Civil Courts may reopen withdrawn suits under Section 151 CPC where no Lok Adalat settlement was concluded.

The respondents had instituted nine suits against Bowring Institute challenging an Enquiry Committee report, resolutions of the Institute’s General Body, and demands for payment of ₹9 lakhs towards regularisation of their memberships.

On 4 December 2023, the suits were referred to the Lok Adalat. On 9 December 2023, the plaintiffs filed applications under Order XXIII Rule 1 CPC seeking withdrawal of the suits, stating that the disputed issues would be placed before the Institute’s General Body Meeting proposed for June 2024.

The Lok Adalat permitted withdrawal and granted liberty to reopen and continue the suits, or file fresh suits, if the General Body resolution was unfavourable.

The proposed settlement before the General Body did not fructify. The plaintiffs consequently filed applications under Section 151 CPC before the Trial Court seeking reopening of the suits.

The Trial Court allowed the applications, holding that there had been no concluded settlement or valid Lok Adalat award because the defendant-Club had not signed a compromise or settlement document.

Bowring Institute challenged those orders under Article 227 of the Constitution, contending that the Trial Court had become functus officio after disposal of the suits before the Lok Adalat.

1. Whether the order dated 9 December 2023 constituted a valid and final Lok Adalat award having the force of a decree, despite the absence of a signed compromise or settlement between the parties.

2. Whether the Civil Court could entertain an application under Section 151 CPC to recall or reopen suits withdrawn pursuant to the Lok Adalat proceedings.

3. Whether the Trial Court’s orders permitting reopening of the suits warranted interference under Article 227 of the Constitution.

Under Sections 20(3), 20(5) and 21 of the Legal Services Authorities Act, 1987, a Lok Adalat may either record a compromise or settlement and make an award having the force of a civil-court decree, or, where no settlement is reached, return the record to the referring court for disposal in accordance with law.

State of Punjab v. Jalour Singh, (2008) 2 SCC 660, and Bhargavi Constructions v. Kothakapu Muthyam Reddy, (2018) 13 SCC 480, establish that a duly signed Lok Adalat settlement is final, binding and challengeable only under Articles 226/227 on limited grounds; absent such settlement, the proceedings do not constitute a Lok Adalat award.

In B.P. Moideen Sevamandir v. A.M. Kutty Hassan, (2009) 2 SCC 198, the Supreme Court held that a Lok Adalat has only two lawful courses: to make an award upon settlement or return the matter upon failure of settlement; it cannot pass a hybrid or adjudicatory order.

Further, under Section 151 CPC, the Civil Court retains inherent power to recall an order permitting withdrawal where necessary to prevent injustice, as recognised in Jet Plywood v. Madhukar Nowlakha, (2006) 3 SCC 699, and Rameswar Sarkar v. State of West Bengal, 1985 SCC OnLine Cal 139.

The Court found that no concluded settlement had been reached before the Lok Adalat. The parties had merely contemplated that the Institute’s General Body would consider the plaintiffs’ grievances at a future meeting; the proposed General Body process was therefore only a precursor to a possible settlement.

No joint compromise memo was executed, the defendant-Club did not sign any settlement document, and the order dated 9 December 2023 was passed on the plaintiffs’ withdrawal applications rather than in terms of a completed settlement.

Consequently, the order was not a statutory Lok Adalat award under Sections 20 and 21 of the LSA Act. Rather, it was an impermissible “hybrid order” because the Lok Adalat both permitted withdrawal and granted conditional liberty to reopen the suits.

Since the contemplated settlement failed and the plaintiffs had acted on the representation that their grievances would be considered by the Club, the Trial Court was entitled to exercise its inherent power under Section 151 CPC to recall or reopen the withdrawal orders.

The Trial Court’s exercise of that discretion did not suffer from jurisdictional error warranting interference under Article 227.

The Trial Court therefore retained jurisdiction to consider the plaintiffs’ applications under Section 151 CPC and correctly permitted reopening of the suits after the proposed General Body resolution failed to resolve the dispute.

All nine writ petitions filed by Bowring Institute were dismissed, pending applications were closed, and the parties’ substantive rights and contentions were left open for adjudication before the Trial Court.