Supreme Court clarifies remedy against Lok Adalat awards: Bhargavi Constructions vs. Kothakapu Muthyam Reddy (2017)

Date of the Judgment: September 7, 2017

Citation: (2017) INSC 769

Judges: R.K. Agrawal, J. and Abhay Manohar Sapre, J.

Can a civil suit be filed to challenge an award passed by the Lok Adalat, or is a writ petition the only recourse? The Supreme Court of India addressed this critical question in a recent case, clarifying the appropriate legal avenue for those aggrieved by Lok Adalat awards. This judgment settles the law on the issue, providing clarity on the remedies available. The bench comprised of Justice R.K. Agrawal and Justice Abhay Manohar Sapre, with the majority opinion authored by Justice Abhay Manohar Sapre.

Case Background

The case originated from a suit for specific performance filed by T. Jagat Singh (respondent No. 5) against respondent Nos. 1 to 34 in the District Judge Court, Ranga Reddy District on May 7, 2007. The suit, O.S. No. 481 of 2007, concerned an agreement of sale dated December 28, 1995, for agricultural land. Initially, the suit was against defendant Nos. 1 to 9, but defendant Nos. 10 to 33 were later joined as they claimed an interest in the land.

During the pendency of the suit, on August 22, 2007, the parties reached a compromise and filed a joint compromise petition before the Lok Adalat. The Lok Adalat accepted the compromise and passed an award under Section 21 of the Legal Services Authorities Act, 1987, disposing of the suit. However, on November 14, 2009, respondent Nos. 1 to 4 (original defendant Nos. 22 to 25 in Suit No. 481 of 2007) filed Civil Suit No. 107 of 2010, challenging the Lok Adalat award, alleging fraud and misrepresentation.

Timeline

Course of Proceedings

The Trial Court, on July 24, 2013, allowed the defendants’ application under Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, and rejected the plaint in Civil Suit No. 107 of 2010. The Trial Court held that a civil suit to challenge a Lok Adalat award was not maintainable, and the proper remedy was a writ petition under Article 226 or 227 of the Constitution of India, relying on the Supreme Court’s decision in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660.

The plaintiffs appealed to the High Court, which reversed the Trial Court’s decision on June 25, 2015. The High Court held that since the suit was based on allegations of fraud and misrepresentation, it could be tried on its merits by a civil court. The defendants then appealed to the Supreme Court.

Legal Framework

The case primarily revolves around the interpretation of the Legal Services Authorities Act, 1987, and Order 7 Rule 11(d) of the Code of Civil Procedure, 1908. Section 21 of the Legal Services Authorities Act, 1987, deals with the finality of awards passed by the Lok Adalat. It states that every award made by a Lok Adalat shall be final and binding on all the parties to the dispute. Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, allows for the rejection of a plaint where the suit appears from the statement in the plaint to be barred by any law.

The Supreme Court also considered Article 141 of the Constitution of India, which states that the law declared by the Supreme Court shall be binding on all courts within the territory of India.

Arguments

Appellants’ Arguments (Defendants):

• The appellants argued that the Trial Court was correct in rejecting the plaint.
• They relied on the Supreme Court’s decision in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660, which held that the only remedy against a Lok Adalat award is a writ petition under Article 226 or 227 of the Constitution of India.
• They contended that the expression “barred by any law” in Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, includes not only legislative enactments but also judicial decisions of the Supreme Court, which are binding under Article 141 of the Constitution of India.
• They argued that the term “law” should be construed liberally to include judicial precedents.

Respondents’ Arguments (Plaintiffs):

• The respondents supported the High Court’s order, arguing that a civil suit is maintainable when the challenge to a Lok Adalat award is based on allegations of fraud and misrepresentation.
• They contended that the expression “law” in Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, does not include judicial decisions, and applies only to bars contained in legislative enactments.
• They further argued that even if judicial decisions are included, the law laid down in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660, should not be interpreted to mean that a suit is barred.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court considered the following key issue:

1. Whether the expression “barred by any law” occurring in clause (d) of Rule 11 of Order 7 of the Code of Civil Procedure, 1908, includes the law laid down by the Supreme Court in judicial precedents and whether a civil suit is maintainable to challenge an award passed by the Lok Adalat.

Treatment of the Issue by the Court

Authorities

Cases Considered by the Court:

• State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660 – Supreme Court of India: This case was the primary authority, establishing that the remedy against a Lok Adalat award is a writ petition.
• Virender Kumar Dixit vs. State of U.P., 2014(9) ADJ 1506 – Allahabad High Court: The court held that “law” includes judicial precedents.
• Hermes Marines Limited vs. Capeshore Maritime Partners F.Z.C. & Anr. (unreported decision in Civil Application (OJ) No.144 of 2016 in Admiralty Suit No.10 of 2016 decided on 22.04.2016) – Gujarat High Court: The court also held that “law” includes judicial precedents.
• Shahid s. Sarkar & Ors. Vs. Usha Ramrao Bhojane , 2017 SCC OnLine Bom 3440 – Bombay High Court: The court relied on the Allahabad and Gujarat High Court decisions and held that the law laid down by the highest court of the State as well as the Supreme Court, is the law.
• Mira Sinha & Ors. Vs. State of Jharkhand & Ors., 2015 SCC OnLine Jhar.4377 – Jharkhand High Court: The court held that the expression “law” included in Rule 11(d) includes Law of Limitation and, it would also include the law declared by the Hon’ble Supreme Court.
• M. Nagaraj & Ors. Vs. U.O.I. & Ors. 2006 ( 8 ) SCC 212 – Supreme Court of India: The court held that the law declared by the Supreme Court is binding on all courts.

Legal Provisions Considered by the Court:

• Section 21 of the Legal Services Authorities Act, 1987: This section deals with the finality of awards passed by the Lok Adalat.
• Order 7 Rule 11(d) of the Code of Civil Procedure, 1908: This rule allows for the rejection of a plaint where the suit appears to be barred by any law.
• Article 141 of the Constitution of India: This article states that the law declared by the Supreme Court shall be binding on all courts within the territory of India.

Authorities Considered by the Court

Judgment

The Supreme Court allowed the appeal, setting aside the High Court’s order and restoring the Trial Court’s order. The Court held that a civil suit is not maintainable to challenge an award passed by the Lok Adalat and the only remedy available to the aggrieved person is to file a writ petition under Article 226 or 227 of the Constitution of India.

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

How each authority was viewed by the Court?

• State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660*: The Supreme Court followed this precedent, reiterating that a writ petition is the only remedy against a Lok Adalat award.
• Virender Kumar Dixit vs. State of U.P., 2014(9) ADJ 1506*: The Supreme Court approved the Allahabad High Court’s view that “law” includes judicial precedents.
• Hermes Marines Limited vs. Capeshore Maritime Partners F.Z.C. & Anr.*: The Supreme Court approved the Gujarat High Court’s view that “law” includes judicial precedents.
• Shahid s. Sarkar & Ors. Vs. Usha Ramrao Bhojane , 2017 SCC OnLine Bom 3440*: The Supreme Court approved the Bombay High Court’s view that the law laid down by the highest court of the State as well as the Supreme Court, is the law.
• Mira Sinha & Ors. Vs. State of Jharkhand & Ors., 2015 SCC OnLine Jhar.4377*: The Supreme Court approved the Jharkhand High Court’s view that the expression “law” included in Rule 11(d) includes Law of Limitation and, it would also include the law declared by the Hon’ble Supreme Court.
• M. Nagaraj & Ors. Vs. U.O.I. & Ors. 2006 ( 8 ) SCC 212*: The Supreme Court relied on this authority to emphasize that its decisions are binding on all courts.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to maintain consistency with its previous judgments and to uphold the binding nature of its pronouncements under Article 141 of the Constitution of India. The Court emphasized the importance of following the established legal procedure for challenging Lok Adalat awards, which it had previously clarified in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660. The Court also gave importance to the definition of law and held that it includes judicial precedents.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio Analysis:

The Court’s reasoning was heavily weighted towards legal considerations, emphasizing the binding nature of precedents and the interpretation of legal terms. The factual aspects of the case were secondary to the legal principles involved.

Logical Reasoning

Key Takeaways

• A civil suit is not maintainable to challenge an award passed by the Lok Adalat.
• The only remedy available to an aggrieved person is to file a writ petition under Article 226 or 227 of the Constitution of India in the High Court.
• The expression “barred by any law” in Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, includes judicial precedents of the Supreme Court.
• The term “law” should be interpreted broadly to include not only legislative enactments but also judicial precedents.

Directions

The Supreme Court clarified that the respondents (plaintiffs) would be at liberty to challenge the legality and correctness of the award dated 22.08.2007 passed by the Lok Adalat by filing a writ petition under Article 226 or 227 of the Constitution in the High Court in accordance with law.

The Court also clarified that it had not examined the merits of the case of either party, and the writ court, in the event of a writ petition being filed, would decide the writ petition strictly in accordance with law without being influenced by any of the Supreme Court’s observations.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of the case is that a civil suit is not maintainable to challenge an award passed by the Lok Adalat. The only remedy available to an aggrieved person is to file a writ petition under Article 226 or 227 of the Constitution of India. This judgment reinforces the principle established in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660, and clarifies the scope of the expression “barred by any law” in Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, to include judicial precedents of the Supreme Court.

Conclusion

The Supreme Court’s judgment in Bhargavi Constructions & Anr. vs. Kothakapu Muthyam Reddy & Ors. clarifies that a civil suit is not the correct legal avenue to challenge an award passed by the Lok Adalat. The only remedy available is to file a writ petition under Article 226 or 227 of the Constitution of India. This decision reinforces the principle that judicial precedents of the Supreme Court are binding on all courts and that the term “law” in Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, includes these precedents. This judgment provides clarity and finality to the process of challenging Lok Adalat awards, ensuring consistency in the application of law.

Category

Parent Category: Civil Procedure Code, 1908

Child Category: Order 7 Rule 11(d), Civil Procedure Code, 1908

Parent Category: Legal Services Authorities Act, 1987

Child Category: Section 21, Legal Services Authorities Act, 1987

Parent Category: Constitution of India

Child Category: Article 141, Constitution of India

Parent Category: Lok Adalat

Child Category: Lok Adalat Awards

Parent Category: Writ Jurisdiction

Child Category: Article 226, Constitution of India

Child Category: Article 227, Constitution of India

FAQ

Q: What should I do if I am not satisfied with an award passed by the Lok Adalat?

A: According to the Supreme Court’s judgment, you cannot file a civil suit to challenge a Lok Adalat award. The only remedy available is to file a writ petition under Article 226 or 227 of the Constitution of India in the High Court.

Q: What does “barred by any law” mean in the context of rejecting a plaint?

A: The Supreme Court has clarified that “barred by any law” includes not only legislative enactments but also judicial precedents of the Supreme Court. This means that if a Supreme Court judgment says that a particular type of suit is not maintainable, then such a suit can be rejected.

Q: Can I challenge a Lok Adalat award if I believe it was obtained through fraud?

A: Yes, you can challenge a Lok Adalat award even if you believe it was obtained through fraud. However, the Supreme Court has clarified that the correct procedure is to file a writ petition under Article 226 or 227 of the Constitution of India, not a civil suit.

Q: What is the significance of Article 141 of the Constitution of India in this case?

A: Article 141 of the Constitution of India states that the law declared by the Supreme Court shall be binding on all courts within the territory of India. This means that the Supreme Court’s interpretation of the law in this case is binding on all lower courts in India.

Q: Does this judgment change the existing law on challenging Lok Adalat awards?

A: This judgment reinforces the existing law as established in State of Punjab & Anr. Vs. Jalour Singh & Ors., (2008) 2 SCC 660. It clarifies that a writ petition is the only remedy for challenging a Lok Adalat award and that the term “law” includes judicial precedents.