Permanent Lok Adalats have adjudicatory functions, empowered to decide case on merits: SC

NEW DELHI: Permanent lok adalats have adjudicatory functions and are empowered to decide the dispute between parties on merits, the Supreme Court said on Thursday.

A bench comprising justices D Y Chandrachud and Pamidighantam Sri Narasimha said the permanent lok adalat is still bound to follow the step-by-step procedure.

"The permanent lok adalat would first conduct conciliation proceedings and attempt to reach an amicable settlement of the dispute. However, if the parties fail to reach an agreement, it shall decide the dispute, as long as the dispute does not relate to an offence. Section 22-D further indicates that the permanent lok adalat is empowered to decide the dispute between the parties on merits," the bench said.

The apex court said a permanent lok adalat's role mutates from that of a conciliatory body to an adjudicatory body, if the parties fail to reach an agreement, where it can decide the dispute between the parties.

The apex court was hearing an appeal filed by Canara Bank against the judgment of a division bench of the High Court of Karnataka.

The single judge had allowed the writ petition instituted by G S Jayarama and set aside an award of the permanent lok adalat dated November 19, 2014.

The division bench dismissed the writ appeal by the appellant and upheld the judgment of the single judge.

Explaining the Objects and Reasons of the Legal Services Authorities Act, the bench said first a lok adalat is constituted under Section 19 of the Legal Services Authorities Act, having no adjudicatory power, which can only conduct conciliatory proceedings.

"The second is a permanent lok adalat, established under Section 22-B(1) of the LSA Act in respect of public utility services, which can carry out both conciliatory and adjudicatory functions, subject to the procedure to be followed under Section 22-C of the LSA Act," it said.

The apex court said the Section 20 of the LSA Act provides that the lok adalat shall aim to arrive at a compromise or settlement between the parties.

"If no such compromise or settlement is arrived at, then the record of the case is returned to the court from which the lok adalat had received the reference. The court would then proceed to adjudicate the dispute," the bench said.

The top court said the observations of the division bench in the impugned judgment in respect of the adjudicatory powers of the permanent lok adalats were incorrect, while upholding its ultimate conclusion since the permanent lok adalat failed to follow the mandatory conciliation proceedings in the present case.