The Permanent Lok Adalat in India: A Comprehensive Legal Analysis

The Permanent Lok Adalat in India: A Comprehensive Legal Analysis of its Framework, Powers, and Judicial Interpretation

Introduction

The Indian legal system, burdened with a significant pendency of cases, has witnessed several innovations aimed at alternative dispute resolution (ADR). Among these, the Permanent Lok Adalat (PLA) stands out as a significant statutory mechanism, particularly for disputes concerning public utility services. Established under Chapter VI-A of the Legal Services Authorities Act, 1987 (LSA Act), inserted by the Amendment Act of 2002, PLAs are designed to provide a pre-litigation mechanism for conciliation and settlement, and where conciliation fails, for adjudication. This article undertakes a comprehensive analysis of the legal framework governing PLAs in India, examining their establishment, objectives, jurisdiction, procedural modalities, the nature of their awards, and the judicial scrutiny they have undergone. The analysis draws heavily upon statutory provisions and key pronouncements of the Supreme Court of India and various High Courts.

Establishment and Objectives of Permanent Lok Adalats

The traditional Lok Adalat system, while effective in settling disputes through compromise, had a notable limitation: if parties failed to reach a settlement, the matter would be returned to the court of law or parties would be advised to seek remedy there, often causing further delay.[16] To address this, and to provide a more robust mechanism for resolving disputes, especially those involving public utility services at a pre-litigation stage, Chapter VI-A was introduced into the LSA Act, 1987, by the Legal Services Authorities (Amendment) Act, 2002.

The Statement of Objects and Reasons for the 2002 Amendment Act explicitly stated the intent: "If Lok Adalats are given power to decide the cases on merits in case parties fails to arrive at any compromise or settlement, this problem can be tackled to a great extent. Further, the cases which arise in relation to public utility services... need to be settled urgently so that people get justice without delay even at pre-litigation stage and thus most of the petty cases which ought not to go in the regular Courts would be settled at the pre-litigation stage itself which would result in reducing the workload of the regular Courts to a great extent."[16] This legislative intent underscores the dual objectives of PLAs: to offer a compulsory pre-litigative mechanism for conciliation and, failing that, settlement through adjudication, thereby promoting speedy justice and reducing the burden on conventional courts.[8, 19]

Section 22B of the LSA Act provides for the establishment of Permanent Lok Adalats by the Central Authority or State Authority at such places and for exercising such jurisdiction in respect of one or more public utility services.[18] A PLA is typically manned by a Chairman who is or has been a District Judge or Additional District Judge or has held a judicial office higher in rank, and two other persons having adequate experience in public utility service.[10, 11] This composition is intended to lend wider powers and expertise to the PLA.[11]

Jurisdiction of Permanent Lok Adalats

The jurisdiction of PLAs is delineated primarily by Section 22C of the LSA Act.[18] Any party to a dispute may, *before the dispute is brought before any court*, make an application to the PLA for its settlement.[18, 17] This pre-litigation character is a hallmark of PLAs.

The subject-matter jurisdiction of PLAs is confined to disputes concerning "public utility services." Section 22A(b) defines "public utility service" to include services like transport, postal/telegraph/telephone, power/light/water supply, public conservancy/sanitation, hospital/dispensary services, and insurance services, and any other service notified by the Central or State Government.[18] The scope of what constitutes a "public utility service" can itself be a matter of contention, as seen in cases like *SAHARA CREDIT COOPERATIVE SOCIETY LTD* where the petitioner society argued it was not engaged in "banking activity" to fall under PLA jurisdiction.[15]

There are crucial limitations to this jurisdiction. Firstly, the PLA shall not have jurisdiction in respect of any matter relating to an offence not compoundable under any law.[18] The Supreme Court in *United India Insurance Company Limited v. Ajay Sinha (2008)* emphasized that this proviso must be interpreted broadly, meaning if the determination before the PLA involves aspects of a non-compoundable offence, it would be outside its purview.[4, 14] Secondly, there is a pecuniary limitation: the PLA shall not have jurisdiction where the value of the property in dispute exceeds a specified amount (initially ten lakh rupees, subject to revision by the Central Government).[18]

A significant aspect of PLA jurisdiction is its ousting effect on other courts. Section 22C(2) stipulates that after an application is made to the PLA, no party to that application shall invoke the jurisdiction of any court in the same dispute.[1, 12, 18] This underscores the PLA's role as an exclusive forum once invoked for a qualifying dispute. The Supreme Court in *Interglobe Aviation Limited v. N. Satchidanand (2011)* clarified that a PLA is a "Special Tribunal" and not a "court" in the traditional sense, thus exclusive jurisdiction clauses in contracts referring to "courts" do not oust the jurisdiction of PLAs.[1, 12, 24]

Procedure and Powers of Permanent Lok Adalats

The procedure before a PLA is unique, often described as a "CON-ARB" model – conciliation-cum-arbitration.[1, 12, 24] It involves a two-stage process: mandatory conciliation followed by adjudication if conciliation fails. Section 22D of the LSA Act mandates that the PLA, while conducting conciliation or deciding a dispute on merit, shall be guided by principles of natural justice, objectivity, fair play, equity, and other principles of justice, and shall *not* be bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872.[1, 9, 12, 24]

Phase 1: Conciliation (Mandatory)

Upon receiving an application under Section 22C(1), the PLA directs parties to file written statements and documents (S.22C(3)).[5, 11] The Supreme Court in *Canara Bank v. G.S. Jayarama (2022)* has emphatically held that the conciliation proceedings outlined in Section 22C are mandatory.[5, 11, 21] The PLA must attempt conciliation between the parties (S.22C(4)-(6)). During this stage, the PLA is to assist parties in their attempt to reach an amicable settlement, taking into account the circumstances of the dispute.[1, 24] If the PLA is of the opinion that there exist elements of a settlement, it may formulate the terms of a possible settlement and submit them to the parties for their observations (S.22C(7)).[5, 11] Some High Courts have stressed the PLA's duty to actively offer terms of settlement.[25] If the parties reach an agreement on the settlement of the dispute, they shall sign the settlement agreement, and the PLA shall pass an award in terms thereof (S.22C(7) concluding part).[5, 11]

Phase 2: Adjudication (if conciliation fails)

This is where PLAs under Chapter VI-A significantly differ from traditional Lok Adalats under Section 19 (which have no adjudicatory powers, as clarified in *State Of Punjab And Another v. Jalour Singh (2008)*[7]). Section 22C(8) of the LSA Act provides that where the parties fail to reach an agreement under sub-section (7), the PLA *shall*, if the dispute does not relate to any offence, *decide the dispute*.[8, 9, 19]

The constitutional validity of this adjudicatory power was upheld by the Supreme Court in *Bar Council Of India v. Union Of India (2012)*.[8, 19] The Court affirmed that PLAs are empowered to decide disputes on merits upon failure of conciliation, and this mechanism is constitutionally sound, aimed at providing speedy justice.[8, 19] This definitive ruling clarifies the adjudicatory competence of PLAs.

However, an earlier Supreme Court decision in *Life Insurance Corporation Of India v. Suresh Kumar (2011)* had observed that a PLA has no jurisdiction to decide a lis if compromise fails, and that the PLA in that case erred by converting itself into a regular court.[6, 20] This judgment needs to be understood in light of the subsequent, more comprehensive ruling in *Bar Council of India* and the specific procedural steps outlined in S.22C. The PLA in *Suresh Kumar* might have proceeded to adjudication without meticulously following the mandatory conciliation stages or the specific conditions under S.22C(8). The prevailing and constitutionally validated position is that PLAs *do* possess adjudicatory powers under S.22C(8) if conciliation fails and the matter is within its competence.[5, 8, 11, 19, 21]

Some High Court judgments, particularly from Jharkhand, have suggested that for a PLA to decide a dispute on merits under S.22C(8), prior written consent of the parties is essential after conciliation fails.[23, 25] This interpretation appears stricter than the plain language of S.22C(8) or the general understanding from Supreme Court pronouncements like *Bar Council of India*, which emphasize the PLA's duty to decide if conciliation fails, provided the dispute is not related to an offence. The initial application to the PLA itself implies consent to its statutory process, including potential adjudication.

The Award of the Permanent Lok Adalat

Section 22E of the LSA Act deals with the award of the PLA. Sub-section (1) states that every award of the PLA under the Act, whether made on merit or in terms of a settlement agreement, shall be final and binding on all the parties thereto and on persons claiming under them.[1, 9, 12, 19] The award is also deemed to be a decree of a civil court.[9]

Furthermore, the award made by the PLA is to be by a majority of the persons constituting it.[9] As highlighted in *Interglobe Aviation*, the award can be transmitted to a civil court having local jurisdiction for execution.[1, 12, 24] A significant feature, as argued by petitioners in *Bar Council of India*, is that the award is final, and no appeal is explicitly provided against it in any court of law.[19] However, this does not preclude the remedy of judicial review by High Courts under Articles 226 and 227 of the Constitution of India against arbitrary or patently illegal awards.[8]

Judicial Scrutiny and Interpretation

The mechanism of PLAs, particularly their adjudicatory powers, has been subject to judicial scrutiny. The landmark decision in *Bar Council Of India v. Union Of India (2012)* firmly established the constitutional validity of Sections 22A to 22E of the LSA Act.[8, 19] The Supreme Court recognized PLAs as a vital tool for enhancing access to justice and judicial efficiency, especially for disputes concerning public utility services.

Courts have consistently emphasized the importance of PLAs adhering strictly to the statutory procedure. In *Canara Bank v. G.S. Jayarama (2022)*, the Supreme Court set aside a PLA award because the mandatory conciliation proceedings were not initiated before adjudication.[5, 11, 21] Similarly, the Karnataka High Court in *Bajaj Allianz Insurance Co. Ltd. v. Madhava Nair* cautioned that a PLA "must not give an impression to any of the disputants that it from the very beginning has an adjudicatory role to play... The Permanent Lok Adalath must exercise its power with due care and caution."[13]

The distinction between PLAs under Chapter VI-A and Lok Adalats organized under Section 19 of the LSA Act is crucial. The latter primarily function based on compromise or settlement and lack adjudicatory powers; if no settlement is reached, the case is returned to the court.[7, 16] PLAs, in contrast, are vested with the power to decide disputes on merits if conciliation fails.[8, 16]

Conclusion

Permanent Lok Adalats represent a significant evolution in India's ADR landscape, offering a specialized, speedy, and less formal forum for resolving disputes related to public utility services. Their unique "CON-ARB" model, combining mandatory conciliation with subsequent adjudicatory powers, aims to reduce the caseload of regular courts and provide timely justice to citizens. While judicial interpretations have clarified and affirmed their constitutional validity and powers, the emphasis remains on strict adherence to the procedural safeguards enshrined in the Legal Services Authorities Act, 1987. The finality of PLA awards, coupled with their enforceability as civil court decrees, makes them an effective dispute resolution mechanism. As an institution, the PLA continues to play a crucial role in ensuring that the operation of the legal system promotes justice on the basis of equal opportunity, particularly in areas directly impacting the common citizen's daily life.

References