Award Passed By Lok Adalat Is Not A Compromise Decree: Supreme Court

The Supreme Court observed that an Award passed by the Lok Adalat is not a compromise decree. 

This observation was made by the bench comprising Justices KM Joseph and PS Narasimha in its judgment holding that an Award passed by a Lok Adalat under Section 20 of the Legal Services Authorities Act, 1987 cannot be the basis for redetermination of compensation as contemplated under Section 28A of the the Land Acquisition Act, 1894. 

"The purport of the law giver is only to confer it with enforceability in like manner as if it were a decree. Thus, the legal fiction that the Award is to be treated as a decree goes no further.", the bench added.

While considering the contentions raised by the parties in this case, the bench noticed a Kerala High Court judgment in Thomas Job v. Thomas 2003 (3) KLT 936, which took the view that by no stretch of imagination, it could be held that an Award passed by the Lok Adalat despite the legal fiction created in Section 21 could be treated as a compromise decree passed by a Civil Court. It observed thus:

 An Award passed by the Lok Adalat is not a compromise decree. An Award passed by the Lok Adalat without anything more, is to be treated as a decree inter alia. We would approve the view of the learned Single Judge of the Kerala High Court in P.T. Thomas (supra).

An award unless it is successfully questioned in appropriate proceedings, becomes unalterable and non-violable. In the case of a compromise falling under Order XXIII Code of Civil Procedure, it becomes a duty of the Court to apply its mind to the terms of the compromise. Without anything more, the mere compromise arrived at between the parties does not have the imprimatur of the Court. It becomes a compromise decree only when the procedures in the Code are undergone.

The court noticed that the jurisdiction of the Lok Adalat under Section 20 is to facilitate a settlement of disputes between the parties in a case.

It has no adjudicatory role. It cannot decide a lis. All that it can do is to bring about a genuine compromise or settlement. Sub-Section (4) of Section 20 is important insofar as the law giver has set out the guiding principles for a Lok Adalat. The principles are justice, equality, fair play and other legal principles.

 The bench made the following observations about Lok Adalat Award:

The purport of the law giver is only to confer it with enforceability in like manner as if it were a decree

An Award passed by the Lok Adalat under 1987 Act is the culmination of a non-adjudicatory process. The parties are persuaded even by members of the Lok Adalat to arrive at mutually agreeable compromise. The Award sets out the terms. The provisions contained in Section 21 by which the Award is treated as if it were a decree is intended only to clothe the Award with enforceability. In view of the provisions of Section 21 by which it is to be treated as a decree which cannot be challenged, undoubtedly, by way of an appeal in view of the express provisions forbidding it, unless it is set aside in other appropriate proceedings, it becomes enforceable. The purport of the law giver is only to confer it with enforceability in like manner as if it were a decree. Thus, the legal fiction that the Award is to be treated as a decree goes no further.

'Court' can can be civil, criminal or a revenue court.

The Lok Adalat as constituted under Section 19(2) would have jurisdiction inter alia to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of any case pending before any Court for which the Lok Adalat is organized. The word 'Court' in this context would mean the court as defined in section 2(aaa), viz., a civil, criminal or revenue court. The word 'Court' also includes any tribunal or any authority constituted under any law for the time being in force which for exercising judicial or even quasi-judicial functions. Thus, the word 'Court' in the 1987 Act in the context of Section 19(5) embraces the bodies referred to in Section 2(aaa) of 1987 Act. The manner of taking cognizance by Lok Adalats is provided in Section 20(1) read with Section 19(5). The Court as defined in Section 2 (aaa) can refer the case to the Lok Adalat. Such court, as already noticed, can be civil, criminal or a revenue court. It can be even a tribunal or authority. When success is achieved as a result of the holding of the Lok Adalat culminating in an award, the words, as the case may be, in Section 21 predicates that it may be instead of a decree of a Civil Court, an order of any other Court.

Even when the Criminal Court refers the matter under Section 138 of the Negotiable Instruments Act in order to make it executable, this Court has taken the view that it will be treated as if it were a decree

If a Revenue Court or a Tribunal which, undoubtedly, fall under Section 2(aaa) of the 1987 Act were to refer a case to the Lok Adalat under Section 20(1) and an award is passed it may become the order of the court/tribunal. In other words, if the matter were finally concluded on a regular basis, that is, without reference to the Lok Adalat, it would be an order which would be passed

'The Court' is not the same as a Lok Adalat.

Not only must it be an award passed as a result of the adjudication but it must be passed by 'the Court' allowing compensation in excess of the amount awarded by the collector. The word 'Court' has been defined in the Act as the Principal Civil Court of original jurisdiction unless the appropriate Government has appointed a Special Judicial Officer to perform judicial functions of the court under this Act. We have noticed the composition of a Lok Adalat in Section 19(2) of the '1987 Act'. The Court is not the same as a Lok Adalat.

Sans compromise, the Lok Adalat loses jurisdiction

An Award passed under Section 19 of the 1987 Act is a product of compromise. Sans compromise, the Lok Adalat loses jurisdiction. The matter goes back to the Court for adjudication. Pursuant to the compromise and the terms being reduced to writing with the approval of the parties it assumes the garb of an Award which in turn is again deemed to be a decree without anything more. We would think that it may not be legislative intention to treat such an award passed under Section 19 of the 1987 Act to be equivalent to an award of the Court which is defined in the Act as already noted by us and made under Part III of the Act. An award of the Court in Section 28A is also treated as a decree. Such an Award becomes executable. It is also appealable. Part III of the Act contains a definite scheme which necessarily involves adjudication by the Court and arriving at the compensation. It is this which can form the basis for any others pressing claim under the same notification by invoking Section 28A. We cannot be entirely oblivious to the prospect of an 'unholy' compromise in a matter of this nature forming the basis for redetermination as a matter of right given under Section 28A.

Case details

Case name: New Okhla Industrial Development Authority (NOIDA) vs Yunus

Citation: 2022 LiveLaw (SC) 123

Case no.| date: CA 901 OF 2022 | 3 Feb 2022

Coram: Justices KM Joseph and PS Narasimha

Counsel: Adv Anil Kaushik for appellant, Sr. Adv Dhruv Mehta and Sr.Adv V. K. Shukla, for respondents

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