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CASE NO.: Appeal (civil)  522 of 2008

PETITIONER: State of Punjab & Anr.

RESPONDENT: Jalour Singh & Ors.

DATE OF JUDGMENT: 18/01/2008

BENCH: CJI K G Balakrishnan,G P Mathur & R V Raveendran

JUDGMENT: O R D E R (Arising out of SLP [C] No.3847/2005] K.G. Balakrishnan, CJI :

       Delay condoned. Leave granted. Heard the learned counsel.

2.      Respondents 1 and 2 herein - the husband and son of one Amarjit  Kaur who died in a motor accident involving a Punjab roadways bus, filed a  claim petition before the Motor Accident Claims Tribunal, Faridkot. As  against the compensation of Rs.5 lacs claimed, the Tribunal, on 1.12.1998  awarded a compensation of Rs.1,44,000. Not being satisfied with the  quantum of compensation, respondents 1 and 2 filed FAO No.1549/1999  before the Punjab & Haryana High Court. The said appeal was referred to  Lok Adalat organised by the High Court, for settlement. 3.      The High Court Lok Adalat took up the case on 3.8.2001. The parties  were not present. Their counsel were present. After hearing them the Lok  Adalat passed the following order :    FAO No.1549 of 1999

"After hearing counsel for the parties, we propose to increase in the  amount of compensation, which is considered just and reasonable in this  case.

The accident took place on March 4, 1997. Amarjit Kaur, aged about 32  years, died in the accident. Her husband and minor son claimed  compensation. The Tribunal granted Rs.1,44,000/- along with 12 percent  per annum interest. Feeling dissatisfied, they are in appeal.

The deceased was doing household work and also looking after some  cattle and selling milk. The tribunal fixed earning capacity at Rs.900/- and  dependency at Rs.600/- Applying multiplier of 15, compensation was  worked out at Rs.1,08,000/-. To this a sum of Rs.28,253 on account of  medical expenses, Rs.2147/- towards incidental charges and Rs.5600/-  towards hospital charges were allowed. We are of the opinion that the  earning capacity of the household wife has been determined on the lower  side. An ordinary labourer gets Rs.1200/- per mensem and at the lowest at  least Rs.1200/- should have been determined the earning capacity of the  deceased and dependency of the claimants at Rs.800/-. The multiplier of  15 applied in this case is also on the lower side. Since the deceased was  aged 32 years, as per Schedule attached to the Motor Vehicles Act,  multiplier should have been 17. Thus, compensation worked out at  Rs.1,63,200/- (Rs.800/- x 12 x 17). To this a sum of Rs.7,000/- is added  i.e. Rs.2,000/- towards funeral expenses and Rs.5,000/- towards loss of  consortium, payable to the husband, making total compensation payable at  Rs.1,70,200/-. The Tribunal under this head allowed compensation of  Rs.1,08,000/- i.e. under this head the claimants would get Rs.62,200/- over  and above that amount. The compensation granted under other heads is  considered just and reasonable.

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Thus, while allowing the appeal, we grant compensation of Rs.62,200/-  over and above the amount awarded by the Tribunal to the appellants,  who would share it equally. On this amount they will get interest at the  rate of 12 percent per annum from the date of filing of the claim petition  i.e. July 28, 1997, till payment. Two months time is allowed to the  respondents to make the payment.

If the parties object to the proposed order as above, they may move  the High Court within two months for disposal of the appeal on merits  according to law.

Copies of the order be supplied to the counsel for the parties."

                                                       (emphasis supplied)

4.      Punjab Roadways (second appellant herein) filed an application dated  15.1.2002 (CM No.13988-CII of 2002 in FAO No.1549/1999) to set aside  order dated 3.8.2001 passed by the Lok Adalat, as it was passed without  their consent. The said application was rejected by a learned Single Judge by  a short order dated 11.9.2002 on the ground that such objections were not  maintainable or entertainable, having regard to its decision in Charanjit  Kaur v. Balwant Singh (CM No.13988-CII of 2002 in FAO No.1827/1999  decided on 30.7.2002) and other cases. In Charanjit Kaur, the learned single  Judge had held that an order passed by the Lok Adalat can be challenged  only by a petition under Article 227 of the Constitution, as all proceedings  before the Lok Adalat are deemed to be judicial proceedings and Lok Adalat  is deemed to be a civil court under section 22(3) of Legal Services  Authorities Act, 1987.

5.      The appellants, therefore, filed a petition under Article 227 of the  Constitution (Civil Revision Petition No.970/2004) challenging the order  dated 3.8.2001 of the Lok Adalat. The said petition was rejected by another  single Judge of the High Court by the following order dated 26.2.2003 :

"The instant petition has been filed under Article 227 of the Constitution  seeking necessary directions quashing the order dated 3.8.2001 passed by  the Lok Adalat enhancing the compensation in favour of the claimant- respondents to the tune of Rs.62,000/-. The order of the Lok Adalat  specifically indicated that if the parties were not satisfied, they could file  objections within a period of two months for the disposal of the appeal on  merits in accordance with law. The petitioners-State had filed objections  which were dismissed on 11.9.2002 and the order of the Lok Adalat dated  3.8.2001 had attained finality.

Now the instant petition has been filed against challenging the order of the  Lok Adalat dated 3.8.2001. Nothing has been pointed out showing that  such a petition under Article 227 of the Constitution is maintainable.  Apart from the fact that the Lok Adalat has granted time for filing the  objections and the objections have been dismissed, the meager increase in  the amount of compensation does not warrant any interference.

In view of the above, the petition is dismissed being not maintainable."

                                                       (emphasis supplied)

The said order is under challenge in this appeal by special leave.

6.      We are rather dismayed at the manner in which the entire matter has  been dealt with, undermining the very purpose and object of Lok Adalats. At  every stage the Lok Adalat and the High Court have acted in a manner  contrary to law.  

7.      A reference to relevant provisions will be of some assistance, before  examination of the issues involved. Section 19 of the Legal Services

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Authorities Act, 1987 (’LSA Act’ for short) provides for organisation of Lok  Adalats. Section 19(5)(i) of LSA Act provides that a Lok Adalat shall have  jurisdiction to determine and to arrive at a compromise or settlement  between the parties to a dispute in respect of any case pending before any  court for which the Lok Adalat is organised. Section 20 relates to cognizance  of cases by Lok Adalats. Sub-section (1) refers to Lok Adalats taking  cognizance of cases referred to by courts and sub-section (2) refers to Lok  Adalats taking cognizance of matters at pre-litigation stage. The relevant  portions of other sub-sections of section 20, relating to cases referred by  courts, are  extracted below :

"(3)    Where any case is referred to a Lok Adalat under sub-section (1)  \005. the Lok Adalat shall proceed to dispose of the case \005 and arrive at a  compromise or settlement between the parties.

(4)     Every Lok Adalat shall, while determining any reference before it  under this Act, act with utmost expedition to arrive at a compromise or  settlement between the parties and shall be guided by the principles of  justice, equity, fair play and other legal principles.

(5)     Where no award is made by the Lok Adalat on the ground that 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.

(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)]"

                                                               (emphasis supplied) 8.      It is evident from the said provisions that 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 put 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 principles of justice, equity, 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.  

9.      But we find that many sitting or retired Judges, while participating in  Lok Adalats as members, tend to conduct 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 Lok Adalats,  will drive the litigants away from Lok Adalats. 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, strength and weaknesses, advantages and disadvantages of their

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respective claims.

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 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 Lok Adalats and legal services.  

11.     The travails of the parties did not end with the Lok Adalat. Because  the Lok Adalat directed the aggrieved party to move the High Court for  disposal of appeal on merits if they had objection to its order, the appellants  moved the High Court by an application in the appeal, stating that they had  not agreed to the enhancement proposed by Lok Adalat and praying that the  order of the Lok Adalat increasing the compensation by Rs.62,200 may be  set aside as there was no settlement or compromise. The learned single  Judge failed to notice that there was no settlement or compromise between  the parties; that the order made by the  Lok Adalat was not an award in  terms of any settlement as contemplated under the LSA Act; that the Lok  Adalat had clearly stated that the parties may either agree to it, or move the  High Court for disposal of the appeal on merits in accordance with law; and  that in the absence of any settlement and ’award’, the appeal before the High  Court continued to be pending and could not have been treated as finally  disposed of. The learned single Judge instead of perusing the order of the  Lok Adalat and hearing the appeal on merits, proceeded on a baseless  assumption that the order dated 3.8.2001 of the Lok Adalat was a binding  award and therefore an application to hear the appeal, was not maintainable  and the only remedy for the appellants was to challenge the order of the Lok  Adalat by filing a writ petition under Article 227 of the Constitution.  

12.     It is true that where an award is made by Lok Adalat in terms of a  settlement arrived at between the parties, (which is duly signed by parties  and annexed to the award of the Lok Adalat), it becomes final and  binding  on the parties to the settlement and becomes executable as if it is a decree of  a civil court, and no appeal lies against it to any court. If any party wants to  challenge such an award based on settlement, it can be done only by filing a   petition under Article 226 and/or Article 227 of the Constitution, that too on  very limited grounds. But where no compromise or settlement is signed by  the parties and the order of the Lok Adalat does not refer to any settlement,  but directs the respondent to either make payment if it agrees to the order, or  approach the High Court for disposal of appeal on merits, if it does not  agree, is not an award of the Lok Adalat. The question of challenging such  an order in a petition under Article 227 does not arise. As already noticed, in  such a situation, the High Court ought to have heard and disposed of the  appeal on merits.

13.     But the travails continued. In view of the order dated 11.9.2002  passed by the learned single Judge holding that a petition under Article 227  has to be filed to challenge the order of the Lok Adalat, the appellants filed a  petition under Article 227. But the said petition was dismissed by another  single Judge on the ground that the order of Lok Adalat passed on 3.8.2001  had attained finality as the objections to it were dismissed on 11.9.2002 and  a petition under Article 227 was not maintainable to challenge the order of  Lok Adalat. He failed to notice that the order dated 3.8.2001 was neither a  decision nor had it attained finality. He also failed to notice that the  objections to the order were not rejected by the High Court after

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consideration on merits. He also overlooked the fact that the learned Judge  who decided the appellants’ application, had directed that the order of the  Lok Adalat should be challenged by filing a petition under Article 227. Be  that as it may.  

11.     Thus we find that the Lok Adalat exercised a power/jurisdiction not  vested in it. On the other hand, the High Court twice refused to exercise the  jurisdiction vested in it, thereby denying justice and driving the appellants to  this Court. In this process, a simple appeal by the legal heirs of the deceased  for enhancement of compensation, has been tossed around and is pending for  more than eight years, putting them to avoidable expense and harassment.

12.     We therefore allow this appeal and quash the order dated 3.8.2001 of  the Lok Adalat as also set aside the orders dated 11.9.2002 and 26.2.2003 of  the High Court. As a consequence, the High Court shall hear and dispose of  FAO No.1549/1999 which continues to be pending on its record, on merits  in accordance with law. The High Court is requested to dispose of the appeal  expeditiously. Parties to bear their respective costs.