The Supreme Court has observed that Permanent Lok Adalat has adjudicatory functions under Legal Services Act, 1987 and is empowered to decide the dispute between the parties on merits following the requisite steps.

The Division Bench comprising of Justice DY Chandrachud and Justice PS Narasimha in an appeal held that conciliation proceedings under Section 22-C of the LSA Act are mandatory in nature and therefore even if the opposite party doesn't appear, the Permanent Lok Adalat is still bound to follow the step-by-step procedure.

The Court opined that main goal is conciliation and settlement of disputes in relation to public utilities, with a decision on merits always being the last resort.

The appeal filed by Canara Bank assailed the High Court judgement via which its writ appeal was dismissed on two aspects:

(1) 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

(2) the Permanent Lok Adalat could not have acted as a regular civil court in adjudicating the proceedings.

This raised two legal questions before the Court to be decided:

(i) Whether under Section 22-C of the LSA Act conciliation proceedings are mandatory; and

(ii) Whether the Permanent Lok Adalats have adjudicatory functions under the LSA Act.?

Legislative Framework of Legal Services Act 1987

The Court after analysing the neccessary statutes stated 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 proceeding.

"A Lok Adalat shall only attempt to reach a compromise or settlement between the parties 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."

The Court reflected on the fact that the Permanent Lok Adalats are constituted under Chapter VI-A of the Legal Services Act, 1987 titled “Pre-Litigation Conciliation and Settlement."

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 civil court shall execute the order as if it were a decree made by that court (Section 22-E(5)). The entrustment of wider powers to the Permanent Lok Adalat is supported by its membership, comprising of a District Judge or Additional District Judge or someone who has held judicial office higher in rank than that of a District Judge (as compared to only judicial officers in Lok Adalats).

The Court laid out the 5 Steps scheme on how a matter is to proceed before the Permanent Lok Adalat. It noted that 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. 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 Legal Services Act, 1987 was upheld.

The Court concluded 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 Legal Services Act, 1987 are mandatory in nature.

Answering the second question, the Court further analysed the relevant provisions and cited United India Assurance Co. Ltd. v. Ajay Sinha & Ors. wherein it was held that the Permanent Lok Adalat performs an adjudicatory role if the conciliation between the parties fails. It also mentioned InterGlobe Aviation Ltd. vs. N.Satchidanand, 2011 Latest Caselaw 467 SC to state that 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.

The Court went on to reiterate that the powers of the Lok Adalat constituted under Section 19 of the Legal Services Act, 1987 are to be distinguished from the nature of powers granted to a Permanent Lok Adalat established under Section 22-B of the Legal Services Act, 1987 . 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 Legal Services Act, 1987

Case Title: Canara Bank Versus G S Jayarama

Case Details: Civil Appeal No. 3872 of 2022

Coram: Justice DY Chandrachud and Justice PS Narasimha

Read Judgement @LatestLaws.com:

Share this Document :

Picture Source :

 
Sheetal Joon