HIGH COURT OF JUDICATURE AT ALLAHABAD A.F.R. Court No. - 2 Case :- WRIT - C No. - 39879 of 2015 Petitioner :- Life Insurance Corporation Of India Respondent :- Syed Zaigham Ali And Anr. Counsel for Petitioner :- Prakash Padia Counsel for Respondent :- Manish Tandon Hon'ble Suneet Kumar,J.
Heard learned counsel for the parties and perused the record.
The petitioner Life Insurance Corporation of India1 is assailing the order dated 28 February, 2015, passed by the second respondent, Permanent Lok Adalat, Kanpur Nagar in Complaint Case No. 41 of 2014.
Sri Maneesh Tandon, learned counsel has put in appearance on behalf of the first respondent.
Learned counsel for the parties would submit that the matter be decided finally without calling for counter affidavit as the facts are not in dispute.
On the consent of the parties, the petition is being decided finally as per the Rules of the Court.
Wife of the first respondent was insured under policies "Jeevan Anand" and "Wealth Plus" by the Corporation. In both the policies, the first respondent was the nominee. On the death of the insured, the first respondent claimed the sum from the Corporation which was not paid, consequently, a petition was filed before the Permanent Lok Adalat2, which was decided by the impugned order dated 28 February, 2015, directing the Corporation to pay Rs. 7,50,000/- to the first respondent along with interest.
The submission of the learned counsel for the petitioner is that in terms of Section 22 (C) of Legal Services Authorities Act, 19873, an attempt should have been made by the PLA for settlement of the dispute interse parties. The provision being mandatory, therefore it was incumbent upon the PLA to have conducted conciliation proceeding to settle the dispute. Though, the impugned order records that despite conciliation the parties could not reach a settlement, therefore, the matter was being adjudicated, is incorrect. Whereas, the entire order sheet would show that not a single date was fixed by the PLA for settlement of dispute interse parties. Further, it is contended that PLA had no jurisdiction to entertain the petition, as the claimant had not approached the prescribed forum under the Redressal of Public Grievance Rules, 1998.
Confronted with the aforementioned submission, Sri Manish Tandon, learned counsel appearing for the respondent would fairly submit that the matter be remanded for the limited purpose to enable PLA to reach a settlement between the parties but would submit that the power of PLA to conciliate and on failure to adjudicate is in addition to and not in derogation of any other forum provided under any other Act or Rules.
Rival submissions fall for consideration.
The advent of the Legal Services Authorities Act, 1987 gave a statutory status to the Lok Adalats, pursuant to the constitutional mandate in Article 39-A of the Constitution of India. Lok Adalats have been created to restore access to remedies, protections and alleviate the institutional burden of the millions of petty cases clogging the regular courts. Thus, it cannot be doubted that Lok Adalats are serving an important public purpose. (Refer: M.P. State Legal Services Authority Versus Prateek Jain4), In Salem Advocate Bar Association (2) Versus Union of India5, the Supreme Court upheld the constitutional validity of 1987 Act.
The Legal Services Authorities (Amendment) Act, 2002 (for short, '2002 Amendment Act'), a new Chapter VI-A titled "Pre-litigation Conciliation and Settlement" comprising of Sections 22-A to 22-E came to be inserted. The Supreme Court in Bar Council of India Versus Union of India6, upheld the vires of 2002 Amendment Act. Chapter VI-A enables a party to a dispute relating to public utility service to approach the Permanent Lok Adalat (PLA) for the settlement of dispute before the dispute is brought before any court.
The establishment of Permanent Lok Adalats and conferring them jurisdiction upto a specific pecuniary limit in respect of one or more public utility services as defined in Section 22-A(b) before the dispute is brought before any court by any party to the dispute is not anathema to the rule of law.
The Permanent Lok Adalats under the 1987 Act (as amended by 2002 Amendment Act) are in addition to and not in derogation of Fora provided under various statutes.
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. Their procedures may differ, but the functions are not essentially different. Both courts and tribunals act "judicially".
There is no compromise on the quality of determination of dispute since the Permanent Lok Adalat has to be objective, decide the dispute with fairness and follow the principles of natural justice. Sense of justice and equity continue to guide the Permanent Lok Adalat while conducting conciliation proceedings or when the conciliation proceedings fail, in deciding a dispute on merit. The plea of the petitioner that the respondents had an alternative remedy is, therefore, rejected.
The Supreme Court in United India Insurance Co. Ltd. Versus Ajay Sinha and another, observed that the term "conciliation" is not defined under the Act.
"It should, therefore, be considered from the perspective of Arbitration and Conciliation Act, 1996. In order to understand what Parliament meant by 'Conciliation', we have necessarily to refer to the functions of a 'Conciliator' as visualized by Part III of the 1996 Act. Section 67 describes the role of a conciliator. Sub-section (1) states that he shall assist parties in an independent and impartial manner. Subsection (2) states that he shall be guided by principles of objectivity, fairness and justice, giving consideration, among other things, to the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. Sub-section (3) states that he shall take 17 into account "the circumstances of the case, the wishes the parties may express, including a request for oral statements". Sub-section (4) is important and permits the 'conciliator' to make proposals for a settlement."
It is one thing to say that an authority is created under a statute to bring about a settlement through Alternate Dispute Resolution (ADR) mechanism but it is other thing to say that an adjudicatory power is conferred on it. Chapter VI-A, therefore, deserves a closure scrutiny.
Sub-section (1) of Section 22-C speaks of settlement of disputes. The authority has to take recourse to conciliation mechanism. One of the essential ingredients of the conciliation proceeding is that nobody shall be forced to take part therein. It has to be voluntary in nature. The scope of voluntary settlement through the mechanism of conciliation is also limited. If the parties in such a case can agree to come to settlement in relation to the principal issues, no exception can be taken thereto as the parties have a right of self determination of the forum, which shall help them to resolve the conflict, but when it comes to some formal differences between the parties, they may leave the matter to the jurisdiction of the conciliator. The conciliation only at the final stage of the proceedings would adopt the role of an arbitrator.
Here, however, the Permanent Lok Adalat does not simply adopt the role of an Arbitrator whose award could be the subject matter of challenge but the role of an adjudicator. The Parliament has given the authority to the Permanent Lok Adalat to decide the matter. It has an adjudicating role to play.
In State of Punjab and another Versus Jalour Singh and others7, Supreme Court expressed its dismay with the manner in which the Lok- Adalat matters are dealt with. Chief Justice of India speaking for the Bench, upon noticing the provisions of the Legal Services Authority Act, 1987, observed that whereas Lok Adalat had to arrive at a just settlement in their conciliatory role guided by the principles of justice, equity, fair play and other legal principles, but in that case 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 within a period fixed by it. It was held that such an order is not an Award. The observation of the Supreme court was on the functioning of Lok Adalat, prior to 2002 Amendment Act, but still holds true in the present circumstances.
This Court in National Insurance Co. Ltd. Versus Permanent Lok Adalat8 commented on the working of the PLA:-
"Invariably all cases which came up before this Court, the Court found that Permanent Lok Adalats, in the teeth of said statutory provisions has been only reciting that "conciliation attempted but failed" before proceeding to adjudicate the issue on merits. There is no material invariably as to when this conciliation was resorted to, in what manner and what terms of settlement were formulated so as to invite comments of the parties concerned. This is neither the spirit of the provision nor could be used as a subterfuge to rope in a public utility service provider. It is not a formality, which is to be mechanically discharged. The record must reflect that a bonafide and sincere attempt was put in to work out a possible settlement including the framing of a possible settlement and only when proposed settlement does not get a desired response, then alone Permanent Lok Adalat should proceed to adjudicate on merits, whenever a plea of lack of jurisdiction is raised, it must be appropriately dealt with......................"
In Ajay Sinha's case (supra), the Court observed that the terms "relating to" an "offence" appearing in first Proviso must be interpreted broadly, and as the determination before the Permanent Lok Adalat will involve the question as to whether or not an offence, which is non-compoundable in nature, has indeed been committed, the case falls outside the jurisdiction of the Permanent Lok Adalat. The appeal of the Insurance Company was allowed.
In Torrent Power Ltd. Versus State of U.P., this Court while setting aside the award of the PLA arising from a provisional assessment under Section 126 of the Electricity Act 2003 held that offence relating to theft of electricity is compoundable but observed:
"Thus, where a dispute which is an offence, but is compoundable can be entertained by the Permanent Lok Adalat for the purpose of conciliation and settlement but, upon failure, the Permanent Lok Adalat cannot proceed to decide such matters on merit, if it relates to an offence irrespective of the fact as to whether it is compoundable or not. If the dispute relates to an offence, the Permanent Lok Adalat will have no jurisdiction to decide the matter on merits."
In one such matter, a Bank came up before this Court assailing the injunction order granted by the PLA restraining the bank from proceeding in terms of Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002. PLA not only lacked jurisdiction but had no power to grant injunction.
The Supreme Court in Interglobe Aviation Limited Versus N. Satchidanand9, held that the nature of proceedings before the Permanent Lok Adalat is initially a conciliation which is non-adjudicatory in nature. Only if the parties fail to reach an agreement by conciliation, the Permanent Lok Adalat would have jurisdiction to adjudicate by deciding the dispute. Paragraph 27 is as extracted:-
"27. The nature of proceedings before the Permanent Lok Adalat is initially a conciliation which is non-adjudicatory in nature. Only if the parties fail to reach an agreement by conciliation, the Permanent Lok Adalat mutates into an adjudicatory body, by deciding the dispute. In short the procedure adopted by Permanent Lok Adalats is what is popularly known as `CON-ARB' (that is "conciliation cum arbitration") in United States, where the parties can approach a neutral third party or authority for conciliation and if the conciliation fails, authorize such neutral third party or authority to decide the dispute itself, such decision being final and binding. The concept of `CON-ARB' before a Permanent Lok Adalat is completely different from the concept of judicial adjudication by courts governed by the Code of Civil Procedure. The Permanent Lok Adalat not being a `court', the provision in the contract relating to exclusivity of jurisdiction of courts at Delhi will not apply."
This Court is constrained to observe that the PLAs in the State are not functioning within the parameter of the 1987 Act, erratic orders are being passed even on matters which do not fall within their domain, it is, therefore, expected that the PLA while exercising power under 1987 Act would observe the following points and must at the outset formulate the questions before proceeding to adjudicate. The guidelines are not exhaustive but merely illustrative.
(1) Whether PLA has jurisdiction on the subject matter;
(2) Primary role of PLA is that of conciliation upon failure of the parties to reach an agreement, PLA mutates into an adjudicatory body;
(3) PLA should not give an impression to the disputants that it from the beginning has an adjudicatory role;
(4) PLA being a Tribunal lacks the inherent power of a Court, therefore, cannot grant injunction/interim orders;
(5) The role assigned to PLA is to settle/adjudicate "most of the petty cases which ought not to go in the regular courts would be settled in the pre-litigation stage itself";
(6) Matters where genuineness of the claim itself is in dispute, parties have taken extreme positions, the same, prima facie, may not be the subject matter of conciliation/adjudication, (7) Whether or not an offence, which is non compoundable or compoundable in nature, has indeed been committed would fall outside the jurisdiction of PLA;
Having due regard to the facts and circumstances of the case, the impugned order dated 28 February 2015 passed by the second respondent Permanent Lok Adalat, Kanpur Nagar is set aside. It is provided that Permanent Lok Adalat, Kanpur Nagar would first endeavour to conduct conciliation interse parties to reach a settlement, upon failure adjudication may be resorted to.
Subject to the above, the writ petition is allowed.
Let a copy of this order be placed by the Registrar General before the Chairman, U.P. State Legal Services Authority, Lucknow for circulation to all the PLA in the State.
Order Date :- 21.7.2015 kkm