CANARA BANK versus G S JAYARAMA

Citation: [2022] 4 S.C.R. 162 · Decided: 19-05-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 4 S.C.R.
CANARA BANK
v.
G S JAYARAMA
(Civil Appeal No. 3872 of 2022)
MAY 19, 2022
[DR DHANANJAYA Y CHANDRACHUD AND
PAMIDIGHANTAM SRI NARASIMHA, JJ.]
Legal Services Authorities Act 1987: s. 22-C – Cognizance
of cases by Permanent Lok Adalat – Conciliation proceedings u/s.
22-C, nature of – Permanent Lok Adalat, if has adjudicatory
functions the under the Act – Held: Conciliation proceedings u/s.
22-C are mandatory in nature – s.22-C provides a step-by-step
scheme on how a matter is to proceed – First step is filing of
application which ousts the jurisdiction of other civil courts –
Thereafter, on parties filing requisite submissions and documents,
the Permanent Lok Adalat attempts conciliation between the parties
and thereafter, draws up terms of settlement and propose them to
the parties – If parties agree thereto, the Permanent Lok Adalat has
to pass an award and if the parties do not agree, then Permanent
Lok Adalat may decide the disputes on merits as long as the dispute
does not relate to an offence – Thus, the adjudication can only be
made when the parties disagree to the terms of settlement formulated
on the basis of the conciliation proceedings – Permanent Lok
Adalats are not allowed to bypass the step – Main goal was the
conciliation and settlement of disputes in relation to public utilities,
with a decision on merits being the last resort – As regards, the
adjudicatory functions, the Permanent Lok Adalats are the second
type of Lok Adalat established u/s. 22-B in respect of utility services
to carry out both conciliatory and adjudicatory functions subject
to procedure followed u/s. 22-C – Lok Adalat constituted u/s. 19
cannot perform any adjudicatory function in terms of s. 20 – On
facts, holding of the Single Judge and the Division Bench of the
High Court that the Permanent Lok Adalat has no adjudicatory
functions, and that the Permanent Lok Adalats cannot act as a
regular civil court in adjudicating the dispute between the parties,
is clearly incorrect, however, the Division Bench rightly held that
the Permanent Lok Adalat failed to follow the mandatory conciliation
[2022] 4 S.C.R. 162
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proceedings since the award of the Permanent Lok Adalat does not
indicate any attempt made by it to propose terms of settlement to the
parties and their rejection – It states that once the respondent and
his guarantor did not appear, it adjudicated the dispute on merits
in favour of the respondent, and the Permanent Lok Adalat could
not have done so and on this point the Division Bench rightly set
aside the award of the Permanent Lok Adalat.
Disposing of the appeal, the Court
HELD: 1.1 Section 22- C of the Legal Services Authorities
Act 1987 provides a step-by-step scheme on how a matter is to
proceed before the Permanent Lok Adalat. The first step is the
filing of the application which ousts the jurisdiction of other civil
courts, in accordance with sub-Sections (1) and (2). The second
step is the parties filing requisite submissions and documents
before the Permanent Lok Adalat, in accordance with sub-Section
(3). On the completion of the third step to its satisfaction, the
Permanent Lok Adalat can move to the fourth step of attempting
conciliation between the parties, in accordance with sub-Sections
(4), (5) and (6). Subsequently, in the fifth step in accordance with
sub-Section (7), the Permanent Lok Adalat has to draw up terms
of settlement on the basis of the conciliation proceedings, and
propose them to the parties. If the parties agree, the Permanent
Lok Adalat has to pass an award on the basis of the agreed upon
terms of settlement. Only if the parties fail to reach an agreement
on the fifth step, can the Permanent Lok Adalat proceed to the
final step and decide the dispute on its merits. [Para 24][182-G-
H; 183-A-C]
1.2 The submission that if the opposite party does not appear
before the Permanent Lok Adalat, it can dispense with the
conciliation proceedings and straightaway adjudicate the dispute
under Section 22-C(8), cannot be accepted. Even if the opposite
party does not appear, the Permanent Lok Adalat is still bound
to follow the step-by-step procedure laid down by Section 22-C.
Under Section 22-C(3), it would require the party before it to file
their submissions and documents, and make the best efforts to
communicate them to the opposite party for their response. If it
is satisfied that no response is forthcoming from the absent
opposit

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