Introduction 

• This is a landmark judgment enunciating the principles governing the functioning of Lok Adalats. 
• This judgment was delivered by two judges bench comprising of Justice DK Jain and Justice RV Raveendran. 

Facts 

• The Appellants were defendants in a suit for declaration and mandatory injunction. 
• The Appellant lost the litigation in the Trial Court and the first appellate Court. 
• The second appeal was filed before the High Court which was admitted and the pending second appeal was referred to the Lok Adalat organized by Kerela High Court Legal Services Committee. 
• The parties reached at a tentative settlement before the Lok Adalat and an award was passed by the Lok Adalat consisting of two retired judges. 
• The Appellants alleged that the parties could not finalize the terms of settlement and therefore no compromise deed was drawn to this effect. 
• The High Court therefore made a second reference to the Lok Adalat. Further, negotiations were unsuccessful and the Lok Adalat sent a failure report. 
• The Second appeal was listed for final hearing on 19th August 2008 before the Learned Single Judge. 
• A request was made by the counsel for appellant that due to personal inconvenience she could not be present and hence matter should be adjourned for next date. 
• The next day an application was filed for restoration of appeal supported by affidavit of the counsel. 
• The above two orders were challenged in appeal by special leave.

Issue Involved

• Whether the appeals in the present case should be allowed? 

Observations 

• The Court held that the Learned Single Judge lost sight of the purpose and scope of Lok Adalats. 
• When a matter is referred to Lok Adalat for settlement tehre are two courses available: 
  • if a compromise or a settlement is arrived at between the parties, to make an award, incorporating such compromise or settlement 
  • if there is no compromise or settlement, to return the record with a failure report to the court 
• There can be no 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 dispute. 
• The Court observed that the settlement should precede the award and not vice versa. 
• Observations of the Court regarding the functioning of Lok Adalats: 
  • Members of Lok Adalats sometimes tend to act as judges forgetting that they are only statutory conciliators and have no judicial role to play. 
  • As an award of a Lok Adalat is an executable decree, it is necessary for the Lok Adalats to have an uniform procedure, prescribed Registers and standardized formats of awards and permanent record of the awards, to avoid misuse or abuse of the ADR process. 
  • The Court suggested that the National Legal Services Authority as the apex body, should issue uniform guidelines for the effective functioning of the Lok Adalats. 
  • The Court also observed that the principles underlying following provisions of Arbitration and Conciliation Axt, 1996 (A & C Act) may also be treated as guidelines to members of Lok Adalats: 
    • Section 67 = Relating to roles of conciliators 
    • Section 75= Relating to confidentiality 
    • Section 86= Relating to admissibility of evidence in other proceedings 
• Observation of the Court regarding role of Courts with reference to Lok Adalats: 
  • Having regard to Section 89 of Civil Procedure Code, 1908 (CPC) it is the duty of the Court the ensure that the parties have recourse to the Alternate Dispute Resolution (ADR). 
  • 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 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. 
• Further, the Court held that the Court should desist in finding fault with any particular litigant or making record of the conduct of the litigant.
• It was observed that a Court should not permit any prejudice to creep into judicial mind due to unreasonable conduct of a litigant before the Lok Adalat.
• Owing to the observations made above the Court held that the Court cannot refuse a short accommodation and dismiss the appeal on the ground that the client was cantankerous and unreasonable.
• Hence the Court in this case allowed the above appeals.

Conclusion

• Lok Adalats are an important alternate dispute resolution mechanism. This judgment signifies the importance of Lok Adalats and further lays down the role of Courts in Lok Adalats.
• It also lays down an important principle that the conduct of a party before the Lok Adalat is totally irrelevant in the present case.