Gujarat High Court
Employees State Insurance Corporation vs Pioma Industries on 6 May, 2008
Author: H.K. Rathod
Bench: H.K. Rathod
JUDGMENT H.K. Rathod, J.
1. Heard learned Advocate Mr. Sachin D. Vasavada for the petitioner and Mr. Dipak R. Dave, learned Advocate for the respondent.
2. RULE. Service is Rule is waived by learned Advocate Mr. DR Dave for the respondent. In the peculiar facts and circumstances of the case, matter is taken up for final hearing today itself.
3. It is a case of lapses committed by the officer of the petitioner ESI Corporation and, on that basis, petitioner is challenging order passed by the Lok Adalat dated 3th October, 2006 in ESI Application No. 23 of 2002. Arguments advanced by the learned Advocate Mr. Vasavada on merits before this Court is totally irrelevant and yet, this Court has permitted him to argue on merits of the matter. Against the order passed by the Lok Adalat, appeal is not available. That is the view taken by the Hon'ble apex court. Limited scope to challenge the order passed in Lok Adalat. Writ petition before the High Court is limited remedy. Contention raised by the ESI Corporation is that the Insurance Inspector is not authorized to settle the matter with the respondent. How the respondent will be aware about this fact that the Insurance Inspector is not authorized. The averments made in this regard in para 3 being material, relevant averment made in para 3 of the petition is reproduced as under:
It is further submitted that the Petitioner also engaged the lawyer and deputed its Insurance Inspector to assist the lawyer as well as the ESI Court in the said proceedings.
4. Aforesaid averment made by the petitioner in para 3 of the petition makes it clear that the Insurance Inspector was authorized officer deputed by the Corporation in the proceedings pending before the ESI Court in ESI Application No. 23 of 2002. Settlement arrived at between the parties in Lok Adalat where Advocate Mr. IR Amarnani was engaged by the ESI Corporation. Whether the Advocate has signed the settlement or not, no details have been given by the ESI Corporation. Why Corporation remained silent about their Advocate, whether he has given any advise to the Insurance Inspector that such kind of settlement is permissible under the ESI Act or not? No details have been given in that regard by the petitioner before this Court. A Corporate Body which is a State Authority has acted in a manner with the private person that they are supreme and superior because they are authority and they are entitled to challenge any kind of binding orders in this High Court. ESI Corporation being the State Authority is supposed to know what is the rule of law. ESI Corporation is supposed to understand that they are also an authority working under the rule of law and law is binding to it. Knowing fully well that this Court has no jurisdiction to examine merits, whole efforts were made by the lawyer before this Court to highlight merits of the matter before this Court only with a view to cause prejudice to the main subject matter where challenge is against the order passed in Lok Adalat. Insurance Inspector was deputed by the Corporation as per the averments made in para 3 and who was to assist the lawyer engaged by the corporation. Settlement is in hand writing. It is signed by the parties including the Insurance Inspector and order was also passed by the Lok Adalat Officer in terms of the settlement in presence of the parties. This settlement was drafted on 26th September, 2006. The same was signed by Advocate of Corporation dated 29th September 2006 on 2nd October 2006 and order was passed by Lok Adalat on 4th October 2006. The parties have signed settlement including Advocates. It was informed by the respondent to the ESI Corporation by letter dated 25h November, 2006 by RPAD addressed to the Regional Director, ESI Corporation, ESIC Bhawan, Ashram Road, Ahmedabad as per page 47 but these facts have been suppressed by the Corporation while making specific averments in the memo of petition that the petitioner corporation is not aware about this settlement order passed by the Lok Adalat and, therefore, immediately it was not challenged by the petitioner corporation before this Court. Paragraph 4(1) of the petition being material, same is reproduced as under:
4(1): Petitioner Corporation further submits that the fact about the said illegal settlement came to know recently i.e. In the month of June 2007 and the present Petitioner Corporation immediately applied for the certified copy of the same. It is further submitted that after getting the order from the ESI Court, Petitioner Corporation carried out the investigation about the fradulent settlement and completion of the proceedings before the ESI Court. Petitioner Corporation submits that the delay has taken place to the present petition only because of its own Insurance Inspector, who did not intimate about any development of the case much less the development settlement, illegal and fraudulent to the Legal Officer as well as authorized officer of the Petitioner Corporation. Petitioner Corporation humbly submits that delay has taken place in filing present writ petition only because of unawareness about the fact of the order passed by ESI Court in ESI Application No. 23 of 2003 on the basis of fraudulent and illegal settlement which was enforced on Petitioner in connivance of the concerned Insurance Inspector. Petitioner Corporation craves leave to refer and rely upon the records of trial court i.e. Entire record of case No. 23/02 and will produce at the time of hearing of the present petition.
5. Bare perusal of the aforesaid para 4(1) of the petition goes to suggest that the ESI Corporation came to know recently in the month of June, 2007 whereas the record suggests something else against the Corporation. Why the Corporation is making such efforts with the help of the lawyer? Whether the Lawyer wants to become smart or whether the Corporation wants to become smart with the Court? Knowing fully well that the respondent has addressed a letter dated 25th November, 2006 received by the Corporation on 28th November, 2006 and xerox copy of letter as well as acknowledgment thereof are on record and yet, petitioner corporation is making such averments in para 4(1) of the petition. No rejoinder to the reply filed by the respondent has been filed by the Petitioner Corporation in this regard denying receipt of letter dated 25th Nov. 2006 on 28th November, 2006 and, therefore, according to my opinion, averments made in para 4(1) are contrary to the record and, therefore, same cannot be believed by this Court.
6. Lok Adalat has passed order where the parties have agreed to the terms of settlement and relying upon this settlement signed by both the learned advocates, lok adalat has passed order dated 2nd October, 2006. Whether the Insurance Inspector is authorized or not; whether he is empowered or not; whether rules permit or not and only some of the authorities alone have been described as authorized officer or not, how the respondent has any concern with it when the deputed Insurance Inspector has signed the consent terms before the lok adalat in the proceedings wherein advocate was also engaged by the corporation. Why the Corporation has not taken care at the time of sending Insurance Inspector in Lok Adalat by giving him specific and clear direction not to settle the dispute because you have no power under the Act and you are not authorized officer. It is not the case of the corporation that at the time when the insurance inspector was sent to the Lok Adalat, at that time, he was specifically asked in writing that he has not to sign any settlement, he has not to agree with any settlement with any party, he has merely remain present and assist the lawyer without taking any initiative for any settlement or compromise. No such thing was given to the Insurance Inspector in writing by the petitioner corporation. Everything was presumed by the lawyer of the petitioner while drafting the petition that the respondent must know that who is authorized officer under the provisions of the ESI Act and who has been given power to sign the settlement. These are the facts naturally not necessary to be known by the respondent. Insurance Inspector on behalf of the ESI Corporation on each and every occasion was remaining present in the proceedings and also signed the settlement on behalf of the corporation. How the respondent could create any doubt against such an officer of the corporation who was appearing for the corporation on each and every occasion and who was assisting the lawyer on each and every occasion before the ESI Court. Lapse has been committed by the corporation by not taking proper care and the insurance inspector has signed the settlement on behalf of the corporation and now, the corporation is making hue and cry for hiding the lapse committed by it through its highest officer and, therefore, present petition has been filed before this Court as if the Lok Adalat has no meaning. Submissions made by the learned Advocate Mr. Vasavada are required to be considered. It has been submitted by him that the respondent is liable to make the payment as per the recovery certificate issued by the authorized officer under Section 45C to 45I and there is no provision available for settlement or bargaining under the Act and, therefore, such settlement before the Lok Adalat is bad and illegal and if any such settlement is arrived at before the Lok Adalat, then, person who has signed it was having no authority in law and, therefore, such settlement has to be considered as illegal and contrary to the provisions of the ESI Act. He relied upon the decision of this Court in the matter of Dineshkumar G. Chavda and Ors. v. State of Gujarat and Ors. reported in 2007 III CLR 533 wherein he highlighted Head Note in Yellow Colour. Same is, therefore, reproduced as under:
The appointment of the petitioners are contrary to the provisions of Section 50 of the Gujarat Municipalities Act.
7. How this judgment is helpful to the petitioner, that has not been canvassed by the learned Advocate Mr. Vasavada before this Court. Lawyer practicing before the High Court is throwing judgment before the Court as if it is the burden of the Court and not the burden of the advocate citing it. It appears that he has merely cited the judgment without ascertaining as to whether it is applicable to the facts of the present case or not. He is citing the decisions with an impression that the court will consider it and will decide whether it is relevant in the facts or not and therefore, without taking any pains in that regard, he is citing the decision before this Court. No pain has been taken by him to verify as to how this judgment is relevant to the issue which is pending before this Court and how it is binding to this Court. No pain whatsoever has been taken by the advocate before citing the decision and mechanically cited the decision as if that judgment is binding to this Court without disclosing the facts and ratio laid down in that judgment. Apart from that, this Court has accepted the copy of the judgment where yellow marking has been made by him but this judgment is going to show about powers of appointment. It has been held therein that the selection committee can only recommend names of selected candidates. Power of appointment is vested with the Chief Officer and not with the President of Nagarpalika. Decision laying down such law regarding powers of appointment in Nagarpalika has been cited by learned lawyer in a proceedings while challenging order passed by the Lok Adalat based on the consent terms arrived at between the parties. Therefore, same is not applicable to the facts of the present case because in this case, insurance inspector was deputed by the Corporation as an authorized officer to assist the lawyer appearing before the ESI Court and to remain present before the court with advocate on each and every occasion in pending matter. It is, therefore, clear that the insurance inspector appearing before the ESI Court to assist the lawyer was not unauthorized officer but he was authorized officer on the basis of his deputation by the petitioner corporation as admitted by the petitioner as ref erred to above. Therefore, it is not open for the petitioner to raise the contention that he was not authorized officer. It is also required to be noted as to whether the corporation has taken any steps against the lawyer who was engaged by the corporation or not. Corporation is required to answer as to why he allowed for such settlement of such dispute which is contrary to the provisions of law. Lawyer committed lapse. Insurance Inspector committed lapse and based upon the consent of the parties, Lok Adalat passed order in terms of settlement which the petitioner is challenging in this petition as if the High Court is an appellate authority. Such an approach on the part of the corporation in acting upon advise from the lawyer to challenge it before the High Court also accepted blindly without considering legal aspects of the matter is required to be deprecated. According to my opinion, settlement was signed by the Insurance Inspector in presence of the lawyer and accordingly Lok Adalat has recorded the settlement. At this stage, facts stated in the reply filed by the respondent are required to be considered. Therefore, facts stated in para 3 of the reply are reproduced as under:
3.1 The present respondent is original applicant before the learned ESI Court. Application came to be filed under Section 71(1)(g) and Section 45(C) to 45(I) of the ESI Act. It was the case of the respondent before the learned ESI Court that the petitioner Corporation has claimed contribution on all the payments made by the applicant establishment to the agencies, contractor, security services, building materials, maintenance charges, payments made to excluded employees, etc., and an amount of such claim on which the contribution was asked, come to Rs. 1,14,548/-. It is required to be noted that for the year 1998-99 and 1999-00, claim was made from the respondent. It is submitted that the claim raised by the petitioner Corporation was absolutely illegal. The applicant had produced several documents on record to show that there was contract given to M/s. Riddhi Engineering and Fabrication alongwith all materials and even the bills of the said contractors were produced below Exh. 15/1 to 15/4. The said work was done through contractor's employees and not from the employees of the respondent. It was the claim of the respondent that for the purpose of repairing of the building of the respondent, the said contract was given and the said work was not having any nexus with the work of the respondent and, therefore, there arises no question of payment on the said amount. Similarly, the respondent produced Notification of the Central Government inter-alia containing that when the work of loading and unloading has been done by the contractor truck operator themselves, there arises no question of deducting the contribution on the said amount. The bills were produced of Honest Labour Contractor below Exh 15 list to show that for the loading and unloading work, payments were made and the work was done by the Honest Labour Contractor for which company shall not have to pay any contribution. The amount of contribution demanded on the security charges could not have been legally claimed by the petitioner Corporation since the security guards were deployed by the security agency. The security guards were not the employee of the respondent. Even the said security agencies were covered under the ESI Act and they deposit the amount of contribution directly to the ESI and, therefore, the respondent can not be asked to pay amount of contribution. Even documents were produced on record of the ESI Court to prove that Docsun Security Services have deposited an amount of contribution for the period of 1/10/1998 to 31/3/2000. Similarly, one another Mangal Security Services had also deposited an amount of ESI contribution.
3.2 It is submitted that demands, which were raised by the Corporation was not legally tenable and improper and detail explanation was given before the learned ESI Court by the respondent. A copy of written arguments filed before the learned ESI Court is annexed herewith and marked as ANNEXURE-R1 with this reply for the kind perusal and ready reference of this Honourable Court. It is submitted that the petitioner has in detail narrated its case before the learned ESI Court by submitting written arguments on 21/6/2005. Instead of repeating the contents thereof, petitioner craves liberty to refer to and rely upon the same at the time of hearing of this petition. The said written arguments may kindly be considered as part and parcel of this reply.
3.3 It is submitted that realizing the case of the respondent, the petitioner agreed to place the case before the Lok Adalat, which has been constituted as per the Legal Services Authorities Act.
3.4 It is submitted that before the Lok Adalat settlement has been arrived at and it has been recorded also before the Lok Adalat. It is submitted that certain amount was agreed to be paid by the respondent to the petitioner and the said amount was written down in separate schedule and was agreed to be paid by the respondent within 15 days from the date of copy of order. It is submitted that whether the Inspector, who remained present before the Lok Adalat was having any authority or not is of no consequences so far as the respondent is concerned and the respondent has been made to believe that the ESI Corporation has been represented by the said Inspector. In all earlier Court proceedings, the said Inspector had appeared on behalf of the petitioner Corporation. It is submitted that the settlement took place before the Lok Adalat on 4/10/2006 and accordingly, the order has been passed by the learned ESI Court on the basis of the said settlement on 13/10/2006. It is at this stage required to pay certain amount of contribution, so as to resolve the disputes, which was pending since long and looking to the litigation cost also, the respondent decided to make the payment of certain contribution. The said amount was not legal liability of the respondent. However, the respondent has entered into the settlement and accordingly, decided to make the contribution. It is submitted that as per the said order, the respondent was to deposit Rs. 54,184/- towards contribution. However, at the time of grant of stay as per the order of the learned ESI Court, the respondent had already deposited Rs. 55,000/- vide challan dated 27/2/2002 and, therefore, the respondent requested to the petitioner Corporation to refund an amount of Rs. 816/- by its letter dated 25/11/2006. A copy of said letter dated 25/11/2006 alongwith acknowledgment sleep is annexed herewith and marked as ANNEXURE-R2 with this reply. It is submitted that till the date the petitioner Corporation has failed to comply with the order of the learned ESI Court and has not refunded the amount of Rs. 816/-.
3.5 Now the petitioner has approached this Honourable Court on the ground that the learned Inspector, who has entered into the settlement, was not authorized officer of the petitioner Corporation. It is submitted that as per the proceedings of Section 21 and 22 of the Legal Services Authorities Act, award made by the Lok Adalat will become final and cannot be challenged before any Court. It is absolutely incorrect that the settlement was illegal or fraudulent. The petitioner Corporation has deliberately not pointed as to what was the investigation, which they have alleged to have been carried out after the order and the conclusion of the said investigation. This Hon'ble Court may be pleased to direct the petitioner Corporation to place on record the investigation report, which the Corporation has stated to have been carried out as per the averments made in para 4 of the petition.
3.6 The petitioner has made false statement to the effect that the petitioner Corporation has come to know about the settlement only in June, 2007. It is submitted that the Regional Director was already aware with regard to the order passed on 13/10/2006 by ESI Court, which was forwarded by the respondent alongwith its request letter dated 25/11/2006. Thus, the petitioner Corporation has gone to the extent of making false averments before this Hon'ble Court. It is most respectfully and humbly prayed that for making false averments on oath before this Hon'ble Court, deponent of this petition may kindly be appropriately deal with. It is submitted that because of extraneous consideration, this petition has been filed so as to harass the respondent company. It has not been appreciated by the petitioner Corporation that though there were several disputes with regard to the contribution to be paid by the respondent and legally the respondent company was not liable to make certain payments, as a good gesture so as to avoid undue litigation, settlement was reached by the respondent and even after the settlement in Lok Adalat, harassment has been continued and now this petition has been filed by the petitioner Corporation. It is submitted that this petition is nothing but an abuse of process law. By making false averment the petitioner has explained delay but only on the ground that the false explanation has been given by the petitioner, this petition may kindly be rejected.
3.7 It is submitted that even during the proceedings under Section 45(C) to 45(I) of the Act, absolutely illegal order was passed and that too without hearing the respondent. The order was passed in violation of principal of natural justice. It is submitted that except alleging that there was fraudulent settlement, nothing has been placed on record by the petitioner Corporation with regard to substantiate its claim of fraudulent settlement. The respondent would obviously not concern as to whether the person signing the settlement is authorized officer of the Corporation or not? In fact, when all throughout the said officer has taken participation in the proceedings before the learned ESI Court, there were all reasons for the respondent to believe that the said person is authorized person and therefore, the settlement took place before the Lok Adalat. The grounds urged by the petitioner are not legally tenable. The petitioner has not approached either Lok Adalat or before the learned ESI Court with their alleged case of fraud. Straightway petition before this Hon'ble Court under Art 226 of the Constitution of India would not be maintainable in eye of law inasmuch as the factual aspect could have been well appreciated by the Lok Adalat/learned ESI Court. The petitioner Corporation has also not disclosed the action, which it has taken against the Insurance Inspector. It is absolutely incorrect that respondent company in connivance with the Insurance Inspector has entered into settlement. In any case, looking to the provisions of Legal Services Authorities Act and looking to the fact that all throughout learned Insurance Inspector had appeared on behalf of the learned ESI Corporation and also before the Lok Adalat, allegation of the petitioner Company is absolutely false and frivolous and therefore, this petition may kindly be rejected without cost.
8. Page 47 letter of respondent dated 25th November, 2006 addressed to the Regional Director, ESI Corporation, ESIC Bhawan, Ashram Road, Ahmedabad and received by him on 28th November, 2006 is also material and, therefore, contents thereof are also reproduced as under:
In connection with the above subject, the Hon'ble Judge of Employees Insurance Insurance Court Ahmedabad has passed an order dated 13.10.2006, the copy which is enclosed herewith.
According to the said order and statement of our establishment has to pay Rs. 54,184/- within 15 days from receipt of order.
However, the establishment has already deposited Rs. 55,000.00 vide challan dated 27.4.02 and therefore, we request you to refund an amt. Of Rs. 816.00 oblige.
9. No affidavit in rejoinder has been filed by the petitioner to the affidavit in reply filed by the respondent. Therefore, considering the averments made by the respondent in his affidavit in reply and also considering the contents of the letter dated 25th November, 2006 page 47, according to my opinion, such type of petition challenging orders made by the Lok Adalat on the basis of the consent terms arrived at between the parties on the ground that the officer who has signed the consent terms is not authorized to sign such settlement as he is not authorized officer, cannot be entertained by this Court. If such challenges are encouraged, then, Lok Adalats would become meaningless and the orders passed by the Lok Adalats would be losing their efficacy and the purpose of lok adalats would also stand defeated and frustrated and, therefore, such petition cannot be entertained by this Court.
10. Learned Advocate Mr. Dave for the respondent has relied upon the decision of the apex court in case of P.T. Thomas v. Thomas Job . Relevant observations made in para 16 to 27 of the decision as are reproduced as under:
16. In our opinion, the award of the Lok Adalat is fictionally deemed to be decrees of Court and therefore the courts have all the powers in relation thereto as it has in relation to a decree passed by itself. This, in our opinion, includes the powers to extend time in appropriate cases. In our opinion, the award passed by the Lok Adalat is the decision of the court itself though arrived at by the simpler method of conciliation instead of the process of arguments in court. The effect is the same. In this connection, the High Court has failed to note that by the award what is put an end to is the appeal in the District Court and thereby the litigations between brothers forever. The view taken by the High Court, in our view, will totally defeat the object and purpose of the Legal Services Authorities Act and render the decision of the Lok Adalat meaningless.
17. Section 21 of the Legal Services Authorities Act, 1987 reads as follows:
21 AWARD OF LOK ADALAT.- 2[(1)] 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 Court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred on it under Sub-section (1) of Section 20, the court fee paid in such cases shall be refunded; in the manner provided under the Court-fees Act, 1870 (7 of 1870).
(2) Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any Court against the award.
Section 22 reads thus:
22. POWERS OF LOK ADALATS - (1) The Lok Adalat shall, for the purposes of holding any determination under this Act, have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit in respect of the following matters, namely:
(a) the summoning and enforcing the attendance of any witness and examining him on oath;
(b) the discovery and production of any document;
(c) the reception of evidence on affidavits;
(d) the requisitioning of any public record or document or copy of such record or document from any Court or Office; and
(e) such other matters as may be prescribed.
(2) Without prejudice to the generality of the powers contained in Sub-section (1), every Lok Adalat shall have the requisite powers to specify its own procedure for the determination of any dispute coming before it.
(3) All proceedings before a Lok Adalat shall be deemed to be judicial proceedings within the meaning of Sections 193, 219 and 228 of the Indian Penal Code (45 of 1860) and every Lok Adalat shall be deemed to be a Civil Court for the purpose of Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
Unreported judgments 2004 (2) VOL 37.
19. What is Lok Adalat ?:
The "Lok Adalat" is an old form of adjudicating system prevailed in ancient India and it's validity has not been taken away even in the modern days too. The word 'Lok Adalat' means 'People Court'. This system is based on Gandhian Principles. It is one of the components of ADR system. As the Indian Courts are over burdened with the backlog of cases and the regular Courts are to decide the cases involve a lengthy, expensive and tedious procedure. The Court takes years together to settle even petty cases. Lok Adalat, therefore provides alternative resolution or devise for expeditious and inexpensive justice.
In Lok Adalat proceedings there are no victors and vanquished and, thus, no rancour.
Experiment of 'Lok Adalat' as an alternate mode of dispute settlement has come to be accepted in India, as a viable, economic, efficient and informal one.
LOK ADALAT is another alternative to JUDICIAL JUSTICE. This is a recent strategy for delivering informal, cheap and expeditious justice to the common man by way of settling disputes, which are pending in Courts and also those, which have not yet reached Courts by negotiation, conciliation and by adopting persuasive, common sense and human approach to the problems of the disputants, with the assistance of specially trained and experienced Members of a Team of Conciliators.
20. Benefits Under Lok Adalat:
1. There is no Court fee and if Court fee is already paid the amount will be refunded if the dispute is settled at Lok Adalat according to the rules.
2. The basic features of Lok Adalat are the procedural flexibility and speedy trial of the disputes. There is no strict application of procedural laws like Civil Procedure Code and Evidence Act while assessing the claim by Lok Adalat.
3. The parties to the dispute can directly interact with the Judge through their Counsel which is not possible in regular Courts of law.
4. The award by the Lok Adalat is binding on the parties and it has the status of a decree of a Civil Court and it is non-appealable which does not cause the delay in the settlement of disputes finally.
In view of above facilities provided by the 'Act' Lok Adalats are boon to the litigating public they can get their disputes settled fast and free of cost amicably.
21. AWARD OF LOK ADALAT:
The Lok Adalat shall proceed and dispose the case and arrive at a compromise or settlement by following the legal principles, equity and natural justice. Ultimately the Lok Adalat passes an award, and every such award shall be deemed to be a decree of Civil Court or as the case may be which is final
22. AWARD OF LOK ADALAT SHALL BE FINAL:
The Lok Adalat will pass the award with the consent of the parties, therefore there is no need either to reconsider or review the matter again and again, as the award passed by the Lok Adalat shall be final. Even as under Section 96(3) of C.P.C. that "no appeal shall lie from a decree passed by the Court with the consent of the parties". The award of the Lok Adalat is an order by the Lok Adalat under the consent of the parties, and it shall be deemed to be a decree of the Civil Court, therefore an appeal shall not lie from the award of the Lok Adalat as under Section 96(3) C.P.C.
23. In Punjab National Bank v. Lakshmichand Rah , the High Court held that "The provisions of the Act shall prevail in the matter of filing an appeal and an appeal would not lie under the provisions of Section 96 C.P.C. Lok Adalat is conducted under an independent enactment and once the award is made by Lok Adalat the right of appeal shall be governed by the provisions of the Legal Services Authorities Act when it has been specifically barred under Provisions of Section 21(2), no appeal can be filed against the award under Section 96 C.P.C." The Court further stated that "It may incidentally be further seen that even the Code of Civil Procedure does not provide for an appeal under Section 96(3) against a consent decree. The Code of Civil Procedure also intends that once a consent decree is passed by Civil Court finality is attached to it. Such finality cannot be permitted to be destroyed, particularly under the Legal Services Authorities Act, as it would amount to defeat the very aim and object of the Act with which it has been enacted, hence, we hold that the appeal filed is not maintainable.
24. The High Court of Andhra Pradesh held that, in Board of Trustees of the Port of Visakhapatnam v. Presiding Officer, Permanent, Lok Adalat-cum-Secretary, District Legal Services Authority, Visakha-patnam and Anr. , "The award is enforceable as a decree and it is final. In all fours, the endeavour is only to see that the disputes are narrowed down and make the final settlement so that the parties are not again driven to further litigation or any dispute. Though the award of a Lok Adalat is not a result of a contest on merits just as a regular suit by a Court on a regular trial, however, it is as equal and on par with a decree on compromise and will have the same binding effect and conclusive just as the decree passed on the compromises cannot be challenged in a regular appeal, the award of the Lok Adalat being akin to the same, cannot be challenged by any regular remedies available under law including invoking Article 226 of the Constitution of India challenging the correctness of the award on any ground. Judicial review cannot be invoked in such awards especially on the grounds as raised in this writ petition. 2000 Lab IC 3735
25. The award of Lok Adalat is final and permanent which is equivalent to a decree executable, and the same is an ending to the litigation among parties.
26. In Sailendra Narayan Bhanja Deo v. The State of Orissa , (Constitution Bench) held as follows:
A Judgment by consent or default is as effective an estoppel between the parties as a judgment whereby the court exercises its mind on a contested case. (1895) 1 Ch 37 and 1929 AC 482, Rel. on;
In - 'In re South American and Mexican Co., Ex. Parte Bank of England' (1895) 1 Ch 37(C), it has been held that a judgment by consent or default is as effective an estoppel between the parties as a judgment whereby the Court exercises its mind on a contested case. Upholding the judgment of Vaughan Williams, J. Lord Herschell said at page 50:
The truth is, a judgment by consent is intended to put a stop to litigation between the parties just as much as is a judgment which results from the decision of the Court after the matter has been fought out to the end.
And I think it would be very mischievous if one were not to give a fair and reasonable interpretation to such judgments, and were to allow questions that were really involved in the action to be fought over again in a subsequent action.
To the like effect are the following observations of the Judicial Committee in - 'Kinch v. Walvott' 1929 AC 482 at p. 493 (D):
First of all their Lordships are clear that in relation to this plea of estoppel it is of no advantage to the appellant that the order in the libel action which is said to raise it was a consent order. For such a purpose an order by consent, not discharged by mutual agreement, and remaining unreduced, is as effective as an order of the Court made otherwise than by consent and not discharged on appeal.
27. The same principle has been followed by the High Courts in India in a number of reported decisions. Reference need only be made to the cases of - 'Secy. of State v. Ateendranath Das' 63 Cal 550 at p. 558(E); 'Bhaishanker v. Moraji' 36 Bom 283(F) and 'Raja Kumara Venkata Perumal Raja Bahadur v. Thatha Ramaswamy Chetty' 35 Mad 75(G). In the Calcutta case after referring to the English decisions the High Court observed as follows:
On this authority it becomes absolutely clear that the consent order is as effective as an order passed on contest, not only with reference to the conclusion arrived at in the previous suit but also with regard to every step in the process of reasoning on which the said conclusion is founded.
When we say 'every step in the reasoning' we mean the findings on the essential facts on which the judgment or the ultimate conclusion was founded. In other words the finding which it was necessary to arrive at for the purpose of sustaining the judgment in the particular case will operate as estoppel by judgment.
The Civil Procedure Code contains the following provisions:
Order 23 Rule 3 provides for compromise of suit- where it is proved to the satisfaction of the Court that a suit has been adjusted wholly in part by any lawful agreement or compromise, written and signed by the parties. The Court after satisfying itself about the settlement, it can convert the settlement into a judgment decree.
11. Reliance was placed by the learned Advocate Mr. Vasavada on the decision of the apex court in case of State of Punjab and Anr. v. Jalour Singh and Ors. 2008 AIR SCW 1196. While relying upon the said decision, learned Advocate MR. Vasavada for the petitioner submitted that the award of lok adalat can be challenged by way of writ petition under the Constitution that too on very limited ground. I have considered the said decision. It is relating to the Legal Services Authorities Act. In the said judgment, the apex court has deprecated functioning of lok adalat to be decided by way of hearing to the parties or method of hearing adopted which is not applicable to the facts of the present case. However, relevant observations made therein by the Hon'ble Apex Court in para 12 and 13 are reproduced as under:
12. It is true that where an award is made by Lok Adalat in terms of a settlement arrived at between the parties, (which is duly signed by parties and annexed to the award of the Lok Adalat), it becomes final and binding on the parties to the settlement and becomes executable as if it is a decree of a civil court, and no appeal lies against it to any court. If any party wants to challenge such an award based on settlement, it can be done only by filing a petition under Article 226 and/or Article 227 of the Constitution, that too on very limited grounds. But where no compromise or settlement is signed by the parties and the order of the Lok Adalat does not refer to any settlement, but directs the respondent to either make payment if it agrees to the order, or approach the High Court for disposal of appeal on merits, if it does not agree, is not an award of the Lok Adalat. The question of challenging such an order in a petition under Article 227 does not arise. As already noticed, in such a situation, the High Court ought to have heard and disposed of the appeal on merits.
13. But the travails continued. In view of the order dated 11.9.2002 passed by the learned single Judge holding that a petition under Article 227 has to be filed to challenge the order of the Lok Adalat, the appellants filed a petition under Article 227. But the said petition was dismissed by another single Judge on the ground that the order of Lok Adalat passed on 3.8.2001 had attained finality as the objections to it were dismissed on 11.9.2002 and a petition under Article 227 was not maintainable to challenge the order of Lok Adalat. He failed to notice that the order dated 3.8.2001 was neither a decision nor had it attained finality. He also failed to notice that the objections to the order were not rejected by the High Court after consideration on merits. He also overlooked the fact that the learned Judge who decided the appellants' application, had directed that the order of the Lok Adalat should be challenged by filing a petition under Article 227. Be that as it may.
12. In Pushpa Devi Bhagat (D) by LR v. Rajinder Singh and Ors. reported in 2006 AIR SCW 3549, the apex court held that the appeal against consent decree is not maintainable. It was also held that the party has to approach the Court which passed consent decree and establish that there was no compromise. Relevant observations made by the apex court in para 12 of the said decision are reproduced as under:
12. The position that emerges from the amended provisions of Order 23, can be summed up thus:
(i) No appeal is maintainable against a consent decree having regard to the specific bar contained in Section 96(3) CPC.
(ii) No appeal is maintainable against the order of the court recording the compromise (or refusing to record a compromise) in view of the deletion of Clause (m) Rule 1 Order 43.
(iii) No independent suit can be filed for setting aside a compromise decree on the ground that the compromise was not lawful in view of the bar contained in Rule 3A.
(iv) A consent decree operates as an estoppel and is valid and binding unless it is set aside by the court which passed the consent decree, by an order on an application under the proviso to Rule 3 of Order 23.
Therefore, the only remedy available to a party to a consent decree to avoid such consent decree, is to approach the court which recorded the compromise and made a decree in terms of it, and establish that there was no compromise. In that event, the court which recorded the compromise will itself consider and decide the question as to whether there was a valid compromise or not. This is so because a consent decree, is nothing but contract between parties superimposed with the seal of approval of the court. The validity of a consent decree depends wholly on the validity of the agreement or compromise on which it is made. The second defendant, who challenged the consent compromise decree was fully aware of this position as she filed an application for setting aside the consent decree on 21.8.2001 by alleging that there was no valid compromise in accordance with law. Significantly, none of the other defendants challenged the consent decree. For reasons best known to herself, the second defendant within a few days thereafter (that is on 27.8.2001), filed an appeal and chose not to pursue the application filed before the court which passed the consent decree. Such an appeal by second defendant was not maintainable, having regard to the express bar contained in Section 96 (3) of the Code.
Re : Point No. (ii)
13. The Sections 21 and 22 of the Act are quoted as under:
In Board of Trustees of the Port of Visakhapatnam v. Presiding Officer Permanent Lok Adalat-cum-Secretary, District Legal Services Authority, Visakhapatnam , it was held:
Sub-section (5) of the Section 19 reads as follows:
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 -any case pending before; or 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.
Under this provision, the Lok Adalat is vested with jurisdiction in respect of any case pending before a Court or any matter which is not before the Court. The expressions used and the purposes behind are very clear and distinct. This is in consonance with the objects which are intended to be achieved and furthering the aims under Article 39-A of the Constitution of India. Thus, it has all the powers not only to take up the dispute pending before the Court but also in pursuance of the applications filed before it during the proceedings. In fact the `Legal Services' as defined under Section 2(c) of the said Act includes rendering of any service in the conduct of any case or other legal proceeding before any Court or other authority or Tribunal and the giving of advice on any legal matter, the object being to provide free legal aid service which is also the one enshrined under Article 39-A. Therefore, the assistance is contemplated is at all levels, not restricted to only those on approaching the Court of law or authority or Tribunal. Further it is not only with a view to settle pending cases but to settle any impending matters and to providing such assistance, this legislation has stepped in. As per Section 22 of the Act, the procedure vested in a Civil Court under the Code of Civil Procedure while trying a suit in respect of the matters provided thereunder have been made fully applicable, apart from enabling to frame its own procedure. Under Section 21 of the said Act, an award of Lok Adalat shall be deemed to be a decree of a Civil Court and the same shall be final and binding on all the parties and no appeal shall lie against the said award. Therefore, the award is enforceable as a decree and it is final. In all fours, the endeavour is only to see that the disputes are narrowed down and make the final settlement so that the parties are not again driven to further litigation or any dispute. Though the award of a Lok Adalat is not a result of a contest on merits just as a regular suit by a Court on a regular trial, however, it is as equal and on par with a decree on compromise and will have the same binding effect and conclusive. Just as the decree passed on compromise cannot be challenged in a regular appeal, the award of Lok Adalat being akin to the same, cannot be challenged by any regular remedies available under law including invoking Article 226 of the Constitution of India challenging the correctness of the award on any ground. Judicial review cannot be invoked in such awards especially on the grounds as raised in this writ petition.
14. It is necessary to note that under the provisions of the Legal Service Authorities Act, 1987, the petitioner 'Corporation and respondent, both, are agreed for referring the dispute to Lok Adalat and also both are agreed to pass the award and accordingly, entered appearance along with their counsel and thereafter, in terms of the settlement, award was passed by Lok Adalat. For taking the cognisance of Lok Adalat, it was necessary that parties to lis agree and thereafter, the matter can be referred to the Lok Adalat. In this case, it is not the case of Corporation that they were not agreed for referring the case to Lok Adalat or they have raised objection for referring the case in Lok Adalat. Therefore, Lok Adalat has rightly taken the cognisance under Section 20 of the Act. Both the parties are agreed for it and award passed by Lok Adalat, then, no appeal shall lie against the award of Lok Adalat. That aspect has been examined by Division Bench of Madhyapradesh High Court in case of Panjab National Bank v. Laxmichand Rai and Ors. . The relevant Para 7 to 14 are quoted as under:
7. The Legal Services Authorities Act, 1987 has been enacted to constitute legal services authorities to provide free and competent legal services to the weaker sections of the society, to ensure that opportunities for securing justice are not denied to nay citizen by reason of economic or other disabilities and to organize Lok Adalats to secure that the operation of the legal system promotes justice on a basis of equal opportunity.
8. In furtherance of the aims and objects as mentioned above, National Legal Service Authority has been constituted as per Section 3. Functions of the Central Authority, i.e. the National Legal Service Authority constituted under Section 3, have been specified in Section 4 One of the functions is to encourage the settlement of disputes by way of negotiations, arbitration and conciliation. Intentment is to provide legal aid, to implement legal aid programmes, to do all things necessary for the purpose of ensuring commitment to the fundamental duties of citizens, and to spread legal literacy and legal awareness amongst weaker section of the society. The idea is to see that litigation comes to an end by way of mutual conciliation, arbitration and negotiations. In the said context it is to be considered whether finality once reached in Lok Adalat should be allowed to be challenged by way of filing an appeal against the said decision. The provision has been made in the Act itself under Section 21(2) that no appeal shall lie to any Court against the award made by Lok Adalat. The award shall be final and binding on all parties to the case. If the submission of the learned Counsel for the appellant is accepted, then no finality shall be attached to the award made by the Lok Adalats. Parties arrive at a consensus that entire sum be decreed and the rate of interest and number and period of installments are left to the Court's discretion. This discretion exercised by the Court also forms part of the consensus reached between the parties and the award so made on the basis of such a consent attains finality under the provisions of Section 21(2) of the Legal Services Authorities Act.
9. The present appeal has been filed under the provisions of Section 96 C.P.C. It has to be examined whether such an appeal is maintainable under the provisions of Section 96 of the C.P.C. Section 25 of the Legal Services Authorities Act provides a non obstante clause and gives the Act an overriding effect on any other law. Section 25 of the Act runs as under:
25. Act to have overriding effect:
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.
This Provision of the Act shall prevail in the matter of filling an appeal and an appeal would not lie under the provisions of Section 96 C.P.C. Lok Adalat is conducted under an independent enactment and once the award is made by Lok Adalat the right of appeal shall be governed by the provisions of the Legal Services Authorities Act. When it has been specifically barred under provisions of Section 21(2), no appeal can be filed against the award under Section 96 C.P.C.
10. 'Lok Adalat' has been defined in Section 2(d) of the Act according to which 'Lok Adalat' means a Lok Adalat organized under Chapter VI Section 19 provides for organization of Lok Adalat which states that every State Authority or District Authority or the Supreme Court Legal Service Committee or every High Court Legal Services Committee or as the case may be, Taluka Legal Service committee may organize Lok Adalat at such intervals and places and for exercising such jurisdiction and for such areas as it thinks fit. Under Section 19(5), jurisdiction of the Lok Adalat has been provided Section 19(5) reads as under:
(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 any case pending before or;
(i) 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.
11. Cognizance of case by Lok Adalat is provided under Section 20 of the Act. For taking cognizance of cases by Lok Adalats, it is necessary that the parties to the lis agree, or one of the parties 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 (2) 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. A reasonable opportunity of being heard has to be provided before referring the case to the Lok Adalat. Under Sub-section (2) of Section 20 on receipt of an application from any one of the parties, after giving a reasonable opportunity of being heard to the other party, the matter can be referred to the Lok Adalat. Function of the Lok Adalat is provide under Section 20(3) which runs as under:
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.
12. It may be seen that in the instant case compromise was reached between both the parties and dispute was referred to Lok Adalat by agreement of both the parties. Both parties had also agreed to pass an award and had entered appearance along with counsel. Thus in terms of the compromise award was passed by Lok Adalat.
13. Lok Adalats have been conferred power of the Civil Court under the C.P.C. in respect of matters such as summoning and enforcing the attendance of any witnesses and examining him on oath, discovery and production of any documents reception of evidence on affidavits, requisitioning of any public record or document or copy of such record or document from any Court or office and such other matters as may be prescribed. It cannot be said that by implication appeal under Section 96 C.P.C. would lie against the award of Lok Adalat, in view of the fact that there is specific prohibition contained in Section 21(2) of the Act. We are of the view that the provisions of Section 96 C.P.C. are not applicable to file an appeal against the award of Lok Adalat.
14. It may incidentally by further seen that even the Code of Civil Procedure does not provide for an appeal under Section 96(3) against a consent decree. The code of Civil Procedure also intends that once a consent decree is passed by Civil Court finality is attached to it. Such finality cannot be permitted to be destroyed, particularly under the legal services Authority Act, as it would amount to defeat the very aim and object of the Act with which it has been enacted. Hence, we hold that the appeal filed is not maintainable.
15. Considering the aforesaid decision, what is relevant is that of limited challenge available to the party against the order passed in the lok adalat which is not available to the petitioner in the case before hand. Therefore, according to my opinion, in view of the peculiar facts and circumstances of the present case, present petitioner is not come with clean hands, hear and mind is not entitled to challenge the order passed by the Lok Adalat because it is also not satisfying the requirement for being covered by the limited challenge. Reason is obvious. Admittedly, an advocate was engaged by the Corporation before the ESI Court for conducting the case proceedings before the ESI Court and the Insurance Inspector was also deputed by the Corporation to assist the lawyer before the ESI Court which ultimately resulted in the settlement signed by the Insurance Inspector and Advocate and that has been challenged by the petitioner ESI Corporation after delay of about more than six months before this Court as if this Court is an appellate court, therefore, according to my opinion, submissions made by the learned Advocate Mr. Vasavada for the petitioner cannot be accepted. Whole approach of the lawyer to argue the matter on merits is not permissible in law. This Court is fully satisfied with the order passed by the Lok Adalat on the basis of the consent terms arrived at between the parties, duly signed by the Insurance Inspector and lawyer engaged by the petitioner Corporation and the respondent. Settlement has been recorded by the Lok Adalat - Member, Industrial Court working as ESI Court who is of the level of District Judge. The day on which settlement was recorded, somebody must be in the corporation to ask the insurance inspector as to what has happened in the Lok Adalat when he was deputed by the Corporation. It was within the knowledge of the Corporation that the matter has been placed before the Lok Adalat for settlement, if possible. At that time, Corporation could have issued instructions to the Insurance Inspector and/or the lawyer engaged by it to raise objection against putting of the matter before the Lok Adalat but no objection was raised when the matter was placed before the Lok Adalat. Thereafter, whether the higher officer of the corporation has asked the advocate engaged by the corporation and/or the insurance inspector as to what has happened in the lok adalat, what is the status of the matter but there is no averment on record to that effect made in the petition. ESI Corporation has remained silent as if nothing has happened or whatever happened is legal and thereafter, all of a sudden, just to save the skin and shirk the responsibility, the higher officer of the Corporation has with the help of the lawyer, approached this Court as if this Court can consider and examine the orders passed by the Lok Adalat based on consent terms. If such attempts of the petitioner corporation are entertained and/or encouraged, then, there would be no sanctity of the orders passed by the Lok Adalat on the basis of the consent terms arrived at between the parties and it would inspire the litigants in future to settle the matter at the first instance before the Lok Adalat and thereafter to challenge the same before the High Court under the one or the other reason. This method has been adopted by the petitioner by making allegation against the insurance inspector that he was not authorized officer to sign the settlement but it has remained silent as to what has happened with the advocate engaged by the corporation to represent its case before the ESI Court. No correspondence between the corporation and the lawyer engaged by the Corporation has been placed on record for consideration of this Court. I am openly discussing the things tried to be suppressed by the petitioner while filing this petition before this Court because it is not a petition with bona fide purpose as petitioner has not come with clean hands, heart and mind. It is a petition with clear mala fide purpose just to shirk the responsibility of the higher authority of the corporation by filing this petition before this Court. If such type of petition is entertained by this Court, whole purpose of Lok Adalat shall stand frustrated and/or defeated and the orders passed by the Lok Adalat would be losing their sanctity and efficacy. This Court cannot become a party to such things. Therefore, according to my opinion, this being a frivolous petition filed by the petitioner corporation with some ulterior oblique motive, same cannot be entertained and such an approach of the petitioner corporation cannot be encouraged as it lacks bona fide. For filing such frivolous petition and misusing the process of the court, petitioner is liable to be saddled with the costs, quantified at Rs. 10,000.00, to be deposited by the petitioner before the Legal Services Authority for the work of Lok Adalat.
16. According to learned Advocate Mr. Vasavada, departmental inquiry is initiated against the Insurance Inspector who has signed the settlement without authority. If that is so, then, why action is not taken against the advocate who had been representing the petitioner before the ESI Court and allowed the unauthorized person to sign the settlement? There is no whisper in the petition about the action taken or sought to be taken against the advocate by the corporation. Further, if the action has been initiated by the corporation against the Insurance Inspector for signing the settlement without authority, then, if it is ultimately established that the settlement was signed by the person not authorized to sign it on behalf of the corporation, then, whatever loss caused to the corporation because of such settlement could be recovered by the corporation from the person who has signed it without authority or from the advocate who permitted such unauthorized person to sign such settlement and, therefore, in view of that also, this petition cannot be entertained and same is required to be dismissed.
17. Therefore, in result, this petition is dismissed with costs, quantified at Rs. 10,000.00 (Rupees ten thousand only), to be deposited by the petitioner before the High Court Legal Services Committee for the work of Lok Adalat as the matter was placed before the Lok Adalat with consent of both the parties. It is not the case of Corporation that matter was placed in Lok Adalat without their consent and they were not aware about it. Therefore, once the matter is put up in Lok Adalat and for that, Insurance Inspector has been deputed by Corporation who has signed the settlement alongwith advocate, the presumption is that impliedly, he was authorised to settle the matter, otherwise, according to the contentions raised by learned advocate Mr. Vasavada, under the ESI Act, such kind of settlement is not permissible, then, why the matter has been put up in Lok Adalat with the consent of Corporation. Rule is discharged.