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2014 DIGILAW 369 (CAL)

Bajaj Allianz General Insurance Company Ltd v. State Legal Services Authority, West Bengal

2014-04-22

DIPANKAR DATTA

body2014
JUDGMENT : Dipankar Datta, J. The petitioning insurance company (hereafter the insurer) by presenting this writ petition calls in question an order dated April 27, 2013 passed by the Lok Adalat, Nadia (hereafter the Lok Adalat). The said order allowed an application under Section 166 of the Motor Vehicles Act, 1988 (hereafter the said application), registered as Motor Accident Claims Case No. 333 of 2011, on compromise. The claimants were awarded a compensation of Rs.26,50,000/-, to be paid within a month from the date of the order and in such case the awarded compensation would not earn any interest; however, in default of such payment, the awarded compensation would carry interest @ 12% p.a. from the date of filing of the said application till full realization. 2. The claimants in the said application were the minor son, the husband, the mother and the father of the victim Nila Roy, a school teacher. She was on her way to school traveling in a bus. Owing to alleged rash and negligent driving of the bus, the same overturned resulting in the instant death of the victim. The claimants having filed the said application before the Motor Accident Claims Tribunal, Nadia at Krishnanagar (hereafter the tribunal), the same was transferred to the Lok Adalat. The order impugned came to be made thereafter. 3. The claimants, on the failure of the insurer to effect payment in terms of the order of the Lok Adalat, instituted proceedings for execution before the tribunal giving rise to Money Execution Case No. 3 of 2014. The insurer filed a written objection to the application for execution. It was the claim of the insurer that the order was received by it through its learned lawyer on May 14, 2013. Although the insurer was obliged to make payment within May 26, 2013, it had defaulted and ultimately the payment was effected on June 7, 2013, resulting in a delay of only 11 days in effecting payment in terms of the order of the Lok Adalat. According to the insurer, the order awarding interest was passed by the Lok Adalat without jurisdiction. According to the insurer, the order awarding interest was passed by the Lok Adalat without jurisdiction. An order dated February 20, 2014 was passed by the tribunal recording that the written objection filed by the insurer is misconceived, since it is beyond its jurisdiction to travel behind the award, and that the petition for attachment would be considered on the next date i.e. March 23, 2014, if payment were not effected in the meanwhile. The execution case is pending. 4. It is after such order of the tribunal that the insurer has approached this Court with the instant writ petition dated March 21, 2014. 5. Mr. Ahmed, learned advocate for the insurer, sought to assail the order of the Lok Adalat on three grounds, viz., i) a lok adalat in terms of provisions contained in Regulation 9 of the National Legal Services Authority (Lok Adalats) Regulations, 2009 (hereafter the Regulations) has no authority to pass any order in respect of the dispute between the parties, who intend to settle the same before it (the lok adalat) and, therefore, the portion regarding payment of interest under "ORDERED" in the impugned order of the Lok Adalat is without jurisdiction; ii) the insurer never agreed to payment of any interest in default of payment of the awarded compensation within the time stipulated in the impugned order and, therefore, question of bearing the interest component does not and cannot arise; and (iii) the insurer through its representative made endorsement without even knowing about the portion regarding payment of interest, which was held back from him. 6. In support of his submissions, Mr. Ahmed relied on the decisions of the Supreme Court reported in (2011) 7 SCC 491 : LIC v. Suresh Kumar; (SC; Suppl) 2006 (4) CHN 93 : Pushpa Devi Bhagat v. Rajinder Singh; and (2004) 7 SCC 555 : State of Punjab v. Phulan Rani. 7. Mr. Bhattacharya, learned advocate representing the State Legal Services Authority, respondent no. 1, urged that none of the contentions urged by his adversary has merit. According to him, a lok adalat upon a compromise being reached between the parties is entitled to record its terms by passing an order and that is exactly what the impugned order recorded. 7. Mr. Bhattacharya, learned advocate representing the State Legal Services Authority, respondent no. 1, urged that none of the contentions urged by his adversary has merit. According to him, a lok adalat upon a compromise being reached between the parties is entitled to record its terms by passing an order and that is exactly what the impugned order recorded. He drew my attention to that part of the order impugned where the learned lawyer for the insurer before the Lok Adalat had signed at two places, - once for the insurer and once in his capacity as the lawyer for the insurer. It was submitted that the impugned order spreads over two pages and is a composite one and it is inconceivable that the learned lawyer for the insurer either did not agree to payment of interest, should there be a default in payment of the awarded compensation within the time stipulated therein, or did not notice the operative portion of the impugned order. The Lok Adalat, he contended, did not pass any order upon deciding a contentious issue and reliance placed by Mr. Ahmed on Regulation 9 of the Regulations was misplaced. 8. The decision reported in (2012) 2 SCC 51 : K. N. Govindan Kutty Menon v. C.D. Shaji was cited by Mr. Bhattacharya in support of his submission that the writ petition being without merit, is liable to be dismissed in limine. 9. The contentions raised by Mr. Bhattacharya were adopted by Mr. Roy, learned advocate for the respondents 3 to 6 (claimants in the said application). 10. I have heard the parties and perused the decisions cited at the bar. None of the contentions urged by Mr. Ahmed commend to be worthy of acceptance. 11. The lok adalats have been conceived to ensure termination of legal proceedings through such adalats upon a compromise being reached by the parties to the dispute, which are set out in the document commonly known as an award. The procedure to be followed by a lok adalat is provided in Regulation 13 of the Regulations. Regulation 9 of the Regulations, it is clear, prohibits an order containing a decision on contentious issues, which only a Court of law is empowered to pass. The procedure to be followed by a lok adalat is provided in Regulation 13 of the Regulations. Regulation 9 of the Regulations, it is clear, prohibits an order containing a decision on contentious issues, which only a Court of law is empowered to pass. What is, therefore, decisive is whether there has been adjudication of any contentious issue by the Lok Adalat or not, which is reflected in the document recording disposal of the case before it. 12. Bearing in mind the above, I propose to examine the points raised by Mr. Ahmed now. 13. A printed format was used for the order of disposal of the said application and the blank spaces therein were filled up by hand. Such printed format appears to be made use of in respect of all motor accident claim cases, which are disposed of by the Lok Adalat on compromise. The terms in print reveal that no interest is payable on the compensation awarded if payment is made within one month from the date of the order, but a default would expose the award debtor to a liability of paying interest @ 12% p.a. 14. Although it would have been desirable if the printed format used for disposing of a case on compromise were titled "AWARD", nothing turns on it in favour of the insurer. The order impugned in the present writ petition although uses the term "ORDERED" just above the operative portion, it must necessarily be distinguished from an order passed by an adjudicating authority, upon due consideration of the issue(s) of fact and/or law and necessarily deciding an issue in favour of one and against the other. If indeed the contentions of Mr. Ahmed were accepted, there would be no formal recording as to what transpired before the Lok Adalat once the parties agreed to have their inter se dispute settled by such adalat. 15. The order impugned records that the claim for payment of Rs.36,81,500/- on the death of the victim has been settled on compromise and that the insurer would pay a compensation of Rs.26,50,000/-. It was recorded further, in hand, that the minor son of the victim would be entitled to Rs.11,50,000/- and the rest were to be distributed to the other claimants in equal shares of Rs.5,00,000/-, wherefor the insurer was to issue four separate cheques. It was recorded further, in hand, that the minor son of the victim would be entitled to Rs.11,50,000/- and the rest were to be distributed to the other claimants in equal shares of Rs.5,00,000/-, wherefor the insurer was to issue four separate cheques. The claimants themselves (except the minor son of the victim) as well as their learned lawyer signed on the first page of the order. As has been submitted by Mr. Bhattacharya and noted above, the learned lawyer for the insurer signed the document at two places. All of them declared that there had been no coercion, threat, undue influence, allurement or misrepresentation in arriving at the said settlement and that the awarded compensation would be distributed amongst the claimants in equal proportion (although it was not so ultimately). Upon consideration of the same and true to the terms of the printed format of the order, the Lok Adalat proceeded to dispose of the said application by directing the insurer to pay the compensation amount of Rs.26,50,000/- within a month, failing which the awarded compensation would carry interest @ 12% p.a. The claimants were thus not awarded interest on the awarded compensation from the date of the said application, if the insurer were to effect payment within a month from the date of the order, but the insurer would be liable to pay interest @ 12% p.a., should it fail to effect payment within a month from the date of the order. 16. Since the insurer was represented by its learned lawyer who had put his signature thereon, there can be no doubt that the insurer had knowledge of its obligation. Submission made to the contrary by Mr. Ahmed is simply not believable. Imagine a situation where the insurer does not pay within the time agreed upon by the parties and makes payment of the compensation which it had agreed to pay only after proceedings for execution are initiated. In the absence of any default clause making the insurer liable to pay interest, the award holder would not be able to claim interest in execution proceedings for the tribunal cannot travel beyond what the parties agreed before the Lok Adalat. Why should the award holder, in such circumstances, be not entitled to interest? In the absence of any default clause making the insurer liable to pay interest, the award holder would not be able to claim interest in execution proceedings for the tribunal cannot travel beyond what the parties agreed before the Lok Adalat. Why should the award holder, in such circumstances, be not entitled to interest? To avoid such a situation, the printed format is used and those parties willing to have the dispute settled may agree to the terms of settlement. The insurer's learned lawyer having put his signature on the first page of the impugned order, an inference can legitimately be drawn that he was aware of how the payments were to be effected, for, the second page was in fact the continuation of the first page ending with the word "Hence". Failure on the part of the insurer to make payment within the time fixed by the Lok Adalat on the ground that the copy of the order was obtained late and it was unaware of its liability to pay interest, is nothing but a ruse. I quite agree with Mr. Bhattacharya that it is inconceivable that the learned lawyer of the insurer was not aware of the obligation of the insurer as reflected in the printed format at the second page of the order as well as directions in hand regarding sharing of the awarded compensation. 17. The decisions cited by Mr. Ahmed do not lend any assistance to the claim of the insurer. For reasons discussed above, there cannot be any iota of doubt that the Lok Adalat did neither act like a regular Court nor decide any lis on merits, which was the case in Suresh Kumar (supra). The facts involved in Pushpa Devi Bhagat (supra) led to formulation of the two questions for decision as noted in paragraph 9 of the report. The law laid down therein, viewed in the light of the facts here, does not persuade me to hold that there was no valid compromise between the parties before the Lok Adalat. That apart, it is not possible for the Court to accept, even after the learned lawyer for the insurer signed the order, that there was no compromise or settlement between the parties. The dictum in Phulan Rani (supra), thus, does not apply here. 18. That apart, it is not possible for the Court to accept, even after the learned lawyer for the insurer signed the order, that there was no compromise or settlement between the parties. The dictum in Phulan Rani (supra), thus, does not apply here. 18. It appears to be a clear case of the insurer invoking the equity jurisdiction of the Court after having committed a default for which the insurer itself is to blame. The jurisdiction of the High Court under Article 226 of the Constitution is not intended to avoid obligations voluntarily incurred, is settled law and I see no reason to come to the rescue of such defaulting insurer who has sought to resile from the settlement reached before the Lok Adalat and while refusing to pay interest, urged the Court to interfere in a case of the present nature where the facts speak for itself. 19. The writ petition is without merit and, accordingly, stands dismissed. There shall be no order as to costs. 20. The tribunal shall proceed with the execution case without any further delay. Urgent photostat certified copy of this order, if applied for, shall be furnished to the applicant at an early date.