* THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA + WRIT PETITION No.18159 of 2010 % 12.12.2011 Between: Bal Reddy. … Petitioner AND The Taluka Legal Services Committee, Narayanapet, Mahabubnagar District, Represented by its Chairman, And others. … Respondents ! Counsel for the Petitioner: Sri K.Venkatesh Gupta ^Counsel for the Respondents: G.P for Revenue Sri N.Ashok Kumar Sri T.Sudha Muralidhar <Gist: >Head Note: ? Citations: 1. (2006) 8 SCC 364 2. (2008) 3 SCC 660 THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA WRIT PETITION No.18159 of 2010 Dated:12.12.2011 Between: Bal Reddy. …Petitioner and The Taluka Legal Services Committee, Narayanapet, Mahabubnagar District, Represented by its Chairman, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA WRIT PETITION No.18159 of 2010 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The writ petition is filed assailing the Award dated 05.09.2009 in Pre-Litigation Case No.6 of 2009 passed by the Lok Adalat Bench, Taluka Legal Services Committee, Narayanapet (hereafter referred to as Lok Adalat), and for a direction to set aside the said Award. Initially, the Lok Adalat, one U.Basanth Reddy (brother of the petitioner), and the Tahsildar, Makthal Mandal, were shown as the respondents. Subsequently, by order dated 16.08.2010, in W.P.M.P.No.25082 of 2010, respondent Nos.4 to 6, who are the sons of the petitioner, and respondent No.7, who is another brother of the petitioner, were impleaded. The brief background facts are as follows. The petitioner, respondent Nos.2 and 7 are the sons of late Nagi Reddy. His father Malla Reddy was owner of land admeasuring Acs.98.39 guntas in Satyawar Village of Makthal Mandal in Mahabubnagar District. He and his three sons constituted Hindu joint family. The three brothers succeeded to the property of Malla Reddy, who died intestate. It is the case of the petitioner that when the second respondent claimed exclusive ownership of the entire land, the other two brothers demanded partition. Even before steps could be initiated in that direction, the petitioner received a notice dated 26.03.2010 from the Lok Adalat along with a copy of the impugned Award. The petitioner would contend that the said Award was passed behind the back of the petitioner and respondent No.7, that they never received any notice, they never appeared before the Lok Adalat and that they never entered into any settlement or compromise with the second respondent. Alleging that after obtaining the impugned Award, the second respondent is trying for change of revenue records, the present writ petition is filed. After receiving notice, the second respondent on the one hand, and respondent Nos.4 to 7 on the other filed separate counters. The second respondent projected the case which is as follows. There have been family disputes among the brothers with regard to the share of the property after death of the father. When the petitioner and his three sons tried to dispossess, he filed O.S.No.67 of 2008 on the file of the Court of the Junior Civil Judge, Narayanpet, for injunction. The said suit was, however, withdrawn with the intervention of the elders. Thereafter, the second respondent made an application to the District Collector on 27.07.2009 bringing to his notice about the partition of the properties in 1992 itself. This letter was referred to the Lok Adalat for resolving the dispute which was registered as Pre-Litigation Case No.6 of 2009. At that stage, the village elders and well wishers settled the matter between the parties in the meeting held on 21.08.2009. The three brothers agreed for the agreement and a draft of the “Bhoo Bhaga Parishkara Patram” (land dispute settlement agreement) was prepared. The three brothers signed it in the presence of eighteen witnesses. At that stage, the Lok Adalat issued a notice on 24.08.2009 directing the petitioner and the second respondent to appear before them. As the parties have already entered into an agreement, which was produced before the Lok Adalat, the Chairman-cum-Senior Civil Judge, Taluka Legal Services Committee, requested the Lok Adalat to pass the Award as per the agreement. Accordingly, the Award was passed on 05.09.2009. The second respondent also asserts that the signature of the petitioner was not taken in the column meant for the respondent, as he did not take the copy of the Award. But, the parties to the Award were present and signed the settlement, which was the basis, and therefore, the Award cannot be invalidated on that ground. Respondent Nos.4 to 7 while stating that there was no information or knowledge about the Pre- Litigation Case, alleged that the said Award is not based on mutual understanding, and therefore, it is not binding on them. They also alleged that the second respondent suppressed and misrepresented the material facts and obtained the impugned Award. He got allotted all fertile and superior quality lands to his share and got allotted lands with less value to the petitioner and the seventh respondent. We have heard the Counsel for the petitioner, second respondent and respondent Nos.4 to 7. We have perused the Legal Services Authorities Act, 1987 (the Act), the relevant Regulations in the National Legal Services Authority (Lok Adalats) Regulations, 2009 (the Regulations). In the light of these, the only point that would arise for consideration is whether the Award passed by the Lok Adalat in a Pre-Litigation Case without obtaining the signature of the parties to the Award is legally valid. Chapter VI A of the Act contains Sections 22A to 22E. These deal with various aspects of Pre- Litigation Conciliation and Settlement. Section 22C of the Act is the main provision, which reads as under. 22C.Cognizance of cases by Permanent Lok Adalats.- (1) Any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for the settlement of dispute: Provided that the Permanent Lok Adalat shall not have jurisdiction in respect of any matter relating to an offence not compoundable under any law: Provided further that the Permanent Lok Adalat shall also not have jurisdiction in the matter where the value of the property in dispute exceeds ten lakh rupees: Provided also that the Central Government, may, by notification, increase the limit of ten lakh rupees specified in the second proviso in consultation with the Central Authority. (2) After an application is made under sub- section (1) to the Permanent Lok Adalat, no party to that application shall invoke jurisdiction of any court in the same dispute. (3) Where an application is made to a Permanent Lok Adalat under sub- section (1), it- (a) shall direct each party to the application to file before it a written statement, stating therein the facts and nature of dispute under the application, points or issues in such dispute and grounds relied in support of, or in opposition to, such points or issues, as the case may be, and such party may supplement such statement with any document and other evidence which such party deems appropriate in proof of such facts and grounds and shall send a copy of such statement together with a copy of such document and other evidence, if any, to each of the parties to the application; (b) may require any party to the application to file additional statement before it at any stage of the conciliation proceedings; (c) shall communicate any document or statement received by it from any party to the application to the other party, to enable such other party to present reply thereto. (4) When statement, additional statement and reply, if any, have been filed under sub- section (3), to the satisfaction of the Permanent Lok Adalat, it shall conduct conciliation proceedings between the parties to the application in such manner as it thinks appropriate taking into account the circumstances of the dispute. (5) The Permanent Lok Adalat shall, during conduct of conciliation proceedings under sub- section (4), assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner. (6) It shall be the duty of every party to the application to cooperate in good faith with the Permanent Lok Adalat in conciliation of the dispute relating to the application and to comply with the direction of the Permanent Lok Adalat to produce evidence and other related documents before it. (7) When a Permanent Lok Adalat, in the aforesaid conciliation proceedings, is of opinion that there exist elements of settlement in such proceedings which may be acceptable to the parties, it may formulate the terms of a 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 and furnish a copy of the same to each of the parties concerned. (8) Where the parties fail to reach at an agreement under sub-section (7), the Permanent Lok Adalat shall, if the dispute does not relate to any offence, decide the dispute. When an application is made to Permanent Lok Adalat by any party for settlement of dispute, the Permanent Lok Adalat shall direct each party to the application to file before them written statement stating the facts and the nature of the dispute. After receiving the said statement the Permanent Lok Adalat shall conduct conciliation proceedings to the parties to the application and assist the parties to reach an amicable settlement of the dispute. If during the conciliation proceedings Permanent Lok Adalat comes to the opinion that there exists elements of settlement which may be acceptable to the parties, it may formulate the terms of possible settlement. In case the parties reach at an agreement on settlement of dispute, they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an Award thereon and furnish a copy of the same to each of the parties concerned. As per Section 22D of the Act the Permanent Lok Adalat shall be guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice. It shall not be bound by the provisions of the Code of Civil Procedure, 1908, and the Indian Evidence Act, 1872. Section 22E of the Act makes the Award of the Permanent Lok Adalat an executable decree and shall be binding on all the parties thereto. Therefore, unless and until there is settlement agreement between the parties to the dispute and all the parties reach an agreement, there cannot be any valid Award by the Permanent Lok Adalat. In exercise of their powers under Section 29 of the Act, the National Legal Services Authority made the Regulations. Regulation 12 deals with pre-litigation matters. It requires the Permanent Lok Adalat to give a reasonable hearing to the parties concerned and obtain version of each party. Regulation 17 is relevant and reads as under. 17. Award – (1) Drawing up of the award is merely an administrative act by incorporating the terms of settlement or compromise agreed by the parties under the guidance and assistance from Lok Adalat. (2) When both parties sign or affix their thumb impression and the members of the Lok Adalat countersign it, it becomes an award (see a specimen of Appendix I). Every award of the Lok Adalat shall be categorical and lucid and shall be written in regional language used in the local courts or in English. It shall also contain particulars of the case, viz., case number, name of the court and names of parties, date of receipt, register number assigned to the case in the permanent register (maintained as provided under regulation 20) and date of settlement. Wherever the parties are represented by counsel, they should also be required to sign the settlement or award before the members of the Lok Adalat affix their signature. (Regulations (3) to (8) are omitted, as they are not relevant in this case) A perusal of these Regulations would show that when an Award is drawn up which is a mere administrative act, it shall contain the terms of settlement or compromise agreed by the parties under the guidance and assistance of the Permanent Lok Adalat. The draft so drawn up shall become Award only when it is signed or the parties affix their thumb impression, which is counter signed by the Members of the Permanent Lok Adalat. Every Award shall be in the form of Appendix I, which reads as under. APPENDIX I BEFORE THE LOK ADALAT HELD AT ………….. (Organised by ……………. Authority/…………… Committee under Section 19 of the Legal Services Authorities Act, 1987 (Central Act) Petitioner/Plaintiff/Complainant: Defendant/Respondent: No.of proceedings of the …………Court/Authority/Committee Present:- Name of the Judicial Officer : Retired Judicial Officer : Names of Members : (1) (2) AWARD The dispute between the parties having been referred for determination to the Lok Adalat and the parties having compromised/settled the case/matter, the following award is passed in terms of the settlement:- ………………………………………………………………………………………………………………………………………… The parties are informed that the court fee, if any, paid by any of them shall be refunded. Petitioner/Plaintiff/Complainant Defendant/Respondent Judicial Officer Member Member Date………… (Seal of the Authority/Committee) A plain reading of Regulation 17 to the extent necessary, and Appendix I would leave no doubt that unless and until there is a prior settlement/agreement between the parties and unless and until the parties sign the Award drawn in accordance with the settlement before the Permanent Lok Adalat, it cannot become an Award executable under Section 22E of the Act. That there cannot be an Award by Lok Adalat without there being a prior settlement or compromise between the parties to the dispute is well settled. In State of Punjab v Ganpat Raj[1] dealing with Section 20(3) and (5) of the Act, the Supreme Court laid down as under. 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. Two crucial terms in sub- sections (3) and (5) of Section 20 are “compromise” and “settlement”. The former expression means settlement of differences by mutual concessions. It is an agreement reached by adjustment of conflicting or opposing claims by reciprocal modification of demands. As per Termes de la Ley, “compromise is a mutual promise of two or more parties that are at controversy”. As per Bouvier it is “an agreement between two or more persons, who, to avoid a law suit, amicably settle their differences, on such terms as they can agree upon”. The word “compromise” implies some element of accommodation on each side. It is not apt to describe total surrender. (See NFU Development Trust Ltd., Re (1973) 1 All ER 135 = (1972) 1 WLR 1548 (Ch D)). A compromise is always bilateral and means mutual adjustment. “Settlement” is termination of legal proceedings by mutual consent. In State of Punjab v Jalour Singh[2] the legal heirs, wife and son, of the deceased filed petition before the Motor Accidents Claims Tribunal (MACT) claiming Rs.5,00,000/- as compensation. An award was passed by MACT on 01.12.1998 for Rs.1,44,000/-. The claimants’ appeal was referred to High Court Lok Adalat for settlement. On 03.8.2001, Lok Adalat passed an order awarding Rs.1,70,200/- observing that if the parties have any objection to the order proposed, they may move the High Court for disposal of appeal on merits. Aggrieved by the same, Punjab Roadways filed application before the High Court to set aside the Lok Adalat award. A learned Single Judge rejected the same placing reliance on earlier judgment of another learned Single Judge wherein it had been held that an order passed by Lok Adalat can be challenged by filing a petition under Article 227 of Constitution of India. Therefore, another petition was moved under Article 227 of Constitution challenging the order of Lok Adalat. The same was rejected by learned Single Judge on the ground that such a petition is not maintainable under Article 227 of Constitution. The Supreme Court while reversing the award and remanding the matter to High Court laid down as under. It is true that where an award is made by the Lok Adalat in terms of a settlement arrived at between the parties (which is duly signed by parties and annexed to the award of the Lok Adalat), it becomes final and binding on the parties to the settlement and becomes executable as if it is a decree of a civil court, and no appeal lies against it to any court. If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, that too on very limited grounds. But where no compromise or settlement is signed by the parties and the order of the Lok Adalat does not refer to any settlement, but directs the respondent to either make payment if it agrees to the order, or approach the High Court for disposal of appeal on merits, if it does not agree, is not an award of the Lok Adalat… This Court having regard to the petition allegations directed the Government Pleader to produce the file. The entire record of the Permanent Lok Adalat, Narayanpet, is placed before us. We have perused the original draft of the Award. Curiously, it contains signature of the second respondent alone. The signature of the petitioner is absent. Further, the Award purports to divide the property between the petitioner (Sri Bal Reddy), second respondent (Sri U.Basanth Reddy), and the seventh respondent (Sri Chandra Shekar Reddy), although he is not a party to the settlement or compromise. Further, as rightly urged by respondent Nos.4 to 6, the sons of the petitioner, they are also necessary parties, as they are also entitled to the share in the property. For these reasons, the impugned Award is liable to be set aside. This, however, does not preclude the parties to explore the possibilities of settling their disputes amicably. In the result, for the above reasons, the Writ Petition is allowed and the impugned Award, being Pre- Litigation Case No.6 of 2009, dated 05.09.2009, is set aside. There shall be no order as to costs. _______________ (V.V.S.RAO, J) ____________________ (B.N.RAO NALLA, J) 12.12.2011 Note: LR copy to be marked. B/o. vs [1] (2006) 8 SCC 364 [2] (2008) 3 SCC 660