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State Bank of India v/s Dungar Garments

    Civil Writ Petition No. 11674 of 2019

    Decided On, 04 September 2019

    At, High Court of Rajasthan

    By, THE HONOURABLE MR. JUSTICE DINESH MEHTA

    For the Appearing Parties: Anil Vyas, Amit Gaur, Advocates.



Judgment Text

1. By way of the present writ petition, the petitioner - none other than the countrys biggest public sector bank, has challenged the order dated 30.4.2019 passed by the Permanent Lok Adalat, Bikaner.

2. Petitioner bank had extended cash credit facility of Rs. 3 lacs to the respondent Dungar Garments, which had failed to fulfill its commitment. On respondents failure to pay the dues, the petitioner-bank approached Permanent Lok Adalat, constituted under the provisions of Authorities Act, 1987 (hereinafter referred to as the Act of 1987 or the Act) and prayed that an award for sum of Rs. 2,96,828/- alongwith applicable interest be issued in its favour.

3. The learned Permanent Lok Adalat rejected petitioners application at the threshold, inter alia, observing that the Act of 1987 does not permit filing of the petition by the bank. According to the Lok Adalat only a person aggrieved of the public utility service can invoke the provisions of the Act of 1987.

4. Mr. Vyas, learned counsel for the petitioner challenging the order dated 30.4.2019, passed by the learned Permanent Lok Adalat contended that the learned Permanent Lok Adalat has erred in rejecting petitioners petition under Section 22C of the Act of 1987, summarily, without even issuing a notice to the respondent-borrower.

5. Inviting attention of the Court towards provisions of Section 22A of the Act and the notification dated 29.12.2014, he submitted that the banking and financial services are indisputably covered under the definition of public utility service. Expanding his arguments further, he argued that Section 22C of the Act while conferring the power of taking cognizance under the Act of 1987 has used expression "any party to a dispute", hence, the restrictive meaning given by the learned Permanent Lok Adalat, that the bank cannot approach the Permanent Lok Adalat, is contrary to the express provision contained in Section 22C of the Act.

6. Learned counsel argued that the provisions of Section 22C of the Act does not provide any restriction on the bank from filing a petition under Section 22C of the Act and that expression "any party", is wide enough to include everyone, including the bank. The respondent-borrower has failed/refused to fulfill his commitment, hence, the bank was legally entitled and justified in invoking the provisions of the Act of 1987, as their existed a dispute.

7. I have heard learned counsel for the petitioner and perused the relevant provision and the impugned order passed by the Permanent Lok Adalat.

8. The question is short and precise, but has larger repercussions. This Court has to tread on practically a fresh turf as the same does not seem to have been decided by any Court, so far. It would be apt to keep all the relevant provisions handy, the same are being reproduced hereunder:-

"22A. Definitions.- In this Chapter and for the purpose of sections 22 and 23, unless the context otherwise requires;-

(a) "Permanent Lok Adalat" means a Permanent Lok Adalat established under sub-section (1) of section 22B;

(b) "public utility service" means any-

(i) transport service for the carriage of passengers or goods by air, road or water; or

(ii) postal, telegraph or telephone service; or

(iii) supply of power, light or water to the public by any establishment; or

(iv) system of public conservancy or sanitation; or

(v) service in hospital or dispensary; or

(vi) Insurance service,

*(vii) Banking and Financial

*(viii) Housing and Estates

*(ix) Liquified Petroleum Gas Services, and includes any service which the Central Government or the State Government, as the case may be, may, in the public interest, by notification, declare to be a public utility service for the purposes of this chapter.

22B. Establishment of Permanent Lok Adalat.- (1) Notwithstanding anything contained in section 19, the Central Authority or, as the case may be, every State Authority shall, by notification, establish Permanent Lok Adalats at such places and for exercising such jurisdiction in respect of one or more public utility services and for such areas as may be specified in the notification.

(2) ***** ***** ***** ***** *****

22C. 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 not have jurisdiction in the matter where the value of the property in dispute exceeds twenty five lakh rupees:

Provided also that the Central Government, may, by notification, increase the limit of "twenty five 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) ***** ***** ***** ***** *****

(4) ***** ***** ***** ***** *****

(5) ***** ***** ***** ***** *****

(6) ***** ***** ***** ***** *****

(7) ***** ***** ***** ***** *****

(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.

22D. Procedure of Permanent Lok Adalat.- The Permanent Lok Adalat shall, while conducting conciliation proceedings or deciding a dispute on merit under this Act, be guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice, and shall not be bound by the Code of Civil Procedure, 1908 (1 of 1872) and the Indian Evidence Act, 1872 (5 of 1908).

22E. Award of Permanent Lok Adalat to be final.- (1) Every award of the Permanent Lok Adalat under this Act made either on merit or in terms of a settlement agreement shall be final and binding on all the parties thereto and on persons claiming under them.

(2) Every award of the Permanent Lok Adalat under this Act shall be deemed to be a decree of a civil court.

(3) The award made by the Permanent Lok Adalat under this Act shall be by a majority of the persons constituting the Permanent Lok Adalat.

(4) Every award made by the Permanent Lok Adalat under this Act shall be final and shall not be called in question in any original suit, application or execution proceeding.

(5) The Permanent Lok Adalat may transmit any award made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court."

9. The expression used in Section 22C of the Act of 1987 viz.: "any party to a dispute"; will take its colour from the provisions of the Act and the purpose for which the same were enacted. A party can approach the Permanent Lok Adalat for his/her grievances in relation to public utility services, as defined in Section 22A(b) of the Act. Expression "Any" used in Section 22C of the Act cannot be read to include all the persons to a dispute, dehors the provisions of the Act.

10. According to this Court, it is the person aggrieved of the service or a recipient of the service, who can approach the Permanent Lok Adalat for any dispute relating to the prescribed public utility service or services provided by a provider of public utility service. The provisions of the Act of 1987 have been enacted with a view to provide a forum for redressal of the dispute/grievance of a recipient of a service or a citizen.

11. Public utility services are generally provided mainly by large corporate bodies and the forum in the form of Permanent Lok Adalat has been provided for ordinary men and women to ventilate their grievance against such large corporate bodies. Permanent Lok Adalat provides cost-effective and delay free tools for resolution of disputes. The ease of procedure has been provided so that a common man can stand against the large corporate sectors. Such seemless procedure provides insulation to a common man so that he is not trapped in the procedural or technical nittygritties.

12. The provisions of the Act of 1987 provides a forum for the recipient or a aggrieved of the public utility service and the Banks, Insurance Companies etc. cannot invoke jurisdiction of the Permanent Lok Adalat to avoid Court fees and to ensure that award passed at their instance is not subject to appeal etc.

13. Identical issue cropped up before Karnataka High Court, which of course for other reason, held that Bank cannot approach Permanent Lok Adalat. Though this Court does not adopt the reasoning given by the Karnataka High Court, but deems it apt to make a reference of the said judgment rendered in the case of Thimmyya v. State Bank of India reported in ILR 2014 Karnataka 2534. Relevant extract of the said judgment reads thus:-

"3. Therefore, for the permanent Lok Adalat to exercise its power under the Act, one of the parties to the proceedings before it, should be a public utility service. The above definition of public utility service does not include Banking Institutions. From the definition of Public Utility Services, it is clear that after expressly setting out the definition of Public Utility Services, the definition makers it clear that any services, which the Central Government or the State Government as the case may be, may, in the public interest by notification, declare to be public utility service for the process of this chapter. The reason why such a power is conferred on Central Government as well as the State Government is though this is a Parliamentary Legislation, if a Government, which is empowered to include such service as a public utility service. If such a service is under the control of the State Government, it is the State Government, which is empowered to include such service as a public utility service. The Government of Karnataka issued a notification as per Annexure H on 13th March 2008 in exercise of the powers conferred under Section 22-A of the Legal Services Authorities Act agreeing to include Banking and Financial Institutions in the State or Lok Adalat under the category Public Utility Service for the purpose of Chapter VI-A of Legal Services Authorities Act of 1987. The public utility service referred to is, the State Bank of India. It comes under the jurisdiction of the Central Government State Government has no jurisdiction. That is why in the notification, the State Government has explicity stated that they agree to include Banking and Financial Institutions in the State for Lok Adalat under the category of public utility service. Therefore, State Bank of India is not an Institution felling under the State. That notification has no application, Central Government has not issued any notification bringing within the definition of public utility service, the Banking Institutions. Under these circumstances, Lok Adalat was not justified in entertaining the suit filed by the State Bank of India and Anther erred in holding that because of the aforesaid notification issued by the State Government, Banking Institutions are also brought within the public utility service. From the aforesaid material on record, it is clear that the Lok Adalat has no jurisdiction to entertain

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the suit, which is clear from the averments of the plaint itself. Therefore, without any further enquiry, the Lok Adalat ought to have allowed the application and dismissed the suit. Hence, the impugned order passed by the Lok Adalat is illegal and requires to be set-aside." 14. The bank, which is a provider of public utility service having an agreement and security interest in its favour, is required to take appropriate remedies available under the relevant Law or under the terms of the agreement. 15. It is to be noticed that as per Section 22D of the Act of 1987, the Permanent Lok Adalat is not bound by the principles of evidence and the provisions of the Code of Civil Procedure; the Permanent Lok Adalat adopts a summary procedure; no Court fee is payable and above all the award passed by a permanent Lok Adalat is final and binding, as no appeal lies against an award passed by the Act. 16. This Court, therefore, does not find any error of law or of jurisdiction in the impugned order dated 30.4.2019, passed by the Permanent Lok Adalat, Bikaner. The writ petition, therefore fails. 17. The stay petition also stands disposed of accordingly. * inserted vide notification No. F8(1) Law-2/2014 dated 19.1.2019 published in Rajasthan Gazette.
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