points or issues, as the case may be, and such party may supplement such statement with any document and other evidence which such party deems appropriate in proof of such facts and grounds and shall send a copy of such statement together with a copy of such document and other evidence, if any, to each of the parties to the application; (b) may require any party to the application to file additional statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Central Authority, increase this amount through a notification. Indeed, by a notification dated 20 March 201513 this amount has been since raised to Rs. 1 crore. Under Sub-section (2), once an application is made to the Permanent Lok Adalat Under Sub-section (1) in respect of a dispute, no court shall have jurisdiction over it. In accordance with Sub-section (3), once the Permanent Lok Adalat receives an application Under Sub-section (1), it can direct both parties to file detailed submission outlining their factual submissions, issues raised and arguments advanced. To support their submissions, the parties will be permitted to attach documentary evidence. Further, the Permanent Lok Adalat can direct the parties to file additional submissions. It shall also communicate any submissions or documents received by one party to the other, in order to enable them to respond. Once the procedure Under Sub-section (3) is completed, the Permanent Lok Adalat, in accordance with Sub-section (4), shall conduct conciliation proceedings between parties in a manner it sees fit keeping in mind the nature of the dispute. During the conciliation proceedings Under Sub-section (4), Sub-section (5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits of the dispute, shall be final and binding on all parties and any persons claiming under them. Sub-section (2) provides that the award of the Permanent Lok Adalat shall be deemed to be a decree of a civil court. Sub-section (3) provides that every award of the Permanent Lok Adalat shall be decided by a majority of its constituent members. Sub-section (4) reiterates that the award shall be final and shall not be called in question in any original suit, application or execution proceeding. Finally, Sub-section (5) stipulates that the Permanent Lok Adalat may transmit an award made by it to a civil court having local jurisdiction, and such civil court shall execute the order as if it were a decree made by that court. 21. The above survey of the provisions of the LSA Act indicates that there are similarities between Lok Adalats and Permanent Lok Adalats: (i) they can both attempt conciliation proceedings with the parties before them, and can pass awards recording the terms of settlement agreed upon by the parties (Section 20(3) and 22-C(7)); (ii) in doing do, they are both bound by principles of justice, equity, fair play and other legal principles (Section 20(4) and 22-D); and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent Lok Adalat can move to the fourth step of attempting conciliation between the parties, in accordance with Sub-sections (4), (5) and (6). Subsequently, in the fifth step in accordance with Sub-section (7), the Permanent Lok Adalat has to draw up terms of settlement on the basis of the conciliation proceedings, and propose them to the parties. If the parties agree, the Permanent Lok Adalat has to pass an award on the basis of the agreed upon terms of settlement. Only if the parties fail to reach an agreement on the fifth step, can the Permanent Lok Adalat proceed to the final step and decide the dispute on its merits. 25. Such an interpretation is also supported by the decision of a two-Judge Bench of this Court in Bar Council of India (supra), where the constitutionality of Chapter VI-A of the LSA Act was upheld. Speaking for the Bench, Justice R.M. Lodha highlighted that the Permanent Lok Adalats would proceed to adjudication of a dispute on its merits only after attempting and failing to generate a settlement between the parties: "22. Chapter VI-A inserted by the 2002 Amendment Act in the 1987 Act, as its title suggests, provides for pre-litigation conciliation and settlem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and make the best efforts to communicate them to the opposite party for their response. If it is satisfied that no response is forthcoming from the absent opposite party, the Permanent Lok Adalat shall still attempt to settle the dispute through settlement Under Section 22-C(4). It is important to remember that Section 22-C(5) imposes a duty upon the Permanent Lok Adalat to be independent and impartial in attempting to amicably settle the dispute, while Section 22-C(6) imposes a duty upon the party present before the Permanent Lok Adalat to cooperate in good faith and assist the Permanent Lok Adalat. Thereafter, the Permanent Lok Adalat, based on the materials before it, shall propose terms of settlement and communicate them to both parties, regardless of whether they participated in the proceedings. If the party present before the Permanent Lok Adalat does not agree or if the absent party does not respond in a sufficient period of time, only then can the Permanent Lok Adalat adjudicate the dispute on its merits Under Section 22-C(8). Keeping in mind the principles enshrined in Section 22-D, the Permanent Lok Adalat shall once again notify the absent party of its decision to adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a dispute. The Permanent Lok Adalat would first conduct conciliation proceedings and attempt to reach an amicable settlement of the dispute. However, if the parties fail to reach an agreement, it shall decide the dispute, as long as the dispute does not relate to an offence. Section 22-D further indicates that the Permanent Lok Adalat is empowered to decide the dispute between the parties on merits. 29. In United India Assurance Co. Ltd. v. Ajay Sinha and Ors. (2008) 7 SCC 454, this Court held that the Permanent Lok Adalat performs an adjudicatory role if the conciliation between the parties fails. Elucidating on the power of the Permanent Lok Adalat, this Court observed as follows: "25. Chapter VI-A stands independently. Whereas the heading of the Chapter talks of pre-litigation, conciliation and settlement, Section 22-C(8) of the Act speaks of determination. It creates another adjudicatory authority, the decision of which by a legal fiction would be a decision of a civil court. It has the right to decide a case. The term "decide" means to determine; to form a definite opinion; to render judgment. (See Advanced Law Lexicon, 3rd Edn., 2005 at p. 1253.) Any award made by the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despite the endeavours and efforts of the Permanent Lok Adalat the settlement between the parties is not through and the parties are required to have their dispute determined and adjudicated, to avoid delay in adjudication of disputes relating to public utility services, Parliament has intervened and conferred power of adjudication upon the Permanent Lok Adalat. 27. Can the power conferred on Permanent Lok Adalats to adjudicate the disputes between the parties concerning public utility service up to a specific pecuniary limit, if they do not relate to any offence, as provided Under Section 22-C(8), be said to be unconstitutional and irrational? We think not. It is settled law that an authority empowered to adjudicate the disputes between the parties and act as a tribunal may not necessarily have all the trappings of the court. What is essential is that it must be a creature of statute and should adjudicate the dispute between the parties before it after giving reasonable opportunity to them consistent with the principles of fair play and natural justice. It is not a constitutional right of any person to have the dispute adjudicated by means of a court only. Chapter VI-A has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicatory powers of the Permanent Lok Adalats were incorrect, while upholding its ultimate conclusion since the Permanent Lok Adalat failed to follow the mandatory conciliation proceedings in the present case. We make it clear that we have not made any observations on the merits of the dispute between the parties, and all rights and contentions of the parties are kept open. 35. In the circumstances of the case, there shall be no order as to costs. 36. Pending application(s), if any, stand disposed of. ---- 1Writ Petition No. 27778 of 2019 (GM-RES) 2Writ Appeal No. 514 of 2020 (GM-RES) 3PLD No. 69 of 2013 4With effect from 1 April 2020, it has since been merged with the Appellant through a notification dated 4 March 2020 issued by the Central Government in consultation with Reserve Bank of India in exercise of its powers Under Section 9 of Banking Companies (Acquisition & Transfer of Undertakings) Act 1970. Hence, it is also referred to as "Appellant" in this judgment. 5"LSA Act" 6Ex No. 9 of 2019 7"19. Organisation of Lok Adalats.--(1) Every State Authority or District Authority or the Supreme Court Legal Services Committee or every High Court Legal Services Committee or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law for the time being in force, the Authority or Committee organising the Lok Adalat Under Sub-section (1) of Section 19 may, on receipt of an application from any one of the parties to any matter referred to in clause (ii) of Sub-section (5) of Section 19 that such matter needs to be determined by a Lok Adalat, refer such matter to the Lok Adalat, for determination: Provided that no matter shall be referred to the Lok Adalat except after giving a reasonable opportunity of being heard to the other party. (3) Where any case is referred to a Lok Adalat Under Sub-section (1) or where a reference has been 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. (4) Every Lok Adalat shall, while determining any reference before it under this Act, 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. (5) 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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