B.P.Moideen Sevamandir & Anr vs A.M.Kutty Hassan

B. P. Moideen Sevamandir & Anr. ____Appellants

Vs.

A. M. Kutty Hassan ____Respondent

O R D E R

R.V.RAVEENDRAN, J.

Leave granted. Mr. A. Raghunath, learned counsel

accepts notice for the sole respondent. Heard by consent.

2. The appellants were the defendants in a suit for

declaration and mandatory injunction. Having lost before

the trial court and the first appellate court, the

appellants filed a second appeal before the High Court of

Kerala on 6.2.2005. The appeal was admitted and an interim

stay of execution was granted in the said appeal on

1.6.2005. The pending second appeal was referred to the Lok

Adalat organized by the Kerala High Court Legal Services

Committee on 25.5.2007. Before the Lok Adalat, parties

apparently arrived at a tentative settlement. The Lok 2

Adalat consisting of two retired Judges of the High Court

purported to pass the following `award' dated 25.5.2007 in

the appeal :

AWARD

"Counsel for the parties and the appellants and respondent present.

The parties have settled the dispute and agreed to file a memorandum of settlement before the High Court to obtain orders for disposal of this appeal and for refund of court fee.

A plan of the property is produced by the appellant and it is received. The plan used will form part of this order. The appellant will vacate the buildings in plot A to the respondent on or before 31st July, 2007. On such surrender, plot B will belong to the appellant and ............. A compromise deed to this effect will be drawn by the parties and file before the court."

Post before the court on or before 31st July, 2007"

[emphasis supplied]

3. The appellants allege that the parties could not

finalise the terms of settlement as it was found that there

was no access to the portion to which they had to move, and

therefore no compromise petition was drawn up or filed. As

the settlement was not reported, the High Court, by order

dated 10.4.2008 made a second reference to the Lok Adalat.

The parties and counsel again appeared before Lok Adalat.

Further negotiations were unsuccessful and the Lok Adalat

sent the following failure report dated 3.4.2008 to the

court :

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"We have discussed the matter with the counsel and their parties and considering the nature of demand made by the appellants, there is no chance of settlement."

[emphasis supplied]

4. The second appeal was thereafter listed for the final

hearing on 19.8.2008 before a learned Single Judge. When

the matter reached hearing in the post-lunch session, an

advocate attached to the office of the appellants' counsel

submitted that the appeal was to be argued by his colleague

Mrs. Sarita, that due to personal inconvenience she could

not be present during that session, and that therefore the

matter may be adjourned to the next day. The learned Single

Judge rejected the request and dismissed the appeal. The

operative portion of the order dated 19.8.2008 is extracted

below :

"I see no reason why any further adjournment is to be granted in the appeal of 2005 when the parties are willfully abstaining from arriving at any settlement despite an award passed at the Adalath on agreement. In the result, I dismiss this appeal for default."

(emphasis supplied)

5. The very next day, that is on 20.8.2008, an

application was filed for restoration of the appeal

supported by the affidavit of the counsel (Mrs. Saritha)

giving the following reason for her absence at the post-

lunch session on 19.8.2008 :

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"I am an advocate attached to the office of the counsel for the petitioner. I was entrusted to argue the aforementioned second appeal and I was prepared for the same since the matter was listed. The case was taken up as item no.504 in Court I-C in the afternoon session on 19.8.2008. I was present in the court in the forenoon session and unfortunately I developed severe ear pain and had to leave the court. I had entrusted my colleague to appear before the Hon'ble Court and requested a day's adjournment on account of this personal inconvenience and he had submitted the same."

The said application was dismissed by the learned Single

Judge on 29.8.2008. The relevant portion of the said order

is extracted below :

"The order passed on 25.5.2007 by the mediators show that the parties and already settled the dispute and they only wanted to file a memorandum of settlement before this Court to obtain orders disposing of the appeal refunding court fee and it is after having agreed to the terms as stated in the award that untenable and unreasonable contentions are advanced now and that too coming forward with a petition to restore the appeal when the appeal itself was dismissed for reason of absence of counsel. I see no reason to allow the MJC in the circumstances, so as to enable a cantankerous litigant to continue protracting the litigation even after an award is passed at the Adalat."

(emphasis supplied)

6. The said orders dated 19.8.2008 and 29.8.2008 of the

High Court are challenged in these appeals by special

leave. We have heard Sri P.Krishna Murthy, learned senior

counsel for appellants and Sri C.S.Rajan, learned senior

counsel for respondent.

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7. It is unfortunate that the learned members of the Lok

Adalat and the learned Single Judge totally lost sight of

the purpose and scope of Lok Adalats. We may conveniently

recall what this Court has said about the scope of Lok

Adalats, (after referring to the relevant provisions of the

Legal Services Authorities Act, 1987), in State of Punjab

vs. Jalour Singh [2008 (2) SCC 660] :-

"8. It is evident from the said provisions that Lok Adalats have no adjudicatory or judicial functions. Their functions relate purely to conciliation. A Lok Adalat determines a reference on the basis of a compromise or settlement between the parties at its instance, and put its seal of confirmation by making an award in terms of the compromise or settlement. When the Lok Adalat is not able to arrive at a settlement or compromise, no award is made and the case record is returned to the court from which the reference was received, for disposal in accordance with law. No Lok Adalat has the power to "hear" parties to adjudicate cases as a court does. It discusses the subject matter with the parties and persuades them to arrive at a just settlement. In their conciliatory role, the Lok Adalats are guided by principles of justice, equity, fair play. When the LSA Act refers to 'determination' by the Lok Adalat and 'award' by the Lok Adalat, the said Act does not contemplate nor require an adjudicatory judicial determination, but a non-adjudicatory determination based on a compromise or settlement, arrived at by the parties, with guidance and assistance from the Lok Adalat. The 'award' of the Lok Adalat does not mean any independent verdict or opinion arrived at by any decision making process. The making of the award is merely an administrative act of incorporating the terms of settlement or compromise agreed by parties in the presence of the Lok Adalat, in the form of an executable order under the signature and seal of the Lok Adalat.

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8. When a case is referred to the Lok Adalat for

settlement, two courses are open to it : (a) if a

compromise or a settlement is arrived at between the

parties, to make an award, incorporating such compromise or

settlement (which when signed by the parties and

countersigned by the members of the Lok Adalat, has the

force of a decree); or (b) if there is no compromise or

settlement, to return the record with a failure report to

the court. There can be no third hybrid order by the Lok

Adalat containing directions to the parties by way of final

decision, with a further direction to the parties to settle

the case in terms of such directions. In fact, there cannot

be an `award' when there is no settlement. Nor can there be

any `directions' by the Lok Adalat determining the

rights/obligations/title of parties, when there is no

settlement. The settlement should precede the award and not

vice versa. When the Lok Adalat records the minutes of a

proceeding referring to certain terms and directs the

parties to draw a compromise deed or a memorandum of

settlement and file it before the court, it means that

there is no final or concluded settlement and the Lok

Adalat is only making tentative suggestions for settlement;

and such a proceeding recorded by the Lok Adalat, even if 7

it is termed as an `award', is not an `award of the Lok

Adalat'.

9. Although the members of Lok Adalats have been doing a

commendable job, sometime they tend to act as Judges,

forgetting that while functioning as members of Lok

Adalats, they are only statutory conciliators and have no

judicial role. Any overbearing attitude on their part, or

any attempt by them to pressurize or coerce parties to

settle matters before the Lok Adalat (by implying that if

the litigant does not agree for settlement before the Lok

Adalat, his case will be prejudiced when heard in court),

will bring disrepute to Lok Adalats as an alternative

dispute resolution process (for short `ADR process') and

will also tend to bring down the trust and confidence of

the public in the Judiciary.

10. In this case the proceedings dated 25.5.2007 is termed

as an `award'. It is also described as an `order' and

`directs' the appellant to vacate certain buildings on or

before 31.7.2007 and further directs that on such

surrender, another portion shall belong to the appellants.

Such an `award' could have been made by the Lok Adalat only

when there was a final settlement between the parties. The 8

procedure adopted by the Lok Adalat on 25.5.2007, was

clearly erroneous and illegal. The learned counsel for the

respondent stated that the Lok Adalat followed the said

procedure of passing an `Award' dated 25.5.2007 and

directing parties to file a compromise in the court, only

to enable the appellants to get refund of court fee. We

fail to understand how the question of refund of court fee

can have any bearing on the compliance with the statutory

requirements relating to a settlement and award by a Lok

Adalat.

11. Such strange orders by Lok Adalats are the result of

lack of appropriate rules or guidelines. Thousands of Lok

Adalats are held all over the country every year. Many

members of Lok Adalats are not judicially trained. There is

no fixed procedure for the Lok Adalats and each Adalat

adopts its own procedure. Different formats are used by

different Lok Adalats when they settle the matters and make

awards. We have come across Lok Adalats passing `orders',

issuing `directions' and even granting declaratory relief,

which are purely in the realm of courts or specified

Tribunals, that too when there is no settlement. As an

award of a Lok Adalat is an executable decree, it is

necessary for the Lok Adalats to have an uniform procedure, 9

prescribed Registers and standardized formats of awards and

permanent record of the awards, to avoid misuse or abuse of

the ADR process. We suggest that the National Legal

Services Authority as the apex body, should issue uniform

guidelines for the effective functioning of the Lok

Adalats. The principles underlying following provisions in

the Arbitration and Conciliation Act, 1996 relating to

conciliators, may also be treated as guidelines to members

of Lok Adalats, till uniform guidelines are issued :

section 67 relating to role of conciliators; section 75

relating to confidentiality; and section 86 relating to

admissibility of evidence in other proceedings.

12. Lok Adalats should also desist from the temptation of

finding fault with any particular litigant, or making a

record of the conduct of any litigant during the

negotiations, in their failure report submitted to the

court, lest it should prejudice the mind of the court while

hearing the case. For instance, the observation in the

failure report dated 3.4.2008 of the Lok Adalat in this

case (extracted in para 3 above) that there is no chance of

settlement on account of the "nature of demands made by the

appellants", implied that such demands by the appellant

were unreasonable. This apparently affected the mind of the 10

learned Single Judge who assumed that the appellants were

cantankerous, when the second appeal and application for

restoration came up for hearing before the court.

13. We may now turn to the role of courts with reference

to Lok Adalats. Lok Adalats is an alternative dispute

resolution mechanism. Having regard to section 89 of Code

of Civil Procedure, it is the duty of court to ensure that

parties have recourse to the Alternative Dispute Resolution

(for short `ADR') processes and to encourage litigants to

settle their disputes in an amicable manner. But there

should be no pressure, force, coercion or threat to the

litigants to settle disputes against their wishes. Judges

also require some training in selecting and referring cases

to Lok Adalats or other ADR processes. Mechanical reference

to unsuited mode of ADR process may well be counter

productive. A plaintiff who comes to court alleging

unlawful encroachment by a neighbour may well ask what kind

of settlement he should have with an encroacher in a Lok

Adalat. He cannot obviously be asked to sacrifice a part of

his land for purposes of amicable settlement thereby

perpetuating the illegality of an encroachment. A plaintiff

alleging fraud and forgery of documents against a defendant

may well ask what settlement he can have with a fraudster 11

or forger through ADR process as any settlement may mean

yielding to or accepting fraud or forgery.

14. When a case is to be heard and decided on merits by a

court, the conduct of the party before the Lok Adalat or

other ADR fora, howsoever stubborn or unreasonable, is

totally irrelevant. A court should not permit any prejudice

to creep into its judicial mind, on account of what it

perceives as unreasonable conduct of a litigant before the

Lok Adalat. Nor can its judgment be `affected' by the

cantankerous conduct of a litigant. It cannot carry `ill-

will' against a litigant, because he did not settle his

case. It is needless to remind the oath of office, which a

Judge takes when assuming office. He is required to perform

his duties without fear or favour, affection or ill-will.

Any settlement before the Lok Adalat should be voluntary.

No party can be punished for failing to reach the

settlement before the Lok Adalat. Section 20(5) of the Act

statutorily recognizes the right of a party whose case is

not settled before the Lok Adalat to have his case

continued before the court and have a decision on merits.

Any admission made, any tentative agreement reached, or

any concession made during the negotiation process before

the Lok Adalat cannot be used either in favour of a party 12

or against a party when the matter comes back to the court

on failure of the settlement process. To deny hearing to a

party on the ground that his behaviour before the Lok

Adalat was cantankerous or unreasonable would amount to

denial of justice. When deciding a matter on merits of a

case, if a court carries any prejudice against a party on

account of his conduct before an ADR forum, it will violate

the inviolable guarantee against prejudice or bias in

decision making process. Such conduct can neither be

permitted nor be tolerated and requires to be strongly

deprecated. Every Judge should constantly guard against

prejudice, bias and prejudging, in whatever form. Judges

should not only be unbiased, but seem to be unbiased.

Judiciary can serve the nation only on the trust, faith

and confidence of the public in its impartiality and

integrity.

15. When a counsel who is ready in the pre-lunch session,

seeks accommodation in the post-lunch session on the ground

of a sudden illness or physical ailment, the court cannot

refuse a short accommodation and dismiss the appeal on the

ground that his client was cantankerous and unreasonable

before the Lok Adalat. The two issues have no relation to

each other and such dismissal can only be attributed to 13

prejudice. The observation by the High Court that the

parties having arrived at a settlement before the Lok

Adalat, could not refuse to file a compromise petition in

court, is also erroneous. If there was a final settlement

before the Lok Adalat, there would have been an award and

there was no need for the matter to come before the court

for further hearing. If parties state that before the Lok

Adalat that they will enter into an agreement and file it

before the court, it only means that there was only a

tentative settlement before the Lok Adalat.

16. In view of the above, the appeals are allowed. The

impugned orders of the High Court are set aside. The second

appeal is restored to the file of the High Court for being

disposed of on merits in accordance with law. We request

the Hon. Chief Justice to assign the appeal to some other

learned Judge of the High Court. Whatever is stated above

is not intended to be a reflection on the judicial

integrity of the learned Judge, nor intended to impute any

personal prejudice or bias.

_________________J [R. V. Raveendran]

__________________J [D. K. Jain] New Delhi;

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December 12, 2008.