Saturday, 12 January 2019

Whether any admission given by a party before lok adalat is binding on him?

 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 ‘illwill’
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

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.

Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.7282-7283 OF 2008
(Arising out of SLP [C] Nos.28691-28692 of 2008)

B. P. Moideen Sevamandir Vs. A. M. Kutty Hassan 

R.V.RAVEENDRAN, J.
Dated:December 12, 2008.

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
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 postlunch
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
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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
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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,
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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
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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

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 ‘illwill’
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

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

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;

December 12, 2008.

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