New India Assurance Company Limited vs Smt. Purnima Rai and Others

Aparesh Kumar Singh

Heard the parties. In this writ petition the award of the Permanent Lok Adalat in Pre-Litigative Case No. 1259 of 2004 dated 30.06.2006 passed by the Permanent Lok Adalat, Dhanbad is under challenged by the petitioner-New India Assurance Company Limited whereby, the learned Court has awarded a sum of Rs. 5,40,000/- as compensation to the respondent Nos. 1 to 9 and directed the petitioner to pay the same within 30 days from the date of award failing which the same shall be paid with interest @ 6% from the date of filing claim petition till the date of payment.

The short facts of the case are that one Paresh Rai died in a road traffic accident and respondent herein filed claim in Permanent Lok Adalat seeking compensation from the insurance Company. It is the case of the petitioner company that the permanent Lok Adalat, thereafter, proceeded to adjudicate the claim raised in connection with Motor Vehicle Accident on merits and passed the award in the manner indicated hereinabove which is contrary to the mandate of Section 22(C)(8) of the Act 1987.

Learned counsel for the petitioner also submits that there was no joint consent between the parties submitted before the Permanent Lok Adalat to decide on the issue agreed between the parties. However, the Permanent Lok Adalat did not follow the steps as required to be undertaken by framing the terms of settlements offering it to both the parties and thereafter on agreement of parties either making the award or on failure to agree only, thereafter, proceeding to decide the dispute on merits as contemplated in Section 22(C)(8) of the Act 1987.

Learned counsel for the petitioner also submits that the legal position in this regard is no longer res integra. So far as, the procedure as has to be followed by the Permanent Lok Adalat before adjudicating the dispute on merits between the parties in a pre litigation stage, the said legal position has been settled in the case of State Bank of India Vs. State of Jharkhand and Another, . It is further submitted that even the Division Bench of this Court in W.P.(C) No. 1975 of 2007 in the case of M/s. Oriental Insurance Company Limited, Kutchery Road, Ranchi Vs. Bodya Oraon & Anr. vide order dated 30th April, 2012 held that the Permanent Lok Adalat has power to adjudicate upon the dispute, however, after following the procedure provided u/s 22(C) of the Act of 1987.

It has been held therein that the Permanent Lok Adalat after following the procedure of making all efforts of the settlements and upon failing of the parties to arrive at settlement may proceed to adjudicate u/s 8 of Section 22(C) of the Act of 1987 upon the dispute.

Learned counsel for the respondent further submitted that the Permanent Lok Adalat has jurisdiction to decide the Motor Vehicle Accident claim case even at the pre litigation stage under the relevant provision of Section 22(C) of the Act 1987 and the decision in question herein does not suffer any legal infirmity or in the decision making process.

Heard learned counsels for the parties and carefully gone through the records and the impugned order, I find that legal position in the aforesaid contents is no longer res integra as held by the decision of this Court preferred (Supra) i.e. reported in (2009) 3 JCR 374 (Jhar.) extract which are quoted hereinbelow:-

(viii) 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 (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 appealable 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 CPC 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 award, 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 CPC 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 u/s 22-E of the act, 1987.

(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 CPC 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 his awareness, if both the parties given 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 rob 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 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 CPC 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 CPC 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 and Another Vs. Jalour Singh and Others, , in paragraph No. 9 , as under:

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 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)

(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 CPC are applicable, nor the provisions of Indian Evidence Act are applicable, nor the order is appealable (as per Sections 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 u/s 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 he parties, then only Permanent Lok Adalat an decide the dispute on merits and that too, after making the parties to the dispute fully aware of non-applicability of the provisions of CPC 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 and Another, , in paragraph Nos. 25, 26 and 41, as under:

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, u/s 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.

The relevant extraction of the judgment dated 30th April, 2012 in W.P.(C) No. 1975 of 2007 is also quoted hereinbelow:-

Therefore, in view of the said authoritative pronouncement by the Hon''ble Supreme Court any view contrary to the view taken to that of the Hon''ble Supreme Court''s judgments referred above, do not hold field and Permanent Lok Adalat has power to adjudicate upon the dispute, however, after following the procedure provided u/s 22(C) of the Act of 1987.

In view of the above, it is held that the Permanent Lok Adalat after following the procedure of making all efforts of settlements and upon failing of the parties to arrive at settlement and procedure to adjudicate u/s 8 of Section 22(C) of the Act of 1987 can adjudicate upon the dispute.

The respondents are not in a position to dispute that the steps contemplated under the provisions of Section 22(C) before reaching the stage of adjudication on merits of the dispute u/s 22(C) (8) were not undertaken by the Permanent Lok Adalat before passing the award in question. It is not in dispute that there was no joint consent of the parties to allow the Permanent Lok Adalat to proceed to adjudicate the matter on merit.

The application was made under the provision of Section 22(C) at the pre litigative stage and the respondents herein were compelled to face the adjudication on merits when a duly constituted tribunal under the Special Act of the Motor Vehicle Act 1988 is functioning. It is also not in dispute that the Permanent Lok Adalat did not frame any settlement and offered it to the parties to agree on the same either making an award on the settlement or proceeding to decide the dispute on merits on failure between the parties to agree on such settlement.

In these undisputed facts, it is clear that the award suffers from the inherent to flaw in the decision making process and also failure to follow the procedure prescribed under the Act as upheld by the judgment of this Court. Accordingly, the impugned award dated 30.06.2006 is set aside.

However, the respondents are allowed liberty to move before the competent tribunal for adjudication of the dispute if permissible in law which may decide such claim in accordance with law. Accordingly, this writ petition stands allowed.