JUDGMENT Mr. A.K. Sikri C.J. (Oral):- High Court Legal Services Committee held its meeting on 14.05.2012 to sort out certain issues coming in the way of functioning of Daily Lok Adalats and to explore the ways and means to increase the disposal of Daily Lok Adalats. 2. In the said meeting, senior officers of various insurance companies were also invited for this purpose. Main reason for holding this meeting was that the Judges of Daily Lok Adalats were finding that certain Insurance Companies had taken procedural decisions which were becoming impediment in settling the cases, particularly the officers of Oriental Insurance Company Ltd. were taking the stand before the Lok Adalats that they have the instructions from Regional Manager that no compromise should be negotiated or entered into with the appellant(s) for enhancement of compensation where the amount of compensation awarded by Motor Accident Claims Tribunal has already been withdrawn by the claimant(s). This meant that almost in all the cases the Company cannot enter into compromise for enhancement of compensation before the Lok Adalat as in 99% of the cases the claimant(s) accepts the amount deposited by the Company which is awarded by the Motor Accident Claims Tribunal and thereafter file an appeal. 3. It transpires that this posture was taken having regard to the letter dated 01.12.2011 of the D.G.M. of Oriental Insurance Company vide which decision was communicated to its counsel(s). This letter reads as under:- “Compromise in Appeal cases filed by claimants for enhancement of Award after release of Award by Tribunal: With reference to the above and the correspondence exchanged on the subject, we reiterate that the issue has been discussed at the highest level and it has been decided that in all cases where MACT Award has been released by Tribunal to the petitioners and where claimants have thereafter preferred Appeal in High Court for Enhancement of Award, then such cases should not be compromised in Lok Adalats at your level without consulting Head Office.” 4. As per this aforesaid letter, the earlier stand taken by the company, as noted above, had been changed and a direction was given that no compromise be arrived at without consultation with the Head Office. To sort out this issue, the aforesaid meeting of the High Court Legal Services Committee was convened on 14.05.2012. As per this aforesaid letter, the earlier stand taken by the company, as noted above, had been changed and a direction was given that no compromise be arrived at without consultation with the Head Office. To sort out this issue, the aforesaid meeting of the High Court Legal Services Committee was convened on 14.05.2012. During the meeting, it transpired that the stand taken by the Oriental Insurance Company was also adopted by other Insurance Companies. The members of the Permanent Lok Adalats who were present cited various orders passed by the Lok Adalats proposing enhancement and giving reasons as to why such enhancement was admissible in terms of the principles laid down by the Supreme Court in various judgments. However, the Insurance Companies had declined all these proposals without assigning any reasons, though during the meeting it was accepted by the representatives of the Insurance Companies that declining of proposal without assigning reasons was not proper but they expressed their helplessness. The Legal Services Committee was of the opinion that this kind of posture of Insurance Companies was paralyzing the entire working of the Lok Adalats functioning. It was noted that withdrawal of the amount of compensation by the claimants in pursuance of the award of the MACT cannot act as estoppel to claim higher amount of compensation in view of the judgment of Hon’ble Supreme Court in P.R.Deshpande Vs. Maruti Balaram Haibatti, 1988(6) SCC 507 wherein it has been held that principle of estoppel has no application when statutory rights and liabilities are involved. The Committee thus decided to place the matter before the appropriate Bench to test the legality and validity of the stand of the Public Sector Insurance Companies. It is on this basis that the present writ petition was registered and on the basis of the aforesaid minutes of the meeting, notice was issued to the General Managers of Oriental Insurance Company Ltd., New India Assurance Company Ltd., National Insurance Co. Ltd., and United Insurance Co. Ltd. 5. These Insurance Companies were duly served and they put in their appearance. Though they have filed their replies, basically it is the Oriental Insurance Company which took adversarial stand in its reply that there cannot be any settlement in the Lok Adalat(s) unless the insurance companies agree voluntarily and thus no directions can be given in this behalf. Ltd. 5. These Insurance Companies were duly served and they put in their appearance. Though they have filed their replies, basically it is the Oriental Insurance Company which took adversarial stand in its reply that there cannot be any settlement in the Lok Adalat(s) unless the insurance companies agree voluntarily and thus no directions can be given in this behalf. Other insurance companies had stated that they would participate in the proceedings before the Lok Adalat(s) with open mind and wherever it is found that there is justification in enhancement of compensation, they would accept the same. When the matter was taken up on 16.10.2012, Mr. Sidharth Luthra, Ld. Additional Solicitor General of India appeared for Oriental Insurance Company Ltd. The matter was discussed in detail and certain suggestions were mooted to resolve the issue. Mr. Luthra took some time to enable the insurance companies to consider the said issues and come out with complete scheme or solution. At his request, the matter was adjourned for today. 6. Mr. Animesh Sinha, learned counsel appearing for Oriental Insurance Company has produced a scheme for participation in Lok Adalat(s) as devised by Oriental Insurance Company. This scheme is in the nature of certain suggestions. Para No. 3 of the scheme reads as under:- “3. The company does not intend to take away the authority of officers at the regional level to settle cases. The existing financial authority of the officers (Scale 5) for settling motor third party cases including compromise settlement(s) is Rs. 10 lac w.e.f. 29th July, 2010. The company vide Circular No. HO Ref-MCT/TP/11- 12/CHD/MISC dated 1st December, 2011 decided at the highest level that all cases where MACT Award has been released by the Tribunal to the petitioners and where claimants have thereafter preferred appeal in High Court for enhancement of Award, then in such cases no compromise in Lok Adalats shall be made without consulting the Head Office. In view of the observations of this Hon’ble Court in previous hearings the company wishes to withdraw the circular. It intends to withdraw the scheme of mandatory consultation with Head Office for claims below the sum of Rs. 10 lac. The officers (Scale 5) at the Regional level shall be fully empowered to settle cases where claim amount does not exceed Rs. 10 lacs.” 7. It intends to withdraw the scheme of mandatory consultation with Head Office for claims below the sum of Rs. 10 lac. The officers (Scale 5) at the Regional level shall be fully empowered to settle cases where claim amount does not exceed Rs. 10 lacs.” 7. It is clear from the above that the Oriental Insurance Company has decided to withdraw its circular dated 01.12.2011 and thus cognizance of this matter taken stands achieved. However, at the same time, certain suggestions are mooted in the said scheme for more efficient working of the Lok Adalat(s). Out of these suggestions, the suggestions which were pressed at the time of hearing are contained in paras No. 2,5,6, 7 and 10. Paras No. 2,5,6, 7 and 10 read as under:- “2. Lok Adalats could be scheduled on a monthly basis instead of a weekly basis as this will enable the company to be better prepared at hearings with necessary instructions. Further, more frequent proceedings tend to put a huge strain on the human resources available at the office for office work. Both the reasons combined together are leading to a lag in the system. 5. Appearance of petitioner at the Lok Adalats, both at the Tribunal level and the High Court level, could be made mandatory for at least some fixed hearings so that maximum settlements can take place. The panoply of conciliation process is based on party autonomy. As suggested above, this Court can issue guidelines where certain dates may be fixed for personal appearance of both parties. If there are some fixed hearings where the petitioner/claimant will be present in person it will substantially reduce litigation and promote settlement. 6. Petitioners must be asked to provide details of their bank account and proof of residence before processing the cases, deeming such procedure as proof of identity. 7. The Courts could call for the complete case file from the Tribunal in advance of Lok Adalat and permit the company also to review the same. At present, list of cases is sent only one day in advance hence insurer has no time to study the file. Court could give reasonable time so that the company has time to review the cases and obtain legal opinion on the same prior to the conciliation proceedings and prior to the Lok Adalat putting forth their proposal for compromise. 10. Court could give reasonable time so that the company has time to review the cases and obtain legal opinion on the same prior to the conciliation proceedings and prior to the Lok Adalat putting forth their proposal for compromise. 10. Proposal should be based on the amicable consent of both the parties. The company is bound by the ratio of the decision of the Hon’ble Supreme Court in State of Punjab and Anr. Vs. Jalour Singh and Ors., [2008(2) Law Herald (P&H) 1755 (SC)] : 2006(8) SCC 660 wherein the Supreme Court decided that Lok Adalats do not have adjudicatory powers and Lok Adalat Awards not based on compromise and settlement is void. In view of the decision, the company humbly requests that compromise and settlement in Lok Adalat should be at the discretion of the company. The company also requests that reasons for passing an award must be recorded by the Lok Adalat.” 8. In so far as suggestion No.2 is concerned, we do not find any substance therein. It is not understood how weekly sittings of the Lok Adalat(s) impede functioning of the Insurance Companies. If in a particular case it is realized that there is no sufficient time to prepare a particular case with necessary instructions, a request for accommodation can always be made. 9. In so far as suggestions No. 5 and 6 are concerned, they are mainly aimed at ensuring that the complainants are generally interested in appeals and it is the complainant who gets the enhanced amount if agreed to in the Lok Adalat. Wherever need for such particulars arises in a given case, a request can always be made to the Lok Adalat and the Member of the Lok Adalat can pass appropriate directions in this behalf. 10. As far as suggestion No. 7 is concerned, we are of the opinion that it may not be necessary to have the case file from the Tribunal in each and every matter. Wherever such file is needed, a request can always be made and in those particular cases, the Member of the Lok Adalat can summon the file, if required. 11. In so far as submissions made in para No. 10 are concerned, that is a legal position and no body disputes the same. Wherever such file is needed, a request can always be made and in those particular cases, the Member of the Lok Adalat can summon the file, if required. 11. In so far as submissions made in para No. 10 are concerned, that is a legal position and no body disputes the same. We have seen that if in particular cases the Lok Adalats are enhancing compensation, they are giving adequate reasons in support thereof and it is on that basis only the parties are asked to give their consent. What is emphasized that once it is found that the view of the Lok Adalat(s) is based upon detailed reasons justifying the same; the proposal should not be rejected by the insurance companies without any cogent reasons. 12. Before we part with, we may record that it hardly needs to be reminded that the Lok Adalats are constituted under Section 19 of the Legal Services Authority Act, 1987 (hereinafter called the Act). The statement of objects and reasons given for enacting the Act are:- “For some time now, Lok Adalats are being constituted at various places in the country for the disposal, in a summary way and through the process of arbitration and settlement between the parties, of a large number of cases expeditiously and with lesser costs. The institution of Lok Adalats is at present functioning as a voluntary and conciliatory agency without any statutory backing for its decisions. It has proved to be very popular in providing a speedier system of administration of justice. In view of its growing popularity, there has been a demand for providing a statutory backing to this institution and the awards given by the Lok Adalats. It is felt that such a statutory support would not only reduce the burden of arrears of work in regular Courts, but would also take justice to the door-steps of the poor and the needy and make justice quicker and less expensive.” 13. In order to provide statutory backing to Lok Adalats and its awards, the Legal Services Authority Bill was introduced in the Parliament which ultimately became an Act known as “Legal Services Authorities Act, 1987”. 14. Section 20 of the Act reads as under:- [20. In order to provide statutory backing to Lok Adalats and its awards, the Legal Services Authority Bill was introduced in the Parliament which ultimately became an Act known as “Legal Services Authorities Act, 1987”. 14. Section 20 of the Act reads as under:- [20. Cognizance of cases by Lok Adalats - (1) Where in any case referred to in clause (i) of sub-section (5) of section 19 : (i) (a) the parties thereof agree; or (b) one of the parties thereof makes an application to the court for referring the case to the Lok Adalat for settlement and if such court is prima facie satisfied that there are chances of such settlement; or (ii) the court is satisfied that the matter is an appropriate one to be taken cognizance of by the Lok Adalat, the court shall refer the case to the Lok Adalat : Provided that no case shall be referred to the Lok Adalat under sub-clause (b) of clause (i) or clause (ii) by such court except after giving a reasonable opportunity of being heard to the parties. (2) Notwithstanding anything contained in any other law for the time being in force, the Authority or Committee organizing the Lok Adalat under subsection (1) of section 19 may, on receipt of an application from any one of the parties to any matter referred to in clause (ii) of sub-section (5) of section 19 that such matter needs to be determined by a Lok Adalat, refer such matter to the Lok Adalat, for determination: Provided that no matter shall be referred to the Lok Adalat except after giving a reasonable opportunity of being heard to the other party. (3) Where any case is referred to a Lok Adalat under sub-section (1) or where a reference has been made to it under sub-section (2), the Lok Adalat shall proceed to dispose of the case or matter and arrive at a compromise or settlement between the parties. (4) Every Lok Adalat shall, while determining any reference before it under this Act, act with utmost expedition to arrive at a compromise or settlement between the parties and shall be guided by the principles of justice, equity fair play and other legal principles. (4) Every Lok Adalat shall, while determining any reference before it under this Act, act with utmost expedition to arrive at a compromise or settlement between the parties and shall be guided by the principles of justice, equity fair play and other legal principles. (5) Where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, the record of the case shall be returned by it to the court, from which the reference has been received under sub-section (1) for disposal in accordance with law. (6) Where no award is made by the Lok Adalat on the ground that no compromise or settlement could be arrived at between the parties, in a matter referred to in sub Section (2), that Lok Adalat shall advice the parties to seek remedy in a court. (7) Where the record of the case is returned under subsection (5) to the court, such court shall proceed to deal with such case from the stage which was reached before such reference under sub-section (1).] 15. Section 21 of the Act provides that every award of the Lok Adalat shall be deemed to be a decree of a civil court or, as the case may be, an order of any other and if the matter is settled by way of compromise, the Court fee which may have been affixed, shall be refunded to the plaintiff/appellant/petitioner. The Section further provides that the award of the Lok Adalat(s) shall be final and binding on all the parties to the dispute and no appeal shall lie in any Court against the award. Thus, it will be seen from the provisions of the Act reproduced above that the prime aim and object of settling the cases before the Lok Adalats is to reduce the litigation between the parties and lessen the burden of the Courts where thousand of cases are pending for a long time. It also provides for quicker justice to the parties. 16. Keeping in view the aforesaid spirit, we record our appreciation to the positive change in the attitude of the Oriental Insurance Company which has withdrawn the circular dated 01.12.2011. We hope that while dealing with cases in Lok Adalat(s), these insurance companies shall depict same spirit and objective attitude with open mind. 16. Keeping in view the aforesaid spirit, we record our appreciation to the positive change in the attitude of the Oriental Insurance Company which has withdrawn the circular dated 01.12.2011. We hope that while dealing with cases in Lok Adalat(s), these insurance companies shall depict same spirit and objective attitude with open mind. They will participate in the proceedings in that spirit so that the purpose of constituting the Lok Adalat under the Act of 1987 is achieved meaningfully. It hardly needs to be emphasized that the Public Sector Insurance Companies being State under Article 12 of the Constitution are supposed to act as model litigants and should therefore eschew adversarial approach in such matters. It is more so when the judicial approach in this country is drifting from adversarial system to social context adjudication when it comes to the enforcement of rights of vulnerable sections of the society and cases of victims of motor accidents filed under the Motor Vehicles Act would fall in this category. 17. With the aforesaid observations and directions, we dispose of the present writ petition. ---------0.B.S.0------------