IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 1449 of 2008
State Bank of India, Dhanbad ... Petitioner
Versus
State of Jharkhand & anr. ... Respondents
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CORAM: HON'BLE MR. JUSTICE D.N.PATEL
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For the petitioner: M/s Rajesh Kumar,
Deepak Kumar Bharti,
Manindra Kumar Sinha, Advocates
For Respondent No. 1: M/s Rahul Gupta (JC to AG)
For Respondent No. 2 R.S. Majumdar, Advocate
P.A.S. Pati, Advocate
———
04. Dated 9th April, 2009
1. The present writ petition has been preferred mainly against a
decision rendered by Permanent Lok Adalat at Dhanbad, on
merits, in Permanent Lok Adalat Case No. 91 of 2007 dated
8th February, 2008 (Annexure 2 to the memo of present
petition)
2. Counsel appearing for the petitioner-bank submitted that
Permanent Lok Adalat ought not to have decided, on merits,
the claim between the parties by exercising power,
jurisdiction and authority under the Legal Services Authority
Act, 1987 (hereinafter referred to as “the Act, 1987”). In fact,
there is no willingness, on the part of the petitioner-bank to
pursue the matter before the Permanent Lok Adalat in the
Permanent Lok Adalat Case No. 91 of 2007. It is contended
by the counsel for the petitioner that a loan amount of Rs.
2,25,000/- (Two lacs twenty five thousand) was received by
the respondent from the State Bank of India towards
housing loan in the year, 1995 with an interest @ 11% per
annum, having equal monthly installment of Rs. 3079/- per
month, on the assessable amount. Instead of making
payment of the outstanding amount, an application was
preferred by the respondent before Permanent Lok Adalat at
Dhanbad, State of Jharkhand and Permanent Lok Adalat
Case No. 91 of 2007 was thus instituted. Upon receipt of the
notice, reply was given by petitioner-bank that the borrower
must produce documents and receipts for the amount
deposited, as alleged by him in his application. It is stated
that the bank is not liable to credit the amount for which no
deposit receipt is produced nor it is a case of deficiency of
services and ultimately it was stated before Permanent Lok
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Adalat that the application preferred by the respondent
deserves to be dismissed with cost. It is also submitted by
counsel for the petitioner that Permanent Lok Adalat has not
followed the proper procedure which is envisaged under
Section 22-C of the Act 1987. Firstly it is not the role of
Permanent Lok Adalat that it should decide on merits the
dispute between the parties. It is further stated that the
Permanent Lok Adalat, as the conciliator, must put all efforts
to settle the dispute, between the parties as per sub section
7 of section 22-C of the Act 1987, which empowers that the
settlement ought to have been presented before the parties
by the Permanent Lok Adalat so that the petitioner-bank can
think upon it and can give its suggestion for settlement. It is
also submitted by the counsel for the petitioner that from the
very beginning, approach of the Permanent Lok Adalat is not
that of a conciliator, but, it was playing role of adjudicatory
authority, which is against the provisions of Section 22-C of
the Act 1987 and therefore the claim between the parties
decided on merits like a judgment, by the Permanent Lok
Adalat, dated 8th February, 2008 in Permanent Lok Adalat
Case No. 91 of 2007 deserves to be quashed and set aside,
with cost.
3. The counsel appearing for the petitioner has submitted that
looking to the decision given by the Hon’ble Supreme Court
in the case of State of Punjab Vs. Jalour Singh, as reposted
in (2008) 2 SCC 660, the Permanent Lok Adalat ought not
have decided the dispute between the parties as an
adjudicatory authority, but, ought to have acted like a
conciliator. First of all, steps should have been taken to
settle the matter between the parties and suggestions and
conditions in the form of settlement ought to have been
presented by the Permanent Lok Adalat before the parties, so
that the parties to the disputes, especially the petitioner,
could have pointed out its own suggestions, for better
settlement. Such opportunity ought to have been given,
which is envisaged in Sub Section 7 of Section 22-C of the
Act 1987.
4. Counsel appearing for the petitioner relied upon the decision
rendered by a division bench of this Court in the case of
Bharat Sanchar Nigam Limited Vs. The State of Jharkhand,
as reported in 2008 (3) JLJR 513, and pointed out that the
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Permanent Lok Adalat instead of deciding the disputes on
merits, first of all should have asked for the terms of
settlements to the parties, as required in sub- Section 7 of
Section 22-C of the Act, 1987. Predominantly the role of
Permanent Lok Adalat is like a conciliator and not like an
adjudicating authority. It is submitted by the counsel for the
petitioner that the Bank is neither ready nor willing to go
before the Permanent Lok Adalat for getting the dispute
adjudicated, where the provisions of Code of Civil Procedure
is not applicable nor the Indian Evidence Act is applicable
nor the order is made appellable. Petitioner is neither willing
for adjudication of the dispute on merits nor it is willing to
settle the matter, unless reasonable figure of amount for
settlement is offered by the original applicant or by the
Permanent Lok Adalat. The petitioner, is also not binding
itself, in absence of any suggestions, either from Permanent
Lok Adalat or from the private respondent.
5. I have heard counsel appearing on behalf of respondent no.
2. It is submitted that looking into the provisions of the Act
1987, Permanent Lok Adalat has got power, jurisdiction and
authority to decide the dispute under Section 22-C of the
Act, 1987, which confers power upon the Permanent Lok
Adalat to decide the dispute between the parties. It is
submitted by counsel for the respondent no. 2 that there is
vast difference between Lok Adalat and Permanent Lok
Adalat. Chapter VI-A of the Act, 1987, is altogether a
different procedure envisaged for the Permanent Lok Adalat.
Section 22-C (8) of the Act, 1987, empowers the Permanent
Lok Adalat to adjudicate the dispute, if the settlement is not
possible. It is also submitted by the counsel for the
respondent that no plea, has been raised, in the memo of
present petition, that there is procedural lacuna, on the part
of the Permanent Lok Adalat and, therefore, the order
passed by the Permanent Lok Adalat dated 8th February,
2008, in Permanent Lok Adalat Case No. 91 of 2007 is
absolutely, true, correct and in consonance with the
provisions of the Act, 1987. Counsel appearing on behalf of
respondent, has relied upon the decision rendered by the
Supreme Court in the case of United India Insurance Co. Ltd.
Vs. Ajay Sinha, as reported in (2008)7 SCC 454, and has
submitted that to create another adjudicatory authority than
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the Civil Court, is a privilege and prerogative power of the
Parliament. Permanent Lok Adalat constituted under the
Act, 1987, is an independent and separate forum. Permanent
Lok Adalat is created in Chapter VI-A of the Act, 1987, and it
is clothed with all power of adjudication under Sub-section
(8) of Section 22-C of the Act, 1987. It can also play a role
like a court and an adjudicatory power is vested in it. If
settlement is not possible, by suggestions and counter-
suggestions of the parties to dispute, the Permanent Lok
Adalat itself should make all efforts to settle the dispute
between the parties, but, if dispute is not settled, the case
can be heard and decided on merits. Thus, the decision
rendered by the Permanent Lok Adalat, is absolutely in
consonance with the provisions of the Act, 1987, and in
consonance with the decision, as cited hereinabove, and,
therefore, this Court, may not interfere with, the impugned
order, passed by the Permanent Lok Adalat.
6. Having heard the counsels for the both sides and looking to
the facts and circumstances of the case and the order passed
by the Permanent Lok Adalat, I hereby quash and set aside,
the order passed by the Permanent Lok Adalat, dated 8th
February, 2008, in Permanent Lok Adalat Case No. 91 of
2007, for the following facts and reasons:
(i) Respondent no. 2, who had taken housing loan of
Rs. 2,25000/- @ 11% annual interest, was unable to make
payment to the petitioner-bank and subsequently filed
application before the Permanent Lok Adalat at Dhanbad,
State Jharkhand as Permanent Lok Adalat Case No. 91 of
2007 for settlement of dispute This was unilateral
application or negatively, it was never a joint application.
(ii) Upon receipt of a notice, from Permanent Lok
Adalat, a reply was filed by the petitioner-bank, before
Permanent Lok Adalat, wherein, the disputes have been
raised on factual aspects about an amount paid, as claimed
by respondent no. 2, and also on legal points that it is not
the case of deficiency of services of the bank and therefore
the case can not be decided by the Permanent Lok Adalat.
Deficiency, if any, was on the part of defaulter and no
assurance was given by the previous manager of the State
Bank of the India and ultimately it was replied, that
Permanent Lok Adalat should dismiss the application
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preferred by respondent no. 2 with cost. Looking to the reply
of the petitioner bank, there was no joint application and
there was absence of willingness, on the part of petitioner-
bank, to go before Permanent Lok Adalat. Secondly, there
was dispute regarding the jurisdiction of the Permanent Lok
Adalat also.
(iii) It appears that the bank was demanding, balance
outstanding amount of Rs.1,35,514.41/- and the private
respondent was insisting upon some oral assurance, given
by the concerned Branch Manager, State Bank of India to
settle a loan account. Giving such type of oral promise has
been denied, in black and white, by the petitioner in the
written statement/reply of the notice given in the Permanent
Lok Adalat Case No. 91 of 2007. No figure of settlement was
ever presented by respondent no. 2 in his memo of
application before Permanent Lok Adalat, nor any terms of
settlement were pointed out to the bank, by the Permanent
Lok Adalat during the course of settlement proceeding.
(iv) It ought to be kept in mind by the Permanent Lok
Adalat that they must take all possible steps of settlement of
the dispute. It should not wear a robe of the court from the
very beginning. Predominant role to be played by Permanent
Lok Adalat is of conciliator and not of an adjudicator.
Members of Permanent Lok Adalat may be retired District
Judges or retired members of Judiciary, but, their ability to
decide a dispute, on merits, is not at the touchstone or to be
checked. What is expected under the Act, 1987, is full use of
wisdom and experience of members of Permanent Lok
Adalat, for arriving at settlement of dispute. It is a prime
duty vested in Permanent Lok Adalat to offer, terms of
settlement, on its own, using all its common sense and
knowledge, clarity of law and facts, worldly wisdom and
enormous experience, as per Sub-section (7) of Section 22-C
of the Act, 1987. For ready reference provisions of law read
and read of the Act, 1987, are as under:
“22C. Cognizance of cases by Permanent Lok Adalat.- (1) Any
party to a dispute may, before the dispute is brought before any court,
make an application to the Permanent Lok Adalat for the settlement of
dispute:
Provided that the Permanent Lok Adalat shall not have jurisdiction
in respect of any matter relating to an offence not compoundable under
any law:
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Provided further that the Permanent Lok Adalat shall also not
have jurisdiction in the matter 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 part to the application to file
additional statement before it at any stage of the conciliation
proceedings;
(c) 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 to the parties, it may formulate the
terms of a possible settlement of the dispute and give to the parties
concerned for their observations and in 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.
(8) Where the parties fail to reach at an agreement under sub-
section (7), the Permanent Lok Adalat shall, if the dispute does not relate
to any offence, decide the dispute.
22D. Procedure of Permanent Lok Adalat.- The Permanent Lok
Adalat shall, while conducting conciliation proceedings or deciding a
dispute on merit under this Act, 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, 1908 (5 of 1908) and
the Indian Evidence Act, 1872 (1 of 1872).
22E. Award of Permanent Lok Adalat to be final.- (1) Every
award of the Permanent Lok Adalat under this Act made either on merit or
in terms of a settlement agreement shall be final and binding on all the
parties thereto and on persons claiming under them.
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(2) Every award of the Permanent Lok Adalat under this Act shall
be deemed to be a decree of a civil court.
(3) The award made by the Permanent Lok Adalat under this Act
shall be by a majority of the persons constituting the Permanent Lok
Adalat.
(4) Every award made by the Permanent Lok Adalat under this Act
shall be final and shall not be called in question in any original suit,
application or execution proceeding.
(5) The Permanent Lok Adalat may transmit any 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.”
(Emphasis supplied)
Thus, as per the aforesaid provisions, Permanent Lok
Adalat, must offer terms of settlement, on its own, as stated
hereinabove. Thereafter, some time to think upon it, should
be given to the parties. Without following this procedure, in
facts of the present case, Permanent Lok Adalat has
switched over to an adjudicatory role, as envisaged under
Sub-section (8) of Section 22-C of the Act, 1987, which is
impermissible and illegal. The goal to be achieved by the Act,
1987, is, settlement of dispute, at pre-litigation stage, so that
speedy justice can be rendered. Time and money of litigants,
can be saved and adjudicatory institutions (courts or
tribunals) can invest the time for other complex matters,
where adjudication on merits is required.
(v) It has been held by Hon’ble Supreme Court in the
case of State of Punjab Vs. Jalour Singh (supra), as reported
in (2008)2 SCC 660, in paragraph nos. 8 and 10, as under:
“8. It is evident form the said provisions that the Lok Adalats
have no adjudicatory or judicial functions. Their functions relate
purely to conciliation. A Lok Adalat determines a reference on the
basis of a compromise or settlement between the parties at its
instance, and puts its seal of confirmation by making an award in
terms of the compromise or settlement. When the Lok Adalat is not
able to arrive at a settlement or compromise, no award is made
and the case record is returned to the court from which the
reference was received, for disposal in accordance with law. No
Lok Adalat has the power to “hear” parties to adjudicate cases as
a court does. It discusses the subject-matter with the parties and
persuades them to arrive at a just settlement. In their conciliatory
role, the Lok Adalats are guided by the principles of justice, equity
and fair play. When the LSA Act refers to “determination” by the
Lok Adalat and “award” by the Lok Adalat, the said Act does not
contemplate nor require an adjudicatory judicial determination,
but a non-adjudicatory determination based on a compromise or
settlement, arrived at by the parties, with guidance and assistance
from the Lok Adalat. The “award” of the Lok Adalat does not
mean any independent verdict or opinion arrived at by any
decision-making process. The making of the award is merely an
administrative act of incorporating the terms of settlement or
compromise agreed by parties in the presence of the Lok Adalat, in
the form of an executable order under the signature and seal of the
Lok Adalat.
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10. The order of the Lok Adalat in this case (extracted above),
shows that it assumed a judicial role, heard parties, ignored the
absence of consensus, and increased the compensation to an extent
it considered just and reasonable, by a reasoned order which is
adjudicatory in nature. It arrogated to itself the appellate powers
of the High Court and “allowed” the appeal and “directed” the
respondents in the appeal to pay the enhanced compensation of
Rs.62,200 within two months. The order of the Lok Adalat was not
passed by consent of parties or in pursuance of any compromise or
settlement between the parties, is evident from its observation that
“if the parties object to the proposed order they may move the
High Court within two months for disposal of the appeal on merits
according to law”. Such an order is not an award of the Lok
Adalat. Being contrary to law and beyond the power and
jurisdiction of the Lok Adalat, it is void in the eye of the law. Such
orders which “impose” the views of the Lok Adalats on the parties,
whatever be the good intention behind them, bring a bad name to
the Lok Adalats and legal services.”
(vi) It has been held by the Division Bench of this
Court in the case of Bharat Sanchar Nigam Limited Vs. The
State of Jharkhand (supra), as reported in 2008(3) J.L.J.R.
513, in paragraph no.18, as under:
“18. In the instant case, the respondents claim compensation of
Rs.10,000/- (ten thousand) and cost of Rs.2000/- (two thousand) on
the allegation that his telephone connection remain out of order
for about one month i.e. from 8.5.2005 to 2.6.2005. The appellant
refuted the said allegation and stated that because of cable fault,
the telephone remains out of order and as per the departmental
rule, a rebate was sanctioned for the interruption and thereby
respondent was adequately compensation. Inspite of the aforesaid
fact, Permanent Lok Adalat exercised the adjudicatory role and
ignoring the Telegraph Act and the Rules, awarded compensation
of Rs.10,000/- and cost of Rs.2000/- without any basis. In our
opinion, instead of exercising adjudicatory role, the Permanent
Lok Adalat ought to have acted in such a manner to bring the
parties into a settlement. The duty of the Permanent Lok Adalat is
to bring the parties to a settlement and to pass award instead of
adjudicating a dispute and pass an award without taking notice of
the Act and the Rules under which claim was entertainable. In our
considered opinion, Permanent Lok Adalat has no jurisdiction to
directly invoke the provision of Sub-section (8) of Section 22-C and
decide the dispute on merit against the will of the party. As the
basic object and power of enacting Chapter VIA is to get the
disputes settled at the pre-litigation stage the provision of sub-
section (8) become redundant where the Permanent Lok Adalat
failed to apply the provisions of sub-section (4) to (7) of Section
22-C of the Act.”
(Emphasis supplied)
(vii) Now the question arises how a Permanent Lok
Adalat can switch over to Sub-section (8) of Section 22-C of
the Act, 1987 for playing its adjudicatory role. It appears
from Sub-section (8) of Section 22-C of the Act, 1987, that
Permanent Lok Adalat can decide the dispute if the dispute
is not relating to any offence and if no settlement has been
arrived at, after following the procedure under Sub-section
9(7) of Section 22-C of the Act, 1987. As per Section 22-D of
the Act, 1987, neither the provisions of the Code of Civil
Procedure, 1908 are applicable, nor the provisions of Indian
Evidence Act, 1872 are applicable. Likewise, the order
passed by the Permanent Lok Adalat, as per Section 22-E of
the Act, 1987, is not an appellable order and, therefore, the
Permanent Lok Adalat must make the parties aware of the
aforesaid aspect and, even if, they are giving consent for
playing an adjudicatory role by the Permanent Lok Adalat,
then only the Permanent Lok Adalat can decide the dispute
on merits. Thus, under Sub-section (7) of Section 22-C of the
Act, 1987, Permanent Lok Adalat must offer the terms of
settlement on its own. If the settlement is not arrived at,
then the Permanent Lok Adalat should inform the parties
that whether they wish that dispute may be decided on
merits by Permanent Lok Adalat. This option ought to have
been given and there must be a positive answer from both
the parties. If one of the parties to the dispute is denying the
adjudication of the dispute, Permanent Lok Adalat shall not
decide the dispute on merits. Permanent Lok Adalat shall
also make the parties aware that it is not bound by the
provisions of the Code of Civil Procedure and likewise, it is
also not bound by the provisions of Indian Evidence Act.
Permanent Lok Adalat will also make the parties aware
before exercising powers under Sub-section (8) of Section 22-
C of the Act, 1987, that the award, passed by the Permanent
Lok Adalat, will be a final one and no appeal shall lie and
despite this awareness, if both the parties to the dispute are
giving consent that Permanent Lok Adalat can decide the
dispute on merits, then only Permanent Lok Adalat shall
decide the dispute on merits, otherwise the matter will again
go to the normal course or the parties will be free to take
recourse under the law. This Safeguard is necessary to make
the parties aware, because several parties to the dispute may
not be agreeable for their matters to be decided by the
Permanent Lok Adalat, where neither the provisions of Code
of Civil Procedure nor the provisions of Indian Evidence Act
is applicable. Even, no appeal is provided under the Act,
1987 against the award of Permanent Lok Adalat under
Section 22-E of the Act, 1987.
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(viii) Looking to the scheme of the Act, it appears that
any of the parties to a dispute can make an application to a
Permanent Lok Adalat for settlement of the dispute, as per
Sub-section (1) of Section 22-C of the Act. Thus, any
complex matter may come to the Permanent Lok Adalat
unilaterally, upon an application by a single party, or
without a joint application by the parties to the dispute also,
any party can prefer an application before the Permanent
Lok Adalat for settlement of the dispute and, therefore,
Permanent Lok Adalat ought to follow, as stated
hereinabove, the procedure and the requirement of Sub-
section (7) of Section 22-C of the Act, 1987, and if no
settlement is arrived at, then again, option should be given
to the parties to the dispute, after making them aware of the
non-applicability of the provisions of the Code of Civil
Procedure and the provisions of Indian Evidence Act and
also that there shall be no appeal against the award, passed
by the Permanent Lok Adalat, and even after this awareness,
if both the parties give consent that Permanent Lok Adalat
may decide the dispute on merits, then only Permanent Lok
Adalat shall exercise powers under Sub-section (8) of Section
22-C of the Act, 1987, but if one of the parties is refusing for
adjudication, on merits, of the dispute by Permanent Lok
Adalat, it shall not decide the dispute on merits. The primary
role of the permanent Lok Adalat is settlement and it can
wear a robe of the court for playing adjudicatory role, only
upon consent of all the parties to the dispute and not
otherwise.
(ix) In the facts of the present case, neither the
procedure, as stated hereinabove, under Sub-section (7) of
Section 22-C of the Act, 1987, has been followed i.e. giving
the terms of settlement, by Permanent Lok Adalat to the
parties to the dispute, nor their consent has been taken prior
to playing an adjudicatory role under Sub-section (8) of
Section 22-C of the Act. Consent or sanction of all the
parties to the dispute before adjudication on merits under
Sub-section (8) of Section 22-C of the Act, 1987, is a
condition precedent. Willingness of the parties to the dispute
for adjudication, on merits, of a dispute, is at a pivotal
position. Permanent Lok Adalat is basically not a court at all.
Only as an exceptional case, with consent of the parties, the
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Permanent Lok Adalat can play an adjudicatory role. It is a
prime duty, vested in the Permanent Lok Adalat, before
exercising powers under Sub-section (8) of Section 22-C of
the Act, 1987, to make the parties aware about non-
applicability of the provisions of Code of Civil Procedure and
the provisions of the Indian Evidence Act and also that the
award, passed by the Permanent Lok Adalat, is a non-
appellable order and, thereafter, the Permanent Lok Adalat
must ask for the consent of the parties to the dispute. Such
consent must be reduced in writing by the parties, so as to
avoid future complications and upon taking such
pursis/joint application, signed by both the parties to the
dispute that they are ready and willing for getting decision
on merits, by the Permanent Lok Adalat, of their dispute,
and they are aware that the provisions of the Code of Civil
Procedure and the provisions of Indian Evidence Act are not
applicable and the award, passed by the Permanent Lok
Adalat, is also not appellable, this type of written joint
pursis/joint application, signed by both the parties, must be
taken on record, henceforth, by the Permanent Lok Adalat,
and thereafter only, it shall exercise the powers of deciding,
on merits, the dispute or disputes between the parties under
Sub-section (8) of Section 22-C of the Act, 1987. If there is
no consent by any of the parties to the dispute, Permanent
Lok Adalat shall refrain itself, from exercising powers under
Sub-section (8) of Section 22-C of the Act, 1987. It has also
been held by the Hon’ble Supreme Court in the case of State
of Punjab Vs. Jalour Singh (supra), as reported in (2008)2
SCC 660, in paragraph no.9, as under:
“9. But we find that many sitting or retired Judges, while
participating in the Lok Adalats as members, tend to conduct the
Lok Adalats like courts, by hearing parties, and imposing their
views as to what is just and equitable, on the parties. Sometimes
they get carried away and proceed to pass orders on merits, as in
this case, even though there is no consensus or settlement. Such
acts, instead of fostering alternative dispute resolution through the
Lok Adalats, will drive the litigants away from the Lok Adalats.
The Lok Adalats should resist their temptation to play the part of
judges and constantly strive to function as conciliators. The
endeavour and effort of the Lok Adalats should be to guide and
persuade the parties, with reference to principles of justice, equity
and fair play to compromise and settle the dispute by explaining
the pros and cons, strengths and weaknesses, advantages and
disadvantages of their respective claims.”
(Emphasis supplied)
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(x) If against the desire of the parties, a dispute is
decided on merits under Sub-section (8) of Section 22-C of
the Act, 1987, where neither the provisions of the Code of
Civil Procedure are applicable, nor the provisions of Indian
Evidence Act are applicable, nor the order is appellable (as
per Section 22-D and 22-E of the Act, 1987), then no party
will come for settlement of the dispute at a pre-litigation
stage.
(xi) It appears that in the present case, the primary
role has been forgotten by the Permanent Lok Adalat.
Adjudicatory role under Section 22-C (8) of the Act, 1987,
always depends upon the consent of all the parties to the
dispute. If there is a consent by all the parties, then only
Permanent Lok Adalat can decide the dispute on merits and
that too, after making the parties to the dispute fully aware
of non-applicability of the provisions of Code of Civil
Procedure and the provisions of Indian Evidence Act and
after making aware the parties to the dispute that there shall
be no appeal against the award, passed by the Permanent
Lok Adalat.
(xii) It has been held by the Hon’ble Supreme Court in
the case of United India Insurance Co. Ltd. Vs. Ajay Sinha, as
reported in (2008)7 SCC 454, in paragraph nos. 25, 26 and
41, as under:
“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 from a
definite opinion; to render judgment. (see Advanced Law Lexicon
3rd Adition 2005 at 1253). Any award made by the Permanent Lok
Adalat is executable as a decree. No appeal there against shall lie.
The decision of the Permanent Lok Adalat is final and inding on
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.
26. An option is given to any party to a dispute. It may be a
public utility service provider or a public utility service recipient.
The service must have some relation with public utility. Ordinarily,
13insurance service would not come within the public utility service.
But having regard to the statutory scheme, it must be held to be
included thereunder. It is one thing to say that an authority is
created under a statute to bring about a settlement through
alternate dispute resolution mechanism but it is another thing to
say that an adjudicatory power is conferred on it. Chapter VI-A,
therefore, in our opinion, deserves a closer scrutiny. In a case of
this nature, the level of scrutiny must also be high. (See Anuj Garg
v. Hotel Assn. of India).
41. We must guard against construction of a statute which
would confer such a wide power in the Permanent Lok Adalat
having regard to sub-section (8) of Section 22-C of the Act. The
Permanent Lok Adalat must at the outset formulate the questions.
We, however, do not intend to lay down a law, as at present
advised, that Permanent Lok Adalat would refuse to exercise its
jurisdiction to entertain such cases but emphasise that it must
exercise its power with due care and caution. It must not give an
impression to any of the disputants that it, from the very beginning
has an adjudicatory role to play in relation to its jurisdiction
without going into the statutory provisions and restrictions
imposed thereunder.”
(Emphasis supplied)
7. Thus, in view of the aforesaid decision also, adjudicatory role
should not be played, so hurriedly, unless the independence
and impartiality of the Tribunal is properly established,
unless the incumbents are found eligible to determine the
lis. Thus, a precaution and warning has been given in the
aforesaid paragraphs, of an inbuilt danger for playing an
adjudicatory role, under Section 22-C (8) of the Act, 1987
and, therefore, written joint consent by all the parties is a
minimum requirement, over and above, impartiality and
capability of the members of the Permanent Lok Adalat.
None of the aforesaid aspects has been properly appreciated
by the Permanent Lok Adalat in the facts and circumstances
of the present case and, therefore, I hereby quash and set
aside the order passed by the Permanent Lok Adalat,
Dhanbad, dated February 8, 2008, in Permanent Lok Adalat
Case No. 91 of 2007, which is Annexure 2 to the memo of
present writ petition.
(D.N.Patel, J.)
A.K.Verma/Anit