Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10209 OF 2011
(Arising out of SLP (C) No.2798 of 2010)
K.N. Govindan Kutty Menon .... Appellant (s)
Versus
C.D. Shaji .... Respondent(s)
J U D G M E N T
P. Sathasivam, J.
1) Leave granted.
2) This appeal raises an important question as to the
interpretation of Section 21 of the Legal Services Authorities
Act, 1987 (in short ‘the Act’). The question posed for
consideration is that when a criminal case filed under Section
138 of the Negotiable Instruments Act, 1881 referred to by the
Magistrate Court to Lok Adalat is settled by the parties and an
award is passed recording the settlement, can it be considered
as a decree of a civil court and thus executable?
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3) This appeal is directed against the final judgment and
order dated 24.11.2009 passed by the High Court of Kerala at
Ernakulam in Writ Petition (C) No. 33013 of 2009 whereby the
High Court dismissed the petition filed by the appellant
herein.
4) Brief facts:
(a) The appellant herein filed a complaint being C.C. No.
1216 of 2007 before the Judicial Ist Class Magistrate Court
No.1, Ernakulam against the respondent herein under Section
138 of the Negotiable Instruments Act, 1881 (in short ‘the N.I.
Act’). The Magistrate referred the said complaint to the
Ernakulam District Legal Service Authority for trying the case
for settlement between the parties in the Lok Adalat.
(b) On 08.05.2009, both parties appeared before the Lok
Adalat and the matter was settled and an award was passed
on the same day. As per the award, out of Rs. 6,000/-, the
respondent herein paid Rs.500/- on the same day and agreed
to pay the balance amount of Rs.5,500/- in five equal
th
instalments of Rs.1,100/- per month on or before the 10 day
of every month starting from June, 2009 and, in case of
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default, the appellant herein can recover the balance amount
due from the respondent in lump sum.
(c) As the respondent did not pay any of the installments as
per the settlement, the appellant filed execution petition being
E.P. No….. of 2009 in C.C. No. 1216 of 2007 in the Court of
Principal Munsiff, Ernakulam for seeking the execution of the
award. On 23.09.2009, the Principal Munsiff Judge,
Ernakulam dismissed the petition holding that the award
passed by the Lok Adalat on reference from the Magistrate
Court cannot be construed as a “decree” executable by the
civil court.
(d) Aggrieved by the said order, the appellant filed writ
petition being Writ Petition (C) No. 33013 of 2009 before the
High Court of Kerala. The High Court, vide order dated
24.11.2009, dismissed the writ petition.
(e) Against the said order, the appellant filed the above
appeal by way of special leave before this Court.
5) The respondent, though duly served by this Court, has
not chosen to contest the matter either by appearing in person
or through counsel. Heard Mr. Prashanth P., learned counsel
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for the appellant and Mr. V. Giri, learned senior counsel, who,
on our request, assisted this Court as amicus curiae .
6) In order to find out the answer to the question raised, it
is useful to refer the Statement of Objects and Reasons and
certain provisions of the Act applicable to the question posed
before us.
“Statement of objects and Reasons.- Article 39-A of the
Constitution provides that the State shall secure that the
operation of the legal system promotes justice on the basis of
equal opportunity, and shall, in particular, provide free legal
aid, by suitable legislation or schemes or in any other way,
to ensure that opportunities for securing justice are not
denied to any citizen by reason of economic or other
disabilities.
2. With the object of providing free legal aid, Government
th
had, by Resolution dated the 26 September, 1980
appointed the “Committee for Implementing Legal Aid
Schemes” (CILAS) under the Chairmanship of Mr. Justice
P.N. Bhagwati (as he then was) to monitor and implement
legal aid programmes on a uniform basis in all the States
and Union territories. CILAS evolved a model scheme for
legal aid programme applicable throughout the country by
which several legal aid and advice boards have been set up
in the States and Union territories. CILAS is funded wholly
by grants from the Central Government. The Government is
accordingly concerned with the programme of legal aid as it
is the implementation of a constitutional mandate. But on a
review of the working of the CILAS, certain deficiencies have
come to the fore. It is, therefore, felt that it will be desirable
to constitute statutory legal service authorities at the
National, State and District levels so as to provide for the
effective monitoring of legal aid programmes. The Bill
provides for the composition of such authorities and for the
funding of these authorities by means of grants from the
Central Government and the State Governments. Power has
been also given to the National Committee and the State
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Committees to supervise the effective implementation of legal
aid schemes.
For some time now, Lok Adalats are being constituted at
various places in the country for the disposal, in a summary
way and through the process of arbitration and settlement
between the parties, of a large number of cases expeditiously
and with lesser costs. The institution of Lok Adalats is at
present functioning as a voluntary and conciliatory agency
without any statutory backing for its decisions. It has
proved to be very popular in providing for a speedier system
of administration of justice. In view of its growing
popularity, there has been a demand for providing a
statutory backing to this institution and the awards given by
Lok Adalats. It is felt that such a statutory support would
not only reduce the burden of arrears of work in regular
Courts, but would also take justice to the door-steps of the
poor and the needy and make justice quicker and less
expensive.”
“ 2. (aaa) “Court” means a civil, criminal or revenue Court
and includes any Tribunal or any other authority constituted
under any law for the time being in force, to exercise judicial
or quasi-judicial functions;”
“ 2(c) “legal service” includes the rendering of any service in
the conduct of any case or other legal proceeding before any
Court or other authority or Tribunal and the giving of advice
on any legal matter;”
“ 2(d) “Lok Adalat” means a Lok Adalat organized under
Chapter VI.”
“ 21. Award of Lok Adalat .- (1) Every award of 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-Fee Act, 1870 (7 of 1870).
(2) Every award made by a Lok Adalat shall be final and
binding on all the parties to the dispute, and no appeal shall
lie to any Court against the award.”
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7) Free legal aid to the poor and marginalized members of
the society is now viewed as a tool to empower them to use the
power of the law to advance their rights and interests as
citizens and as economic actors. Parliament enacted the Legal
Services Authorities Act, 1987 in order to give effect to Article
39-A of the Constitution to extend free legal aid, to ensure that
the legal system promotes justice on the basis of equal
opportunity. Those entitled to free legal services are members
of the Scheduled Castes and the Scheduled Tribes, women,
children, persons with disability, victims of ethnic violence,
industrial workmen, persons in custody, and those whose
income does not exceed a level set by the government
(currently it is Rs 1 lakh a year in most States). The Act
empowers Legal Services Authorities at the District, State and
National levels, and the different committees to organize Lok
Adalats to resolve pending and pre-litigation disputes. It
provides for permanent Lok Adalats to settle disputes involving
public utility services. Under the Act, “legal services’ have a
meaning that includes rendering of service in the conduct of
any court-annexed proceedings or proceedings before any
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authority, tribunal and so on, and giving advice on legal
matters. Promoting legal literacy and conducing legal
awareness programmes are the functions of legal services
institutions. The Act provides for a machinery to ensure
access to justice to all through the institutions of legal services
authorities and committees. These institutions are manned by
Judges and judicial officers. Parliament entrusted the
judiciary with the task of implementing the provisions of the
Act.
8) Section 21 of the Act, which we have extracted above,
contemplates a deeming provision, hence, it is a legal fiction
that the “award” of the Lok Adalat is a decree of a civil court.
In the case on hand, the question posed for consideration
before the High Court was that “when a criminal case referred
to by the Magistrate to a Lok Adalat is settled by the parties
and award is passed recording the settlement, can it be
considered as a decree of civil court and thus executable by
that court?” After highlighting the relevant provisions,
namely, Section 21 of the Act, it was contended before the
High Court that every award passed by the Lok Adalat has to
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be deemed to be a decree of a civil court and as such
executable by that court. Unfortunately, the said argument
was not acceptable by the High Court. On the other hand, the
High Court has concluded that when a criminal case is
referred to the Lok Adalat and it is settled at the Lok Adalat,
the award passed has to be treated only as an order of that
criminal court and it cannot be executed as a decree of the
civil court. After saying so, the High Court finally concluded
“an award passed by the Lok Adalat on reference of a criminal
case by the criminal court as already concluded can only be
construed as an order by the criminal court and it is not a
decree passed by a civil court” and confirmed the order of the
Principal Munsiff who declined the request of the petitioner
therein to execute the award passed by the Lok Adalat on
reference of a complaint by the criminal court. On going
through the Statement of Objects and Reasons, definition of
‘Court’, ‘legal service’ as well as Section 21 of the Act, in
addition to the reasons given hereunder, we are of the view
that the interpretation adopted by the Kerala High Court in
the impugned order is erroneous.
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9) It is useful to refer some of the judgments of this Court
and the High Courts which have a bearing on the present
issue.
10) In Subhash Narasappa Mangrule (M/S) and Others vs.
Sidramappa Jagdevappa Unnad, reported in 2009 (3)
Mh.L.J. 857, learned single Judge of the High Court of
Bombay, considered an identical question. In that case, on
22.06.2001, the respondent filed a Criminal Complaint being
S.C.C. No. 923 of 2001 in the Court of Judicial Magistrate,
First Class, Akkalkot under Section 138 of the N.I. Act. Later,
the said criminal case was transferred to Lok Adalat. The
matter was compromised before the Lok Adalat and an award
was passed accordingly for Rs. 4 lakhs. The respondent
therein filed a Darkhast proceeding No. 17 of 2006 in the
Court of C.J.J.D. for execution of the award passed by the Lok
Adalat in the criminal case as there was no compliance of the
compromised order/award. The learned C.J.J.D., issued a
notice under Order XXVII Rule 22 of the Code of Civil
Procedure, 1908 (in short ‘the Code’). The petitioner therein
raised an objection stating that the Darkhast proceeding is not
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maintainable as the award has been passed in criminal case.
By order dated 18.07.2007, the learned Civil Judge, (Jr.
Division) disposed off the objection and directed to proceed
with the execution by the Judgment and order. Aggrieved by
the same, the petitioners therein filed a revision before the
High Court. After adverting to Section 20 and other provisions
of the Act, the learned single Judge has concluded thus:-
“16. The parties were fully aware that under the Act, the
District Legal Services Authority may explore the possibility
of holding pre-litigation Lok Adalats in respect of the cheque
bouncing cases. The compromise in such cases would be
treated as Award having force of a decree. All objections as
raised with regard to the execution in view of above statutory
provisions itself is rightly rejected. Having settled the matter
in Lok Adalat and now after more than 3 years raising such
plea is untenable. Having obtained the award from Lok
Adalat, the party is not permitted to resile from the same. It
attains finality to the dispute between the parties finally and
binds all. Therefore, the order in this regard needs no
interference.
17. Once the parties entered into compromise before the Lok
Adalat, & at that time no question of any pecuniary
jurisdiction raised and or required to be considered by the
Lok Adalat. Therefore, once the award is passed, it is
executable under C.P.C…..”
11) In M/s Valarmathi Oil Industries & Anr. vs. M/s
Saradhi Ginning Factory, AIR 2009 Madras 180, the
admitted facts were that C.C. No. 308 of 2006 was taken on
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file by the learned Judicial Magistrate No. I, Salem on the
complaint given by the respondent therein that the cheque
was issued by the second petitioner therein on behalf of the
first petitioner as partner of the firm, however, the same was
dishonoured by the bank due to insufficient funds. According
to the respondent, after issuance of the legal notice to the
petitioner, the complaint was given under Section 138 of the
N. I. Act against the petitioners. During the pendency of the
criminal case, at the request of both the parties, the matter
was referred to Lok Adalat for settlement. Both the parties
were present before the Lok Adalat and as per the award, they
agreed for the settlement and accordingly, the
petitioner/accused agreed to pay Rs. 3,75,000/- to the
respondent on or before 03.09.2007. It was signed by the
respondent/complainant, petitioners/accused and their
respective counsel. In view of the compromise arrived at
between both the parties, the amount payable was fixed at Rs.
3,75,000/- towards full quit of the claim and that the
petitioners therein agreed to pay the above-said amount on or
before 03.09.2007 and accordingly, the award was passed and
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placed before the Judicial Magistrate Court for further orders.
When the said award was placed before the learned Judicial
Magistrate, by judgment dated 17.10.2007, based on the
award held that the petitioners therein guilty and convicted
under Section 138 of N.I. Act, accordingly, imposed sentence
of one year simple imprisonment and directed the petitioners
therein to pay a sum of Rs. 3,75,000/- as compensation to the
respondent. Aggrieved by which, the petitioners/accused
preferred appeal in C.S.No.167 of 2007 before the Sessions
Judge, Salem. Learned Sessions Judge, while suspending the
sentence of imprisonment till 16.12.2007, directed the
petitioners/accused to deposit the sum of Rs. 3,75,000/-
before the trial court and clarified that in case of failure of
depositing the amount, the order of suspension of sentence
would stand cancelled automatically and the petitioners were
also directed to execute a bond for Rs. 10,000/- with two
sureties each for the like sum to the satisfaction of the trial
court. Aggrieved by the same, the accused preferred criminal
revision case before the High Court. It was contended on
behalf of the petitioners before the High Court that as per
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Section 21 of the Act, every award of the Lok Adalat shall be
deemed to be a decree of a civil court and, therefore, after the
award passed by the Lok Adalat, the respondent/complainant
was entitled to execute the award like a decree of the civil
court, however, in the instant case, the learned Magistrate, by
his Judgment has found the petitioners guilty under Section
138 of N.I. Act and also convicted and sentenced them to
undergo simple imprisonment for one year and to pay the
compensation of Rs. 3,75,000/-. The question formulated by
the High Court is whether the Magistrate can convict the
petitioners/accused under Section 138 of N.I. Act after the
award was passed in the Lok Adalat. Learned single Judge,
after adverting to Section 21(1) of the Act and the order of the
learned Magistrate has concluded as under:-
“13. Had there been no settlement in the Lok Adalat, the
learned Magistrate could have proceeded with the trial and
deliver his Judgment, for which, there is no bar. In the
instant case, as admitted by both the learned Counsel, there
was an award passed in the Lok Adalat, based on the
consensus arrived at between the parties. As per the award,
the petitioners/accused had to pay Rs. 3,75,000/- to the
respondent/complainant on or before 03.09.2007. As it is an
award made by Lok Adalat, it is final and binding on the
parties to the criminal revision and as contemplated under
Section 21(2) of the Act, no appeal shall lie to any court
against the award.
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14. In such circumstances, the petitioners could have filed
the Execution Petition before the appropriate court, seeking
the award amount to be paid with interest and costs. In such
circumstances, it is clear that the learned Judicial
Magistrate became functus officio, to decide the case after
the award passed by Lok Adalat, to convict the accused
under Section 138 of Negotiable Instruments Act, hence, the
impugned order passed by the learned Sessions Judge is
also not sustainable in law, however, it is clear that the
petitioners/accused herein after having given consent for
Lok Adalat award being passed and also the award amount
agreed to pay Rs. 3,75,000/- on or before 03.09.2007 to the
respondent, have not complied with their undertaking made
before the Lok Adalat, which cannot be justified. However,
the order passed by the learned Judicial Magistrate under
Section 138 of Negotiable Instruments Act has to be set
aside, in view of the Lok Adalat award passed under Section
20(1)(i)(b), 20(1)(ii) of Legal Services Authorities Act (Act,
39/1987), as the Judicial Magistrate became functus officio
and the award is an executable decree in the eye of law, as
per Section 21 of the Act.”
After arriving at such conclusion, learned single Judge made it
clear that as per the award passed by the Lok Adalat, the
respondent/complainant is at liberty to file Execution Petition
before the appropriate court to get the award amount of Rs.
3,75,000/- reimbursed with subsequent interest and costs, as
per procedure known to law.
12) In Bhavnagar University vs. Palitana Sugar Mill (P)
Ltd. and Others, (2003) 2 SCC 111, it was held that the
purpose and object of creating a legal fiction in the statute is
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well known and when a legal fiction is created, it must be
given its full effect.
13) In Ittianam and Others vs. Cherichi @ Padmini (2010)
8 SCC 612, it was held that when the Legislature uses a
deeming provision to create a legal fiction, it is always used to
achieve a purpose.
14) A statutory support as evidenced in the statement of
Objects and reasons of the Act would not only reduce the
burden of arrears of work in regular courts, but would also
take justice to the door steps of the poor and the needy and
make justice quicker and less expensive. In the case on hand,
the Courts below erred in holding that only if the matter was
one which was referred by a civil court it could be a decree
and if the matter was referred by a criminal court it will only
be an order of the criminal court and not a decree under
Section 21 of the Act. The Act does not make out any such
distinction between the reference made by a civil court and
criminal court. There is no restriction on the power of Lok
Adalat to pass an award based on the compromise arrived at
between the parties in a case referred by a criminal court
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under Section 138 of the N.I. Act, and by virtue of the deeming
provision it has to be treated as a decree capable of execution
by a civil court. In this regard, the view taken in Subhash
Narasappa Mangrule (supra) and M/s Valarmathi Oil
Industries (supra) supports this contention and we fully
accept the same.
15) It is useful to refer the judgment of this Court in State of
Punjab & Anr. vs. Jalour Singh and Ors . (2008) 2 SCC 660.
The ratio that decision was that 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 the parties in the
presence of the Lok Adalat, in the form of an executable order
under the signature and seal of the Lok Adalat. This judgment
was followed in B.P. Moideen Sevamandir and Anr . vs. A.M.
Kutty Hassan (2009) 2 SCC 198.
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16) In P.T. Thomas vs. Thomas Job, (2005) 6 SCC 478, Lok
Adalat, its benefits, Award and its finality has been extensively
discussed.
17) From the above discussion, the following propositions
emerge:
1) In view of the unambiguous language of Section 21 of
the Act, every award of the Lok Adalat shall be deemed
to be a decree of a civil court and as such it is
executable by that Court.
2) The Act does not make out any such distinction
between the reference made by a civil court and
criminal court.
3) There is no restriction on the power of the Lok Adalat
to pass an award based on the compromise arrived at
between the parties in respect of cases referred to by
various Courts (both civil and criminal), Tribunals,
Family court, Rent Control Court, Consumer Redressal
Forum, Motor Accidents Claims Tribunal and other
Forums of similar nature.
4) Even if a matter is referred by a criminal court under
Section 138 of the Negotiable Instruments Act, 1881
and by virtue of the deeming provisions, the award
passed by the Lok Adalat based on a compromise has
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to be treated as a decree capable of execution by a civil
court.
18) In view of the above discussion and ultimate conclusion,
we set aside the order dated 23.09.2009 passed by the
Principal Munsiff Judge in an unnumbered execution petition
of 2009 in CC No. 1216 of 2007 and the order of the High
Court dated 24.11.2009 in Writ Petition (C) No. 33013 of 2009.
Consequently, we direct the execution court to restore the
execution petition and to proceed further in accordance with
law.
19) Before parting with this case, we would like to record our
deep appreciation for the valuable assistance rendered by the
learned amicus curiae .
20) The civil appeal is allowed. There shall be no order as to
costs.
...…………….…………………………J.
(P. SATHASIVAM)
.…....…………………………………J.
(J. CHELAMESWAR)
NEW DELHI;
NOVEMBER 28, 2011.
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