Lok Adalat does not have the power to adjudicate a controversy on merits like a regular court

In a recent judgement, the Chattisgarh High Court held that by referring to ‘determination’ and ‘award’ by the Lok Adalat, the Legal Services Authorities 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. Therefore, it held that adjudication of a controversy on merits was outside the scope of powers of a Lok Adalat.

The said ratio was pronounced by a Single Judge of the Chattisgarh High Court in the matter of M/s K.K. Distributors Vs. State of Chhattisgarh at Bilaspur, W.P. No. 525 of 2018 on 27.06.2018

Challenge

The controversy emanated from a complaint filed by the State under Sections 18 (a) (vi), 18 (B), 27 (d) & 27 (A) of the Drugs and Cosmetics Act, 1940 read with Rules 65 (3), 65 (4) (4), 65 (5) (3) & 65 (6) of Drugs & cosmetics Rules, 1945. During the course of trial, compromise was effected between the parties and the State was directed to keep the concerned officer present before the Court who is competent to compound and thereafter the case was fixed for compromise. On the date fixed, when the case was referred to Lok Adalat, the Lok Adalat Bench passed the order on merit, holding that the offence so sought to be compounded was non-compoundable and passed an order on merits thereby dismissing the application for compounding. The said order of dismissal came to be challenged before the Chattisgarh High Court.

The counsel for the petitioners submitted that the Lok Adalat could not have passed the order on merits and should have referred the case to a regular court for adjudication as it was beyond the jurisdiction of Lok Adalat to adjudicate a controversy on merits.

Held

Referring to the judgement in the matter of B.P. Moideen Sevamandir Vs. A.M. Kutty Hassan {(2009) 2 SCC 198}, the Chattisgarh High Court discussed the scope and power of the Lok Adalat. It reiterated that a Lok Adalat determines a reference on the basis of a compromise or settlement between the parties at its instance and put 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 principles of justice, equity, fair play. When the Legal Services Authorities 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.

Applying the aforesaid legal position to the facts of the case, the Chattisgarh High Court held that the Lok Adalat exceeded its jurisdiction by entering into merits of the application for compounding and eventually holding the offences to be non-compoundable. Therefore, the impugned order was set aside.