The Divisional Manager vs Ashish Kumar Kantha And Another
2022 Latest Caselaw 4271 Ori

          IN THE HIGH COURT OF ORISSA AT CUTTACK

                            W.P.(C) No.8808 of 2020
                            (Through hybrid mode)

        The Divisional Manager, NIC, Ltd.     ....             Petitioner

                                    Mr. N.K. Mishra, Senior Advocate

                                   -versus-

        Ashish Kumar Kantha and another       ....      Opposite Parties

                                              Mr. A.K. Roy, Advocate


                 CORAM: JUSTICE ARINDAM SINHA
                                  ORDER

Order                            29.08.2022
No.
  9.     1.    Mr. Mishra, learned senior advocate appears on behalf of

petitioner insurance company. He submits, the insured was not a

person eligible to seek alternate dispute resolution from the

Permanent Lok Adalat (PLA). He refers to, inter alia, the preamble

and section 12 in Legal Services Authorities Act, 1987 to submit, the

alternate dispute resolution forum was established to provide justice

to weaker sections of the society. He draws attention to impugned

award dated 31st October, 2019 made by the PLA in favour of the

insured, being a company with authorized capital of Rs.2 crores and

paid up capital of Rs.1.76 crores. Such a party went to the PLA and

said that there should be adjudication on repudiation of the claim. The

// 2 //

PLA, without following procedure provided for adjudication by

Courts, passed impugned award.

2. In keeping with object of the Act, organization and

establishment of Lok Adalats and Permanent Lok Adalats, he submits

with reference to section 12 and rule 16 in Orissa State Legal Services

Authority Rules, 1996, it is legal services offered by State to every

person, whose annual income from all sources does not exceed three

lakhs rupees. That is why, inter alia, Permanent Lok Adalats were

established. He lays emphasis on term 'Lok' to submit, it must be a

person entitled to legal services, being member of weaker sections of

the society, who is entitled to approach the PLA. Opposite parties

may be corporations or banks but a corporation with substantial

financial presence cannot take advantage of provisions in the Act to

bypass adjudication in Court. He submits, it is irrelevant that value of

the property has been increased to Rs.1 crore, from initially legislated

value of Rs.10 lakhs.

3. Mr. Roy, learned advocate appears on behalf of opposite party

no.1 and relies on judgment dated 19th May, 2022 of the Supreme

Court in Civil Appeal no.3872 of 2022 (Canara Bank v. G.S.

Jayarama), paragraphs-18, 24 and 30. On query from Court Mr. Roy

submits, in the case, neither the preamble nor section 12 was under

consideration by the Supreme Court.

// 3 //

4. He submits, his client is not entitled to and did not seek legal

aid. That is not a bar for his client to have moved the PLA. It did so

with a claim within increased property value of Rs.1 crore and has

obtained impugned award. He submits, the Supreme Court in Rajoo

v. State of MP reported in (2012) 8 SCC 553, in paragraph-10 had

noticed that section 12 of the Act lays down criteria for providing

legal services.

5. Preamble of Legal Services Authorities Act, 1987 is

reproduced below.

"An Act to constitute legal services authorities to provide free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities, and to organize Lok Adalats to secure that the operation of the legal system promotes justice on a basis of equal opportunity."

6. Court required production of the policy and petitioner filed

additional affidavit disclosing it. Insured, named in the policy, is a

private limited company. Court has ascertained that the company was

petitioner in the PLA. Its pleading was signed by a Director.

Procedure required by rule 1 in order XXIX of the Code of Civil

// 4 //

Procedure appears to have been satisfied. The point for adjudication

is, however, whether the company could have been petitioner before

the PLA. More so because, by section 22-E every award of the PLA,

either on merits or on terms of settlement, is mandated to be final and

binding on all parties, deemed to be decree of civil Court, as cannot

be called in question in any original suit, application or execution

proceeding and capable of execution. No appeal is provided.

Impugned award is for payment of Rs.42,64,051/- along with accrued

interest. Since the company approached the PLA before either party

had moved Court, impugned award was made by the PLA, on

deciding the dispute.

7. The insured is a corporation. It is not a citizen, who might face

denial by reason of economic or other disability, of securing justice.

Though only specific provisions in the Code are made applicable to

both Lok Adalats and Permanent Lok Adalats, regarding summoning

and enforcing attendance of witnesses, discovery and production of

documents, reception of evidence on affidavits, requisition of public

record or document from any Court or office and such other matter as

may be prescribed, rest of procedure provided by the Code may not

be followed by either or both. It is noticed that in fulfilling object of

the Act, while Lok Adalats are organized consisting of serving or

retired judicial officers and other persons, having same specific power

// 5 //

under the Code as Permanent Lok Adalats, they cannot adjudicate.

Permanent Lok Adalats consisting, inter alia, of a person, who has

held office of District Judge or higher rank and two others, can.

Section 22-C(1) provides for value of the property in dispute to not

exceed Rs.10 lakhs with proviso also that the Central Government

may, by notification, increase the limit in consultation with the

Central Authority. It was increased to one crore rupees by notification

dated 20th March, 2015 but corresponding amendment not yet made to

second proviso under the section.

8. Apart from section 12 and rule 16, there is no specific

provision, pursuant to the preamble, as to who can approach the Lok

Adalats or Permanent Lok Adalats. Sections 12 and 13 mention

persons entitled to legal services. Sections 19 and 20 mention parties

to a dispute before or after approach to Court and section 22C

mentions parties to a dispute before approach to Court. It is clear from

mention of persons in sections 12 and 13 and of parties in sections 19,

20 and 22-C, the latter can include juristic persons like corporations

and banks. For purpose of interpretation, as to who can approach the

PLA, there has to be reliance, therefore, on the preamble. It cannot be

denied that under the Act, Lok Adalats are to be organized and

Permanent Lok Adalats established, to secure that operation of the

legal system promotes justice of equal opportunity. A corporation

// 6 //

such as the insured cannot claim equality with any member of weaker

sections in the society. It has moved the PLA to obtain award in

summary procedure, when it cannot be said that it could not have

obtained or secured justice in a Court of law, by reason of financial

constraint. At instance of the insured, on repudiation of claim under

the policy, where aggregate sum insured was Rs.70,79,176/- on

machinery requiring aggregate premium (with tax etc.) at Rs.89,162/-

for period of one year, the PLA adjudicated since, value of property

conferring jurisdiction on it stood increased, by notification dated 20th

March, 2015, to Rs.1 crore.

9. It is true that law declared in Canara Bank (supra) was,

observation made by the Single and Division Benches of the

Karnataka High Court that, Permanent Lok Adalats cannot act as a

regular civil Court in adjudicating dispute between the parties, were

clearly incorrect. Nevertheless, section 22-C enables any party to a

dispute, before it is brought before any Court, to make an application

to a Permanent Lok Adalat, for settlement of the dispute. The PLA

stands moved for that purpose. Up to sub-section (7) in said section,

emphasis is on settlement. It is only in sub-section (8), where, on

parties' failure to reach at an agreement under sub-section (7), the

PLA shall decide the dispute. This provision was enacted by

Parliament, it must be remembered, on provision of pecuniary limit of

// 7 //

property value below Rs.10 lakhs. Here, once again looking at

provisions in sections 12, 13 and rule 16, it is to be seen that legal

services eligibility and entitlement are both, for prosecuting and

defending. Hence, in prosecuting, the Adalats are approach friendly to

the weaker sections and per rule 16, legal services available are

provided for litigation in Courts, other than the Supreme Court.

10. The writ Court is confronted with impugned award, which may

have been on good adjudication but denies remedy of appeal to

petitioner, against it, though deemed as a decree. Judicial review is

limited in scope, as not possible on merits. This appears to militate

against the object of securing justice to all since, had the matter been

adjudicated in any other forum, there would have been built in

statutory remedy of appeal. This Bench in discharging function under

assignment entry "writ petitions under the Legal Services Authorities

Act", had to and will surely be required to deal with large number of

writ petitions challenging awards made by the PLA. Lok Adalats

cannot adjudicate, as declared by Canara Bank (supra), its awards

based on settlement, to result in closure on those disputes, with

section 21 providing for refund of Court fees. Awards on adjudication

by the PLA give rise to writ petitions challenging them, which goes

against object of the Act in providing for resolution of disputes

through alternate forum.

// 8 //

11. In view of aforesaid, the insured corporation could not have

moved the PLA to use the alternate dispute resolution forum,

established to secure operation of the legal system to promote justice

on a basis of equal opportunity, inasmuch as it cannot say it is

unequal or at a disadvantage in obtaining adjudication under general

law. In adjudicating cause of such a party the PLA was drawn into

illegality. Impugned award is set aside and quashed.

12. Mr. Roy again relies on Canara Bank (supra) to point out that

the bank had moved the Lok Adalat and the matter reached the

Supreme Court to result in the judgment. Facts recited in the

judgment show that private respondent in the PLA did not participate

in conciliation at instance of it. The PLA proceeded to adjudicate and

pass award. The bank initiated execution proceedings, while award

debtor moved the writ Court and had the award set aside and quashed.

The bank preferred appeal unsuccessfully and thereupon the civil

appeal before the Supreme Court. In this connection, a passage from

the judgment is extracted and reproduced below.

"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 as a regular civil Court in

// 9 //

adjudicating the proceedings"

Point taken in this writ petition and dealt with as above was neither

taken nor considered by the Supreme Court in Canara Bank (supra).

Needless to mention the insured will be entitled to exclusion of time

provided under Limitation Act, 1963, in event it wishes to institute

legal proceeding, on its cause, before appropriate forum.

13. Mr. Mishra submits, by order dated 18th August, 2020 his client

was directed to deposit 30% of impugned award. His client had

deposited Rs.10,24,216/- in the Registry on 11th September, 2020. He

prays for direction of refund, with accrued interest. The Registry will

refund the same to petitioner in event, within four weeks from date,

suit or other proceeding has not been filed by the insured. Otherwise,

the security be transferred to the forum of that proceeding, to be held

in favour of it. This is because there already has been an adjudication,

wherein petitioner's liability has been pronounced.

14. The writ petition is disposed of.

(Arindam Sinha) Judge Sks