Lok Adalat Can Only Issue Directions On Equity, Natural Justice In Specific Disputes Before It, Cannot Pass General Directions: P&H High Court

The Punjab & Haryana High Court has made it clear that the guiding principles of natural justice, equity etc. under Section 22-D of the Legal Services Authorities Act ("the Act") are required to be followed by the Lok Adalat only in specific issues raised before it and that it cannot issue generalised directions without being conferred with any power to do so.

The Act states that the Permanent Lok Adalat shall, while conducting conciliation proceedings or deciding a dispute on merit, be guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice, and shall not be bound by the CPC and Evidence Act.

In the present case, the Court quashed the order of Permanent Lok Adalat wherein in a plea for compensation, it issued general directions to a bank to honour cheques up to the value of Rs.10 Lakhs, whether presented in the Home or non-home Branch, till the cheque books were made.

The Court rejected the contention that the Lok Adalat can issue generalised directions in the light of the guiding principles under Section 22 D of the Act. 

Justice Vinod S. Bhardwaj said, "the guiding principles set out under Section 22-D of the Legal Services Authorities Act, 1987 are required to be adopted and/or followed by the Permanent Lok Adalat (Public Utility Services), only in relation to adjudication of a specific dispute that has been brought before it. For issuance of any generalized directions, the specific authority/powers is required to be conferred upon the Permanent Lok Adalat (Public Utility Services)."

Having not been conferred with such powers, any exercise thereof would clearly be exercising a jurisdiction even beyond the territorial boundaries and the pecuniary jurisdiction conferred upon it, the judge added.

The writ petition was filed by the State Bank of India, seeking quashing of the general directions issued to the State Bank of India to honour cheques up to the value of Rs.10 Lakhs, whether presented in the Home or non-home Branch, till the chequebooks are made in consonance with the instructions issued by them.

The Bank argued that the Permanent Lok Adalat (Public Utility Services) is not authorized under the Legal Services Authorities Act, 1987 to issue any generalized directions as the Supreme Court has specifically directed that the adjudicatory powers under Section 22 - C (8) of the Legal Services Authorities Act, 1987 has to be exercised as per the procedure prescribed under Section 22-C (1) to (7).

 "The mandatory conciliation proceedings as contemplated under Section 22-C (4) to 22-C (7) of the Legal Services Authorities Act, 1987 has to be exhausted before adjudication of the application under Section 22- C (8) of the Legal Services Authorities Act, 1987 could be initiated," it added.

Counsel for the bank further argued that the award transgresses beyond the powers conferred on the Permanent Lok Adalat (Public Utility Services), by issuing such generalized directions.

On the other hand, counsel appearing for the respondent (applicant before lok adalat) said that the Permanent Lok Adalat is guided by the principles as provided under Section 22- D of the Legal Services Authorities Act, 1987 and as it is supposed to adjudicate the dispute being guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice. Hence, such generalized directions could be issued.

 After hearing the submissions, the Court examined the issue of "whether the Permanent Lok Adalat (Public Utility Services) would have any jurisdiction or not to issue generalized direction."

Justice Bhardwaj rejected the contention raised by the counsel for the applicant that the directions are within the competence of Lok Adalat in light of the principles under Section 22-D of the Act.

The Court said issuing general directions without conferring any power on the Lok Adalat "would clearly be exercising a jurisdiction even beyond the territorial boundaries and the pecuniary jurisdiction conferred upon it."

Agreeing with the objections raised by the bank, the Court said, "the award dated 24.12.2014, passed by the Permanent Lok Adalat (Public Utility Services), S.A.S. Nagar, Mohali, to the extent of issuing generalized directions to the petitioner-bank 'to honor such cheques upto the value of Rs.10 Lakhs whether presented in the Home or non-home Branch till the cheque books are made in consonance with the instructions issued by them', is set aside."

Mr. Vikas Chatrath, Advocate, and Ms. Priya Kaushik, Advocate, for the State Bank of India.

Mrs. Ritam Aggarwal, Advocate (Legal-aid-counsel), for respondent No.2.

Title: THE CHAIRMAN, STATE BANK OF INDIA AND OTHERS v. THE PERMANENT LOK ADALAT (PUBLIC UTILITY SERVICES), AND ANOTHER

Citation: 2024 LiveLaw (PH) 205

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