UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 1 UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) Dated:- 8.7.09 HON'BLE MR.JUSTICE SANGEET LODHA Mr. R.K.Mehta, for the petitioner. Mr. R.S.Mankad, for the respondents. 1. Heard learned counsel for the parties.. 2. This writ petition is directed against order dated 15.9.05 passed by the Permanent Lok Adalat, Hanumangarh in case no.57/04 whereby an application preferred by the respondent no. 2 under Section 22C of the Legal Services Authorities Act, 1987 (in short 'the Act of 1987') has been allowed and the petitioner has been directed to make payment of a sum of Rs.51,098.40 to the respondent no.2 against the goods damaged covered under Shopkeeper Insurance Policy issued in its favour by the petitioner. 3. The respondent no.2 is a cloth merchant having a shop in Hanumangarh Town on the ground floor and a stock room on the first floor. The shop and the stock room were insured under Shopkeeper Insurance Policy issued by the petitioner Insurance Company. On 25.5.04, on account of heavy rain , the water was collected in the room at the first floor and the stock lying therein UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 2 was damaged. The petitioner submitted the insurance claim for a sum of Rs. 1,27,746/- which was repudiated by the petitioner Insurance Company. In these circumstances, the respondent no. 2 preferred an application before Permanent Lok Adalat claiming a sum of Rs.1,27,746/- against the loss caused alongwith interest @ 12 % p.a. 4. The application was contested on behalf of the petitioner company by filing a reply thereto on the ground that the loss in question was not covered under flood risk peril . It was stated that on 25.5.04 there was no flood in Hanumangarh Town and the stock lying in the first floor was not damaged by flood water. It was stated that the damage was caused due to muddy water entered from balcony to the stock room at the first floor of the shop building, which was not covered under the insurance policy. 5. After hearing both the parties, the claim of the respondent no. 2 has been partly allowed by the Permanent Lok Adalat and he has been held entitled for damage to the extent of 40% of the amount claimed. The learned Permanent Lok Adalat has arrived at the finding that in the policy issued , there is no clear clarification excluding the rain water from flood risk peril. Accordingly, vide order impugned, the petitioner has been directed to pay a sum of Rs.51,098.40 to the respondent no. 2 alongwith interest @ 6 % from the date of application i.e. UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 3 23.9.04. Hence, this petition. 6. It is contended by the learned counsel for the petitioner that the Permanent Lok Adalat has seriously erred in deciding the claim in summary proceedings without giving opportunity to the petitioner to lead evidence. The learned counsel submitted that the petitioner has not been able to establish the loss caused by leading any evidence therefore, the finding arrived at by the Permanent Lok Adalat is ex facie perverse. The learned counsel submitted that Permanent Lok Adalat had no jurisdiction to adjudicate the dispute in summary proceedings and such dispute can only be decided by the civil courts where the parties are given opportunity to lead evidence. It is submitted by the learned counsel that the judgment and order passed by the learned Permanent Lok Adalat is contrary to law and facts and suffers from error apparent on the face of record. The learned counsel submitted that the policy issued in favour of respondent no. 2 covers the risk of flood, inundation , storm, tempest , hurrican, tomadu or cyclone. According to the learned counsel the loss which was admittedly due to rain water, was not covered by the policy. The learned counsel submitted that the learned Permanent Lok Adalat has committed a serious error in holding that the word “flood” includes rain water. Accordingly, it is submitted by the learned counsel that while passing the order UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 4 impugned, the learned Permanent Lok Adalat has exceeded the jurisdiction vested in it. 7. On the other hand, the learned counsel appearing on behalf of the respondent no. 2 submitted that by virtue of provisions of sub-section (8) of Section 22 C , the Permanent Lok Adalat is competent to decide the dispute on merits if the dispute does not relate to any offence, therefore, the adjudication of the dispute on merits by the Permanent Lok Adalat by the order impugned cannot be faulted with.The learned counsel submitted that the finding arrived at by the learned Permanent Lok Adalat after due consideration of the rival submissions of the parties, cannot be said to be perverse and the order impugned does not warrant any interference by this court in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India. 8. I have considered the submissions of the learned counsel and perused the material on record. 9. As per provisions of Section 22C which deals with the settlement of a dispute at a pre litigation stage, at the first instance the Permanent Lok Adalat has to take recourse to the conciliation proceedings for settlement of the dispute between the parties. In the aforesaid conciliation proceedings if a Permanent Lok Adalat is of the opinion that there exists UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 5 elements of settlement in such proceedings which may be acceptable to the parties, it may formulate the terms of the possible settlement of the dispute and give to the parties concerned for their observations and in case, the parties reach at an agreement on the settlement of the dispute, they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an award in terms thereof. It is only when the parties fail to reach at an agreement, the contested dispute can be decided by the Permanent Lok Adalat on merits in terms of provisions of Section 22C(8) of the Act of 1987. However, from bare perusal of the order impugned , it is apparent that no attempt was made by the Permanent Lok Adalat to conduct the conciliation proceedings for settlement of dispute in terms of sub-section (5) to (7) of Section 22 C of the Act of 1987. 10. It is true that by virtue of provisions of Section 22D of the Act of 1987,while conducting conciliation proceedings or deciding a dispute on merit the Permanent Lok Adalat shall not be bound by the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872, but then, it has been specifically provided that it shall be guided by principles of natural justice, objectivity, fair play, equity and other principles of justice. Obviously, the aforesaid provision excluding the applicability of the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872 to the UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 6 proceedings under Section 22C of the Act of 1987, has been incorporated by the legislature with an intention that the procedural technicalities may not impede the expeditious disposal of the dispute by the Permanent Lok Adalat. But, the fact remains that while undertaking the determination of the dispute on merits the Permanent Lok Adalat acquires the role of an adjudicatory authority, therefore, before deciding the dispute and rendering a judgment it has to form a definite opinion on the basis of the evidence on record. Of course, the strict rules of evidence in terms of Indian Evidence Act, 1872 shall not apply to the proceedings before the Permanent Lok Adalat under Section 22C(8) of the Act of 1987 but then, by exclusion of applicability of the provisions of Indian Evidence Act, the basic principles that the proof is incumbent upon the one who affirms and not on one who denies and that the person who affirms must prove, are not done away with. Therefore, the person who brings the dispute before the Permanent Lok Adalat for adjudication has to prove his case by producing the cogent evidence. 11. Admittedly, the assertions made by the respondent in the application preferred before the Permanent Lok Adalat were specifically denied by the petitioner by way of reply. Indisputably, there existed a dispute on facts which could have UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 7 been determined by the Permanent Lok Adalat only by way of the evidence adduced by the parties to the dispute. A perusal of the order impugned goes to show that no evidence whatsoever was produced by the respondent before the Permanent Lok Adalat to prove his case. No points for determination were formulated by the Permanent Lok Adalat and the parties were never invited to lead evidence. In absence of any evidence being produced by the respondent in support of the case set out before the Permanent Lok Adalat, the inference drawn on the basis of the pleadings of the parties by the Permanent Lok Adalat without any basis cannot be countenanced by this Court. 12. It is pertinent to note that as an adjudicatory authority in terms of Section 22C(8), the decision of the Permanent Lok Adalat by legal fiction shall be a decision of the civil court, therefore, while adjudicating the dispute, it must proceed with care and caution and should not adjudicate the dispute in such a cursory manner. The Permanent Lok Adalat adjducating the dispute on merits in terms of Section 22C of the Act of 1987, cannot decide the same by just recording its ipse dixit without assigning any reasons in support of the findings arrived at. Thus, on the facts and in the circumstances of the present case, in considered opinion of this Court, the finding arrived at by the Permanent Lok Adalat as aforesaid without there being even an UNITED INDIA INSURANCE COMPANY LIMITED VS. THE PERMANENT LOK ADALAT, HANUMANGARH & ANR. (S.B.CIVIL WRIT PETITION NO.5658/06) 8 iota of evidence on record in support thereof is ex facie perverse and cannot be sustained. 13. In the result, the writ petition succeeds, it is hereby allowed. The impugned order dated 15.9.05 passed by the Permanent Lok Adalat in case no.57/04 is quashed and set aside. The matter is remanded to the Permanent Lok Adalat for adjudication afresh in accordance with the provisions of Section 22 C and 22 D of the Act of 1987 as discussed above. The parties shall appear before the Permanent Lok Adalat, Hanumangarh on 17th August,09. No order as to costs. (SANGEET LODHA),J. vij