JUDGMENT Mr. K. Kannan J. (Oral) - The revision petition is at the instance of the State, who is aggrieved that the Court below passed as sitting in the Lok Adalat an order after “hearing arguments”. I have seen through the order and I would find it to be untenable. The Lok Adalat does not “pass orders” after hearing arguments. Lok Adalat formulation is to secure settlement after putting the issues for parties to discuss and with persuasions which a Lok Adalat can deal within the parameters set down under the Legal Services Authority Act. When an application was filed by the State for a review stating that they were not willing for release of subsidy in the manner that was directed by the Court, the review application was also disposed of. The revision is against the order passed by the Lok Adalat on 24.05.2003 and against the order passed in review application on 22.04.2009 which was taken up subsequently dismissing the same. 2. It is first important to remember that a Lok Adalat constituted by the Legal Services Authority operating at any level (from Supreme Court to Taluka level) has jurisdiction under Section 19(5) while Permanent Lok Adalats (PLA) are constituted under Chapter VIIA Section 22B. The manner of functioning under the former is regulated under Section 19(2) to 19(5), while the PLA applies procedure under Section 22C to 22E. “19. Organization of Lok Adalats - XXX XXXX XXXX (3) The experience and qualifications of other persons referred to in clause (b) of sub-section (2) for Lok Adalats organized by the Supreme Court Legal Services Committee shall be such as may be prescribed by the Central Government in consultation with the Chief Justice of India. (4) The experience and qualifications of other persons referred to in clause (b) of sub-section (2) for Lok Adalats other than referred to in sub-section (3) shall be such as may be prescribed by the State Government in consultation with the Chief Justice of the High Court. (4) The experience and qualifications of other persons referred to in clause (b) of sub-section (2) for Lok Adalats other than referred to in sub-section (3) shall be such as may be prescribed by the State Government in consultation with the Chief Justice of the High Court. (5) A Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of- (i) any case pending before; or (ii) any matter which is falling within the jurisdiction of, and is not brought before, any court for which the Lok Adalat is organized: Provided that the Lok Adalat shall have no jurisdiction in respect of any case or matter relating to an offence not compoundable under any law. 3. The award that the Lok Adalat passes is under Section 29. It is bound to be by way of settlement or compromise and not by a judgment or reasoning by a Judge. The ‘order’ passed was, therefore, untenable. The said position has been brought out in the decision of the Supreme Court in State of Punjab and others Vs. Ganpat Raj, [2006(4) Law Herald (SC) 2919] : 2006(8) SCC 364 . In para 7, while setting aside an order passed in a writ petition purporting to be in Lok Adalat, the Court held:- “7. 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 Re NFU Development Trust Ltd. (1973) 1 All England Reporter 135 (Ch.D). A compromise is always bilateral and means mutual adjustment. “Settlement” is termination of legal proceedings by mutual consent. The word “compromise” implies some element of accommodation on each side. It is not apt to describe total surrender. (See Re NFU Development Trust Ltd. (1973) 1 All England Reporter 135 (Ch.D). A compromise is always bilateral and means mutual adjustment. “Settlement” is termination of legal proceedings by mutual consent. The cast at hand did not involve compromise or settlement and could not have been disposed of by Lok Adalat. If no compromise or settlement is or could be arrived at, no order can be passed by the Lok Adalat. Therefore, the disposal of the Civil Writ Petition No.943 of 2000 filed by respondent is clearly impermissible. Therefore, the disposal of the Civil Writ Petition 943 of 2000 filed by respondent is clearly impermissible.” 4. The issue relates to a claim for subsidy by the plaintiff-industrial unit contending that persons lower down in the rank of seniority for eligible units for subsidy have been favoured with subsidies but the plaintiff has not been given subsidy. The suit was, therefore, for a mandatory injunction for a direction for payment of subsidy. This suit itself seems to have been on a direction already issued in a writ petition by this Court that the Government will consider the claims to subsidy on the basis of a seniority list which it has prepared and ensure that all units which are functional and which are eligible shall be favoured with subsidies, as and when funds are available. When these subsidies were not given, the plaintiff had instituted the suit. Lok Adalat has given this direction in that suit for release of subsidy. It appears that even when the proceedings were pending, on subsequent visit made to the factory, the Government has found the unit to be closed and they have issued a notice cancelling to show cause against consideration of the petitioner’s case for subsidy. This has been a subject of fresh suit for challenge cancelling the subsidy and the said suit is said to be still pending. The second suit will literally decide an issue of the entitlement of the plaintiff and on its plea that the unit is still running and that was how it has been considered even by the Government through its officials when some other officials carried out personal inspection. 5. Learned counsel for the respondent points out to me several documents showing that the unit is still functioning. 5. Learned counsel for the respondent points out to me several documents showing that the unit is still functioning. It will be possible to him to adduce evidence in the case which is pending and making out a fresh case for release of the subsidies in the light of the Government policy and on proof of the material facts. It will be pre-judging an issue of what is essentially a disputed question of fact and it cannot be closed by Lok Adalat’s fiat through a non-negotiated settlement. The award passed in the Lok Adalt is grossly in error of procedure and betrays a poor understanding of how the Lok Adalat shall function and award shall be passed. 6. The impugned orders are quashed. The trial Court is directed to take up both the suits instituted by the plaintiff together and proceed for disposal of the case at the earliest within a period of six months. The civil revision is disposed of. --------------