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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 ..... 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. 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 adjudicate the dispute on its merits, in case it wishes to join the proceedings at that stage. Section 22-C(8) is amply clear that it only comes into effect once an agreement Under Section 22-C(7) has failed. The corollary of this is that the propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties fails - Likewise, in INTERGLOBE AVIATION LTD. VERSUS N. SATCHIDANAND [ 2011 (7) TMI 1025 - SUPREME COURT] , this Court observed that the Permanent Lok Adalat's role mutates from that of a conciliatory body to an adjudicatory body, if the parties fail to reach an agreement, where it can decide the dispute between the parties. Thus, the powers of the Lok Adalat constituted Under Section 19 of the LSA Act are to be distinguished from the nature of powers granted to a Permanent Lok Adalat established Under Section 22-B of the LSA Act. It is in the context of interpreting the jurisdiction of Lok Adalats constituted Under Section 19 of the LSA Act, that this Court has held that the Lok Adalat cannot perform any adjudicatory function in terms of Section 20 of the LSA Act. The observations of the Division Bench in the impugned judgment in respect of the adjudicatory 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 - Application disposed off. - Civil Appeal No. 3872 of 2022 - - - Dated:- 19-5-2022 - Dr Dhananjaya Y Chandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 2014, when the Permanent Lok Adalat reserved the matter for its award. In its award dated 19 November 2014, the Permanent Lok Adalat noted that the Respondent appeared through an advocate, but did not participate in the proceedings while his guarantor though served with notices...did not participate in the proceedings . Further, it also noted that no conciliation was reported. Hence, the Permanent Lok Adalat allowed the application filed by the Appellant based on the documentary evidence adduced by them and directed the Respondent and his guarantor to pay the Appellant an amount of Rs. 2,40,583 with interest at the rate of 9 per cent till the date of realization. The Appellant filed a petition 6 for execution of the award of the Permanent Lok Adalat before the Civil Judge and Judicial Magistrate First Class, Sullia, Dakshina Kannada. 5. While the Appellant's execution petition was pending and upon the issuance of an arrest notice, the Respondent filed a writ petition Under Article 226 of the Constitution before the Karnataka High Court on 1 July 2019, for challenging the award of the Permanent Lok Adalat dated 19 November 2014. The Single Judge allowed the writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the Appellant has made the following submissions: (i) The impugned judgment is contrary to the provisions contained in Chapter-VI-A of the LSA Act and the decision of this Court in Bar Council of India v. Union of India (2012) 8 SCC 243 ( Bar Council of India ) in as much as the High Court held that Permanent Lok Adalats have no adjudicatory function; (ii) Sufficient opportunity was given to the Respondent to participate in the conciliation proceedings; (iii) If the parties fail to participate in the conciliation proceedings, the Permanent Lok Adalat has no option but to proceed to decide the dispute and pass an award Under Section 22-C of the LSA Act; (iv) Under Section 22-E of the LSA Act, an award passed by the Permanent Lok Adalat is deemed to be a decree of a civil court and such award is final and cannot be called into question in any original suit, application or execution proceedings; (v) The object and purpose behind introducing Chapter VI-A to the LSA Act would be frustrated if the Permanent Lok Adalat is denied the power of adjudicating a dispute if a party deliberately avoids appearing and participating in the conciliation proceedings, even af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proviso stipulates that it shall only make its determination after giving parties a reasonable opportunity of being heard. Section 20(3) indicates that when a case is referred to a Lok Adalat Under Section 20(1) and (2), it shall proceed to dispose of the case and arrive at a compromise or settlement between the parties. Section 20(4) provides that in disposing of a case, the Lok Adalat shall be guided by the principles of justice, equity, fair play and other legal principles. In case the Lok Adalat is unable to reach a settlement between the parties and no award is made, it shall: (i) return the case to the court if it was received Under Section 20(1) (in accordance with Section 20(5)), which shall resume hearing it from the stage where it was referred to the Lok Adalat (in accordance with Section 20(7)); or (ii) advise the parties to approach the court if it was received Under Section 20(2) (in accordance with Section 20(6)). 13. Section 21 9 stipulates that the awards of Lok Adalats shall be deemed to be a decree of a civil court or, as the case may be, an order of any other court. These awards shall be final and binding on all the parties to the dispute, and no appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s whose case is before it. If a compromise or settlement is reached, the Lok Adalat shall issue it as its award, and the statute deems it to be equivalent to the decree of a court, against which no appeal shall lie. On the other hand, if it fails to reach a compromise or settlement, the Lok Adalat shall return the case to the court or advise the parties to approach the court. 16. On the other hand, Permanent Lok Adalats are constituted under Chapter VIA of the LSA Act titled Pre-Litigation Conciliation and Settlement . The chapter was added to the LSA Act by The Legal Services Authorities (Amendment) Act 2002 11 . It is necessary to analyse the rationale for introducing such an institutional mechanism for resolving disputes when Lok Adalats constituted Under Section 19 of the LSA Act were already in existence. The Statement of Objects and Reasons of the LSA Amendment Act reads as follows: (1) The Legal Services Authorities Act, 1987 was enacted to constitute legal services authorities for providing (sic) and competent legal services to the weaker Sections of the society to ensure that opportunities for securing justice were not denied to any citizen by reason of economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utility services and for such areas as may be specified in the notification. (2) Every Permanent Lok Adalat established for an area notified Under Sub-section (1) shall consist of-- (a) a person who is, or has been, a district Judge or additional district Judge or has held judicial office higher in rank than that of a district Judge, shall be the Chairman of the Permanent Lok Adalat; and (b) two other persons having adequate experience in public utility service to be nominated by the Central Government or, as the case may be, the State Government on the recommendation of the Central Authority or, as the case may be, the State Authority, appointed by the Central Authority or, as the case may be, the State Authority, establishing such Permanent Lok Adalat and the other terms and conditions of the appointment of the Chairman and other persons referred to in Clause (b) shall be such as may be prescribed by the Central Government. Sub-section (1) of Section 22-B stipulates that the Central or State Authority under the LSA Act shall establish Permanent Lok Adalats in respect of one or more public utility services (defined Under Section 22-A(b) 12 ) and for specific area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) shall communicate any document or statement received by it from any party to the application to the other party, to enable such other party to present reply thereto. (4) When statement, additional statement and reply, if any, have been filed Under Sub-section (3), to the satisfaction of the Permanent Lok Adalat, it shall conduct conciliation proceedings between the parties to the application in such manner as it thinks appropriate taking into account the circumstances of the dispute. (5) The Permanent Lok Adalat shall, during conduct of conciliation proceedings Under Sub-section (4), assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner. (6) It shall be the duty of every party to the application to cooperate in good faith with the Permanent Lok Adalat in conciliation of the dispute relating to the application and to comply with the direction of the Permanent Lok Adalat to produce evidence and other related documents before it. (7) When a Permanent Lok Adalat, in the aforesaid conciliation proceedings, is of opinion that there exist elements of settlement in such proceedings which may be acceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an amicable resolution to their dispute in an independent and impartial manner. On the other hand, Sub-section (6) imposes a duty on the parties to cooperate with the Permanent Lok Adalat in good faith and produce any evidence/documents required for the resolution of the dispute. Sub-section (7) empowers the Permanent Lok Adalat, when it is of the opinion that a settlement exists between the parties, to formulate the terms of such settlement and present it to the parties. If the parties are agreeable to the terms of the settlement, the Permanent Lok Adalat shall pass an award incorporating those terms and provide a copy to each party. Finally, if the parties fail to reach an agreement Under Sub-section (7), the Permanent Lok Adalat can decide the dispute on merits Under Sub-section (8), if the dispute does not relate to any offence. 19. Section 22-D 14 stipulates that while conducting conciliation proceedings or deciding the dispute on its merits, the Permanent Lok Adalat shall be guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice and shall not be bound by the Code of Civil Procedure and the Indian Evidence Act 1872 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be final and cannot be challenged in an appeal (Section 21 and 22-E). Yet, despite these similarities, there are crucial differences under the statute. 22. While the jurisdiction of the Permanent Lok Adalat is limited to disputes regarding public utility services, crucially, its powers are wider than the Lok Adalat in many respects: (i) Parties can approach Permanent Lok Adalats directly Under Section 22-C(1), while Lok Adalats are sent their cases by courts where the dispute is pending (Under Section 20(1)) or by the Authority or Committee organising the Lok Adalat Under Section 19(1) after they receive it from the parties (Under Section 20(2)). Indeed, an application made to the Permanent Lok Adalat ousts the jurisdiction of a civil court (Under Section 22-C(2)); (ii) Permanent Lok Adalats can direct the parties to submit written submissions, replies, evidence and documents (Section 22-C(3)); (iii) Other then attempting conciliation with parties, the Permanent Lok Adalats can also decide a dispute on its merits if the settlement fails (Section-C(7)); and (iv) Permanent Lok Adalats can transmit an award made to a civil court having local jurisdiction, and such civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to public utility service need urgent attention with focus on their resolution at the threshold by conciliation and settlement and if for any reason such effort fails, then to have such disputes adjudicated through an appropriate mechanism as early as may be possible... 23. The Statement of Objects and Reasons itself spells out the salient features of Chapter VI-A. By bringing in this law, the litigation concerning public utility service is sought to be nipped in the bud by first affording the parties to such dispute an opportunity to settle their dispute through the endeavours of the Permanent Lok Adalat and if such effort fails then to have the dispute between the parties adjudicated through the decision of the Permanent Lok Adalat... [...] 26. It is necessary to bear in mind that the disputes relating to public utility services have been entrusted to Permanent Lok Adalats only if the process of conciliation and settlement fails. The emphasis is on settlement in respect of disputes concerning public utility services through the medium of Permanent Lok Adalat . It is for this reason that Sub-section (1) of Section 22-C states in no unambiguous terms that any party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts merits, in case it wishes to join the proceedings at that stage. 27. Section 22-C(8) is amply clear that it only comes into effect once an agreement Under Section 22-C(7) has failed. The corollary of this is that the proposed terms of settlement Under Section 22-C(7), and the conciliation proceedings preceding it, are mandatory. If Permanent Lok Adalats are allowed to bypass this step just because a party is absent, it would be tantamount to deciding disputes on their merit ex parte and issuing awards which will be final, binding and will be deemed to be decrees of civil courts. This was simply not the intention of the Parliament when it introduced the LSA Amendment Act. Its main goal was still the conciliation and settlement of disputes in relation to public utilities, with a decision on merits always being the last resort. Therefore, we hold that conciliation proceedings Under Section 22-C of the LSA Act are mandatory in nature. C.3 Whether Permanent Lok Adalat has adjudicatory functions 28. The second issue which is in contention before this Court is whether the Permanent Lok Adalat has any adjudicatory function. As highlighted in the Objects and Reasons accompanyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adalat is executable as a decree. No appeal thereagainst shall lie. The decision of the Permanent Lok Adalat is final and binding on the parties. Whereas on the one hand, keeping in view the parliamentary intent, settlement of all disputes through negotiation, conciliation, mediation, Lok Adalat and judicial settlement are required to be encouraged, it is equally well settled that where the jurisdiction of a court is sought to be taken away, the statutory provisions deserve strict construction. A balance is thus required to be struck. A court of law can be created under a statute. It must have the requisite infrastructure therefor. Independence and impartiality of Tribunal being a part of human right is required to be taken into consideration for construction of such a provision. When a court is created, the incumbents must be eligible to determine the lis. [...] ...the Permanent Lok Adalat does not simply adopt the role of an arbitrator whose award could be the subject-matter of challenge but also the role of an adjudicator. Parliament has given the authority to the Permanent Lok Adalat to decide the matter. It has an adjudicating role to play. Likewise, in Inter Globe Av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enacted to provide for an institutional mechanism, through the establishment of Permanent Lok Adalats for settlement of disputes concerning public utility service before the matter is brought to the court and in the event of failure to reach any settlement, empowering the Permanent Lok Adalat to adjudicate such dispute if it does not relate to any offence. (emphasis supplied) 31. We reiterate that the powers of the Lok Adalat constituted Under Section 19 of the LSA Act are to be distinguished from the nature of powers granted to a Permanent Lok Adalat established Under Section 22-B of the LSA Act. It is in the context of interpreting the jurisdiction of Lok Adalats constituted Under Section 19 of the LSA Act, that this Court has held that the Lok Adalat cannot perform any adjudicatory function in terms of Section 20 of the LSA Act 15 . D. Conclusion 32. The Single Judge of the Karnataka High Court in the order dated 3 July 2019 observed that the Permanent Lok Adalat has no adjudicatory function. This finding of the Single Judge was upheld by the Division Bench of the Karnataka High Court in its impugned judgment dated 6 March 2021 where it observed that the Perman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee or every High Court Legal Services Committee or, as the case may be, Taluk Legal Services Committee may organise Lok Adalats at such intervals and places and for exercising such jurisdiction and for such areas as it thinks fit. (2) Every Lok Adalat organised for an area shall consist of such number of-- (a) serving or retired judicial officers; and (b) other persons, of the area as may be specified by the State Authority or the District Authority or the Supreme Court Legal Services Committee or the High Court Legal Services Committee, or, as the case may be, the Taluk Legal Services Committee, organising such Lok Adalat. (3) The experience and qualifications of other persons referred to in clause (b) of Sub-section (2) for Lok Adalats organised by the Supreme Court Legal Services Committee shall be such as may be prescribed by the Central Government in consultation with the Chief Justice of India. (4) The experience and qualifications of other persons referred to in clause (b) of Sub-section (2) for Lok Adalats other than referred to in Sub-section (3) shall be such as may be prescribed by the State Government in consultation with the Chief Justice of the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no compromise or settlement could be arrived at between the parties, the record of the case shall be returned by it to the court, from which the reference has been received Under Sub-section (1) for disposal in accordance with law. (6) Where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, in a matter referred to in Sub-section (2), that Lok Adalat shall advise the parties to seek remedy in a court. (7) Where the record of the case is returned Under Sub-section (5) to the court, such court shall proceed to deal with such case from the stage which was reached before such reference Under Sub-section (1). 9 21. Award of Lok Adalat.--(1) 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 Under Sub-section (1) of Section 20, the court-fee paid in such case shall be refunded in the manner provided under the Court Fees Act, 1870 (7 of 1870). (2) Every award made by a Lok Adalat shall be final and binding on all the parties to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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