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2009 DIGILAW 635 (JHR)

National Insurance Co. Ltd. v. Sanjori Devi

2009-04-28

AJIT KUMAR SINHA

body2009
Order In the instant writ petition the petitioner prays for issuance of a writ of certiorari or any other appropriate writ, order or direction for quashing/setting aside of the Award dated 12.12.2006 passed by the Permanent Lok Adalat, Dhanbad in exercise of its power under the Legal Services Authority Act, 1987 through which he has directed the petitioner to pay Rs. 5,00,000/- with interest @ 9% to the respondent no. 11. 2. The facts, in brief, are set out as under:- The respondent herein filed a claim application for payment of the sum assured to the extent of Rs. 5,00,000/- on account of death of Dhananjay Kumar Singh who was covered under personal accident policy with the petitioner. However, the petitioner authority disputed the claim on the ground that no supporting document regarding specific cause of death was enclosed and accordingly repudiated the claim vide its letter dated 23.11.2004. The respondent herein filed the claim against the aforesaid order before Permanent Lok Adalat, Dhanbad which was registered as P.L. Case No. 1253 of 2005. Upon notice the petitioner authority challenged the maintainability of the case before the Permanent Lok Adalat. 3. The main contention raised by the counsel for the petitioner is that Permanent Lok Adalat had no jurisdiction to adjudicate the claim of the respondent and it should have remitted the matter back to the Civil Courts. It has further been submitted that unless the conciliation proceeding was conducted as required under Section 22-C(4) of the Legal Services Authority Act, 1987 it had no jurisdiction to decide the dispute in absence of any compromise or settlement. Finally, the Award was passed on 12.12.2006 by the Permanent Lok Adalat in exercise of the power under the Legal Services Authority Act, 1987 vide which the petitioner authority was directed to pay Rs. 5,00,000/- along" with interest @ 9% per annum to the respondent herein. 4. The moot question raised before this court by the learned counsel for the petitioner is as to whether the Permanent Lok Adalat had the jurisdiction to adjudicate and decide the dispute and give the Award. The second contention raised by the learned counsel for the petitioner-Company is that the Permanent 'Lok Adalat was established under Chapter-VIA of the Legal Services Authority Act, 1987 only to act as a conciliator or an arbitrator and not to act as an adjudicator. 5. The second contention raised by the learned counsel for the petitioner-Company is that the Permanent 'Lok Adalat was established under Chapter-VIA of the Legal Services Authority Act, 1987 only to act as a conciliator or an arbitrator and not to act as an adjudicator. 5. I have considered the pleadings, rival submissions as well as the settled law on the issue. Chapter-VIA was inserted in the Act in 2002 (Act 37 of 2002) w.e.f. 11.6.2002. By the aforesaid amendment. Sections 22-A to 22-E were inserted. Clause (a) of Section 22-A defines "Permanent Lok Adalat" which means a Permanent Lok Adalat established under subsection (1) of Section 22-B. Section 22-B confers power upon the Central Authority and the State Authority to establish by notification Permanent Lok Adalat at such places to exercise such jurisdiction in respect of one or more public utility services. Section 22-C is the relevant provision which provides for settlement of disputes and also spells out the, power and jurisdiction of the Permanent Lok Adalat. Section 22-C reads as under:- "22-C. Cognizance of cases by Permanent Lok Adalat.-(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 or 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 subsection (1), it-- (a). (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 subsection (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 wounds relied In support of, or in opposition to, such points or issues, as the case may be, and such party may supplement such statement 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 and, 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 co-operate 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. (6) It shall be the duty of every party to the application to co-operate 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." ' 6. From the perusal of the aforesaid provision it will be evident that under Clause 22-C (8) if the parties fail to reach at an agreement as provided under subsection 7 of Section 22-C, then Section 22(8) of the Act can be invoked by the Permanent Lok Adalat to decide the dispute if it does not relate to any offence. The aforesaid statutory power conferred upon Permanent Lok Adalat can be termed as a residuary power even though it is mandatory in nature due to word "shall" but the same cannot be exercised directly and/or in violation of statutory provisions. There is no doubt that Chapter-VIA was inserted in the Legal Services Authority Act, 1987 for dealing with a pre-litigation conciliation and settlement. However, the Parliament in its wisdom has also conferred power upon Permanent Lok Adalat under sub-section 8 to Section 22-C to decide the dispute with a rider i.e., if the parties fail to reach to an agreement. The High Court in its writ jurisdiction has no power to add, substract, modify a statutory provision and the same has to be read as it is. The Hon'ble Supreme Court in a recent decision has considered an identical issue arising out of an appeal preferred by United Insurance Company itself and the same is reported as (2008)7 SCC pg. The High Court in its writ jurisdiction has no power to add, substract, modify a statutory provision and the same has to be read as it is. The Hon'ble Supreme Court in a recent decision has considered an identical issue arising out of an appeal preferred by United Insurance Company itself and the same is reported as (2008)7 SCC pg. 454 and it will be relevant to refer para-28 of the judgment wherein the Hon'ble Supreme Court held as under:- "28. Here, however, the Permanent Lok Adalat does not simply adopt the role of an arbitrator whose award could be the subject-matter of challenge but also the role of an adjudicator. Parliament has given the authority to the Permanent Lok Adalat to decide the matter. It has an adjudicating role to play." 7. In another judgment reported in (2008)2 SCC pg. 660 (State of Punjab and Anr. vs. Jalour Singh & Ors.), the Hon'ble Supreme Court upon noticing the provisions of the Legal Services Authorities Act, 1987, observed that whereas Lok Adalat had to arrive at a just settlement in their conciliatory role guided by the principles of justice, equity, fair play and other legal principles, but in that case it assumed a judicial role, heard parties, ignored the absence of consensus, and increased the compensation to an extent it considered just and reasonable, by a reasoned order which is adjudicatory in nature. It arrogated to itself the appellate powers of the High Court and "allowed" the appeal and "directed" the respondents in the appeal to pay the enhanced compensation within a period fixed by it. It was held that such an order is not an award. However, this was a case relating to Lok Adalat as provided under Sections 20(3) and (5) of the Legal Services Authority Act, 1987. 8. A Division Bench of this court in a recent judgment reported in 2008(3) JLJR pg. 513 while considering the relevant statutory provision and case laws on the scope, power and jurisdiction of the Lok Adalat and the Permanent Lok Adalat held that in exercise of an adjudicatory role the permanent Lok Adalat cannot ignore the provisions of the Telegraph Act and the Rules to award compensation and cost and the same was held to be without any basis and devoid of jurisdiction. The duty of the Permanent Lok Adalat is to bring the parties to a settlement and to pass ~n award instead of adjudication of the dispute and it had no jurisdiction to directly invoke the provision of sub-section (8) of Section 22-C of the Act. 9. On considering the aforesaid facts and circumstances of the case and the relevant provision of Legal Services Authority Act, the power and jurisdiction of Permanent Lok Adalat and the case law on the issue, the consensus remains that the power under Section 22-C(8) is there to decide a dispute. However, the same is subject to the provisions of sub-section (4) to sub-section (7) of the Section 22-C. There is no dispute that the main and basic function of even the Permanent Lok Adalat is to settle dispute at the pre-litigation stage and to arrive at an agreement or settlement and Section 22-C(8) can be exercised or invoked only as a last resort. 10. In the impugned order under challenge when the conciliation/settlement failed then only the Permanent Lok Adalat awarded the sum of Rs. 5,00,000/- in favour of the petitioner which was the assured amount on the basis of the Insurance Policy taken by the husband of the respondent herein and accordingly Permanent Lok Adalat directed the petitioner Insurance Company to deposit the same in favour of the respondent herein as agreed upon. Thus, this is not a case where the Permanent Lok Adalat awarded compensation and/or imposed cost in contravention to the statutory provisions and or Rules but instead it awarded the assured sum on the basis of the Insurance Policy. It will be evident that the Permanent Lok Adalat rejected the other claims of compensation/damages as prayed for. The Hon'ble Division Bench (supra) of this Court rightly held that the Permanent Lok Adalat exercised adjudicatory role ignoring the Telegraph Act and the Rules and awarded compensation of Rs. 10,000/- and cost of Rs. 2,000/- which was wholly without jurisdiction. 11. Considering the aforesaid facts and circumstances of the case and in view of the admitted position that in the instant case when the conciliation failed and the settlement/agreement could not be reached then the Permanent Lok Adalat rightly decided the dispute and directed the payment of the assured amount of the policy in the light of the residuary power conferred under Section 22-C(8) of the Legal Services Authority Act. 12. 12. Considering the aforesaid peculiar facts and circumstances of this case, I am not inclined to interfere against the impugned order passed by the Permanent Lok Adalat and the Writ Petition is accordingly dismissed without any order as to costs.