Supreme Court Clarifies Lok Adalat Jurisdiction: Settlement vs. Merits in Estate Officer vs. Colonel H.V. Mankotia (2021)

Introduction

Date of the Judgment: October 7, 2021

Citation: (2021) INSC 683

Judges: M.R. Shah, J. and A.S. Bopanna, J.

Can a Lok Adalat, meant for settling disputes through compromise, delve into the merits of a case and dismiss it? The Supreme Court of India recently addressed this crucial question regarding the jurisdiction of Lok Adalats. This case clarifies that Lok Adalats cannot decide cases on their merits if a settlement is not reached. The judgment was delivered by a bench comprising Justices M.R. Shah and A.S. Bopanna, with Justice M.R. Shah authoring the opinion.

Case Background

The Estate Officer (appellant) had filed a writ petition before the High Court of Madhya Pradesh, Bench at Indore. The case was then referred to a Lok Adalat. On November 30, 2013, the Lok Adalat, instead of facilitating a settlement, examined the merits of the writ petition and dismissed it. The Estate Officer then filed a restoration application in the High Court, arguing that the Lok Adalat had acted beyond its jurisdiction. The High Court dismissed this application, leading to the present appeal before the Supreme Court.

Timeline

Course of Proceedings

The High Court of Madhya Pradesh, Bench at Indore, referred the writ petition filed by the Estate Officer to a Lok Adalat. The Lok Adalat, instead of facilitating a settlement, proceeded to dismiss the writ petition on merits. The Estate Officer then filed a restoration application, which was also dismissed by the High Court. This led to the appeal before the Supreme Court.

Legal Framework

The Supreme Court referred to the Legal Services Authorities Act, 1987, particularly Section 19(5), Section 20(3), and Section 20(5).

✓ Section 19(5) of the Legal Services Authorities Act, 1987: This section defines the jurisdiction of a Lok Adalat, stating it has the power to “determine and to arrive at a compromise or settlement between the parties to a dispute.”

✓ Section 20(3) of the Legal Services Authorities Act, 1987: This section specifies that when a case is referred to a Lok Adalat, the Lok Adalat shall “proceed to dispose of the case or matter and arrive at a compromise or settlement between the parties.”

✓ Section 20(5) of the Legal Services Authorities Act, 1987: This section states that if no compromise or settlement is reached, the Lok Adalat must return the case to the court that referred it.

The Court emphasized that the Lok Adalat’s role is to facilitate settlements, not to adjudicate disputes on merits.

Arguments

Appellant’s Arguments:

• The Lok Adalat exceeded its jurisdiction by deciding the writ petition on merits instead of facilitating a settlement. The appellant argued that the Lok Adalat’s role is limited to arriving at a compromise or settlement between the parties, and not to adjudicate the matter on merits.

  The appellant relied on the provisions of Section 19(5), Section 20(3) and Section 20(5) of the Legal Services Authorities Act, 1987, to support its argument that a Lok Adalat does not have the jurisdiction to decide a case on merits. The appellant also cited the Supreme Court’s decision in State of Punjab and Ors. Vs. Ganpat Raj (2006) 8 SCC 364.

Respondent’s Arguments:

• The respondent argued that since the matter was placed before the Lok Adalat with the consent of the appellant’s counsel, the Lok Adalat had the authority to dispose of the matter on merits. The respondent contended that the entire matter was at large before the Lok Adalat, and hence the Lok Adalat was justified in dismissing the writ petition.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether in the Lok Adalat held by the High Court, was it open for the members of the Lok Adalat to enter into the merits of the writ petition and to dismiss the same on merits, in absence of any settlement arrived at between the parties?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ The Supreme Court followed State of Punjab and Ors. Vs. Ganpat Raj (2006) 8 SCC 364* and reiterated that a Lok Adalat can only dispose of a matter by way of compromise or settlement and cannot decide a case on merits if no settlement is reached.

✓ The Court interpreted Section 19(5) of the Legal Services Authorities Act, 1987* to mean that the jurisdiction of the Lok Adalat is to determine and arrive at a compromise or settlement.

✓ The Court interpreted Section 20(3) of the Legal Services Authorities Act, 1987* to mean that the Lok Adalat must proceed to dispose of the case and arrive at a compromise or settlement.

✓ The Court interpreted Section 20(5) of the Legal Services Authorities Act, 1987* to mean that if no settlement is reached, the Lok Adalat must return the case to the court that referred it.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the statutory provisions of the Legal Services Authorities Act, 1987, which clearly define the role and jurisdiction of Lok Adalats. The Court emphasized that the legislative intent behind establishing Lok Adalats was to provide an alternative dispute resolution mechanism focused on settlement and compromise, not adjudication. The Court’s reasoning also reflects a concern for maintaining the integrity of the legal process, ensuring that each forum operates within its defined boundaries. The Court’s decision was influenced by the need to ensure that the mandate of the Legal Services Authorities Act, 1987 is upheld and that Lok Adalats do not overstep their jurisdiction.

Fact:Law Ratio

The Court’s reasoning was heavily based on the legal provisions of the Legal Services Authorities Act, 1987 and the interpretation of the same.

The Supreme Court observed that “The specific language used in sub-section (3) of Section 20 makes it clear that the Lok Adalat can dispose of a matter by way of a compromise or settlement between the parties.”

The Supreme Court also noted that “If no compromise or settlement is or could be arrived at, no order can be passed by the Lok Adalat.”

The Court further clarified that “The consent to place the matter before the Lok Adalat was to arrive at a settlement and or a compromise between the parties and not for placing the matter before the Lok Adalat for deciding the matter on merits.”

Key Takeaways

• Lok Adalats are primarily for facilitating settlements and compromises between parties.
• Lok Adalats do not have the jurisdiction to decide cases on merits if no settlement is reached.
• If a settlement is not achieved, the Lok Adalat must return the case to the court that referred it.

Directions

The Supreme Court quashed the order passed by the Lok Adalat and remanded the matter back to the High Court to decide the writ petition on merits and in accordance with law.

Development of Law

The ratio decidendi of this case is that a Lok Adalat’s jurisdiction is limited to facilitating settlements and compromises and that it cannot decide a case on merits if no settlement is reached. This judgment reinforces the established legal position regarding the limited jurisdiction of Lok Adalats and clarifies that they cannot act as regular courts of law. The Supreme Court has reaffirmed the principles laid down in State of Punjab and Ors. Vs. Ganpat Raj (2006) 8 SCC 364. There is no change in the previous positions of law.

Conclusion

The Supreme Court’s decision in Estate Officer vs. Colonel H.V. Mankotia (Retired) clarifies that Lok Adalats cannot decide cases on merits if a settlement is not reached. The judgment reinforces the statutory framework of the Legal Services Authorities Act, 1987, emphasizing the role of Lok Adalats as facilitators of compromise and settlement, not as adjudicators of disputes.