Enforcement Of Lok Adalat Award Does Not Require Payment Of Stamp Duty/ Registration: Bombay High Court

"Settlement recorded by Lok Adalat having binding force of decree would not need payment of stamp duty or registration", the court held.

Justice Sandeep V. Marne of the Aurangabad bench dismissed two writ petitions which claimed that a Lok Adalat award is a contract and has to be enforced via a suit for specific performance.

"By no stretch of imagination, it (Lok Adalat award) can be construed to mean a fresh contract being executed between the parties. Therefore, there is no question of making the respondents/landlord file another suit for specific performance of the terms and conditions of the settlement based upon which the Lok Adalat has passed the decrees", the court held.

The respondents/landlords had filed civil suits for possession of suit property against the petitioners/tenants under the Maharashtra Rent Control Act, 1999. During the pendency of the suits, the parties entered into a compromise before the Lok Adalat.

When the tenants did not handover possession of their shops as per the Lok Adalat Award, the landlords instituted execution proceedings. The executing court allowed them temporary possession of the premises. The District Court dismissed the revision petitions filed by the tenants. Hence the present petitions.

Advocate Sharad V. Natu for the petitioners/tenants objected to the execution proceedings. Firstly, he said that since the suit was for eviction of tenants under the Rent Control Act, it was mandatory to specify grounds under section 16 of the Act in the compromise decree. In absence of any ground, the decree is null and not executable.

The court noted that the terms of compromise do not contemplate eviction of petitioners from the premises. It only envisages the redevelopment of the structure and allotment of shops in the new building. Therefore section 16 of the Rent Control Act would not render the decree non-executable, the court held.

Natu's second objection was that the compromise decree is a contract and a specific performance suit is the proper remedy for enforcing it rather than seeking execution of the compromise decree.

The court referred to section 21 of the Legal Services Authorities Act, 1987 which provides that a Lok Adalat award is deemed to be a civil court decree binding on all parties to the dispute.

Relying on Apex Court judgement in New Okhla Industrial Development Authority v. Yanus and Ors., the court stated that a Lok Adalat award is not a compromise decree under Order XXIII Rule 3(a) of the CPC.

Therefore, the court stated Lok Adalat awards are fully executable. There is no question of a specific performance suit for the settlement which the Lok Adalat has decreed, the court stated.

Natu's third objection was that the landlords cannot seek enforcement of the compromise without payment of stamp duty and registration of the instrument. Since the court already concluded that the Lok Adalat awards are decrees and not contracts, it rejected this objection.

The court also condemned the conduct of the petitioners/tenants as they simultaneously sought review of the District Court order as well as filed the present petitions challenging the same order. Further, the petitioner did not disclose that the review petition was rejected.

The court condemned the fact that the petitioners did not handover possession of the premises despite agreeing to the settlement terms. The court stated that they raised baseless objections to frustrate execution of the decrees and imposed costs of Rs.25,000 on the petitioners.

Case no. – Writ Petition No. 1841 of 2022

Case Title – Shrichand @ Chandanmal Sugnamal Panjwani v. Ahamed Ismayil Valodia and Ors.

Citation: 2022 LiveLaw (Bom) 493