Decisions of LOK ADALAT can be overturned / quashed by High Court

Whether award passed by Lok adalat can be quashed?
“… I see that the Lok Adalath has merely endorsed theterms of concurrence of the parties without considering theprobable issues of violation of morals and public policy inpermitting parties to settle on contingent terms which dependson the decisions of this Court in future. 
This is grosslyinappropriate and I am of the view that the Lok Adalathmisdirected itself in allowing the parties to enter in to asettlement which is contra bonos mores and contra public policy. 13. I am of the firm view that the Lok Adalaths have a dutyto ensure that the settlements entered into by the parties confirmto law, morals and public policy of the Society and the Polity. 
Any settlement entered in contravention of these would be completelyunsustainable and incompetent. If this Court notices that thesettlement is one that offers undue advantage to one side onaccount of prescription of certain contingencies, it becomes acase of contravention of public morals as also of public policyand, therefore, this Court would obtain certain justification ininterfering with such Awards under Article 226 of the Constitutionof India, it being null, void and non-est. 
 14. The unexpendable requirement of Lok Adalats to investdue care, attention and position while passing awards has alreadybeen spoken to about by a Division Bench of this Court inRajagopala Rao v. State Police Chief [2016 (3) KLT 358].The Bench had formated certain guidelines and are very pertinentto read. I, therefore, deem it necessary to extract the relevantparagraph of the said judgment as under: “18. In order to prevent the menace of passing awardswithout due care, attention and precision by Lok Adalats, weintend to formulate some guidelines. We may hastily add thatthey are not exhaustive and may take in other things as well,depending on the facts of each case. The crucial points to beborne in mind by the persons presiding over the Lok Adalats andthe lawyers appearing for the parties are thus: (i) The persons presiding shall thoroughly study and clearly understand the facts of the case coming up for settlement. (ii) They must have a clear understanding about the legal issues involved in the dispute between the parties. (iii) If the parties have engaged lawyers, they shall also participate in the proceedings before the Lok Adalat so that a proper settlement could be arrived at. (iv) The persons presiding over the Lok Adalat and the lawyers concerned shall bear in mind the fundamental principles, under the Indian Contract Act, 1872, essentially required for executing a legally enforceable agreement. (v) They shall bear in mind the principles under Order XXIII Rule 3 of the code of Civil Procedure, 1908 also, so that the award must be in the form of an enforceable decree, if the parties so wish. This is all the more important because by virtue of sub-section (2) of Section 21 of the Legal Services Authorities Act, 1987, every award made by Lok Adalats shall be final and binding on the parties to the dispute and no appeal shall lie to any court against the award. (vi) The persons presiding over the Lok Adalat shall see that the award passed is clear in its terms and there shall be no room for any confusion in respect of the terms and conditions in the award. They shall take care to see that on account of ill-drafting of the compromise, no litigation in future arises in respect of the matters once settled. (vii) They shall see that the awards passed are not only legal, but also conforming to the norms prescribed for a decree with all the required details in clear and explicit terms.” 
 15. However, in spite of express declarations by this Court,it is extremely disheartening and disquieting that lessons are notbeing learnt requiring repeated interventions Court. 
 16. In the case at hand, I see that the absence of a Clausein Ext.P7 as to what would happen in the event this Courtdismisses Crl.M.C. No.295/2013, would render the settlementbetween the parties, as recorded by the Lok Adalath, inoperativeand completely contingent and therefore, contrary to publicmorals. Contingent Awards cannot be countenanced, especiallywhen such contingencies are relating to pending matters beforeCourts, especially this Court. 
 17. The malafides involved in the present stand of the 2ndrespondent would be very apparent because it now asserts thatsince Crl.M.C. No.295/2013 has been withdrawn by thepetitioner, it is under no obligation to make payment at all. Thisobviously offers an illegal and unlawful advantage to the 2ndrespondent, tilting the balance of the scales of justice capriciouslyagainst the petitioner, merely because Ext.P7 Award had beenallowed to be entered into thoughtlessly by the competentAuthority of the 1st respondent. I cannot permit this to happenand I, therefore, am of the view that I will be justified ininterfering with Ext.P7 Award and relegating the parties to theirnormal channel of litigation, so that substantial justice can beobtained for both sides. In such circumstances, I have no hesitation in striking downand quashing Ext.P7 Award so as to pave way for theproceedings before the Sub Court, Kollam pending in O.S.No.381/2013 to be continued and concluded in the manner thatis appropriate in law. I do so.
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: MR. JUSTICE DEVAN RAMACHANDRAN 7TH DAY OF APRIL 2017 WP(C).No. 35992 of 2015 P.O.THOMAS, S/O. OOMMAN,V KOLLAM TALUK LEGAL SERVICE COMMITTEE, 
 If there ever be a Book on Lawyers’ Truths, the firstaphoristic percept that would occupy it is that a bad settlement isbetter than a good law suit. This truism is well recognisedbecause litigation is expensive, time consuming andunpredictable. However, many a time, this aphorism has beenpushed well beyond its intent leading to a settle-at-all-costsmentality without being cognizant of the forensic worth or valueof such settlement. 
 2. The bane of thoughtless and ill drafted settlements isthat the cure became worse than the malady, ironically thencausing even more litigation. When settlements couched onillogical, unenforceable, impractical and sometimes even dissoluteterms are brought to the notice of Courts, it become difficult tobe blind to it since the final outcome of any judicial process injustice and everything else is only a cornolony effort toapproximate the result of a well functioning judicial system. 
 3. The situation presented in this case is graphicallyillustrative of what I have said above.  
4. The petitioner assails Ext.P7, which is an award passed ina Lok Adalath conducted by the Kollam Taluk Legal ServicesCommittee. This challenge hypostized on Article 226 of theConstitution of India against such an Award would, at first blushappear to be slightly far fetched and perhaps even incompetenton account of the imperative provision of the Kerala Lok AdalathAct, which virtually invest settlement of awards in total finality.However, on an analysis of the facts involved, I am persuaded tothink otherwise. 
 5. The wood cut of the facts, as is constitutive for myconsideration, is that the petitioner had entered into anagreement for sale with the 2nd respondent on 20.12.2010. Theagreement involved 55 cents of land and the sale considerationwas fixed at Rs.1.9 Crores. As per the terms of the agreement,the 2nd respondent was to execute the Sale Deed within a periodof two months and on such covenant, the petitioner paid theentire consideration of Rs.1.9 Crores to the 2nd respondent in2012. These facts are virtually conceded to by the 2ndrespondent. However, it appears that while matters stood thus,the 2nd respondent, which is a Private Limited Company, wasproceeded against by various of its other creditors, leading toExt.P3 order being issued by the Chief Judicial Magistrate’s Court,Kollam, injuncting the 2nd respondent from disposing of theCompany properties or the personal properties of the Directors.This consequently constrrained the petitioner to file O.S.No.381/2013 on the files of the Sub Court, Kollam seekingrecovery of Rs.1.9 Crores paid by him under the agreement ofsale. While the suit was pending, the matter was referred to theLok Adalath for an attempt of settlement. 
 6. In the Lok Adalath, the parties agreed to certain terms,which were reduced to writing and recorded by the Adalath as asettlement, as is discernible from Ext.P7. The two terms inExt.P7, which is recorded in Malayalam, is as under: (i) The parties agree that the suit will be settled on the defendant paying the plaintiff an amount of Rs.1.9 Crores in full and final settlement. (ii) The defendant will pay the amount of Rs.1.9 Crores to the plaintiff within a period of 9 months after Crl.M.C. No.295/2013 filed by the plaintiff is allowed by the High Court. 
 7. It transpires that based on this award, but on amisinterpretation of its terms, the petitioner, who was theplaintiff in the suit, withdrew Crl.M.C. No.295/2013 before thisCourt. 
 8. The reasons that led to the petitioner filing Crl.M.C.No.295/2013 is also relevant here. This Crl.M.C. was filed by thepetitioner to vary the terms of Ext.P3, under which the Companywas injuncted from selling its properties, as has been mentionedby me earlier. So, obviously the parties thought that once theinjunction is vacated by an order of this Court, the amountretained by the Company could be returned to the petitioner. 
 9. However, when Crl.M.C. No.295/2013 was withdrawn bythe petitioner, on a misjudgment of the terms of the award, the2nd respondent Company took the stand that under the terms ofExt.P7, they are no longer obligated in making payment to thepetitioner. This has led to the present fracas between the partiesand to this writ petition being filed challenging the terms ofExt.P7. 
 10. I started this judgment by saying that the challengeagainst an Award of the the Lok Adalath, voluntarily entered intoby the parties, would normally be not countenanced. It is only incases where the Award can be seen to be vitiated bymisrepresentation and fraud or if it is opposed to public policy,can this Court, exercising jurisdiction under Article 226 of theConstitution of India, even entertain a challenge against it. 
 11. In the case at hand, I see that the parties have agreedinto the terms of the award on the happening of a specificcontingency that this Court allow Crl.M.C. No.295/2013. This wasa matter of pure conjuncture and speculation. I am concernedthat the Award did not provide for a prescription as to how theparties would be regulated, if the Court had dismissed Crl.M.C.No.295/2013. Both parties appear to have been inexplicablyconfident that this Court would act in a particular fashion andthat the said Crl.M.C. would be allowed in future. I do not seehow the parties could entertain such an impression in theirminds, and how the Lok Adalath could have allowed the parties toenter in to such an award. 
 12. I see that the Lok Adalath has merely endorsed theterms of concurrence of the parties without considering theprobable issues of violation of morals and public policy inpermitting parties to settle on contingent terms which dependson the decisions of this Court in future. This is grosslyinappropriate and I am of the view that the Lok Adalathmisdirected itself in allowing the parties to enter in to asettlement which is contra bonos mores and contra public policy. 
 13. I am of the firm view that the Lok Adalaths have a dutyto ensure that the settlements entered into by the parties confirmto law, morals and public policy of the Society and the Polity. Anysettlement entered in contravention of these would be completelyunsustainable and incompetent. If this Court notices that thesettlement is one that offers undue advantage to one side onaccount of prescription of certain contingencies, it becomes acase of contravention of public morals as also of public policyand, therefore, this Court would obtain certain justification ininterfering with such Awards under Article 226 of the Constitutionof India, it being null, void and non-est. 
 14. The unexpendable requirement of Lok Adalats to investdue care, attention and position while passing awards has alreadybeen spoken to about by a Division Bench of this Court inRajagopala Rao v. State Police Chief [2016 (3) KLT 358].The Bench had formated certain guidelines and are very pertinentto read. I, therefore, deem it necessary to extract the relevantparagraph of the said judgment as under: “18. In order to prevent the menace of passing awardswithout due care, attention and precision by Lok Adalats, weintend to formulate some guidelines. We may hastily add thatthey are not exhaustive and may take in other things as well,depending on the facts of each case. The crucial points to beborne in mind by the persons presiding over the Lok Adalats andthe lawyers appearing for the parties are thus: (i) The persons presiding shall thoroughly study and clearly understand the facts of the case coming up for settlement. (ii) They must have a clear understanding about the legal issues involved in the dispute between the parties. (iii) If the parties have engaged lawyers, they shall also participate in the proceedings before the Lok Adalat so that a proper settlement could be arrived at. (iv) The persons presiding over the Lok Adalat and the lawyers concerned shall bear in mind the fundamental principles, under the Indian Contract Act, 1872, essentially required for executing a legally enforceable agreement. (v) They shall bear in mind the principles under Order XXIII Rule 3 of the code of Civil Procedure, 1908 also, so that the award must be in the form of an enforceable decree, if the parties so wish. This is all the more important because by virtue of sub-section (2) of Section 21 of the Legal Services Authorities Act, 1987, every award made by Lok Adalats shall be final and binding on the parties to the dispute and no appeal shall lie to any court against the award. (vi) The persons presiding over the Lok Adalat shall see that the award passed is clear in its terms and there shall be no room for any confusion in respect of the terms and conditions in the award. They shall take care to see that on account of ill-drafting of the compromise, no litigation in future arises in respect of the matters once settled. (vii) They shall see that the awards passed are not only legal, but also conforming to the norms prescribed for a decree with all the required details in clear and explicit terms.” 
 15. However, in spite of express declarations by this Court,it is extremely disheartening and disquieting that lessons are notbeing learnt requiring repeated interventions Court. 
 16. In the case at hand, I see that the absence of a Clausein Ext.P7 as to what would happen in the event this Courtdismisses Crl.M.C. No.295/2013, would render the settlementbetween the parties, as recorded by the Lok Adalath, inoperativeand completely contingent and therefore, contrary to publicmorals. Contingent Awards cannot be countenanced, especiallywhen such contingencies are relating to pending matters beforeCourts, especially this Court. 
 17. The malafides involved in the present stand of the 2ndrespondent would be very apparent because it now asserts thatsince Crl.M.C. No.295/2013 has been withdrawn by thepetitioner, it is under no obligation to make payment at all. Thisobviously offers an illegal and unlawful advantage to the 2ndrespondent, tilting the balance of the scales of justice capriciouslyagainst the petitioner, merely because Ext.P7 Award had beenallowed to be entered into thoughtlessly by the competentAuthority of the 1st respondent. I cannot permit this to happenand I, therefore, am of the view that I will be justified ininterfering with Ext.P7 Award and relegating the parties to theirnormal channel of litigation, so that substantial justice can beobtained for both sides. In such circumstances, I have no hesitation in striking downand quashing Ext.P7 Award so as to pave way for theproceedings before the Sub Court, Kollam pending in O.S.No.381/2013 to be continued and concluded in the manner thatis appropriate in law. I do so. Consequently, the Sub Court is directed to continue with theprocesses, trial and disposal of O.S. No.381/2013, pending beforeit, expeditiously and without any avoidable further delay. Theparties are directed to appear before the Sub Court, Kollam, forthis purpose on 15th of June, 2017. This writ petition is thus ordered as above. In the peculiarfacts and circumstances of this case, I make no order as to costsand I direct the parties to suffer their respective costs.                                           

 Sd/-                              

 DEVAN RAMACHANDRAN, JUDGE.

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