Lok Adalat Awards in India

The Nature, Finality, and Enforceability of Lok Adalat Awards in India: A Comprehensive Analysis

Introduction

The Indian judicial system, burdened with a significant backlog of cases, has increasingly embraced Alternative Dispute Resolution (ADR) mechanisms to ensure speedier justice. Among these, the institution of Lok Adalat (People's Court) holds a prominent place, functioning under the aegis of the Legal Services Authorities Act, 1987 (hereinafter "LSA Act"). Lok Adalats are designed to settle disputes amicably through conciliation and compromise, thereby reducing the burden on conventional courts and providing an inexpensive and quick resolution to litigants. The culmination of a successful Lok Adalat proceeding is an 'award', which carries significant legal weight. This article undertakes a comprehensive analysis of the legal framework governing Lok Adalat awards in India, delving into their nature, the process of their making, their legal status, finality, enforceability, and the avenues for challenge, drawing upon statutory provisions and judicial pronouncements.

Conceptual Framework of Lok Adalats under the LSA Act, 1987

The LSA Act was enacted to give statutory backing to Lok Adalats and to provide free and competent legal services to the weaker sections of society. Chapter VI of the LSA Act (Sections 19 to 22) deals with Lok Adalats organized by Taluk, District, State, or National Legal Services Authorities, or High Court or Supreme Court Legal Services Committees. Chapter VI-A (Sections 22A to 22E), introduced by the Legal Services Authorities (Amendment) Act, 2002, provides for Permanent Lok Adalats (PLAs) for public utility services.

Lok Adalats under Section 19 have jurisdiction to determine and arrive at a compromise or settlement between parties to a dispute in respect of: (i) any case pending before; or (ii) any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organised (LSA Act, Section 19(5)). However, Lok Adalats have no jurisdiction in respect of any case or matter relating to an offence not compoundable under any law (LSA Act, Section 19(5); Abul Hassan & Ors. v. Delhi Vidyut Board & Ors., 1999; United India Insurance Company Limited v. Ajay Sinha And Another, 2008). PLAs, established under Section 22B, deal with disputes concerning public utility services before they are brought to court (pre-litigation conciliation and settlement) or even if pending, provided parties agree (LSA Act, Section 22C; Sri S.M Anjineyulu v. Sri K. Satya Prakash And Another, 2013). The Supreme Court in Bar Council Of India v. Union Of India (2012) upheld the constitutional validity of PLAs, recognizing their role in providing speedy justice in disputes related to public utility services.

The Making of a Lok Adalat Award

The fundamental principle underlying Lok Adalat proceedings is settlement by consent. A Lok Adalat is primarily a forum for conciliation and compromise, not adjudication, especially for those organized under Section 19 of the LSA Act. Its members, which may include serving or retired judicial officers and other persons (LSA Act, Section 19(2); Abul Hassan & Ors. v. Delhi Vidyut Board & Ors., 1999), are to be guided by principles of justice, equity, fair play, and other legal principles to persuade parties to come to a settlement (LSA Act, Section 20(4); Moni Mathai And Others v. Federal Bank Ltd., 2003).

The Supreme Court in State Of Punjab And Another v. Jalour Singh And Others (2008) emphatically clarified that Lok Adalats have no adjudicatory or judicial functions. Their function relates purely to conciliation. An award by the Lok Adalat is the result of a compromise or settlement between the parties. If no compromise or settlement is arrived at, the Lok Adalat cannot pass any order or award on merits; the case is returned to the court from which the reference was received for disposal in accordance with law (LSA Act, Section 20(5); New Okhla Industrial Development Authority (Noida) (S) v. Yunus And Others (S), 2022). Similarly, if a PLA under Chapter VI-A finds no scope for compromise in a matter where it cannot decide on merits (e.g., if it involves an offence or parties do not agree to its decision on merits), it cannot impose an award (Life Insurance Corporation Of India v. Suresh Kumar, 2011). The making of an award is an administrative act of incorporating the terms of settlement agreed by parties (State Bank Of India, Dhanbad Petitioner v. State Of Jharkhand & Anr. S, 2009; K.S. Sunil v. Sherly, 2016, citing National Legal Services Authority (Lok Adalats) Regulations, 2009, Reg. 17). The award must be signed by the parties and countersigned by the members of the Lok Adalat (K.S. Sunil v. Sherly, 2016; JIA LAL v. CHAIRMAN,TEHSIL LEGAL SERVICE AND ORS., 2019).

A crucial distinction arises with Permanent Lok Adalats established under Chapter VI-A for public utility services. While the PLA shall first conduct conciliation proceedings (LSA Act, Section 22C(4)), if the parties fail to reach an agreement, the PLA has the power to decide the dispute on merits, provided the dispute does not relate to any offence (LSA Act, Section 22C(8)). This adjudicatory power is specific to PLAs and was upheld in Bar Council Of India v. Union Of India (2012). However, even here, the PLA must follow principles of natural justice and give parties an opportunity to be heard.

Legal Status, Binding Nature, and Enforceability of the Award

Section 21 of the LSA Act is pivotal in defining the legal status of a Lok Adalat award. It states:

"Every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the case may be, an order of any other court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of Section 20, the court-fee paid in such case shall be refunded in the manner provided under the Court Fees Act, 1870." (LSA Act, Section 21(1); New Okhla Industrial Development Authority (Noida) (S) v. Yunus And Others (S), 2022).

This deeming fiction equates the award to a civil court decree, making it executable as such (P.T Thomas v. Thomas Job, 2005). The Supreme Court in P.T Thomas v. Thomas Job (2005) emphasized that the award of a Lok Adalat is final and binding on all parties to the dispute, and no appeal shall lie to any court against the award (LSA Act, Section 21(2)). This finality applies to awards passed by both Lok Adalats under Section 19 and PLAs under Chapter VI-A (Bar Council Of India v. Union Of India, 2012).

The enforceability extends even to awards passed in criminal cases (like those under Section 138 of the Negotiable Instruments Act, 1881) when referred to a Lok Adalat and settled. Such awards are also deemed to be decrees of a civil court and are executable (K.N Govindan Kutty Menon v. C.D Shaji, 2011). The primary objective is to ensure that settlements reached through Lok Adalats are honored and effectively implemented, preventing further litigation (P.T Thomas v. Thomas Job, 2005).

Distinction in Awards: Section 19 Lok Adalats v. Permanent Lok Adalats

While Section 21 applies to awards from both types of Lok Adalats, the process leading to the award can differ significantly.

For Lok Adalats organized under Section 19, the award is exclusively based on compromise or settlement between the parties (State Of Punjab And Another v. Jalour Singh And Others, 2008). If parties do not agree, there is no award, and the matter returns to the court or the parties are advised to seek remedy in court (LSA Act, Section 20(5), 20(7)). These Lok Adalats possess no adjudicatory power.

Permanent Lok Adalats (PLAs) under Chapter VI-A, dealing with public utility services, also prioritize conciliation (LSA Act, Section 22C). However, if conciliation fails and the dispute does not involve an offence, the PLA can decide the dispute on its merits (LSA Act, Section 22C(8)). This adjudicatory power is a distinguishing feature. The Supreme Court in Interglobe Aviation Limited v. N. Satchidanand (2011) clarified the distinct nature of PLAs under Section 22B from those under Section 19, and also noted that exclusive jurisdiction clauses in contracts referring to "courts" do not oust the jurisdiction of PLAs, as PLAs are specialized tribunals, not "courts" in that context. However, the jurisdiction of PLAs is circumscribed; for instance, they cannot entertain disputes involving non-compoundable offences (United India Insurance Company Limited v. Ajay Sinha And Another, 2008). The award of a PLA, whether based on settlement or on a decision on merits (where permissible), is final and binding (LSA Act, Section 22E).

Challenges to Lok Adalat Awards

Given the finality accorded by Section 21(2) of the LSA Act and the absence of a provision for appeal, a Lok Adalat award is generally immune to challenge through ordinary appellate procedures. However, this finality is not absolute and does not preclude judicial review under the writ jurisdiction of the High Courts (Article 226 and/or Article 227 of the Constitution of India).

The Supreme Court in State Of Punjab And Another v. Jalour Singh And Others (2008) held that where an award is made by the Lok Adalat in terms of a settlement arrived at between the parties (duly signed and annexed), it becomes final and binding. If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, on very limited grounds. Such grounds typically include:

The High Courts have entertained writ petitions challenging Lok Adalat awards where such egregious flaws are demonstrated (Lata v. Shankar And Others, Bombay HC, 2021). Even third parties, not party to the original dispute but adversely affected by a Lok Adalat award (e.g., due to fraud or collusion between the original litigants), may have recourse by filing a writ petition or a separate suit for declaration (Kusumbai And Others v. Bhausaheb And Others, Bombay HC, 2019; Batchu Subba Lakshmi And Others v. Sannidhi Srinivasulu And Others, AP HC, 2009; MGF DEVELOPMENTS LTD v. STATE OF HARYANA AND ORS, P&H HC, 2022).

Judicial Pronouncements: Reinforcing Principles

The judiciary has played a crucial role in interpreting the provisions of the LSA Act and shaping the understanding of Lok Adalat awards.

The emphasis on the conciliatory, non-adjudicatory role of Lok Adalats (under Section 19) was strongly laid down in State Of Punjab And Another v. Jalour Singh And Others (2008) and reiterated in cases like Bal Reddy v. Taluka Legal Services Committee (Telangana HC, 2011). Any award passed by such a Lok Adalat by assuming an adjudicatory role without the consent of parties is considered void.

The finality and enforceability of Lok Adalat awards as decrees of civil courts have been consistently upheld, as seen in P.T Thomas v. Thomas Job (2005) and K.N Govindan Kutty Menon v. C.D Shaji (2011). This ensures the efficacy of the Lok Adalat system.

The jurisdictional boundaries and distinct nature of Permanent Lok Adalats were clarified in Interglobe Aviation Limited v. N. Satchidanand (2011) and United India Insurance Company Limited v. Ajay Sinha And Another (2008). The Supreme Court affirmed the constitutional validity of PLAs and their unique mechanism, including limited adjudicatory powers in specific circumstances, in Bar Council Of India v. Union Of India (2012).

The case of Afcons Infrastructure Limited And Another v. Cherian Varkey Construction Company Private Limited And Others (2010), while primarily dealing with Section 89 of the Code of Civil Procedure, 1908, lists Lok Adalat as one of the ADR processes to which courts can refer parties, underscoring its integration into the broader ADR landscape.

Conclusion

Lok Adalat awards represent a significant instrument in the Indian legal system for delivering swift, amicable, and cost-effective justice. The LSA Act, 1987, endows these awards with the status of a civil court decree, ensuring their finality and enforceability, which are critical to their effectiveness. While Lok Adalats under Section 19 operate purely on consent and compromise, Permanent Lok Adalats for public utility services possess a limited adjudicatory power if conciliation fails and the dispute does not involve an offence.

Despite the statutory bar on appeals, the judiciary, through its writ jurisdiction, provides a necessary check against potential abuse, fraud, or jurisdictional overreach, ensuring that the awards are products of genuine settlement or, in the case of PLAs, fair adjudication within statutory limits. The careful balance struck by the legislature and refined by judicial interpretation aims to preserve the integrity of the Lok Adalat system as a vital component of access to justice in India, fostering public confidence in this alternative dispute resolution mechanism. The continued success of Lok Adalats hinges on their adherence to principles of fairness, transparency, and the consensual spirit that underpins their existence.