Case: United India Insurance Company Limited, Through It'S Divisional Manager, S.V. Devbhankar Vs. Shaikh Akbar Najir &amp; Another

of the judicial records (in pre-litigation matter, the original award may be kept with the legal services authority or committee, concerned) and a copy of the award shall be given to each of the parties duly certifying them to be true by the officer designated by the Member Secretary or Secretary of the High Court Legal Services Committee or District Legal Services Authority or, as the case may be, the Chairman of Taluka Legal Services Committees free of cost and the official seal of the Authority concerned or Committee shall be affixed on all awards.13. Thus, the conjoint reading of Section 20 of the Act of 1987 and the Regulation no.17 of Regulations 2009 indicates that, the Lok-Adalats shall while determining any reference, act with utmost expedition to arrive at a compromise or settlement between the parties and such a compromise or settlement if it is signed by both the parties and countersigned by the Members of Lok Adalat, becomes an award. If the parties are represented by counsel, they should also be required to sign the settlement or award before the Members of Lok-Adalat, affix their signatures on it.14. In view of sub-section 2 of Section 22 of the Act of 1987, the Lok Adalats shall have the requisite powers to specify its own procedure for the determination of any dispute coming before it. The Regulations of 2009 prescribes the procedure for organizing the Lok Adalats, allotment of cases to Lok Adalats and the procedure to be followed in Lok Adalats at all levels. It has prescribed in Regulation No.13, more particularly in sub-regulation Nos.3 and 4 of Regulations 2009 that, the Members of the Lok Adalat shall discuss the subject matter with the parties for arriving at a just settlement or compromise and such members of the Lok Adalat shall assist the parties in an independent and impartial manner in an attempt to reach amicable settlement of their dispute. In that process, the members of the Lok Adalat shall be guided by the principles of natural justice, equity, fairplay, objectivity, giving consideration to, among other things, the rights and obligations of the parties, custom and usages and the circumstances surrounding the dispute. The relevant Clause Nos. 3 and 4 of Regulation No.13 reads as under:13. Procedure in Lok Adalats:(1).............................................................(2)............................................................(3). In a Lok Adalat the members shall discuss the subject matter with the parties for arriving at a just settlement or compromise and such members of Lok Adalat shall assist the parties in an independent and impartial manner in their attempt to reach amicable settlement of their dispute:Provided that if it found necessary the assistance of an independent person or a trained mediator may also be availed by the Lok Adalat.(4) Members of Lok Adalat shall be guided by principles of natural justice, equity, fair-play, objectivity, giving consideration to, among other things, the rights and obligations of the parties, custom and usages and the circumstances surrounding the dispute.(5)..............................................................(6)..............................................................It thus appears that, prime importance is given to the participation of the parties to the litigation in the Lok Adalat process and an attempt to reach amicable settlement of their dispute can only be possible if the parties are arriving at a settlement or compromise.15. In a case ByramPestonji Gariwala, Vs. Union Bank of India and others, Reported in AIR 1991 Supreme Court 2234, the question arose for consideration as regards to the construction of Order 23 Rule 3 of Code of Civil Procedure. The Honble Apex Court has observed that the words in writing and signed by the parties inserted in Order 23 Rule 3 of Code of civil Procedure necessarily mean and include duly authorized representative and counsel. It is also held that, a compromise in writing and signed by counsel representing the parties, but not signed by the parties in person, is valid and binding on the parties and is executable even if the compromise relates to matters concerning the parties, but extending beyond the subject matter of the suit. The Honble Apex Court, however, in paragraph no.37 of the Judgment has also made following observations:37. We may, however, hasten to add that it will be prudent for counsel not to act on implied authority except when warranted by the exigency of circumstances demanding immediate adjustment of suit by agreement or compromise and the signature of the party cannot be obtained without undue delay. In these days of easier and quicker communication, such contingency may seldom arise. A wise and careful counsel will no doubt arm himself in advance with the necessary authority expressed in writing to meet all such contingencies in order that neither his authority nor integrity is ever doubted. This essential precaution will safeguard the personal reputation of counsel as well as uphold the prestige and dignity of the legal profession.16. In the instant case, the learned counsel had no express authority in writing to compromise or settle the matter on behalf of the petitioner company. The provisions of the Act of 1987 and the Regulations of 2009 contemplates participation of parties to the litigation in the Lok Adalat process. The Lok Adalats are being constituted and organized for disposal of the matters through the process of settlement between the parties. In view of this, parties presence before the Lok Adalat is essential and only after signing the compromise or settlement and countersigned by the Members, such compromise becomes an award. However, in case of any extreme hardship, or if it is warranted by the exigency of circumstances, the Counsel may settle or compromise the matter on behalf of his client only after procuring an express authority in writing from his client in this regard.17. In view of this, we do not think that said compromise and consequential award passed on its basis is in terms of the provisions of Section 20 of the Act of 1987 read with Regulation No.17 of Regulations 2009. Thus, said compromise and consequential award passed on its basis is nullity and not an award in the eyes of law.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]11. In the instant case, even though statutory defence was available to the petitioner company, matter was referred toIn our opinion, greater responsibility is fixed upon the Courts to avoid mechanical reference of a case.In the instant case, the learned counsel had no express authority in writing to compromise or settle the matter on behalf of the petitioner company. The provisions of the Act of 1987 and the Regulations of 2009 contemplates participation of parties to the litigation in the Lok Adalat process. The Lok Adalats are being constituted and organized for disposal of the matters through the process of settlement between the parties. In view of this, parties presence before the Lok Adalat is essential and only after signing the compromise or settlement and countersigned by the Members, such compromise becomes an award. However, in case of any extreme hardship, or if it is warranted by the exigency of circumstances, the Counsel may settle or compromise the matter on behalf of his client only after procuring an express authority in writing from his client in this regard.17. In view of this, we do not think that said compromise and consequential award passed on its basis is in terms of the provisions of Section 20 of the Act of 1987 read with Regulation No.17 of Regulations 2009. Thus, said compromise and consequential award passed on its basis is nullity and not an award in the eyes of law.