Courts Or Tribunals Referring Disputes To Lok Adalat Barred From Entertaining Appeals Against Awards Passed In Such Cases: Patna High Court

The Patna High Court on Tuesday (Aug. 6) held that it would be impermissible for the courts/tribunals referring a matter for settlement to Lok Adalats to examine the correctness of the award passed by the Lok Adalat.

The court said that the referral courts/tribunals would also be barred from entertaining the challenge to the award passed in the Lok Adalat on the grounds of fraud and misrepresentation and clarified that a proper challenge to the award passed in the Lok Adalat could only be made to the High Court in a petition under Article 226 of the Constitution.

“Just as a judicial decision, awards passed by the Lok Adalat also should have a finality to it. If the terms of the settlement are not complied with then, necessarily the order based on compromise works itself out and there cannot be a further settlement ordered by the Court or Tribunal, which has referred the matter to the Lok Adalat, especially without the consent of the other side.”, the court said.

"Merely because a sitting Judicial Officer is the Lok Adalat or a member of the Lok Adalat, that would not confer jurisdiction on the Court, which he or she normally occupies, with the jurisdiction to challenge the award passed in the Lok Adalat. Nor can an award of the Lok Adalat be challenged before the Court which referred it, since once the matter is referred and the matter is settled, the Court of reference becomes functus officio.", the court added.

In the present case, the Single Bench refused to interfere with the proceedings initiated by a Bank, against the order of the Lok Adalat before the Debts Recovery Tribunal under the Recovery of the Debts and Bankruptcy Act, 1993.

The petitioner was also aggrieved with the recovery proceedings initiated against him dehors the settlement arrived at in the Lok Adalat.

Setting aside the order of the Single Bench, the Division Bench observed that the Single Bench erred in holding that the Tribunal was found to be entitled to empower or recall the order or award passed by the Lok Adalat on the ground of fraud or misrepresentation or mistake of fact.

“Examining the case on the basis of the declaration of law made by the Hon'ble Supreme Court, we are clear in our minds that the challenge made by the Bank to the award, before the DRT by M.A. No.51 of 2015 is clearly without jurisdiction despite the fact that the Presiding Officer of the DRT was the Lok Adalat which passed the award. Neither that nor the fact that the matter was referred to the Lok Adalat by the DRT, does not empower or clothe the DRT with the authority to examine the correctness or otherwise of the award passed on settlement. Nor can it examine the issue as to whether the same is passed on fraud or misrepresentation; which grounds can be raised only when a proper challenge is made to the award passed in a petition under Article 226 before the High Court.”, the bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy observed.

The Court relied on the judgment of Bhargavi Constructions and Another v. Kothakapu Muthyam Reddy and Others (2018)  where the Supreme Court had categorically laid down that the challenge to an order of Lok Adalat can only be raised before the High Court under Article 226/227.

The judgment authored by the Chief Justice distinguished the judgment of R. Janakiammal v. S.K. Kumarsamy and Others (2021) cited by the respondents/banks to contend that the compromise decree if alleged to be void or voidable, a party to the said consent decree, for challenging the same, has to approach the same Court, which recorded the compromise.

“Again, we have to reiterate the distinct nature and status of a decree passed on compromise under the CPC and an award passed under the LSA Act. The question to be decided would be when a Lok Adalat is constituted in the DRT or any other Court; whether the members constituting the Lok Adalat would bring with him/her the status of the Courts, they are normally occupying and render the award passed also, the status of an award/decree passed by the Court they officially occupy. If the answer is in the negative, there is no question of the award of the Lok Adalat being challenged in the Court, normally occupied by the member/members. The decision in R. Janakiammal (supra) has absolutely no application insofar as the awards passed under the LSA Act.”, the court observed.

Reference was also drawn from the case of State of Punjab v. Jalour Singh (2008) where the Supreme Court expressed dismay over the High Court's Single Bench decision in rejecting the petition filed under Article 227 of the Constitution against the decision of the Lok Adalat enhancing the compensation in a Motor Accident Claims Case.

In the above terms, the appeal was allowed.

Appearance :

For the Appellant/s : Mr. Arbind Kumar Jha, Advocate Mr. Vijay Kumar Verma, Advocate

For the Respondent/s : Mr. Kaushlendra Kumar Sinha, Advocate

Case Details: Sri Praveen Anand Versus The Asst. General Manager State Bank of India & Anr., Letters Patent Appeal No.1688 of 2019 In Civil Writ Jurisdiction Case No.19502 of 2016

Citation: 2024 LiveLaw (SC) 64

Click here to read/download the judgment