How a Permanent Lok Adalat Decides, and Why It May Decide at All

So the safe and accurate answer is the layered one. The figure in the second proviso is ten lakh rupees; the third proviso empowers the Central Government, in consultation with the Central Authority, to increase it by notification; and NALSA states the present jurisdiction to be one crore rupees, although its own site is not consistent about it. Do not assert a single figure as settled without seeing the notification, and check the current limit before advising anybody. What is certainly wrong is to say the ceiling is fixed at ten lakh and cannot change, because the third proviso says otherwise.

Section 22C(2): after an application is made, no party to that application shall invoke the jurisdiction of any court in the same dispute.

This is a strong provision and it is the other half of the bargain. Approaching a Permanent Lok Adalat is not a free attempt that can be abandoned for court if it goes badly. The applicant is committed, and so is the other side.

Section 22C(3) to (6): the written stage, and the duty to cooperate

Section 22C(3): on an application being made, the Permanent Lok Adalat:

• (a) shall direct each party to file a written statement stating the facts and nature of the dispute, the points or issues in it, and the grounds relied on in support of or in opposition to those points, which a party may supplement with documents and other evidence; and shall send a copy of each statement and its documents to each of the other parties;
• (b) may require any party to file an additional statement at any stage of the conciliation proceedings; and
• (c) shall communicate any document or statement received from any party to the other party, to enable a reply.

Notice how much of the ordinary adversarial structure is here: statements of case, documents, and service on the other side. That is not an accident. A body that may eventually decide has to build a record it can decide on, and section 22C(3) is that record.

Section 22C(4): when the statements, additional statements and replies have been filed to its satisfaction, the Permanent Lok Adalat shall conduct conciliation proceedings between the parties in such manner as it thinks appropriate, taking into account the circumstances of the dispute.

Section 22C(5): during the conciliation proceedings, it shall assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner.

Section 22C(6): it is the duty of every party to cooperate in good faith with the Permanent Lok Adalat in the conciliation, and to comply with its direction to produce evidence and other related documents.

Section 22C(7): settlement, if it can be had

Where, in the conciliation proceedings, the Permanent Lok Adalat is of opinion that there exist elements of settlement which may be acceptable to the parties, it may formulate the terms of a possible settlement and give them to the parties for their observations. If the parties reach agreement, they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an award in terms of it and furnish a copy to each party.

Compare this with conciliation under section 73 of the Arbitration and Conciliation Act 1996, which chapter 570 works through. The structure is almost identical: the neutral formulates terms, the parties observe on them, and a signed agreement follows. Chapter VIA is conciliation, right up to the point where it stops being conciliation.

Section 22C(8): the sentence that changes everything

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

Read it slowly, because four things are packed into it.

"Fail to reach an agreement": the power arises only after conciliation has been tried and has failed. A Permanent Lok Adalat cannot decide first.

"Shall": it is a duty, not a discretion. Once conciliation fails, the forum must decide.

"If the dispute does not relate to any offence": the criminal exclusion is repeated. A Permanent Lok Adalat may settle a compoundable offence but may never decide a matter relating to an offence.

"Decide the dispute": an adjudication, on the merits, binding on a party who never agreed to anything.

Section 22D: the rules it decides by

The Permanent Lok Adalat, while conducting conciliation proceedings or deciding a dispute on merit, shall 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 and the Indian Evidence Act 1872.

Two halves, and both are necessary.

Natural justice means, at its core, that each side must be heard and the decision-maker must be impartial. Applying it here is what keeps section 22C(8) constitutional: a body that decides without agreement must at least hear both sides fairly.

Not bound by the Code and the Evidence Act is what keeps it quick. There is no framing of issues, no examination-in-chief and cross-examination, and no rules about admissibility. That freedom was one of the grounds on which Chapter VIA was attacked.

Section 22E: the award, and its finality

Section 22E(1): every award, whether made on merit or in terms of a settlement agreement, shall be final and binding on all the parties and on persons claiming under them.

Section 22E(2): every award shall be deemed to be a decree of a civil court.

Section 22E(3): the award shall be by a majority of the persons constituting the Permanent Lok Adalat.

Section 22E(4): every award shall be final and shall not be called in question in any original suit, application or execution proceeding.

Section 22E(5): the Permanent Lok Adalat may transmit any award to a civil court having local jurisdiction, and that court shall execute the order as if it were a decree made by that court.

Sub-section (3) is worth noticing because it only makes sense for a body that decides. A three-member forum that could only record agreements would never need a majority rule.

Bar Council of India v. Union of India: the challenge, and the answer

Bar Council of India v. Union of India, AIR 2012 SC 3246, (2012) 8 SCC 243, decided 3 August 2012, R.M. Lodha and Anil R. Dave JJ.

Facts. A petition under article 32 challenging sections 22A to 22E as arbitrary and violative of article 14. The grounds were the sharpest that can be put against Chapter VIA, and they are worth knowing because they are the criticism section of any answer on this topic:

• a service provider can move a Permanent Lok Adalat unilaterally under section 22C(1) and (2), and so pre-empt an aggrieved consumer from going to the consumer fora or any other judicial forum;
• the forum may then decide on merits under section 22C(8) without following the Code of Civil Procedure or the Evidence Act;
• under section 22E(1) and (4) the award is final, cannot be questioned in any forum, and carries no right of appeal; and
• public utility services engage the right to life under article 21, so an adverse decision on merits has serious consequences.

Held. The writ petition was dismissed. On the absence of an appeal, the Court gave two reasons. It is important that a dispute of this kind is brought to an end at the earliest and not prolonged unnecessarily. And, more importantly, a party aggrieved by an award can always approach the High Court under its supervisory and extraordinary jurisdiction under articles 226 and 227 of the Constitution. The Court rejected the submission that this would simply return the burden of litigation to the High Courts.

The Court also relied on the earlier three-judge decision in S.N. Pandey, which had found no constitutional infirmity in the same Chapter, observing that the legislature's effort is to decrease the workload of the courts by resorting to alternative dispute resolution, that Lok Adalats have been a fast means of dispensation of justice for over two decades, and that the composition of a Permanent Lok Adalat contemplates a judicial officer or retired judicial officer together with persons having adequate experience in public utility services.

Why it matters. It is the authority for the constitutionality of the only body in this subject that can impose a decision without consent, and it supplies the answer to the obvious objection that section 22E leaves an aggrieved party with no remedy. The remedy is articles 226 and 227. That single sentence is the most useful thing in the case for an examination.

A worked example

Prakash's insurer rejected his claim of Rs. 3,80,000 for a fire in his shop. He has not sued.

Can he go to a Permanent Lok Adalat? Yes. Insurance service is within section 22A(b)(vi); he has not brought the dispute before any court, so section 22C(1) is satisfied; and the amount is well within the ceiling.

What happens next? Under section 22C(3) both sides file written statements with documents, each served on the other. Under section 22C(4) and (5) the forum conducts conciliation, impartially. Under section 22C(6) both must cooperate in good faith and produce what is asked for.

The insurer offers Rs. 1,00,000 and Prakash refuses. Under section 22C(7), if the forum thinks there are elements of a settlement it may formulate terms and give them to the parties for observations. Suppose neither accepts them.

Then what? Section 22C(8): the parties having failed to agree, and the dispute not relating to an offence, the Permanent Lok Adalat shall decide the dispute. It does so guided by natural justice, objectivity, fair play and equity, and it is not bound by the Code of Civil Procedure or the Evidence Act, under section 22D.

It awards him Rs. 2,60,000, by two votes to one. That is valid under section 22E(3), which requires a majority. The award is final and binding under section 22E(1), deemed a decree of a civil court under section 22E(2), and cannot be questioned in any original suit, application or execution proceeding under section 22E(4). If the insurer does not pay, the award can be transmitted to a civil court with local jurisdiction, which executes it as its own decree under section 22E(5).

Can the insurer challenge it anywhere? Not by appeal; none lies. Its only route is the High Court under articles 226 and 227, as Bar Council of India v. Union of India holds.

Now change one fact. Suppose Prakash had already filed a consumer complaint before applying. Section 22C(1) requires the application to be made before the dispute is brought before any court, and section 2(1)(aaa) defines court to include a tribunal or quasi-judicial authority. The Permanent Lok Adalat would have no jurisdiction.

What beginners get wrong

A Permanent Lok Adalat does not decide first. Conciliation under section 22C(4) to (7) must be attempted, and only its failure triggers section 22C(8).

The pecuniary limit in the Act is not the current limit. Ten lakh rupees is in the second proviso; the third proviso allows an increase, and NALSA states the present jurisdiction is up to one crore.

Section 22C(2) is a real bar. Once an application is made, no party may invoke any court's jurisdiction in the same dispute.

"No appeal" is not "no remedy". Articles 226 and 227 remain, per Bar Council of India v. Union of India.

The award may be by majority. Section 22E(3), which distinguishes this forum from every other body in Module I.

Quick revision

• Section 22C(1): application by any party before the dispute is brought before any court. Provisos: no jurisdiction over a non-compoundable offence; no jurisdiction where the value of the property in dispute exceeds ten lakh rupees; and the Central Government may raise that limit by notification. NALSA states the present jurisdiction to be one crore rupees, though its own pages are inconsistent, so give the statutory figure, the power to raise it, and the current stated figure together.
• Section 22C(2): after the application, no party may invoke any court's jurisdiction in the same dispute.
• Section 22C(3) to (6): written statements, documents, service on the other side, additional statements; conciliation conducted independently and impartially; a duty on the parties to cooperate in good faith.
• Section 22C(7): the forum may formulate terms of a possible settlement; if the parties agree, they sign and the forum passes an award in those terms.
• Section 22C(8): on failure to agree, and if the dispute does not relate to any offence, the Permanent Lok Adalat shall decide the dispute.
• Section 22D: guided by natural justice, objectivity, fair play, equity and other principles of justice; not bound by the Code of Civil Procedure 1908 or the Indian Evidence Act 1872.
• Section 22E: the award, on merit or on settlement, is final and binding on the parties and those claiming under them; deemed a decree of a civil court; made by majority; not questionable in any original suit, application or execution proceeding; transmissible to a civil court for execution.
• Bar Council of India v. Union of India (2012) 8 SCC 243: Chapter VIA upheld; the remedy against an award is the High Court under articles 226 and 227.

Test yourself

1. When may a Permanent Lok Adalat decide a dispute, and when may it not? Under section 22C(8) it shall decide where the parties have failed to reach an agreement under sub-section (7), provided the dispute does not relate to any offence. It cannot decide before conciliation has been attempted and has failed, and it can never decide a matter relating to an offence.

2. A consumer files a complaint before a consumer commission and then applies to a Permanent Lok Adalat. Is the application maintainable? No. Section 22C(1) permits an application only before the dispute is brought before any court, and section 2(1)(aaa) defines court to include any tribunal or authority exercising judicial or quasi-judicial functions, which a consumer commission does.

3. What is the pecuniary limit on a Permanent Lok Adalat's jurisdiction? The second proviso to section 22C(1) sets it at ten lakh rupees, and the third proviso permits the Central Government, in consultation with the Central Authority, to increase that limit by notification. NALSA states the present jurisdiction to be up to one crore rupees, although its own website gives ten lakh on another page, so an answer should give the statutory figure, the power to raise it, and the currently stated figure rather than a single number.

4. There being no appeal against an award under section 22E, what remedy does an aggrieved party have? The supervisory and extraordinary jurisdiction of the High Court under articles 226 and 227 of the Constitution, as the Supreme Court held in Bar Council of India v. Union of India while upholding Chapter VIA.

5. State two differences between the procedure of a Lok Adalat and that of a Permanent Lok Adalat. First, a Permanent Lok Adalat requires written statements, documents and service on the other party under section 22C(3), which an ordinary Lok Adalat does not. Second, section 22D expressly frees it from the Code of Civil Procedure 1908 and the Indian Evidence Act 1872 and directs it to be guided by natural justice, objectivity, fair play and equity, because unlike an ordinary Lok Adalat it may decide the dispute on merits.