The Jurisprudence of Referral to Lok Adalat in India

The Jurisprudence of Referral to Lok Adalat: An Analysis of Statutory Mechanisms and Judicial Interpretation in India

Introduction

The establishment of Lok Adalats under the Legal Services Authorities Act, 1987 (hereinafter "LSA Act") represents a seminal development in India's pursuit of alternative dispute resolution (ADR). Conceived to alleviate the formidable burden on conventional courts and to provide speedy, inexpensive, and amicable justice, Lok Adalats have become an integral part of the judicial landscape (H.V Venkatesh v. Oriental Insurance Co. Ltd. & Ors., 2002). The efficacy of this institution, however, hinges significantly on the legal framework governing the referral of disputes to it. This article provides a comprehensive analysis of the mechanisms for referring a case to a Lok Adalat, examining the interplay between Section 89 of the Code of Civil Procedure, 1908 (CPC) and the specific provisions of Section 20 of the LSA Act. It delves into the nuanced jurisprudence shaped by the Supreme Court and various High Courts concerning the role of judicial discretion and the requirement of party consent in the referral process.

The Statutory Framework for Referral

The legislative architecture for referring disputes to Lok Adalats is primarily constructed upon two pillars: the general mandate under Section 89 of the CPC and the specific procedural directives within Section 20 of the LSA Act.

Section 89 of the Code of Civil Procedure, 1908

Section 89 of the CPC, introduced by the Amendment Act of 1999, empowers civil courts to refer disputes to various ADR mechanisms where it appears that there exist elements of a settlement which may be acceptable to the parties. The Supreme Court, in Salem Advocate Bar Association, T.N v. Union Of India (2005), upheld the constitutional validity of this provision and underscored its pivotal role in promoting ADR. The Court directed the formulation of model rules to facilitate its effective implementation, thereby standardizing the referral process.

A landmark interpretation of Section 89 was provided in Afcons Infrastructure Limited And Another v. Cherian Varkey Construction Company Private Limited And Others (2010). The Supreme Court meticulously distinguished between adjudicatory and non-adjudicatory ADR processes. It held that a referral to arbitration, an adjudicatory process, requires the explicit consent of all parties. Conversely, for non-adjudicatory methods like conciliation, mediation, and judicial settlement, including Lok Adalat, the court has greater discretion. The judgment clarified that when a court refers a dispute to a Lok Adalat under Section 89(1)(c), it must do so in accordance with the provisions of Section 20(1) of the LSA Act. This establishes a direct procedural linkage between the CPC's general empowerment and the LSA Act's specific mechanism.

Section 20 of the Legal Services Authorities Act, 1987

Section 20 of the LSA Act provides the definitive procedure for taking cognizance of cases by Lok Adalats. It envisages three distinct scenarios for the referral of a pending case from a court:

  1. Referral by Mutual Consent [Section 20(1)(i)(a)]: This is the most straightforward pathway, where all parties to the dispute agree to have their matter referred to the Lok Adalat for settlement.
  2. Referral on Application of One Party [Section 20(1)(i)(b)]: A court can refer a case if one of the parties makes an application for such a referral, and the court is "prima facie satisfied that there are chances of such settlement." This provision vests the court with the responsibility to make a preliminary assessment of the possibility of a compromise before making the reference (State of Punjab and Others v. Ganpat Raj, 2006; Vasudevan V.A v. State Of Kerala, 2003).
  3. Suo Motu Referral by the Court [Section 20(1)(ii)]: The court is empowered to refer a case on its own motion if it is "satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat." This clause grants the court significant discretionary power to identify cases suitable for conciliation, even in the absence of an application from any party.

A critical safeguard is embedded in the proviso to Section 20(1), which mandates that no case shall be referred under clauses (i)(b) or (ii) "except after giving a reasonable opportunity of being heard to the parties." This procedural requirement ensures that a referral, particularly one that is not based on mutual consent, is not made arbitrarily and that parties have a chance to present their views on the appropriateness of the reference (Estate Officer v. Colonel H.V. Mankotia (Retired), 2021).

Judicial Interpretation and the Role of Consent

The judiciary has played a crucial role in interpreting the nuances of the referral mechanism, particularly concerning the extent to which party consent is a prerequisite.

The Spectrum of Consent: From Mandatory to Discretionary

The Supreme Court in Afcons Infrastructure (2010) firmly established that consent is indispensable for arbitration but not necessarily for other forms of ADR. This distinction is vital. The Bombay High Court, in MADHUKAR BABURAO SHETE v. YOGESH TRIMBAK SHETE (2024), elaborating on Section 20(1)(ii), held that the court's power to refer a case *suo motu* does not depend on whether the parties agree. The quintessence is the court's satisfaction that the matter is "appropriate" for conciliation. The court reasoned that the purpose of such a reference is merely to "explore the possibility of conciliation," not to impose a settlement. This interpretation promotes the use of Lok Adalats as an exploratory forum for settlement, even where parties are initially adversarial.

The Distinction Between Referral and Settlement

A cornerstone of the jurisprudence on this subject is the clear distinction between referring a case to a Lok Adalat and compelling a settlement. The Supreme Court has repeatedly and emphatically clarified that the function of a Lok Adalat is purely conciliatory and not adjudicatory (State Of Punjab And Another v. Jalour Singh And Others, 2008; B.P Moideen Sevamandir And Another v. A.M Kutty Hassan, 2008). A Lok Adalat has no power to hear parties and adjudicate the dispute on merits. Its role is to guide the parties towards a compromise or settlement.

This principle is reinforced by Section 20(5) of the LSA Act, which provides a crucial "return mechanism." If no compromise or settlement is arrived at, the Lok Adalat must return the record of the case to the court from which the reference was received. The court then proceeds to dispose of the case on merits, from the stage it had reached before the reference (Union Of India v. Ananto (Dead) And Another, 2007). This ensures that a party's right to adjudication is not extinguished by a non-consensual or unsuccessful referral. The referral is thus a procedural step to facilitate settlement, not a final disposal of the case against a party's will.

The Scope and Limitations Post-Referral

Once a case is referred, the powers and procedures of the Lok Adalat are strictly circumscribed by the LSA Act.

The Purely Conciliatory Function

Any attempt by a Lok Adalat to assume an adjudicatory role is an ultra vires act. In a series of cases involving the State of Punjab, the Supreme Court quashed orders where Lok Adalats had passed reasoned decisions enhancing compensation or deciding pensionary claims on merits, without a valid compromise between the parties. The Court held that such orders were not "awards" in the eyes of the law, as they were not based on a settlement (State of Punjab and Others v. Phulan Rani And Another, 2004; State Of Punjab And Others v. Ganpat Raj, 2006). The term "compromise" implies mutual concessions and an agreement reached by adjustment of conflicting claims, not a unilateral decision imposed by the forum (State Of Punjab And Others v. Mohinderjit Kaur, 2005).

The Nature and Finality of a Lok Adalat Award

When a settlement is successfully reached, the Lok Adalat passes an "award." Under Section 21 of the LSA Act, this award is deemed to be a decree of a civil court and is final and binding on all parties. No appeal lies against such an award to any court. This finality is a key feature designed to give legal sanctity to the settlement. The award is directly executable as a decree, and there is no requirement for it to be sent back to the referring court for a decree to be passed in its terms (Vijayalakshmi.R v. Bhuvaneswari, 2022). However, this finality is predicated on the existence of a genuine settlement. If an award is procured by fraud or is passed without a valid compromise, it can be challenged, albeit on very limited grounds, through a writ petition under Article 226 or 227 of the Constitution of India (State Of Punjab And Another v. Jalour Singh And Others, 2008).

The LSA Act also provides for pre-litigation conciliation through Permanent Lok Adalats for public utility services, where a party may apply for settlement before the dispute is even brought before a court, further emphasizing the legislative intent to promote settlement at the earliest possible stage (Sri S.M. Anjineyulu. v. Sri K. Satya Prakash And Another, 2013).

Conclusion

The legal framework governing the referral of cases to Lok Adalats in India, as enshrined in Section 89 of the CPC and Section 20 of the LSA Act, creates a flexible yet regulated system. The jurisprudence evolved by the Indian judiciary demonstrates a purposive interpretation aimed at maximizing the potential of ADR. The courts have established that while mutual consent is the ideal pathway for referral, it is not an absolute sine qua non. A court can, upon its own satisfaction of the appropriateness of a matter and after affording the parties a hearing, refer a dispute to a Lok Adalat to explore the possibility of a settlement.

This power is carefully balanced by the unequivocal principle that the Lok Adalat's role is strictly conciliatory. The statutory "return mechanism" ensures that if no settlement is reached, the parties' right to a full and fair adjudication on merits remains inviolate. By distinguishing the act of referral from the act of settlement, and by strictly curtailing the Lok Adalat's function to that of a facilitator, the law ensures that the promotion of amicable dispute resolution does not devolve into a system of coerced compromise. The framework thus stands as a testament to a balanced legal policy that encourages settlement without sacrificing the fundamental tenets of justice and party autonomy.