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Royal Living Homes Pvt Limited v/s Aseem Kumar Sharma

    Civil Writ Petition No. 16279 of 2018
    Decided On, 11 September 2018
    At, High Court of Rajasthan Jaipur Bench
    By, THE HONOURABLE MR. JUSTICE SANJEEV PRAKASH SHARMA
    For the Appearing Parties: Prateek Kasliwal, T.C. Vyas, Advocates.


Judgment Text
1. The petitioner assails the order dated 08.06.2018 passed by the Permanent Lok Adalat whereby the petitioner is being asked to forcefully participate in the conciliation proceedings.

2. Learned counsel for the petitioner submits that the Permanent Lok Adalat does not have the jurisdiction to hear the case and it could not have directly invoked the provisions of Section 22-C and decide the dispute against the wishes of the party. Learned counsel submits that the Chapter VI A enacted in the Legal Services Authority Act, 1987 is incorporated essentially with the object and power to settle disputes at the pre-litigation stage and for the said purpose sub-Sections 4 to 7 of Section 22-C require conciliation proceedings to be conducted, however, as the petitioner does not want to enter into conciliation proceedings, the Permanent Lok Adalat cannot force the petitioner to participate in the proceedings initiated by the respondents under Section 22-C itself.

3. Learned counsel submits that the Supreme Court in the case of United Insurance Company Versus Ajay Sinha And Another, (2008) 7 SCC 454 has observed that no one can be forced to participate in the conciliation proceedings and the Permanent Lok Adalat was required to first take consent of the parties before taking up the proceedings under Section 22-C wherein the Apex Court states as under:-

"22. The term "conciliation" is not defined under the Act. It should, therefore, be considered from the perspective of Arbitration and Conciliation Act, 1996. In order to understand what Parliament meant by 'Conciliation', we have necessarily to refer to the functions of a 'Conciliator' as visualized by Part III of the 1996 Act. Section 67 describes the role of a conciliator. Sub-section (1) states that he shall assist parties in an independent and impartial manner. Subsection (2) states that he shall be guided by principles of objectivity, fairness and justice, giving consideration, among other things, to the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. Sub-section (3) states that he shall take into account "the circumstances of the case, the wishes the parties may express, including a request for oral statements". Sub-section (4) is important and permits the 'conciliator' to make proposals for a settlement. This section is based on Article 7 of UNICTRAL Conciliation Rules.

25. Chapter VI-A stands independently. Whereas, the heading of the Chapter talks of pre-litigation, conciliation and settlement, Section 22-C(8) of the Act speaks of determination. It creates another adjudicatory authority, the decision of which by a legal fiction would be a decision of a civil court. It has the right to decide a case. The term 'decide' means to determine ; to form a definite opinion ; to render judgment. (See Advanced Law Lexicon 3rd Edition 2005 at 1253). Any award made by the Permanent Lok Adalat is executable as a decree. No appeal thereagainst shall lie. The decision of the Permanent Lok Adalat is final and binding on parties. Whereas on the one hand, keeping in view the Parliamentary intent, settlement of all disputes through negotiation, conciliation, medication, Lok Adalat and Judicial Settlement are required to be encouraged, it is equally well settled that where the jurisdiction of a court is sought to be taken away, the statutory provisions deserve strict construction. A balance is thus required to be struck. A court of law can be created under a statute. It must have the requisite infrastructure therefor. Independence and impartiality of Tribunal being a part of human right is required to be taken into consideration for construction of such a provision. When a court is created, the incumbents must be eligible to determine the lis.

26. An option is given to any party to a dispute. It may be a public utility service provider or a public utility service recipient. The service must have some relation with public utility. Ordinarily, insurance service would not come within the public utility service. But having regard to the statutory scheme, it must be held to be included thereunder. It is one thing to say that an authority is created under a statute to bring about a settlement through Alternate Dispute Resolution mechanism but it is another thing to say that an adjudicatory power is conferred on it. Chapter VI-A, therefore, in our opinion, deserves a closure scrutiny. In a case of this nature, the level of scrutiny must also be high. (See Anuj Garg and Ors. v. Hotel Association of India and Ors., (2008) 3 SCC 1).

27. Sub-section (1) of Section 22C speaks of settlement of disputes. The authority has to take recourse to conciliation mechanism. One of the essential ingredients of the conciliation proceeding is that nobody shall be forced to take part therein. It has to be voluntary in nature. The proceedings are akin to one of the recognized ADR mechanism which is made of Medola. It may be treated on a par with Conciliation and Arbitration. In such a case the parties agree for settlement of dispute by negotiation, conciliation or mediation. The proceedings adopted are not binding ones, whereas the arbitration is a binding procedure. Even in relation to arbitration, an award can be the subject matter of challenge. The provisions of the Arbitration and Conciliation Act, 1996 shall apply thereto. The jurisdiction in terms of Section 34 of the Arbitration and Conciliation Act, 1996 is wide. The court in exercise of the said jurisdiction may not enter into the merit of the case but would be entitled to consider as to whether the arbitrator was guilty of misconduct. If he is found to be biased, his award would be set aside. The scope of voluntary settlement through the mechanism of conciliation is also limited. If the parties in such a case can agree to come to settlement in relation to the principal issues, no exception can be taken thereto as the parties have a right of self-determination of the forum, which shall help them to resolve the conflict, but when it comes to some formal differences between the parties, they may leave the matter to the jurisdiction of the conciliator. The conciliatior only at the final stage of the proceedings would adopt the role of an arbitrator."

4. Learned counsel also relies on the judgment passed by the High Court of Jharkhand in the case of National Insurance Co. Ltd. Vs. Arti Banerjee and Ors., decided on 15.03.2010 wherein the High Court has observed as under:-

"6. It is also submitted by the learned Counsel for the petitioner that the role of the Permanent Lok Adalat is not of an adjudicator, but, is of a conciliator. Never any terms of settlement were offered by the Permanent Lok Adalat, as required under Sub-section (7) of Section 22C of the Legal Services Authority Act 1987 and therefore, also the impugned order deserves to be quashed and set aside.

7. It has been held by a Division Bench of this Court in the case of Bharat Sanchar Nigam Ltd. v. State of Jharkhand and Anr, (2008) 3 JLJR 513, that it is prime duty of the Permanent Lok Adalat to offer terms of settlement under Subsection (7) of Section 22C of the Act, 1987. Thus, the Motor Vehicle Accident Claim Tribunal being in existence, the Permanent Lok Adalat, Dhanbad cannot decide the dispute, on merits, and, therefore, the order at Annexure-1 deserves to he quashed and set aside.

9. It is also submitted by the learned Counsel for Respondent No. 1 that looking into the written statement, it has never been stated by the present petitioner (original defendant) that they are not giving consent for decision, on merits, by the Permanent, Lok Adalat, Dhanbad."

5. Thus, it is prayed to quash and set-aside the order dated 08.06.2018 and dismiss the application moved by the respondent before the Permanent Lok Adalat.

6. Per contra, learned counsel for the respondent submits that the Constitutional validity of Section 22-C (8) was challenged before the Supreme Court in the case of Bar Council of India versus Union of India, (2012) AIR SC 3246 and it held as under:-

"22. .........Can the power conferred on Permanent Lok Adalats to adjudicate the disputes between the parties concerning public utility service upto a specific pecuniary limit, if they do not relate to any offence, as provided under Section 22-C(8), be said to be unconstitutional and irrational? We think not. It is settled law that an authority empowered to adjudicate the disputes between the parties and act as a tribunal may not necessarily have all the trappings of the court. What is essential is that it must be a creature of statute and should adjudicate the dispute between the parties before it after giving reasonable opportunity to them consistent with the principles of fair play and natural justice. It is not a constitutional right of any person to have the dispute adjudicated by means of a court only. Chapter VI-A has been enacted to provide for an institutional mechanism, through the establishment of Permanent Lok Adalats for settlement of disputes concerning public utility service before the matter is brought to the court and in the event of failure to reach any settlement, empowering the Permanent Lok Adalat to adjudicate such dispute if it does not relate to any offence."

7. Learned counsel submits that in view of Section 22-C after an application has been made by the petitioner before the Permanent Lok Adalat, it would not have any other remedy available to it and therefore on the application moved by the respondent, he cannot be ousted on the ground that the petitioner does not want to submit to the jurisdiction of the Permanent Lok Adalat.

8. Having noted the submissions, this Court notes that Rule 22- C of the Act of 1987 reads as under:-

"22-C. Cognizance of cases by Permanent Lok Adalat.

(1) Any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for the settlement of dispute:

Provided that the Permanent Lok Adalat shall not have jurisdiction in respect of any matter relating to an offence not compoundable under any law: Provided further that the Permanent Lok Adalat shall also not have jurisdiction in the matter where the value of the property in dispute exceeds one crore rupees: (as enhanced from rupees ten lakh to rupees one crore w.e.f. 20.03.2015 vide gazette notification.)

Provided also that the Central Government, may by notification, increase the limit of ten lakh rupees specified in the second proviso in consultation with the Central Authority.

(2) After an application is made under sub-section (1) to the Permanent Lok Adalat, no party to that application shall invoke jurisdiction of any court in the same dispute.

(3) Where an application is made to a Permanent Lok Adalat under sub-section (1), it

(a) shall direct each party to the application to file before it a written statement, stating therein the facts and nature of dispute under the application, points or issues in such dispute and grounds relied in support of, or in opposition to, such points or issues, as the case may be, and such party may supplement such statement with any document and other evidence which such party deems appropriate in proof of such facts and grounds and shall send a copy of such statement together with a copy of such document and other evidence, if any, to each of the parties to the application;

(b) may require any party to the application to file additional statement before it at any stage of the conciliation proceedings;

(c) shall communicate any document or statement received by it from any party to the application to the other party, to enable such other party to present reply thereto.

(4) When statement, additional statement and reply, if any, have been filed under sub-section (3), to the satisfaction of the Permanent Lok Adalat, it shall conduct conciliation proceedings between the parties to the application in such manner as it thinks appropriate taking into account the circumstances of the dispute.

(5) The Permanent Lok Adalat shall, during conduct of conciliation proceedings under sub-section (4), assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner.

(6) It shall be the duty of the every party to the application to cooperate in good faith with the Permanent Lok Adalat in conciliation of the dispute relating to the application and to comply with the direction of the Permanent Lok Adalat to produce evidence and other related documents before it.

(7) When a Permanent Lok Adalat, in the aforesaid conciliation proceedings, is of opinion that there exist elements of settlement in such proceedings which may be acceptable to the parties, it may formulate the terms of a possible settlement of the dispute and give to the parties concerned for their observations and in case the parties reach at an agreement on the settlement of the dispute, they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an award in terms thereof and furnish a copy of the same to each of the parties concerned.

(8) Where the parties fail to reach at an agreement under sub-section (7), the Permanent Lok Adalat shall, if the dispute does not relate to any offence, decide the dispute.

From its perusal, it is apparent that the power of cognizance of cases has been provided to the Permanent Lok Adalat in matters relating to offence which are compoundable and also in cases where the valuation of the property in dispute is of Rs. 1 crore and are also those which are relating to public utility. Sub- section 1 of Section 22-C provides that any party to the dispute may make an application for settlement of the dispute, before the dispute is brought before any Court. Sub-section 2 provides that if an application is so made the said party would be prevented from invoking jurisdiction from any Court with regard to the same dispute. The procedure as laid down under Section 22-C (Subsection 3) and the other party to the dispute is directed by the Permanent Lok Adalat to file reply to the application in a manner of written statement as provided in Sub-section 3(a) and thereafter allowed the party, who moved the application to file additional statement and reply thereto. When all the said pleadings are complete, sub-section 4 goes into operation i.e. conducting of conciliation proceedings.

9. Thus viewed, it is only when the pleadings being completed with the Permanent Lok Adalat proceedings for conciliation, it is at that stage, therefore, with the consent of the parties, conciliation proceedings may be proceeded for.

As has been opined by the Apex Court in United Insurance Company Versus Ajay Sinha and by the High Court of Jharkhand in National Insurance Co. Ltd. Vs. Arti Banerjee and Ors. , the parties to the dispute may not agree for conciliation or may even refuse to participate in the conciliation proceedings.

On such refusal, or failure of conciliation, sub-section 8 of Section 22-C would than come into operation and the Permanent Lok Adalat would than decide the case on relegance and adjudicate the dispute.

The submission of learned counsel for the petitioner that if one of the party has refused to participate in conciliation proceedings, the jurisdiction of the Permanent Lok Adalat itself is ousted and the Permanent Lok Adalat is ought to be held having no jurisdiction to proceed in the matter, is therefore, unsustainable in law.

No party can be stopped from moving an application before the Permanent Lok Adalat. The stage of conciliation is subsequent, the other party cannot wriggle out itself from the jurisdiction of the Permanent Lok Adalat merely by saying that it does not want to participate in the conciliation proceedings and the jurisdiction of the Permanent Lok Adalat, therefore, cannot be said to have been ousted. In view of this Court, no party can by its conduct oust the jurisdiction of the adjudicating authority. The very purpose of Section 22-C would be rendered redundant if a view is taken that both parties consent has to be taken before proceeding to take cognizance under Section 22-C.

The only requirement in view of this Court, for taking cognizance by Permanent Lok Adalat are the two criterias, namely offence is compoundable or it is affecting public utility and secondly the valuation of dispute.

10. The conciliation proceedings are not uncommon under the various provisions. The conciliation proceedings made under Section 22-C (4) are not only similar to that which one finds in the Arbitration and Conciliation Act, 1996, but are also found under the Industrial Disputes Act, 1947, Section 10 wherein before the case is taken up by the labour court, the conciliation proceedings are taken up between the workman and the concerned employer. Similarly conciliation procedure are provided under Section 18 of the MSMED Act of 2006 as pre-requisite before sending the dispute to the Arbitrator.

So far as the failure of conciliation proceedings are concerned they may be occasioned either on account of refusal to participate in the conciliation or on account of not accepting the settlement conditions by both the parties. In both the cases, the conciliation would be treated as having failed and the Permanent Lok Adalat would thereafter proceed to adjudicate the dispute immediately thereto in terms of Section 22-C (8). My view is advised by observations as made by Supreme Court in Bar Council of India Versus Union of India .

11.

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The next submission of the counsel for the petitioner that if the petitioner agrees to the jurisdiction of the Permanent Lok Adalat no right of appeal would available to him, has been aptly answered by the Apex Court in Bar Council of India Versus Union of India , held as under:- "33. There is no inherent right of appeal. Appeal is always a creature of statute and if no appeal is provided to an aggrieved party in a particular statute, that by itself may not render that statute unconstitutional. Section 22-E(1) makes every award of the Permanent Lok Adalat under 1987 Act either on merit or in terms of a settlement final and binding on all the parties thereto and on persons claiming under them. No appeal is provided from the award passed by the Permanent Lok Adalat but that, in our opinion, does not render the impugned provisions unconstitutional. In the first place, having regard to the nature of dispute upto a specific pecuniary limit relating to public utility service and resolution of such dispute by the procedure provided in Section 22-C(1) to 22-C(8), it is important that such dispute is brought to an end at the earliest and is not prolonged unnecessarily. Secondly, and more importantly, if at all a party to the dispute has a grievance against the award of Permanent Lok Adalat he can always approach the High Court under its supervisory and extraordinary jurisdiction under Articles 226 and 227 of the Constitution of India. There is no merit in the submission of the Learned Counsel for the Petitioner that in that situation the burden of litigation would be brought back on the High Courts after the award is passed by the Permanent Lok Adalat on merits." 12. The purpose of Permanent Lok Adalat is to provide speedy remedy and writ petition preferred before this Court appears to be only with purpose to stall the proceedings. 13. Accordingly, the writ petition is dismissed with cost of Rs. 25,000/- which is to be paid to the respondents.
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