Permanent Lok Adalat Can Decide Public Utility Service Disputes Like Insurance Which Do Not Relate To Any Offence: Jharkhand HC

The Jharkhand High Court has reiterated that Permanent Lok Adalats have the jurisdiction to adjudicate disputes pertaining to insurance claims.

Presiding over the case, Justice Navneet Kumar emphasized,

“Permanent Lok Adalat...has right to decide the dispute which could not be settled by a settlement agreement between the parties and the dispute does not relate to any offence. Such right has been vested in Permanent Lok Adalat with respect to the cases which arise in relation to Public Utility Services such as transport service for the carriage of passenger or goods by air, road or water; postal telegraph or telephone services; supply of power, light or water to the public by any establishment; system of public conservancy or sanitation; service in hospital or dispensary; or insurance service etc. need to be settled urgently so that people get justice without delay.”

“The Permanent Lok Adalat shall be guided by the principles of natural justice, objectivity, fair play equity and other principles of natural justice in exercise of its jurisdiction either in the process of conciliation and settlement or in deciding a dispute on merit under the Legal Services Authorities Act, 1987 and shall not be bound by the Code of Civil Procedure, 1908 and Indian Evidence Act, 1872,” Justice Kumar added.

The ruling stemmed from a writ petition challenging the judgment of Permanent Lok Adalat, Sahibganj, regarding an insurance claim dispute. The petitioner, National Insurance Company Limited, contested the adjudication of the claimant-respondent No. 1, whose husband had obtained a personal accident insurance policy.

Per the facts presented, the claimant's husband tragically passed away, prompting the claimant to file an insurance claim beyond the stipulated time limit. The insurance company rejected the claim, citing policy conditions. Subsequently, the claimant sought recourse through Permanent Lok Adalat, Sahibganj, which ruled in her favor, directing the insurance company to pay the claim amount with interest and costs.

The petitioner's counsel argued that Permanent Lok Adalat exceeded its authority by adjudicating the dispute without the insurance company's written consent and without following conciliation procedures outlined in the Legal Services Authority Act, 1987.

In response, the High Court referenced precedent cases, including Bar Council of India vs. Union of India reported in (2012) 8 SCC 243 and Canara Bank vs. G.S. Jayarama reported in (2022) 7 SCC 776, affirming the jurisdiction of Permanent Lok Adalat in resolving disputes related to public utility services, including insurance services.

“It is well settled from the aforesaid observations of Hon'ble Supreme Court with respect to the jurisdiction and power of Permanent Lok Adalat that a Permanent Lok Adalat constituted under Chapter VI –A of the Legal Services Authorities Act, 1987 vide the Legal Services Authorities (Amendment Act, 2002), has right to decide the dispute which could not be settled by a settlement agreement between the parties and the dispute does not relate to any offence,” the Court added.

The Court highlighted Section 22-C of the Act, which empowers Permanent Lok Adalat to settle disputes that fail to reach a settlement agreement between parties. It noted that in cases where conciliation efforts falter, the Permanent Lok Adalat has the authority to adjudicate disputes on merit, provided they do not pertain to any offenses.

“In the present case, it is found that the Permanent Lok Adalat has decided the dispute on merit when the conciliation and settlement between the parties has failed and therefore the Permanent Lok Adalat has rightly exercised its jurisdiction and this Court does not find any illegality in the Impugned Order dated 03.08.2010 passed by the Permanent Lok Adalat in C. Case No. 171 of 2008,” the Court held dismissing the Writ Application.

Case Title: The Chairman-cum-Managing Director, National Insurance Co and Ors vs Kisha Devi and Ors

LL Citation: 2024 LiveLaw (Jha) 73

Click Here To Read The Judgement