Karnataka High Court
Kumari Rashika D/O. Bhairu Shinde vs Smt. Shobha W/O. Babu Kadam on 8 April, 2026
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH
DATED THIS THE 08TH DAY OF APRIL, 2026 R
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.103648 OF 2021 (GM-AC)
C/W
MISCELLANEOUS FIRST APPEAL No.101133 OF 2022 (MV)
IN WRIT PETITION No.103648 OF 2021:
BETWEEN:
1. KUMARI RASHIKA D/O BHAIRU SHINDE
AGED ABOUT 06 YEARS
OCC: STUDENT, SINCE MINOR
REPRESENTED BY HER NEXT FRIEND
SMT. SUSHILA W/O DASHARATH SHELAR
AGED ABOUT 68 YEARS
OCC: HOUSEHOLD WORK
R/O HARAGAPURGAD - 591 313
TALUK: HUKKERI, DISTRICT: BELAGAVI.
2. SMT. SUSHILA W/O DASHARATH SHELAR
AGED ABOUT 68 YEARS
OCC: HOUSEHOLD WORK
R/O HARAGAPURGAD - 591 313
TALUK: HUKKERI, DISTRICT: BELAGAVI.
... PETITIONERS
(BY SMT. SUNANDA P.PATIL, ADVOCATE)
AND:
2
1. SMT. SHOBHA W/O BABU KADAM
FALSELY CALLING HERSELF AS
MINOR GUARDIAN OF MINOR PETITIONER
RASHIKA D/O BHAIRU SHINDE
R/O MANAGUTTI - 591 243
TALUK: HUKKERI, DISTRICT: BELAGAVI.
2. SHRI RAHUL S/O SHANKAR RAO PATIL
AGED ABOUT 30 YEARS
OCC: BUSINESS
R/O F.NO. 3-A(S-4) SECOND FLOOR
DEEPALI APPTS, B WING, BORDA SALCETE
MARGOA SOUTH GOA, GOA - 403 601.
3. HDFC ERGO GENERAL INSURANCE CO. LTD.,
REPRESENTED BY ITS OFFICE AT
1ST FLOOR, VIRUPAKSHKRUPA
OPP: KIMS MAIN GATE, P.B.ROAD
HUBBALLI - 580 021.
4. N.YASHAVANT S/O T.G.NATARAJ
R/O KALAGHATAGI ROAD
NO.61, GIRI NAGAR, SARASWATPUR
DHARWAD - 580 002.
5. HDFC ERGO GENERAL INSURANCE CO. LTD.,
REPRESENTED BY ITS OFFICE AT
1ST FLOOR VIRUPAKSHKRUPA
OPP: KIMS MAIN GATE, P.B.ROAD
HUBBALLI - 580 021.
... RESPONDENTS
(BY SRI PRASHANT MATHAPATI, ADVOCATE FOR R1;
SRI NAGARAJ C.KOLLOORI, ADVOCATE FOR R3 AND R5;
SMT. CHITRA M.GOUNDALKAR, ADVOCATE FOR R2;
R4 - SERVED)
3
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO A WRIT IN THE
NATURE OF CERTIORARI OR ANY OTHER WRIT, ORDER OR
DIRECTION QUASHING THE COMPROMISE DECREE/AWARD DATED
14.08.2021 IN MVC 1567/2020 PRODUCED AT ANNEXURE M
PASSED BY VIII ADDITIONAL DISTRICT AND SESSIONS JUDGE,
BELAGAVI, BEFORE LOK ADALAT.
IN MISCELLANEOUS FIRST APPEAL No.101133 OF 2022:
BETWEEN:
KUMARI RASHIKA D/O BHAIRU SHINDE
AGED ABOUT 06 YEARS
OCCUPATION: STUDENT
SINCE MINOR
REPRESENTED BY HER NEXT FRIEND
SMT. SUSHILA W/O DASHARATH SHELAR
AGED ABOUT 68 YEARS
OCC: HOUSEHOLD WORK
R/O HARAGAPURGAD - 591 313
TALUK: HUKKERI, DISTRICT: BELAGAVI.
... APPELLANT
(BY SMT. SUNANDA P.PATIL, ADVOCATE)
AND:
1. SHRI RAHUL S/O SHANKAR RAO PATIL
AGED ABOUT 30 YEARS
OCC: BUSINESS
R/O F NO. 3-A(S-4) SECOND FLOOR
DEEPALI APPTS, B WING, BORDA SALCETE
MARGOA SOUTH GOA, GOA - 403 601.
2. HDFC ERGO GENERAL INURANCE CO. LTD.,
4
REPRESENTED BY ITS OFFICE AT
1ST FLOOR, VIRUPAKSHKRUPA
OPP. KIMS MAIN GATE, P.B.ROAD
HUBBALLI - 580 021.
3. N.YASHAVANT S/O T.G.NATARAJ
R/O KALAGHATAGI ROAD, NO.61
GIRI NAGAR, SARASWATPUR
DHARWAD - 580 002.
4. HDFC ERGO GENERAL INSURANCE CO. LTD.,
REPRESENTED BY ITS OFFICE AT
1ST FLOOR VIRUPAKSHKRUPA
OPP. KIMS MAIN GATE, P.B.ROAD
HUBBALLI - 580 021.
... RESPONDENTS
(BY SMT. CHITRA M.GOUNDALKAR, ADVOCATE FOR R1;
SMT. BHARATHI G.BHAT, ADVOCATE FOR R3;
SRI NAGARAJ C.KOLLOORI, ADVOCATE FOR R2 AND R4)
THIS MFA IS FILED U/S 173(1) OF THE MV ACT, 1988 ALLOW
THE APPEAL BY SETTING ASIDE THE ORDER AS PETITION CLOSED
DATED 25.08.2021 IN MVC NO.2324/2019 PASSED BY THE SENIOR
CIVIL JUDGE AND ADDITIONAL MACT, HUKKERI.
THESE WRIT PETITION AND MISCELLANEOUS FIRST APPEAL
ARE HAVING BEEN HEARD AND RESERVED FOR ORDERS /
JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY, THE
COURT MADE THE FOLLOWING:-
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CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER/JUDGMENT
The petitioners and the appellant in both these cases are
before this Court calling in question the award of the Lok Adalat
passed in M.V.C.No.1567 of 2020 dated 14-08-2021 and the order
of dismissal of the claim petition in M.V.C.No.2324 of 2019 dated
25-08-2021 respectively in the Writ Petition and the Miscellaneous
First Appeal, on the score that the award of the Lok Adalat was
passed in the absence of the petitioners who had filed the first
claim petition and that the compensation awarded is grossly under
calculated. For the sake of convenience, the facts and the parties
would be referred to as per their ranks in the writ petition, as the
subject matter in both the cases arises from one incident.
2. Facts in brief, germane, are as follows: -
2.1. 1st petitioner is the minor grand-daughter of the 2nd
petitioner. Respondent No.1 is the maternal grand-mother of the 1st
petitioner/minor. Respondents 3 and 5 are Insurance Companies.
Bhairu Shinde and Rekha are the parents of the 1st petitioner,
minor. It is the averment in the petition that Bhairu Shinde was
6
adopted by his parental aunt when he was just 3 years old. It is the
further averment that notwithstanding the adoption of Bhairu
Shinde, he was raised by the 2nd petitioner and her husband.
Between 2016 and 2018, Bhairu Shinde and Rekha filed a petition
for divorce in M.C.No.60 of 2016 which is decreed on 15-12-2018.
After the said decree of divorce Bhairu Shinde dies in a road traffic
accident on 09-03-2019. A complaint is registered by the son of
petitioner No.2 one Sanjay Shelar before the Sankeshwar Police
Station against the drivers of offending vehicles/respondents 2 and
4 herein in Crime No.37 of 2019 for offences punishable under
Sections 279, 283, 337, 338 and 304A of the IPC.
Contemporaneously, the 2nd petitioner, wife of Dasharath Shelar
files a claim petition before the concerned Court in M.V.C.No.2324
of 2019. The claim petition in M.V.C.No.2324 of 2019 was filed
seeking compensation to the tune of ₹20,00,000/- against the
owners of the offending vehicles, respondent Nos. 2 and 4 as well
as insurers. The income of the deceased is shown at ₹15,000/- per
month from his avocation of driving and ₹2,00,000/- per annum as
agricultural income.
7
2.2. The 1st respondent also files a claim petition in
M.V.C.No.1567 of 2020 seeking compensation to the tune of
₹20,00,000/- against the owners of the offending vehicles.
Respondents 2 and 4 (who are respondent 1 and 3 in the said claim
petition) as well as respondents 3 and 5 insurers (who are
respondents 2 and 4 in the said claim petition) contested the
matter. The ground taken in both the claim petitions was that
Bhairu Shinde was the sole bread winner of the family and the 1st
petitioner was the dependent to the deceased Bhairu Shinde. It is
the averment in the petition that the 1st petitioner was living with
the 1st respondent until the death of Bhairu Shinde and is living
with the 2nd petitioner after his death. Respondent Nos. 3 and 5
filed a memo in M.V.C.No.1567 of 2020 when another claim petition
in M.V.C.No.2324 of 2019 was subsisting, to the effect that the
matter is settled between the parties. The M.V.C.No.2324 of 2019
was consented to be dismissed.
2.3. The claim petition in M.V.C.No.1567 of 2020 was not
settled before the Court, but it was settled before the Lok Adalat. A
joint memo comes to be filed in M.V.C.No.1567 of 2020 recording
8
compromise of ₹12,00,000/- as full and final settlement which the
respondents therein i.e., the insurance companies were required to
pay within two months. The order of the concerned Court in
M.V.C.No.1567 of 2020 also records the joint memo being filed and
full and final settlement being arrived at ₹12,00,000/-. In
furtherance of the said joint memo, the Lok Adalat passed the said
award and awards the said compensation.
2.4. 3rd respondent in the writ petition files an application in
M.V.C.No.2324 of 2019 stating that another petition is filed by the
1st petitioner in M.V.C.No.1567 of 2020 and the 1st petitioner
intends to continue the proceedings in M.V.C.No.1567 of 2020 and
close the proceedings in M.V.C.No.2324 of 2019. The application
filed by respondent No.3 is allowed and the M.V.C.No.2324 of 2019
is closed which was earlier filed as having become unnecessary in
the light of the settlement arrived at in M.V.C.No.1567 of 2020.
Therefore, two proceedings spring before this Court, one in Writ
Petition No.103648 of 2021 challenging the Lok Adalat award dated
14-08-2021 in M.V.C.No.1567 of 2020 and the other in
M.F.A.No.101133 of 2022 challenging the order of dismissal in
9
M.V.C.No.2324 of 2019 dated 25-08-2021. Since two different
proceedings arose out of common facts, the two were tagged and
heard together.
4. Heard Smt Sunanda P. Patil, learned counsel appearing for
petitioners in both the petitions, Sri Prashant Mathapathi, learned
counsel for respondent No.1, Sri Nagaraj C Kalloori, learned counsel
for respondents 3 and 5 in W.P.No.103648 of 2021 and respondents
2 and 4 in MFA.No.101133 of 2022 and Smt. Chitra N Goundalkar,
learned counsel for respondent No.2 in W.P.No.103648 of 2021 and
respondent No.1 in MFA.No.101133 of 2022 and Smt.Bharathi G
Bhat, learned counsel for respondent No.3 in MFA.No.101133 of
2022.
5. The learned counsel appearing for the petitioners in the
writ petition would contend that the 1st respondent is not the
guardian of the 1st petitioner. 1st respondent has not obtained any
permission from the civil Court to file a claim petition. Therefore,
the 1st respondent could not have filed a claim petition for the death
of Bhairu Shinde and could not have entered into a compromise
10
with the insurers. The 1st respondent was aware that the 2nd
petitioner, wife of Dasharath Shelar had filed a claim petition on
behalf of the child in M.V.C.No.2324 of 2019. Despite the same,
another claim petition is filed and settlement is arrived at. The
compromise entered into in M.V.C.No.1567 of 2020 is not adequate
compensation, as it is a compromise between Respondents 1 and 3
by colluding with each other. The matter was settled for
₹12,00,000/- as full and final settlement. However, the deceased
was earning ₹15,000/- per month from his avocation as driver and
₹2,00,000/- per annum as agricultural income. Therefore, as per
the notional chart prepared by the High Court Legal Services
Authority, the notional income of the deceased has to be taken as
₹13,250/- and the petitioners were entitled to a claim of
₹24,84,400/-. The award is passed without giving opportunity to
any of the parties to think over the matter, as the applications are
filed on 14-08-2021, recorded and closed on the same day.
6. Per contra, the learned counsel appearing for the 1st
Respondent in the Writ Petition would contend that the 1st
respondent is taking care of the minor, 1st petitioner. The 1st
11
respondent is the maternal grand mother of the 1st petitioner. The
deceased, Bhairu Shinde, was adopted by his aunt. Therefore, the
2nd petitioner in the writ petition is not a legal parent of the
deceased and as such, no claim petition filed by the 2nd petitioner
would even be entertainable. The learned counsel submits that
compromise is entered into before the Lok Adalat and does not
merit any interference at the hands of this Court.
7. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record. In furtherance whereof ,the following issues
would arise for consideration:
(i) Whether the award of the Lok Adalat requires to
be set aside?
(ii) Whether the compensation to be payable to the
1st petitioner, minor child, is to be modified in
accordance with law?
12
ISSUE NO.1:
Whether the award of the Lok Adalat requires to be set
aside?
8. The issue as to under what circumstances the award of Lok
Adalat can be interfered with in a writ proceeding is dealt with, in
detail, in a judgment of this Court in GURAMMA v. SMT.
NAGAMMA NAGALAPURA1. The findings recorded therein are as
follows:
".... .... ....
ISSUE NO.1:
Whether the drawing up of a decree on the award
of the Lok Adalat, can be challenged in a writ petition?
9. The Apex Court has time and again held that an award
of the Lok Adalat can only be challenged by filing a writ petition
under Article 226 or 227 of the Constitution of India on limited
grounds of fraud.
9.1 In the case of STATE OF PUNJAB v. JALOUR
SINGH [(2008) 2 SCC 660] , the Apex Court has held as
follows:
".... .... ....
"7. A reference to relevant provisions will be of some
assistance, before examination of the issues involved. Section
19 of the Legal Services Authorities Act, 1987 ("the LSA Act",
for short) provides for organisation of the Lok Adalats. Section
1
Writ Petition No.101962 of 2025 decided on 15.12.2025
13
19(5)(i) of the LSA Act provides that 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 any court for which the Lok Adalat is
organised. Section 20 relates to cognizance of cases by the Lok
Adalats. Sub-section (1) refers to the Lok Adalats taking
cognizance of cases referred to by courts and sub-section (2)
refers to the Lok Adalats taking cognizance of matters at pre-
litigation stage. The relevant portions of other sub-sections of
Section 20, relating to cases referred by courts, are extracted
below:
"20. (3) Where any case is referred to a Lok Adalat
under sub-section (1) ... the Lok Adalat shall proceed to
dispose of the case ... 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.
(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.
***
(7) Where the record of the case is returned under
sub-section (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)."
(emphasis supplied)
8. It is evident from the said provisions that the
Lok Adalats have no adjudicatory or judicial functions.
Their functions relate purely to conciliation. A Lok Adalat
determines a reference on the basis of a compromise or
settlement between the parties at its instance, and puts
its seal of confirmation by making an award in terms of
the compromise or settlement. When the Lok Adalat is not
able to arrive at a settlement or compromise, no award is made
and the case record is returned to the court from which the
reference was received, for disposal in accordance with law. No
14
Lok Adalat has the power to "hear" parties to adjudicate
cases as a court does. It discusses the subject-matter with
the parties and persuades them to arrive at a just settlement.
In their conciliatory role, the Lok Adalats are guided by the
principles of justice, equity and fair play. When the LSA Act
refers to "determination" by the Lok Adalat and "award" by the
Lok Adalat, the said Act does not contemplate nor require an
adjudicatory judicial determination, but a non-adjudicatory
determination based on a compromise or settlement, arrived at
by the parties, with guidance and assistance from the Lok
Adalat. The "award" of the Lok Adalat does not mean any
independent verdict or opinion arrived at by any decision-
making process. The making of the award is merely an
administrative act of incorporating the terms of settlement or
compromise agreed by parties in the presence of the Lok
Adalat, in the form of an executable order under the signature
and seal of the Lok Adalat.
.... .... ....
12. It is true that where an award is made by the
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."
(Emphasis supplied)
15
9.2 The Apex Court following JALOUR SINGH supra, in
the case of BHARGAVI CONSTRUCTIONS V. KOTHAKAPU
MUTHYAM REDDY [(2018) 13 SCC 480], has held as follows:
"10. The defendants, on being served with the notice of
the suit, filed an application under Order 7 Rule 11(d) of the
Code of Civil Procedure, 1908 (hereinafter referred to as "the
Code") and prayed for rejection of the plaint. According to the
defendants, since the suit seeks to challenge the award of Lok
Adalat, it is not maintainable being barred by virtue of rigour
contained in Order 7 Rule 11(d) of the Code. It was
contended that the remedy of the plaintiff was in filing
writ petition under Article 226 or/and Article 227 of the
Constitution of India to challenge the award dated 22-8-
2007 as held by this Court in State of Punjab v. Jalour
Singh [State of Punjab v. Jalour Singh, (2008) 2 SCC 660
: (2008) 1 SCC (Civ) 669 : (2008) 1 SCC (Cri) 524 :
(2008) 1 SCC (L&S) 535] .
11. The trial court, by order dated 24-7-2013
allowed the application filed by the defendants and
rejected the plaint by invoking powers under clause (d)
of Rule 11. It was held that the filing of the civil suit to
challenge the award of Lok Adalat is impliedly barred
and the remedy of the plaintiffs is to challenge the award
by filing writ petition under Articles 226 or/and 227 of
the Constitution in the High Court as held by this Court
in State of Punjab [State of Punjab v. Jalour Singh,
(2008) 2 SCC 660 : (2008) 1 SCC (Civ) 669 : (2008) 1
SCC (Cri) 524 : (2008) 1 SCC (L&S) 535] .
.... .... ....
22. The question arose before this Court (three-
Judge Bench) in State of Punjab [State of
Punjab v. Jalour Singh, (2008) 2 SCC 660 : (2008) 1 SCC
(Civ) 669 : (2008) 1 SCC (Cri) 524 : (2008) 1 SCC (L&S)
535] as to what is the remedy available to the person
aggrieved of the award passed by the Lok Adalat under
Section 20 of the Act. In that case, the award was passed
by the Lok Adalat which had resulted in disposal of the
appeal pending before the High Court relating to a claim
case arising out of the Motor Vehicles Act. One party to
the appeal felt aggrieved of the award and, therefore,
questioned its legality and correctness by filing a writ
16
petition under Articles 226/227 of the Constitution of
India. The High Court dismissed the writ petition holding
it to be not maintainable. The aggrieved party, therefore,
filed an appeal by way of special leave before this Court.
This Court, after examining the scheme of the Act
allowed the appeal and set aside the order of the High
Court. This Court held that the High Court was not right
in dismissing the writ petition as not maintainable. It
was held that the only remedy available with the
aggrieved person was to challenge the award of the Lok
Adalat by filing a writ petition under Article 226 or/and
Article 227 of the Constitution of India in the High Court
and that too on very limited grounds. The case was
accordingly remanded to the High Court for deciding the
writ petition filed by the aggrieved person on its merits
in accordance with law.
23. This is what their Lordships held in para 12 : (Jalour
Singh case [State of Punjab v. Jalour Singh, (2008) 2 SCC 660
: (2008) 1 SCC (Civ) 669 : (2008) 1 SCC (Cri) 524 : (2008) 1
SCC (L&S) 535] , SCC p. 666, para 12)
"12. It is true that where an award is made by the 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."
(Emphasis supplied)
In the light of the judgments of the Apex Court in
JALOUR SINGH and BHARGAVI CONSTRUCTIONS (supra),
17
and the facts obtaining in the case at hand, the decree so drawn
on the basis of the award of the Lok Adalat can only be
challenged by filing a writ petition under Article 226 or 227 of
the Constitution of India on the grounds set out by the Apex
Court in the afore-quoted two judgments. The issue is
answered accordingly.
ISSUE NO.2:
Whether a writ petition filed by a third party
challenging the award of the Lok Adalat is maintainable
and entertainable ?
10. To consider the said issue, it is necessary to consider
the facts that has lead the petitioners before this Court, though
at the periphery. It is not in dispute that the suit is for partition
and separate possession, in which the distinction of a plaintiff
and defendant is illusory, as all of them are entitled to a share
in the property. The contention of the petitioners is that, the
genealogical tree produced before the concerned Court is said to
be in error, as it has left out the petitioners from the family. The
genealogical tree upon which the present petition is preferred is
as follows:
18
On the strength of the said genealogical tree, the
petitioners have built their submissions. The submission is,
tracing the history to 17.02.1968, when the partition deed was
entered into by the family. The partition recognized certain
rights of the petitioners and certain shares in the suit properties.
The submission now is that, the share that is allotted to the
petitioners in the partition deed in the year 1968 is further
partitioned without providing the respective shares to these
petitioners. Further, the petitioners' father, way back in the year
1970 had acquired by purchasing the properties from
Bharamaiah, who is the only son of Lakshmaiah, who inherited
his share of the properties in the partition deed dated
17.02.1968. Therefore, the petitioners ought to have been made
as parties - defendants before the concerned Court, especially
when the petitioners have a higher share in the suit properties.
The respondents instead, without impleading the petitioners in
the suit for partition, have fraudulently entered into a
compromise decree on the entirety of the suit properties,
without having any right to the same. Therefore, the issue now
would be, whether a person who is not arrayed as a party to the
suit can challenge the decree or award of compromise passed by
the Lok Adalat, arising from the said suit.
11. Jurisprudence is replete as to whether a person who
is not a party / third party can file a writ petition challenging an
award of the Lok Adalat. I deem it appropriate to quote a few
judgments on this issue.
11.1. A Division Bench of the High Court of Andhra
Pradesh, in the case of BATCHU SUBBA LAKSHMI V.
SANNIDHI SRINIVASULU[2009 SCC OnLine AP 795], has
held as follows:
".... .... ....
Who can file writ petition challenging the Lok
Adalat Award
8. The parties to the compromise or settlement,
which is the basis for award of Lok Adalat, no doubt
entitled to challenge the award on any of the grounds
referred to herein above grounds. Ordinarily, a third
party cannot challenge the award in a writ petition even
19
if such award causes prejudice. The remedy of such party
would be to institute a separate suit or proceeding for
necessary redressal and seek appropriate decree of
declaration by filing a suit within the period of limitation
prescribed under law. Under Section 34 of the Specific
Relief Act, 1963, any person entitled to legal character or
any right as to any property, may file a suit for
declaration. Under this provision, any person can even
institute a suit for declaration that the decree passed by
Civil Court in an earlier suit is not binding on him. When
a civil Court can even declare that an earlier decree of
the Court is not binding on the party before it, we do not
see any objection for a third party to institute a suit in a
civil Court seeking a declaration that the award of Lok
Adalat is not binding on him/her subject to the law of
limitation. We however hasten to add that there may be
extraordinary cases where a third party is meted with
injustice at the behest of two or more conniving and
colluding parties, who may have obtained an award of
Lok Adalat by fraud or misrepresentation only to defeat
the rights of such third party. In such cases within a
reasonable period such third party may maintain a writ
petition. But in such cases, there should be prima facie
evidence of fraud or misrepresentation or collusion in
obtaining the award of Lok Adalat. Even if such
allegations are made and the question involves
complicated questions of fact requiring voluminous
evidence, third party should be left to seek remedy in a
civil Court rather than preferring extraordinary remedy
under Article 226 of Constitution.
What are grounds of challenge
9. Insofar as legal position that the Lok Adalat cannot
pass award unless and until there is a compromise and
settlement under Section 20(3) and (5) of the Act between the
parties, is well settled. In State of Punjab v. Ganpat Raj, (2006)
8 SCC 364, respondent moved Punjab and Haryana High Court
by filing writ petition seeking writ of Mandamus to the State to
pay interest at 18% per annum on the delayed payment of
pension arrears and other retiral benefits. The case was sent to
Lok Adalat, which passed award without any settlement or
compromise between the pensioner and the State. The writ
petition filed by the State was dismissed as misconceived. In
the Supreme Court, it was submitted that the matter could not
have been disposed of by Lok Adalat in view of the specific
provisions contained in Section 20 of the Act. While allowing
20
the appeal, the matter was remitted to High Court for de novo
consideration. The purport of Section 20(3) and (5) of the Act is
explained by Supreme Court in the following words.
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 NFU Development Trust Ltd., Re, (1973) 1 All
ER 135 : (1972) 1 WLR 1548 (Ch D)). A compromise is always
bilateral and means mutual adjustment. "Settlement" is
termination of legal proceedings by mutual consent.
10. In State of Punjab v. Jalour Singh, (2008) 3 SCC
660, the wife and son of Amarjit Kaur, who died in a motor
accident, filed petition before the Motor Accidents Claims
Tribunal (MACT) claiming Rs. 5,00,000/- as compensation. An
award was passed by MACT on 1.12.1998 for Rs. 1,44,000/-.
The claimants filed appeal before High Court, which was
referred to High Court Lok Adalat for settlement. On 3.8.2001,
Lok Adalat passed an order awarding Rs. 1,70,200/- observing
that if the parties have any objection to the order proposed,
they may move the High Court for disposal of appeal on merits.
Aggrieved by the same, Punjab Roadways filed application
before the High Court to set aside the Lok Adalat award. A
learned Single Judge rejected the same placing reliance on
earlier judgment of another learned Single Judge wherein it had
been held that an order passed by Lok Adalat can be challenged
by filing a petition under Article 227 of Constitution of India.
Therefore, another petition was moved under Article 227 of
Constitution challenging the order of Lok Adalat. The same was
rejected by learned Single Judge on the ground that such a
petition is not maintainable under Article 227 of Constitution.
The Supreme Court while reversing the award and remanding
the matter to High Court laid down as under.
21
It is true that where an award is made by the 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.
11. Dealing with the provisions of the Act especially
Sections 19 and 20, their Lordships observed as under:
It is evident from the said provisions that the Lok
Adalats have no adjudicatory or judicial functions. Their
functions relate purely to conciliation. A Lok Adalat
determines a reference on the basis of a compromise or
settlement between the parties at its instance, and puts
its seal of confirmation by making an award in terms of
the compromise or settlement. When the Lok Adalat is
not able to arrive at a settlement or compromise, no
award is made and the case record is returned to the
Court from which the reference was received, for
disposal in accordance with law. No Lok Adalat has the
power to "hear" parties to adjudicate cases as a Court
does. It discusses the subject-matter with the parties
and persuades them to arrive at a just settlement. In
their conciliatory role, the Lok Adalats are guided by the
principles of justice, equity and fair play. When the LSA
Act refers to "determination" by the Lok Adalat and
"award" by the Lok Adalat, the said Act does not
contemplate nor require an adjudicatory judicial
determination, but a non-adjudicatory determination
based on a compromise or settlement, arrived at by the
parties, with guidance and assistance from the Lok
Adalat. The "award" of the Lok Adalat does not mean
any independent verdict or opinion arrived at by any
decision-making process. The making of the award is
merely an administrative act of incorporating the terms
of settlement or compromise agreed by parties in the
22
presence of the Lok Adalat, in the form of an executable
order under the signature and seal of the Lok Adalat.
(emphasis supplied)
12. From the above judgments, it may be taken as
well settled that the award of Lok Adalat is
administrative act of incorporating the terms of
compromise or settlement agreed by the parties in the
presence of Lok Adalat and Lok Adalat does not sit in
adjudication of the dispute. When an award is passed in
terms of the settlement arrived between the parties,
which is duly signed by the parties annexed to the award
of Lok Adalat, it becomes binding on the parties to the
settlement and becomes executable as if it is a decree of
Civil Court. No appeal would lie against the award of Lok
Adalat and if any party wants to challenge such an
award, it can be by way of petition under Article 226 or
227 of Constitution. If there is no compromise or settlement
between the parties before the Lok Adalat, it cannot pass any
award nor such award can bind the parties. The challenge to
the award of Lok Adalat under Article 226 of Constitution can
be entertained on very limited grounds raised only by parties to
the settlement/compromise before Lok Adalat and not by
anybody else."
(Emphasis supplied)
11.2 The High Court of Bombay, in the case of
KUSUMBAI v. BHAUSAHEB [2019 SCC OnLine Bom 585], has
held as follows:
".... .... ....
2. The issue raised in this petition is as to
whether, the third party can challenge the award of the
Lok Adalath before the High Court on the ground that the
litigating sides had excluded the third party from the
litigation?
.... .... ....
6. I find from Bhargavi Constructions (supra) that
the Honourable Supreme Court was not dealing with the
issue as to whether, a third party could also have the
same remedy of challenging the Lok Adalat award in the
23
High Court contending that such third party is aggrieved
by the Lok Adalat Award. The Honourable Supreme
Court, therefore, concluded that an "aggrieved party"
can challenge the Lok Adalat award before the High
Court.
7. The Division Bench of the Andhra Pradesh High
Court, in the matter of Batchu Subba Lakshmi v. Sannidhi
Srinivasulu, 2010 (1) ALT 483 : 2010 (1) ALD 277, dealt
with the issue of a third party challenging the award of
the Lok Adalat. The observations made by the Andhra
Pradesh High Court as to who can challenge the Lok
Adalat award are found in paragraph 8 of the judgment,
which read as under:--
"Who can file writ petition challenging the Lok
Adalat Award.
8. The parties to the compromise or settlement,
which is the basis for award of Lok Adalat, no doubt
entitled to challenge the award on any of the grounds
referred to herein above grounds. Ordinarily, a third
party cannot challenge the award in a writ petition even
if such award causes prejudice. The remedy of such
party would be to institute a separate suit or proceeding
for necessary redressal and seek appropriate decree of
declaration by filing a suit within the period of limitation
prescribed under law. Under Section 34 of the Specific
Relief Act, 1963, any person entitled to legal character
or any right as to any property, may file a suit for
declaration. Under this provision, any person can even
institute a suit for declaration that the decree passed by
Civil Court in an earlier suit is not binding on him. When
a civil Court can even declare that an earlier decree of
the Court is not binding on the party before it, we do not
see any objection for a third party to institute a suit in a
civil Court seeking a declaration that the award of Lok
Adalat is not binding on him/her subject to the law of
limitation. We however hasten to add that there may be
extraordinary cases where a third party is meted with
injustice at the behest of two or more conniving and
colluding parties, who may have obtained an award of
Lok Adalat by fraud or misrepresentation only to defeat
the rights of such third party. In such cases within a
reasonable period such third party may maintain a writ
petition. But in such cases, there should be prima facie
evidence of fraud or misrepresentation or collusion in
obtaining the award of Lok Adalat. Even if such
allegations are made and the question involves
complicated questions of fact requiring voluminous
24
evidence, third party should be left to seek remedy in a
civil Court rather than preferring extraordinary remedy
under Article 226 of Constitution."
8. While dealing with such challenge, the Andhra
Pradesh High Court also concluded in Batchu Subba
Lakshmi (supra) that such a challenge can be posed on
certain grounds. The grounds for challenge are recorded
in paragraph 9 of the said judgment, which read as
under:--
"What are grounds of challenge.
9. Insofar as legal position that the Lok Adalat
cannot pass award unless and until there is a
compromise and settlement under Section 20(3) and (5)
of the Act between the parties, is well settled. In State
of Punjab v. Ganpat Raj : (2006) 8 SCC 364 : 2006 (7)
SCJ 364 : 2007 (1) ALT 283 (DNSC), respondent moved
Punjab and Haryana High Court by filing writ petition
seeking writ of Mandamus to the State to pay interest at
18% per annum on the delayed payment of pension
arrears and other retiral benefits. The case was sent to
Lok Adalat, which passed award without any settlement
or compromise between the pensioner and the State.
The writ petition filed by the State was dismissed as
misconceived. In the Supreme Court, it was submitted
that the matter could not have been disposed of by Lok
Adalat in view of the specific provisions contained in
Section 20 of the Act. While allowing the appeal, the
matter was remitted to High Court for de novo
consideration. The purport of Section 20(3) and (5) of
the Act is explained by Supreme Court in the following
words.
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 Tertnes 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
25
accommodation on each side. It is not apt to describe
total surrender. (See NFU Development Trust Ltd., Re
(2) (1973) 1 All ER 135 : (1972) 1 WLR 1548 (Ch D)). A
compromise is always bilateral and means mutual
adjustment. 'Settlement' is termination of legal
proceedings by mutual consent."
9. In the instant case, RCS No. 730/2017 was filed on
30.06.2017 and the Defendants appeared suo moto in the said
matter. It was immediately placed in the list of matters, which
could be taken up in the Lok Adalat after 08 days, scheduled on
08.07.2017. On the said date, the suit was compromised with
reference to the properties mentioned above. Prima facie, a
fraud is played by the Plaintiff and the Defendants on
these Petitioners. All of them were parties to the earlier
RCS No. 447/2000. The entire family as appearing in the
family tree was before the Civil Court. The said first suit
was compromised on 02.09.2002 and the shares of the
parties were demarcated. The property at Survey No.
104 in Vadjai sector was mentioned in the suit properties
in the 2000 suit as well as in the 2017 suit as noted
above. The Plaintiff in the 2017 suit, therefore, had no
reason to exclude these Petitioners.
10. The learned counsel for the Petitioners submits that
this mischief is played because the husband of Petitioner No. 1
(deceased Ramesh), who is the brother of the Plaintiff
Bhausaheb in the 2017 suit, had passed away in 2000 and
Bhusaheb along with other relatives desired to deprive the
widow of Ramesh with that share of the property to which
Ramesh would have a right. This prima facie appears to be
the fraud played upon these Petitioners as well as the
court when the 2017 suit was settled in the Lok Adalat
within 08 days of it's institution and when the
Defendants had appeared suo moto without any notice.
All had declared that there are no other family members.
11. These set of facts are not found in the judgments
delivered by the Honourable Supreme Court in Bhargavi
Construction (supra) and in State of Punjab v. Jalour Singh,
(2008) 2 SCC 660 and in the matter decided by the High Court
of Punjab and Haryana in the case of Shalu v. Vineet, 2014
(174) (2) PLR 602 : 2013 TLP & H 4103.
12. It is true that a party aggrieved by the Lok
Adalat award can approach the High Court if it discovers
any fraud post the Lok Adalat award. It is equally true
26
that the third party, which is not a litigant in a suit which
has suffered a compromise decree, can also file a
separate suit for seeking a declaration that such decree
which affects the rights of the third party, would not be
binding upon the said party as the said decree was
delivered in the matter in which, such third party was
never arrayed. It, therefore, appears that an option to
either prefer a separate suit or file a writ petition in the
High Court would be available to such third party. At
times, the issue of limitation would crop up and the suit
to be preferred by such third party might be barred, of
course, subject to the date of the knowledge of such
decree.
13. Both the learned Advocates submit that
despite their best efforts, they could not locate any
judgment, directly on this law point, delivered by this
Court or by the Honourable Supreme Court. It is
conceded that the judgment delivered by the High Court
of Andhra Pradesh in the matter of Batchu Subba
Lakshmi (supra) is the only judicial pronouncement
available dealing with a third party being aggrieved by
the Lok Adalat award on the ground of fraud and his/her
exclusion from such proceedings, which culminated into
the Lok Adalat award.
14. The learned Advocate for the Petitioners, who
are the third parties, relies upon the judgments delivered
by the Honourable Supreme Court in Bhargavi
Constructions (supra) and State of Punjab (supra) to
contend that when any aggrieved party can approach the
High Court for challenging the Lok Adalat award, such
"aggrieved party" would also include a "third party" as
like the Petitioners herein.
15. While hearing the learned Advocates for the
respective sides, notwithstanding that prima facie the
contention of fraud is sustainable, I have perused the record
and have found that the property situated in Survey No. 104
which is known as Vadjai area, was the suit property in the
2000 suit for partition and separate possession and the same
survey number involving a larger area of land in Vadjai area
was the suit property in the 2017 suit, in which these
Petitioners were excluded. As such, if at all there is any fraud
played by the Plaintiff (Bhausaheb) or the Defendants
(Kondabai and Lahanabai) in the 2017 suit, it relates to the
27
property Survey No. 104 in Vadjai area and which, therefore,
fortifies the contention of the Petitioners that the property
admeasuring 3 Acres 35 Gunthas, which was subject matter of
the 2000 suit is the suit property in the 2017 suit, which is
shown to be admeasuring 7 Acres 19 Gunthas.
16. In view of the above, I conclude, in the light of
the law laid down by the Honourable Supreme Court in
Bhargavi Constructions (supra) and State of Punjab
(supra), that the third party would be covered by the
meaning "aggrieved person" and as is held by the High
Court of Andhra Pradesh in the matter of Batchu Subba
Lakshmi (supra), such a third party can challenge the
Lok Adalat award provided the ground of fraud and
misrepresentation is, prima facie, made out."
(Emphasis supplied)
The view taken by the High Court of Bombay in the afore-
quoted case was subsequently followed by the same High Court
of again in the case of LATA v. SHANKAR reported in 2021
SCC ONLINE BOM 6358.
11.3 The High Court of Madras, in the case of M.
ANTONYSAMY v. S. MUMTAJ [2018 SCC OnLine Mad 12537],
has held as follows:
".... .... ....
21. When the entire facts leading to the registration of
the award obtained before the Lok Adalat is established to have
been obtained by playing a fraud and the parties colluding
among themselves, the award itself would be a nullity and non-
est in the eyes of law.
22. The learned Senior counsel for the petitioner relied
upon the decision of the Hon'ble Apex Court in S.P.
Chengalvaraya Naidu v. Jagannath reported in (1994) 1 SCC 1
: AIR 1994 SC 853 on these proposition and the relevant
observation reads as follows:--
"1."Fraud avoids all judicial acts, ecclesiastical or
temporal" observed Chief Justice Edward Coke of England
about three centuries ago. It is the settled proposition of law
that a judgment or decree obtained by playing fraud on the
28
court is a nullity and non est in the eyes of law. Such a
judgment/decree by the first court or by the highest court has
to be treated as a nullity by every court, whether superior or
inferior. It can be challenged in any court even in collateral
proceedings.
8. The facts of the present case leave no manner of
doubt that Jagannath obtained the preliminary decree by
playing fraud on the court. A fraud is an act of deliberate
deception with the design of securing something by taking
unfair advantage of another. It is a deception in order to gain
by another's loss. It is a cheating intended to get an
advantage...."
23. Insofar as what constitutes a fraud or collusion has
been discussed by this Court in a decision reported in 1998 (1)
CTC 66 [Ranipet Municipality v. M. Shamsheerkhan] and this
Court made the following observations:
"9. It is this conduct of the respondent that is attacked
by the petitioner as abuse of process of Court. What is 'abuse
of the process of the Court'? Of course, for the term 'abuse of
the process of the Court' the Code of Civil Procedure has not
given any definition. A party to a litigation is said to be guilty
of abuse of process of the Court, in any of the following
cases:--
(1) Gaining an unfair advantage by the use of a rule of
procedure.
(2) Contempt of the authority of the Court by a party or
stranger.
(3) Fraud or collusion in Court proceedings as between
parties.
(4) Retention of a benefit wrongly received.
(5) Resorting to and encouraging multiplicity of
proceedings.
(6) Circumventing of the law by indirect means.
(7) Presence of witness during examination of previous
witness.
(8) Institution vexatious, obstructive or dilatory actions.
(9) Introduction of Scandalous or objectionable matter in
proceedings.
(10) Executing a decree manifestly at variance with its
purpose and intent.
(11) Institution of a suit by a puppet plaintiff.
(12) Institution of a suit in the name of the firm by one
partner against the majority opinion of other partners
etc. (See The Code of Civil Procedure - A.I.R.
Commentary to Section 151, C.P.C.) The above are
only some of the instances, where a party may be said
29
to be guilty of committing abuse of the process of
Court."
24. The issue as to whether the revision petitioner,
who was not a party to the suit, can seek for setting
aside an award obtained by fraud or misrepresentation is
also no more res-integra in view of the following
decisions:
1) 1998 (1) CTC 470 [J. Sivasubramanian v. N.
Govindarajan],
"1. A person who is not a party to the suit, but
who is aggrieved by the decree, has come to this Court,
under Art. 227 of the Constitution of India, alleging
fraud and collusion in obtaining the decree.
13. I feel that all these decisions will show that a
duty is cast on the litigant to plead, pray and get relief
by placing all materials before Court. By suppressing
facts and without impleading the necessary parties, a
collusive decree is obtained. In the case on hand, the
collusion is apparent. A person who has no right in the
property concedes the right of the plaintiff to get a
decree, and that too within 49 hours of filing of the suit.
The result of this is getting unfair advantage over the
rights of the petitioners and to deprive them of their
properties. Both the respondents were aware that the
petitioners are in possession on the basis of documents.
They themselves (i, e. parties to the suit) admit the
possession of the petitioners. But, without disclosing
any of these documents, the power of attorney (agent)
filed the suit against the principal and gets a decree, by
consent. I have already stated as to what is the legal
effect, i.e., the second respondent (defendant) himself
is the plaintiff and defendant. It will be unjust to accept
the contention of the respondents. Such a collusive
decree also cannot be allowed to stand. After coming to
know of these facts, if any Court shuts its eyes to
realities, it will cease to be a Court of Justice. By
invoking the judicial supervisory jurisdiction, I declare
that the decree in O.S. No. 7631 of 1997, on the file of
XV Assistant Judge, City Civil Court at Madras is a nullity
and on the basis of the said decree, possession of the
petitioners shall not be disturbed. I further find that
since the suit is filed fraudulently, the same is liable to
be quashed, and I do so. O.S. No. 7631 of 1997 is struck
off from the file of the lower Court. The Civil Revision
Petition is allowed with costs. Advocate's fee Rs.
30
2,500/- (Rupees Two thousand five hundred). CMP. No.
17556 of 1997 for stay is closed."
2) 2009 SCC OnLine AP 795 [Batchu Subba
Lakshmi v. Sannidhi Srinivasualu]
"7. Under Section 21(1) of the Act an award of
Lok Adalat shall be deemed to be decree of a Civil Court
and under Section 21(2) of the Act every award made by
Lok Adalat shall be final and binding on all the parties.
No appeal shall lie to any Court against the award, and
therefore, ordinarily a writ petition challenging award is
also barred. But there may be situations where there
being no compromise or settlement as envisaged under
Section 20(3) and (5) of the Act, Lok Adalat may have
passed an award. In other words, what would be the
position if Lok Adalat passes an order even without
parties arriving at a compromise or settlement among
themselves. In such a situation, it cannot be said that
there is an award of Lok Adalat, which can be enforced
by a Civil Court as a decree. There may be yet another
situation where in the absence of the parties to the lis
or in the absence of one of the parties to the lis, award
of Lok Adalat may have been obtained by
impersonation, misrepresentation or fraud. Even in such
cases, there being no valid award, Section 21(1) of the
Act is not attracted. Having regard to the language of
Article 226(1) of Constitution of India, which empowers
the High Court of a State to issue writs, orders or
directions against any public authority or against
authorities discharging public functions, the High Court
can entertain a writ petition against an award of Lok
Adalat. The phrase 'for any other purpose' appearing in
Article 226(1) of Constitution, in our opinion, is broad
enough to take within its purview the situations where a
statute contains 'no Certiorari clause'. It is well settled
that 'no Certiorari clause' in a statute does not bar the
Constitutional Court from entertaining a petition for
redressal of grievance and issue an appropriate order ex
debito justitiae. Therefore, in either of the situations or
any such other situations, a writ petition would lie.
Who can file writ petition challenging the Lok
Adalat Award
8. The parties to the compromise or settlement,
which is the basis for award of Lok Adalat, no doubt
entitled to challenge the award on any of the grounds
referred to herein above grounds. Ordinarily, a third
party cannot challenge the award in a writ petition even
if such award causes prejudice. The remedy of such
31
party would be to institute a separate suit or proceeding
for necessary redressal and seek appropriate decree of
declaration by filing a suit within the period of limitation
prescribed under law. Under Section 34 of the Specific
Relief Act, 1963, any person entitled to legal character
or any right as to any property, may file a suit for
declaration. Under this provision, any person can even
institute a suit for declaration that the decree passed by
Civil Court in an earlier suit is not binding on him. When
a civil Court can even declare that an earlier decree of
the Court is not binding on the party before it, we do not
see any objection for a third party to institute a suit in a
civil Court seeking a declaration that the award of Lok
Adalat is not binding on him/her subject to the law of
limitation. We however hasten to add that there may be
extraordinary cases where a third party is meted with
injustice at the behest of two or more conniving and
colluding parties, who may have obtained an award of
Lok Adalat by fraud or misrepresentation only to defeat
the rights of such third party. In such cases within a
reasonable period such third party may maintain a writ
petition. But in such cases, there should be prima facie
evidence of fraud or misrepresentation or collusion in
obtaining the award of Lok Adalat. Even if such
allegations are made and the question involves
complicated questions of fact requiring voluminous
evidence, third party should be left to seek remedy in a
civil Court rather than preferring extraordinary remedy
under Article 226 of Constitution.
13. Reverting to the facts of this case, there is no
dispute that respondents 1, 2 and 4 are partners in 3rd
respondent firm. There is also no dispute that
respondents 1 and 2 filed O.S. No. 1 of 2004 against
third respondent and its Managing Partner, the fourth
respondent, for dissolution of firm and rendition of
accounts. On 07.2.2004, plaintiffs and defendants
therein signed memorandum of compromise and
settlement whereunder they agreed to withdraw from
the firm and fourth respondent was permitted to
continue the business till 31.3.2008, failing which it
shall be open to first respondent to execute the decree
and recover possession of vacant site used as stockyard
for the business of third respondent. The award passed
by Lok Adalat on 07.2.2004 was signed by respondents
1 and 2. Fourth respondent signed on his behalf and
also on behalf of third respondent firm. Either on the
date of award of Lok Adalat or during pendency of suit
before District Court, Nandyal, allegation of
reconstitution of third respondent firm with petitioners
and fourth respondent as new partners was not
revealed. There is also no dispute nor it can be denied
32
that partnership deed dated 01.4.2003 was executed by
petitioners and fourth respondent on the stamp papers
which had been produced (sic. purchased) by third
respondent firm on 27.3.2001 long prior to disputes
arose among respondents 1 to 4. This creates any
amount of doubt on the case put up by petitioners. This
doubt becomes strong when we realised that the
petitioners 1 to 3 are stepmother, wife and grandfather
respectively of fourth respondent and they are all living
under the same roof. The allegation made by
respondents 1 and 2 in their counter affidavit remains
uncontroverted. These lend support to the submissions
made on behalf of respondents 1 and 2 and we do not
see strong reasons to discredit those submissions."
3) 2013 (6) CTC 166 [P. Subramani v. A. Periyasamy]
"21. In the present case, the entire proceedings
relating to delivery of possession are vitiated by fraud.
When an order is obtained by resorting to fraud, all the
subsequent proceedings thereto will also render it
vitiated. In this context, I am fortified by the decision of
this Court reported in (J. Sivasubramanian v. N.
Govindarajan) 1998 1 CTC 470 relied on by the learned
counsel for the revision petitioner. In that case, this
Court took note of the fact that the suit was filed by
suppressing material facts and by not impleading the
proper and necessary parties. This Court held that fraud
and collusion are palpable and that the decree was
obtained by power of attorney agent as against his own
principal thereby depriving his right over the property,
which was purchased by him from the original owner. As
the power agent filed the suit by suppressing the
material facts, this Court held that "....in such cases, it is
the duty of the Court to see that the suit itself is wiped
off from the file." It was also held by this Court that in
such circumstances the revision petition under Article
227 of the Constitution of India is very much
maintainable. In that case, this Court, relying on the
decision of the Honourable Supreme Court reported in
S.P. Chengalvaraya Naidu (dead) by Lrs. v. Jagannath
(dead) by Lrs., (1994) 1 SCC 1 culled out the legal
propositions as follows:
"12. In S.P. Chengalvaraya Naidu (dead) by LRs. v.
Jagannath (dead) by LRs., their Lordships have decided
as to what is meant by 'fraud'. In paragraph 6, Their
Lordships have held thus:--
"... A fraud is an act of deliberate deception
with the design of securing something by taking unfair
advantage 14 of another. It is a deception in order to
33
gain by another's loss. It is a cheating intended to get
an advantage..." Their Lordships have further said
thus:-- "A litigant who approaches the Court, is bound
to produce all the documents executed by him which
are relevant to the litigation. If he withholds a vital
document in order to gain advantage on the other
side, then he would be guilty of playing fraud on the
Court as well as on the opposite party." In the earlier
portion of that Judgment, their Lordships have held
thus:-- "... We have no hesitation to say that a person
whose case is based on falsehood, has no right to
approach the Court. He can be summarily thrown out
at any stage of the litigation." The effect of such a
decree obtained in such cases is also stated in that
judgment thus:-- "... The principle of "finality of
litigation" cannot be pressed to the extent of such an
absurdity that it becomes an engine of fraud in the
hands of dishonest litigants. The Courts of law are
meant for imparting justice between the parties. One
who comes to the Court, must come with clean
hands.... A judgment or decree obtained by playing
fraud on the court is a nullity and non est in the eyes
of law. Such a judgment/decree by the first Court or
by the highest Court has to be treated as a nullity by
every Court, whether superior or inferior. It can be
challenged in any court even in collateral
proceedings." In Mahboob Sahab v. Syed Ismail, of
the judgment, Their Lordships declared thus:-- "... The
reason is that fraud is and extrinsic collateral act,
which vitiates the most solemn proceedings of courts
of justice. If a party obtains a decree from the Court
by practicing fraud or collusion, he cannot be allowed
to say that the matter is res judicata and cannot be
reopened. There can also be no question of res
judicata in a case where signs of fraud or collusion are
transparently pregnant or apparent from the facts on
record." In paragraph 10, Their Lordships further
declared thus:--
"... Section 44 of the Evidence Act
envisages that any party to a suit or
proceeding may show that any judgment,
order or decree, which is relevant under
Sections 40, 41 or 42 has been obtained by
fraud or collusion. Under Section 40, the
existence of the judgment, order or decree
which by law prevents any Court from taking
cognizance of a suit or holding a trial, is a
relevant fact when the question is whether
such court ought to take cognizance of such
suit or to hold such trial." In Indian Bank v.
Satyam Fibres (India) Pvt. Ltd., it was
declared thus:--
"The authorities, be they constitutional,
statutory or administrative, (and particularly those who
have to decide a lis) possess the power to recall their
judgments or orders if they are obtained by fraud as
fraud and justice never dwell together (Fraud et jus
nunquam cohabitant). Fraud and deceit defend or
excuse no man (Fraud et dolus nemini patrocinari
debent). The judiciary in India also possesses inherent
power, specially under Section 151, CPC., to recall its
judgment or order if it is obtained by fraud on court. In
34
the case of fraud on a party to the suit or proceedings,
the Court may direct the affected parly to file a
separate suit for setting aside the decree obtained by
fraud. Inherent powers are powers which are resident
in all Courts, especially of superior jurisdiction. These
powers spring not from legislation but from the nature
and the constitution of the tribunals or courts
themselves so as to enable them to maintain their
dignity, secure obedience to its process and rule,
protect its officers from indignity and wrong and to
punish unseemly behaviour. This power is necessary
for the orderly administration of the Court's business.
Since fraud affects the solemnity, regularity and
orderliness of the proceedings of the court and also
amounts to an abuse of the process of court, the courts
have been held to have inherent power to set aside an
order obtained by fraud practised upon that Court."
25. On a overall appreciation of the observations
in the aforesaid decisions, I am of the view that the
award before the Lok Adalat was obtained by fraud and
collusion exercised by the parties to the suit and as such,
the award itself has no validity and deemed to be non-
est. It is a settled law that fraud vitiates all solemn acts
and an award obtained by playing fraud is nullity. Hence,
this Court would be justified in setting aside the award
by exercising its power under Article 227 of the
Constitution of India."
(Emphasis supplied)
11.4 A Division Bench of the High Court of Telangana, in
the case of DASARI LOKESH CHANDRA v. LOK ADALAT
[W.P.18369/2021 decided on 20.12.2021] has held as follows:
".... .... .....
6. Point No.1:-
Arguing at length in respect of the merits of the case,
the learned counsel for the petitioner contended that the
petitioner is a bona fide purchaser of Plot Nos.379 and 452
admeasuring 400 square yards in Survey No.175 of Patancheru
Mandal, Sangareddy District and he purchased the said
property on 30.01.2021 through a registered sale deed for
valuable consideration, but subsequently he came to know that
an Award was passed by the Lok Adalat in respect of the said
property and other property in a suit between the sons and the
daughters of late Lakkaraju Laxmana Rao and the said Award is
35
based on the terms of compromise entered into between the
parties i.e., the sons and the daughters of late Lakkaraju
Laxmana Rao and indeed, the said deed of compromise is a
collusive one and therefore, the Award passed basing on the
said deed of compromise is unsustainable. He further submitted
that as there is no other remedy for the petitioner who is a
third party to the proceedings to question the Award of the Lok
Adalat, he filed the present Writ Petition challenging the same.
7. Undoubtedly, challenge to an Award of the Lok
Adalat can be done only by filing a Writ Petition under
Article 226 or 227 of the Constitution of India, as
observed by the Hon'ble Supreme Court in Bhargavi
Constructions and another Vs. Kothakapu Muthyam
Reddy and others - (2018) 13 SCC 480.
8. Under Section 21(1) of the Legal Services
Authority Act, 1987, an Award of the Lok Adalat shall be
deemed to be a decree of the civil Court. Also, as per
Section 21(2) of the said Act, the Award made is final
and binding on the parties. Law does not provide any
appeal to any Court against the said Award. Thus, only,
Writ Petitions can be filed challenging the Award passed
by the Lok Adalat. However, the grounds of challenge are
very limited.
9. Observing that there may be extra-ordinary
cases where a third party is meted with injustice at the
behest of two or more conniving and colluding parties,
who may have obtained the Award of the Lok Adalat by
fraud or misrepresentation, the Courts in a series of
decisions held that even a third party may maintain a
Writ Petition challenging the Award of the Lok Adalat.
One of such cases where the said observation is made is
Batchu Subba Lakshmi and others Vs. Sannidhi
Srinivasulu and others - 2010(1) ALD 277 DB, wherein a
Division Bench of this Court at para 8 held as follows:-
"The parties to the compromise or settlement,
which is the basis for award of Lok Adalat, no doubt
entitled to challenge the award on any of the grounds
referred to herein above grounds. Ordinarily, a third
party cannot challenge the award in a writ petition even
if such award causes prejudice. The remedy of such
party would be to institute a separate suit or proceeding
for necessary redressal and seek appropriate decree of
declaration by filing a suit within the period of limitation
36
prescribed under law. Under Section 34 of the Specific
Relief Act, 1963, any person entitled to legal character
or any right as to any property, may file a suit for
declaration. Under this provision, any person can even
institute a suit for declaration that the decree passed by
Civil Court in an earlier suit is not binding on him. When
a civil Court can even declare that an earlier decree of
the Court is not binding on the party before it, we do not
see any objection for a third party to institute a suit in a
civil Court seeking a declaration that the award of Lok
Adalat is not binding on him/her subject to the law of
limitation. We however hasten to add that there may be
extraordinary cases where a third party is meted with
injustice at the behest of two or more conniving and
colluding parties, who may have obtained an award of
Lok Adalat by fraud or misrepresentation only to defeat
the rights of such third party. In such cases within a
reasonable period such third party may maintain a writ
petition. But in such cases, there should be prima facie
evidence of fraud or misrepresentation or collusion in
obtaining the award of Lok Adalat. Even if such
allegations are made and the question involves
complicated questions of fact requiring voluminous
evidence, third party should be left to seek remedy in a
civil Court rather than preferring extraordinary remedy
under Article 226 of Constitution."
(Emphasis supplied)
The views taken in the cases of BATCHU
SUBBALAKSHMI supra and DASARI VENKATESH supra were
subsequently affirmed by another Division Bench of the High
Court of Telangana in the case of SMT. B. LAVANYA v. THE
STATE OF TELANGANA in Writ Petition No.2906 of 2021,
decided on 16.12.2023.
11.5. Therefore, in the light of the law as laid down by
the Apex Court, and different High Courts, what would
unmistakably emerge is that a writ petition challenging the
award of the Lok Adalat filed by third parties is maintainable in
extraordinary circumstances, provided that there is prima facie
evidence of fraud, misrepresentation or collusion in obtaining
the award. Further, the definition of an 'aggrieved party' to the
award would also include a 'third party' to the suit, thereby
allowing such third parties to challenge the award of the Lok
Adalat. I therefore answer the issue holding that the present
37
petition by a person who is not a party to the suit is
entertainable owing to the peculiar facts of the case."
On a perusal of the afore-mentioned judgment, I do not find any
reason to differ from what is rendered by this Court vis-à-vis the
facts obtaining in the case at hand. In the present case, a common
order sheet was maintained between the regular Court and the Lok
Adalat albeit the claim petition filed was for compensation of
₹20,00,000/-. It is deliberately settled at ₹12,00,000/- terming it to
be full and final settlement. The memo of compromise filed before
the Lok Adalat does not refer to the manner in which the
compensation is split. It merely records that in full and final
settlement ₹12,00,000/- is awarded. The squabble between the 2nd
petitioner and the 1st respondent is projected from the shoulders of
the minor child. Therefore, a second claim petition had been
preferred and in the second claim petition settlement is arrived at
closing the first claim petition, without even hearing the claimant or
the guardian of the claimant in the first claim petition. This is
enough circumstance to set aside the award of the Lok Adalat, as it
is trite law that compensation must be adequate, just and proper.
38
Therefore, the issue is answered that award of the Lok Adalat
requires to be set aside.
9. What remains to be considered is, whether the matter is to
be remitted back to the Court to be decided with respect to the
challenge raised to the award in its entirety in the companion
petition i.e., M.F.A.No.101133 of 2022. Therefore, springs the
second issue.
ISSUE NO.2:
Whether the compensation to be payable to the 1st
petitioner, minor child, is to be modified in accordance with
law?
10. The parties to the lis before the concerned Court or before
this Court have not provided documentary proof to demonstrate the
income of the deceased at ₹15,000/- per month as on the date of
the accident. In those circumstances and in cases of death, the year
of the accident becomes imperative to arrive at compensation in
terms of the chart of the High Court Legal Services Authority. The
39
deceased was below 40 years old at the time of death and the
income fixed by the High Court Legal Services Authority for a death
of the year 2019 and for a person who was less than 40 years at
the time of death would be ₹14,000/- plus 40% towards future
prospects. This is in tune with the Constitution Bench judgment of
the Apex Court in the case of NATIONAL INSURANCE COMPANY
LIMITED v. PRANAY SETHI2. The deceased was aged 31 years at
the time of death. In such circumstances, the multiplier that would
be applicable would be 16, as held by the Constitution Bench
judgment in PRANAY SETHI's case wherein the Apex Court directs
as follows:
".... .... ....
37. Before we proceed to analyse the principle for
addition of future prospects, we think it seemly to clear the
maze which is vividly reflectible from Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 :
(2009) 2 SCC (Cri) 1002] , Reshma Kumari [Reshma
Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ)
191 : (2013) 3 SCC (Cri) 826] , Rajesh [Rajesh v. Rajbir Singh,
(2013) 9 SCC 54 : (2013) 4 SCC (Civ) 179 : (2013) 3 SCC (Cri)
817 : (2014) 1 SCC (L&S) 149] and Munna Lal Jain [Munna Lal
Jain v. Vipin Kumar Sharma, (2015) 6 SCC 347 : (2015) 3 SCC
(Civ) 315 : (2015) 4 SCC (Cri) 195] . Three aspects need to
be clarified. The first one pertains to deduction towards
personal and living expenses. In paras 30, 31 and
32, Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 :
2
(2017) 16 SCC 680
40
(2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] lays
down : (SCC p. 136)
"30. Though in some cases the deduction to be made
towards personal and living expenses is calculated on
the basis of units indicated in Trilok Chandra [UP
SRTC v. Trilok Chandra, (1996) 4 SCC 362] , the general
practice is to apply standardised deductions. Having
considered several subsequent decisions of this Court,
we are of the view that where the deceased was married,
the deduction towards personal and living expenses of
the deceased, should be one-third (1/3rd) where the
number of dependent family members is 2 to 3, one-
fourth (¼th) where the number of dependent family
members is 4 to 6, and one-fifth (1/5th) where the
number of dependent family members exceeds six.
31. Where the deceased was a bachelor and the claimants
are the parents, the deduction follows a different principle. In
regard to bachelors, normally, 50% is deducted as personal and
living expenses, because it is assumed that a bachelor would
tend to spend more on himself. Even otherwise, there is also
the possibility of his getting married in a short time, in which
event the contribution to the parent(s) and siblings is likely to
be cut drastically. Further, subject to evidence to the contrary,
the father is likely to have his own income and will not be
considered as a dependant and the mother alone will be
considered as a dependant. In the absence of evidence to the
contrary, brothers and sisters will not be considered as
dependants, because they will either be independent and
earning, or married, or be dependent on the father.
32. Thus even if the deceased is survived by parents and
siblings, only the mother would be considered to be a
dependant, and 50% would be treated as the personal and
living expenses of the bachelor and 50% as the contribution to
the family. However, where the family of the bachelor is large
and dependent on the income of the deceased, as in a case
where he has a widowed mother and large number of younger
non-earning sisters or brothers, his personal and living
expenses may be restricted to one-third and contribution to the
family will be taken as two-third."
38. In Reshma Kumari [Reshma Kumari v. Madan
Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 :
(2013) 3 SCC (Cri) 826] , the three-Judge Bench agreed
41
with the multiplier determined in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] and eventually held that the
advantage of the Table prepared in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] is that uniformity and
consistency in selection of multiplier can be achieved. It
has observed : (Reshma Kumari case [Reshma
Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC
(Civ) 191 : (2013) 3 SCC (Cri) 826] , SCC p. 88, para 35)
"35. ... The assessment of extent of dependency
depends on examination of the unique situation of the
individual case. Valuing the dependency or the
multiplicand is to some extent an arithmetical exercise.
The multiplicand is normally based on the net annual
value of the dependency on the date of the deceased's
death. Once the net annual loss (multiplicand) is
assessed, taking into account the age of the deceased,
such amount is to be multiplied by a "multiplier" to
arrive at the loss of dependency."
39. In Reshma Kumari [Reshma Kumari v. Madan
Mohan, (2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 :
(2013) 3 SCC (Cri) 826] , the three-Judge Bench,
reproduced paras 30, 31 and 32 of Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] and approved the same by
stating thus : (Reshma Kumari case [Reshma
Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC
(Civ) 191 : (2013) 3 SCC (Cri) 826] , SCC pp. 90-91, paras
41-42)
"41. The above does provide guidance for the
appropriate deduction for personal and living expenses.
One must bear in mind that the proportion of a man's net
earnings that he saves or spends exclusively for the
maintenance of others does not form part of his living
expenses but what he spends exclusively on himself
does. The percentage of deduction on account of
personal and living expenses may vary with reference to
the number of dependent members in the family and the
personal living expenses of the deceased need not
exactly correspond to the number of dependants.
42
42. In our view, the standards fixed by this Court
in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 :
(2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] on the
aspect of deduction for personal living expenses in paras
30, 31 and 32 must ordinarily be followed unless a case
for departure in the circumstances noted in the
preceding paragraph is made out."
40. The conclusions that have been summed up
in Reshma Kumari [Reshma Kumari v. Madan Mohan,
(2013) 9 SCC 65 : (2013) 4 SCC (Civ) 191 : (2013) 3 SCC
(Cri) 826] are as follows : (SCC p. 91, para 43)
"43.1. In the applications for compensation made
under Section 166 of the 1988 Act in death cases where
the age of the deceased is 15 years and above, the
Claims Tribunals shall select the multiplier as indicated
in Column (4) of the Table prepared in Sarla
Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] read with para
42 of that judgment.
43.2. In cases where the age of the deceased is up to 15
years, irrespective of Section 166 or Section 163-A under which
the claim for compensation has been made, multiplier of 15 and
the assessment as indicated in the Second Schedule subject to
correction as pointed out in Column (6) of the Table in Sarla
Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC
(Civ) 770 : (2009) 2 SCC (Cri) 1002] should be followed.
43.3. As a result of the above, while considering the claim
applications made under Section 166 in death cases where the
age of the deceased is above 15 years, there is no necessity for
the Claims Tribunals to seek guidance or for placing reliance on
the Second Schedule in the 1988 Act.
43.4. The Claims Tribunals shall follow the steps and
guidelines stated in para 19 of Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 :
(2009) 2 SCC (Cri) 1002] for determination of compensation in
cases of death.
43.5. While making addition to income for future
prospects, the Tribunals shall follow para 24 of the
judgment in Sarla Verma [Sarla Verma v. DTC, (2009) 6
43
SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri)
1002] .
43.6. Insofar as deduction for personal and living
expenses is concerned, it is directed that the Tribunals
shall ordinarily follow the standards prescribed in paras
30, 31 and 32 of the judgment in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ)
770 : (2009) 2 SCC (Cri) 1002] subject to the
observations made by us in para 41 above."
41. On a perusal of the analysis made in Sarla
Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] which has been
reconsidered in Reshma Kumari [Reshma
Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC
(Civ) 191 : (2013) 3 SCC (Cri) 826] , we think it
appropriate to state that as far as the guidance provided
for appropriate deduction for personal and living
expenses is concerned, the tribunals and courts should be
guided by Conclusion 43.6 of Reshma Kumari [Reshma
Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4 SCC
(Civ) 191 : (2013) 3 SCC (Cri) 826] . We concur with the
same as we have no hesitation in approving the method
provided therein.
42. As far as the multiplier is concerned, the Claims
Tribunal and the courts shall be guided by Step 2 that
finds place in para 19 of Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] read with para 42 of the said
judgment. For the sake of completeness, para 42 is
extracted below : (Sarla Verma case [Sarla Verma v. DTC,
(2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC
(Cri) 1002] , SCC p. 140)
"42. We therefore hold that the multiplier to be used
should be as mentioned in Column (4) of the Table above
(prepared by applying Susamma Thomas [Kerala
SRTC v. Susamma Thomas, (1994) 2 SCC 176 : 1994 SCC
(Cri) 335] , Trilok Chandra [UP SRTC v. Trilok Chandra,
(1996) 4 SCC 362] and Charlie [New India Assurance Co.
Ltd. v. Charlie, (2005) 10 SCC 720 : 2005 SCC (Cri) 1657]
), which starts with an operative multiplier of 18 (for the
44
age groups of 15 to 20 and 21 to 25 years), reduced by
one unit for every five years, that is, M-17 for 26 to 30
years, M-16 for 31 to 35 years, M-15 for 36 to 40 years,
M-14 for 41 to 45 years, and M-13 for 46 to 50 years,
then reduced by two units for every five years, that is, M-
11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61
to 65 years and M-5 for 66 to 70 years."
.... .... ....
52. As far as the conventional heads are concerned,
we find it difficult to agree with the view expressed
in Rajesh [Rajesh v. Rajbir Singh, (2013) 9 SCC 54 :
(2013) 4 SCC (Civ) 179 : (2013) 3 SCC (Cri) 817 : (2014)
1 SCC (L&S) 149] . It has granted Rs 25,000 towards
funeral expenses, Rs 1,00,000 towards loss of consortium
and Rs 1,00,000 towards loss of care and guidance for
minor children. The head relating to loss of care and
minor children does not exist.
Though Rajesh [Rajesh v. Rajbir Singh, (2013) 9 SCC 54 :
(2013) 4 SCC (Civ) 179 : (2013) 3 SCC (Cri) 817 : (2014)
1 SCC (L&S) 149] refers to Santosh Devi [Santosh
Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421 :
(2012) 3 SCC (Civ) 726 : (2012) 3 SCC (Cri) 160 : (2012)
2 SCC (L&S) 167] , it does not seem to follow the same.
The conventional and traditional heads, needless to say,
cannot be determined on percentage basis because that
would not be an acceptable criterion. Unlike
determination of income, the said heads have to be
quantified. Any quantification must have a reasonable
foundation. There can be no dispute over the fact that
price index, fall in bank interest, escalation of rates in
many a field have to be noticed. The court cannot remain
oblivious to the same. There has been a thumb rule in
this aspect. Otherwise, there will be extreme difficulty in
determination of the same and unless the thumb rule is
applied, there will be immense variation lacking any kind
of consistency as a consequence of which, the orders
passed by the tribunals and courts are likely to be
unguided. Therefore, we think it seemly to fix reasonable
sums. It seems to us that reasonable figures on
conventional heads, namely, loss of estate, loss of
consortium and funeral expenses should be Rs 15,000, Rs
45
40,000 and Rs 15,000 respectively. The principle of
revisiting the said heads is an acceptable principle. But the
revisit should not be fact-centric or quantum-centric. We think
that it would be condign that the amount that we have
quantified should be enhanced on percentage basis in every
three years and the enhancement should be at the rate of 10%
in a span of three years. We are disposed to hold so because
that will bring in consistency in respect of those heads.
.... .... ....
55. Section 168 of the Act deals with the concept of
"just compensation" and the same has to be determined
on the foundation of fairness, reasonableness and
equitability on acceptable legal standard because such
determination can never be in arithmetical exactitude. It
can never be perfect. The aim is to achieve an acceptable
degree of proximity to arithmetical precision on the basis
of materials brought on record in an individual case. The
conception of "just compensation" has to be viewed
through the prism of fairness, reasonableness and non-
violation of the principle of equitability. In a case of
death, the legal heirs of the claimants cannot expect a
windfall. Simultaneously, the compensation granted
cannot be an apology for compensation. It cannot be a
pittance. Though the discretion vested in the tribunal is
quite wide, yet it is obligatory on the part of the tribunal
to be guided by the expression, that is, "just
compensation". The determination has to be on the
foundation of evidence brought on record as regards the
age and income of the deceased and thereafter the
apposite multiplier to be applied. The formula relating to
multiplier has been clearly stated in Sarla Verma [Sarla Verma
v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770 : (2009) 2
SCC (Cri) 1002] and it has been approved in Reshma Kumari
[Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 : (2013) 4
SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] . The age and income,
as stated earlier, have to be established by adducing evidence.
The tribunal and the courts have to bear in mind that the
basic principle lies in pragmatic computation which is in
proximity to reality. It is a well-accepted norm that
money cannot substitute a life lost but an effort has to be
46
made for grant of just compensation having uniformity of
approach. There has to be a balance between the two
extremes, that is, a windfall and the pittance, a bonanza
and the modicum. In such an adjudication, the duty of the
tribunal and the courts is difficult and hence, an
endeavour has been made by this Court for
standardisation which in its ambit includes addition of
future prospects on the proven income at present. As far
as future prospects are concerned, there has been
standardisation keeping in view the principle of certainty,
stability and consistency. We approve the principle of
"standardisation" so that a specific and certain multiplicand is
determined for applying the multiplier on the basis of age.
.... .... ....
57. Having bestowed our anxious consideration, we are
disposed to think when we accept the principle of
standardisation, there is really no rationale not to apply the said
principle to the self-employed or a person who is on a fixed
salary. To follow the doctrine of actual income at the time of
death and not to add any amount with regard to future
prospects to the income for the purpose of determination of
multiplicand would be unjust. The determination of income while
computing compensation has to include future prospects so that
the method will come within the ambit and sweep of just
compensation as postulated under Section 168 of the Act. In
case of a deceased who had held a permanent job with inbuilt
grant of annual increment, there is an acceptable certainty. But
to state that the legal representatives of a deceased who was on
a fixed salary would not be entitled to the benefit of future
prospects for the purpose of computation of compensation
would be inapposite. It is because the criterion of distinction
between the two in that event would be certainty on the one
hand and staticness on the other. One may perceive that the
comparative measure is certainty on the one hand and
uncertainty on the other but such a perception is fallacious. It is
because the price rise does affect a self-employed person; and
that apart there is always an incessant effort to enhance one's
income for sustenance. The purchasing capacity of a salaried
person on permanent job when increases because of grant of
increments and pay revision or for some other change in service
47
conditions, there is always a competing attitude in the private
sector to enhance the salary to get better efficiency from the
employees. Similarly, a person who is self-employed is bound to
garner his resources and raise his charges/fees so that he can
live with same facilities. To have the perception that he is likely
to remain static and his income to remain stagnant is contrary
to the fundamental concept of human attitude which always
intends to live with dynamism and move and change with the
time. Though it may seem appropriate that there cannot be
certainty in addition of future prospects to the existing income
unlike in the case of a person having a permanent job, yet the
said perception does not really deserve acceptance. We are
inclined to think that there can be some degree of difference as
regards the percentage that is meant for or applied to in respect
of the legal representatives who claim on behalf of the deceased
who had a permanent job than a person who is self-employed or
on a fixed salary. But not to apply the principle of
standardisation on the foundation of perceived lack of certainty
would tantamount to remaining oblivious to the marrows of
ground reality. And, therefore, degree-test is imperative. Unless
the degree-test is applied and left to the parties to adduce
evidence to establish, it would be unfair and inequitable. The
degree-test has to have the inbuilt concept of percentage.
Taking into consideration the cumulative factors, namely,
passage of time, the changing society, escalation of price,
the change in price index, the human attitude to follow a
particular pattern of life, etc., an addition of 40% of the
established income of the deceased towards future
prospects and where the deceased was below 40 years an
addition of 25% where the deceased was between the age of 40
to 50 years would be reasonable.
.... .... ....
59. In view of the aforesaid analysis, we proceed to
record our conclusions:
59.1. The two-Judge Bench in Santosh Devi [Santosh
Devi v. National Insurance Co. Ltd., (2012) 6 SCC 421 : (2012)
3 SCC (Civ) 726 : (2012) 3 SCC (Cri) 160 : (2012) 2 SCC (L&S)
167] should have been well advised to refer the matter to a
larger Bench as it was taking a different view than what has
been stated in Sarla Verma [Sarla Verma v. DTC, (2009) 6 SCC
48
121 : (2009) 2 SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] , a
judgment by a coordinate Bench. It is because a coordinate
Bench of the same strength cannot take a contrary view than
what has been held by another coordinate Bench.
59.2. As Rajesh [Rajesh v. Rajbir Singh, (2013) 9 SCC 54
: (2013) 4 SCC (Civ) 179 : (2013) 3 SCC (Cri) 817 : (2014) 1
SCC (L&S) 149] has not taken note of the decision in Reshma
Kumari [Reshma Kumari v. Madan Mohan, (2013) 9 SCC 65 :
(2013) 4 SCC (Civ) 191 : (2013) 3 SCC (Cri) 826] , which was
delivered at earlier point of time, the decision
in Rajesh [Rajesh v. Rajbir Singh, (2013) 9 SCC 54 : (2013) 4
SCC (Civ) 179 : (2013) 3 SCC (Cri) 817 : (2014) 1 SCC (L&S)
149] is not a binding precedent.
59.3. While determining the income, an addition of
50% of actual salary to the income of the deceased
towards future prospects, where the deceased had a
permanent job and was below the age of 40 years, should
be made. The addition should be 30%, if the age of the
deceased was between 40 to 50 years. In case the
deceased was between the age of 50 to 60 years, the
addition should be 15%. Actual salary should be read as
actual salary less tax.
59.4. In case the deceased was self-employed or on
a fixed salary, an addition of 40% of the established
income should be the warrant where the deceased was
below the age of 40 years. An addition of 25% where the
deceased was between the age of 40 to 50 years and 10%
where the deceased was between the age of 50 to 60 years
should be regarded as the necessary method of computation.
The established income means the income minus the tax
component.
59.5. For determination of the multiplicand, the
deduction for personal and living expenses, the tribunals
and the courts shall be guided by paras 30 to 32 of Sarla
Verma [Sarla Verma v. DTC, (2009) 6 SCC 121 : (2009) 2
SCC (Civ) 770 : (2009) 2 SCC (Cri) 1002] which we have
reproduced hereinbefore.
49
59.6. The selection of multiplier shall be as
indicated in the Table in Sarla Verma [Sarla
Verma v. DTC, (2009) 6 SCC 121 : (2009) 2 SCC (Civ) 770
: (2009) 2 SCC (Cri) 1002] read with para 42 of that
judgment.
59.7. The age of the deceased should be the basis
for applying the multiplier.
59.8. Reasonable figures on conventional heads,
namely, loss of estate, loss of consortium and funeral
expenses should be Rs 15,000, Rs 40,000 and Rs 15,000
respectively. The aforesaid amounts should be enhanced at
the rate of 10% in every three years."
In the light of the Constitution Bench judgment, the income of a
person who dies before reaching the age of 40 years would be
taking 40% future prospects, applying the multiplier of 16 and 1/3rd
of the income to be deducted as personal expenses, since the
deceased had one child. The loss of estate and funeral expenses to
be determined at ₹15,000/- each and loss of consortium at
₹40,000/-. All these calculations are what the Apex Court has held
in PRANAY SETHI's case. The loss of consortium would include
parental consortium, in the light of the Apex Court judgment in
MAGMA GENERAL INSURANCE COMPANY LIMITED v. NANU
RAM3 wherein it is held as follows:
".... .... ....
3
(2018) 18 SCC 130
50
21. A Constitution Bench of this Court in Pranay
Sethi [National Insurance Co. Ltd. v. Pranay Sethi, (2017)
16 SCC 680: (2018) 3 SCC (Civ) 248: (2018) 2 SCC (Cri)
205] dealt with the various heads under which
compensation is to be awarded in a death case. One of
these heads is loss of consortium. In legal parlance,
"consortium" is a compendious term which encompasses
"spousal consortium", "parental consortium", and "filial
consortium". The right to consortium would include the
company, care, help, comfort, guidance, solace and
affection of the deceased, which is a loss to his family.
With respect to a spouse, it would include sexual relations with
the deceased spouse: [Rajesh v. Rajbir Singh, (2013) 9 SCC 54:
(2013) 4 SCC (Civ) 179: (2013) 3 SCC (Cri) 817: (2014) 1 SCC
(L&S) 149]
21.1. Spousal consortium is generally defined as rights
pertaining to the relationship of a husband-wife which allows
compensation to the surviving spouse for loss of "company,
society, cooperation, affection, and aid of the other in every
conjugal relation". [Black's Law Dictionary (5th Edn., 1979).]
21.2. Parental consortium is granted to the child
upon the premature death of a parent, for loss of
"parental aid, protection, affection, society, discipline,
guidance and training".
21.3. Filial consortium is the right of the parents to
compensation in the case of an accidental death of a child. An
accident leading to the death of a child causes great shock and
agony to the parents and family of the deceased. The greatest
agony for a parent is to lose their child during their lifetime.
Children are valued for their love, affection, companionship and
their role in the family unit.
... ... ...
23. The Motor Vehicles Act is a beneficial legislation
aimed at providing relief to the victims or their families,
in cases of genuine claims. In case where a parent has lost
their minor child, or unmarried son or daughter, the parents are
entitled to be awarded loss of consortium under the head of filial
consortium. Parental consortium is awarded to children
51
who lose their parents in motor vehicle accidents under
the Act. A few High Courts have awarded compensation on this
count [ Rajasthan High Court in Jagmala Ram v. Sohi Ram,
2017 SCC OnLine Raj 3848: (2017) 4 RLW 3368; Uttarakhand
High Court in Rita Rana v. Pradeep Kumar, 2013 SCC OnLineUtt
2435: (2014) 3 UC 1687; Karnataka High Court
in Lakshman v. Susheela Chand Choudhary, 1996 SCC OnLine
Kar 74: (1996) 3 Kant LJ 570]. However, there was no clarity
with respect to the principles on which compensation could be
awarded on loss of filial consortium."
(Emphasis supplied at each instance)
If the aforesaid calculations are put together, the 1st petitioner
becomes entitled to the following compensation.
"CALCULATION OF LOSS OF DEPENDENCY
HEADING AMOUNT PAYABLE
Notional Income per month Rs. 14,000/-
(+) Addition of 40% towards future prospects (+) Rs. 5,600/-
(40% of 14,000)
income after addition of future prospects Rs. 19,600/-
(-) ⅓ deduction towards personal expenses (-) Rs. 6,533 (Rs.
19,600 / 3)
income after deduction of personal Rs. 13,067/-
expenses
52
INCOME PER YEAR Rs. 13,067 * 12 =
Rs. 1,56,804/-
LOSS OF DEPENDENCY Rs. 1,56,804 * 16
(multiplier) = Rs.
25,08,864/-
CALCULATION OF COMPENSATION
HEADING AMOUNT PAYABLE
Loss of dependency (as calculated in the Rs. 25,08,864/-
previous table)
Loss of consortium Rs. 40,000/-
Loss of estate Rs. 15,000/-
Funeral expenses Rs. 15,000/-
TOTAL COMPENSATION Rs. 25,78,864/-
11. The compensation payable now would be ₹25,78,864/- in
terms of the prevailing law. It is submitted by the learned counsel
appearing for the insurance companies that an amount of
₹12,00,000/- was immediately deposited before the concerned
Court in M.V.C.No.1567 of 2020. Now that the compensation has
varied, the remainder of the amount which is the enhanced
53
compensation, which comes to ₹13,78,864/- shall be paid to the
claimant.
12. As observed hereinabove, the 1st respondent and the
claimant are fighting from the shoulders of the minor for the
amount of compensation. Therefore, the amount of compensation in
its entirety shall be deposited in the name of the minor in a
nationalized Bank earning maximum interest in any scheme and the
interest that it earns must be utilized for the development of the
child.
13. For the aforesaid reasons, the following:
ORDER
(i) Writ Petition No.103648 of 2021 is allowed and the award passed by the Lok Adalat in M.V.C.No.1567 of 2020 dated 14-08-2021 stands quashed.
(ii) M.F.A.No.101133 of 2022 is allowed and the compensation is determined at ₹25,78,864/- along with interest at 6% p.a. from the date of claim petition till the date of payment.
54(iii) The amount in deposit of ₹12,00,000/- and the reminder that is to be paid apart from ₹12,00,000/- i.e., Rs.13,78,864/- shall be disbursed by the insurance companies in favour of the minor child. The entire amount shall be placed in a fixed deposit earning maximum interest till the child attains majority. The interest that is earned shall be utilized by the mother or the grand-mother for the development of the child.
(iv) Once the child attains majority, the child would be at liberty to withdraw the amount in fixed deposit or deal with it as she deems fit.
SD/-
(M.NAGAPRASANNA) JUDGE bkp CT:SS