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apex court held yes= court means any court of civil and criminal. award means any compromise decree is called as decree as per legal services authority act= The question posed for consideration is that when a criminal case filed under Section 138 of the Negotiable Instruments Act, 1881 referred to by the Magistrate Court to Lok Adalat is settled by the parties and an award is passed recording the settlement, can it be considered as a decree of a civil court and thus executable?

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10209 OF 2011

(Arising out of SLP (C) No.2798 of 2010)

K.N. Govindan Kutty Menon …. Appellant (s)

Versus

C.D. Shaji …. Respondent(s)
J U D G M E N T
P. Sathasivam, J.
1) Leave granted.

2) This appeal raises an important question as to the

interpretation of Section 21 of the Legal Services Authorities

Act, 1987 (in short `the Act’). The question posed for

consideration is that when a criminal case filed under Section

138 of the Negotiable Instruments Act, 1881 referred to by the

Magistrate Court to Lok Adalat is settled by the parties and an

award is passed recording the settlement, can it be considered

as a decree of a civil court and thus executable?

1
3) This appeal is directed against the final judgment and

order dated 24.11.2009 passed by the High Court of Kerala at

Ernakulam in Writ Petition (C) No. 33013 of 2009 whereby the

High Court dismissed the petition filed by the appellant

herein.
4) Brief facts:
(a) The appellant herein filed a complaint being C.C. No.

1216 of 2007 before the Judicial Ist Class Magistrate Court

No.1, Ernakulam against the respondent herein under Section

138 of the Negotiable Instruments Act, 1881 (in short `the N.I.

Act’). The Magistrate referred the said complaint to the

Ernakulam District Legal Service Authority for trying the case

for settlement between the parties in the Lok Adalat.

(b) On 08.05.2009, both parties appeared before the Lok

Adalat and the matter was settled and an award was passed

on the same day. As per the award, out of Rs. 6,000/-, the

respondent herein paid Rs.500/- on the same day and agreed

to pay the balance amount of Rs.5,500/- in five equal

instalments of Rs.1,100/- per month on or before the 10th day

of every month starting from June, 2009 and, in case of
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default, the appellant herein can recover the balance amount

due from the respondent in lump sum.

(c) As the respondent did not pay any of the installments as

per the settlement, the appellant filed execution petition being

E.P. No….. of 2009 in C.C. No. 1216 of 2007 in the Court of

Principal Munsiff, Ernakulam for seeking the execution of the

award. On 23.09.2009, the Principal Munsiff Judge,

Ernakulam dismissed the petition holding that the award

passed by the Lok Adalat on reference from the Magistrate

Court cannot be construed as a “decree” executable by the

civil court.

(d) Aggrieved by the said order, the appellant filed writ

petition being Writ Petition (C) No. 33013 of 2009 before the

High Court of Kerala. The High Court, vide order dated

24.11.2009, dismissed the writ petition.

(e) Against the said order, the appellant filed the above

appeal by way of special leave before this Court.

5) The respondent, though duly served by this Court, has

not chosen to contest the matter either by appearing in person

or through counsel. Heard Mr. Prashanth P., learned counsel
3
for the appellant and Mr. V. Giri, learned senior counsel, who,

on our request, assisted this Court as amicus curiae.

6) In order to find out the answer to the question raised, it

is useful to refer the Statement of Objects and Reasons and

certain provisions of the Act applicable to the question posed

before us.
“Statement of objects and Reasons.- Article 39-A of the

Constitution provides that the State shall secure that the

operation of the legal system promotes justice on the basis of

equal opportunity, and shall, in particular, provide free legal

aid, by suitable legislation or schemes or in any other way,

to ensure that opportunities for securing justice are not

denied to any citizen by reason of economic or other

disabilities.

2. With the object of providing free legal aid, Government

had, by Resolution dated the 26th September, 1980

appointed the “Committee for Implementing Legal Aid

Schemes” (CILAS) under the Chairmanship of Mr. Justice

P.N. Bhagwati (as he then was) to monitor and implement

legal aid programmes on a uniform basis in all the States

and Union territories. CILAS evolved a model scheme for

legal aid programme applicable throughout the country by

which several legal aid and advice boards have been set up

in the States and Union territories. CILAS is funded wholly

by grants from the Central Government. The Government is

accordingly concerned with the programme of legal aid as it

is the implementation of a constitutional mandate. But on a

review of the working of the CILAS, certain deficiencies have

come to the fore. It is, therefore, felt that it will be desirable

to constitute statutory legal service authorities at the

National, State and District levels so as to provide for the

effective monitoring of legal aid programmes. The Bill

provides for the composition of such authorities and for the

funding of these authorities by means of grants from the

Central Government and the State Governments. Power has

been also given to the National Committee and the State

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Committees to supervise the effective implementation of legal

aid schemes.

For some time now, Lok Adalats are being constituted at

various places in the country for the disposal, in a summary

way and through the process of arbitration and settlement

between the parties, of a large number of cases expeditiously

and with lesser costs. The institution of Lok Adalats is at

present functioning as a voluntary and conciliatory agency

without any statutory backing for its decisions. It has

proved to be very popular in providing for a speedier system

of administration of justice. In view of its growing

popularity, there has been a demand for providing a

statutory backing to this institution and the awards given by

Lok Adalats. It is felt that such a statutory support would

not only reduce the burden of arrears of work in regular

Courts, but would also take justice to the door-steps of the

poor and the needy and make justice quicker and less

expensive.”

“2. (aaa) “Court” means a civil, criminal or revenue Court

and includes any Tribunal or any other authority constituted

under any law for the time being in force, to exercise judicial

or quasi-judicial functions;”

“2(c) “legal service” includes the rendering of any service in

the conduct of any case or other legal proceeding before any

Court or other authority or Tribunal and the giving of advice

on any legal matter;”

“2(d) “Lok Adalat” means a Lok Adalat organized under

Chapter VI.”

“21. Award of Lok Adalat.- (1) Every award of Lok Adalat

shall be deemed to be a decree of a Civil Court or, as the

case may be, an order of any other Court and where a

compromise or settlement has been arrived at, by a Lok

Adalat in a case referred to it under sub-section (1) of section

20, the Court-fee paid in such case shall be refunded in the

manner provided under the Court-Fee Act, 1870 (7 of 1870).

(2) Every award made by a Lok Adalat shall be final and

binding on all the parties to the dispute, and no appeal shall

lie to any Court against the award.”

5
7) Free legal aid to the poor and marginalized members of

the society is now viewed as a tool to empower them to use the

power of the law to advance their rights and interests as

citizens and as economic actors. Parliament enacted the Legal

Services Authorities Act, 1987 in order to give effect to Article

39-A of the Constitution to extend free legal aid, to ensure that

the legal system promotes justice on the basis of equal

opportunity. Those entitled to free legal services are members

of the Scheduled Castes and the Scheduled Tribes, women,

children, persons with disability, victims of ethnic violence,

industrial workmen, persons in custody, and those whose

income does not exceed a level set by the government

(currently it is Rs 1 lakh a year in most States). The Act

empowers Legal Services Authorities at the District, State and

National levels, and the different committees to organize Lok

Adalats to resolve pending and pre-litigation disputes. It

provides for permanent Lok Adalats to settle disputes involving

public utility services. Under the Act, “legal services’ have a

meaning that includes rendering of service in the conduct of

any court-annexed proceedings or proceedings before any
6
authority, tribunal and so on, and giving advice on legal

matters. Promoting legal literacy and conducing legal

awareness programmes are the functions of legal services

institutions. The Act provides for a machinery to ensure

access to justice to all through the institutions of legal services

authorities and committees. These institutions are manned by

Judges and judicial officers. Parliament entrusted the

judiciary with the task of implementing the provisions of the

Act.

8) Section 21 of the Act, which we have extracted above,

contemplates a deeming provision, hence, it is a legal fiction

that the “award” of the Lok Adalat is a decree of a civil court.

In the case on hand, the question posed for consideration

before the High Court was that “when a criminal case referred

to by the Magistrate to a Lok Adalat is settled by the parties

and award is passed recording the settlement, can it be

considered as a decree of civil court and thus executable by

that court?” After highlighting the relevant provisions,

namely, Section 21 of the Act, it was contended before the

High Court that every award passed by the Lok Adalat has to
7
be deemed to be a decree of a civil court and as such

executable by that court. Unfortunately, the said argument

was not acceptable by the High Court. On the other hand, the

High Court has concluded that when a criminal case is

referred to the Lok Adalat and it is settled at the Lok Adalat,

the award passed has to be treated only as an order of that

criminal court and it cannot be executed as a decree of the

civil court. After saying so, the High Court finally concluded

“an award passed by the Lok Adalat on reference of a criminal

case by the criminal court as already concluded can only be

construed as an order by the criminal court and it is not a

decree passed by a civil court” and confirmed the order of the

Principal Munsiff who declined the request of the petitioner

therein to execute the award passed by the Lok Adalat on

reference of a complaint by the criminal court. On going

through the Statement of Objects and Reasons, definition of

`Court’, `legal service’ as well as Section 21 of the Act, in

addition to the reasons given hereunder, we are of the view

that the interpretation adopted by the Kerala High Court in

the impugned order is erroneous.
8
9) It is useful to refer some of the judgments of this Court

and the High Courts which have a bearing on the present

issue.

10) In Subhash Narasappa Mangrule (M/S) and Others vs.
Sidramappa Jagdevappa Unnad, reported in 2009 (3)
Mh.L.J. 857, learned single Judge of the High Court of

Bombay, considered an identical question. In that case, on

22.06.2001, the respondent filed a Criminal Complaint being

S.C.C. No. 923 of 2001 in the Court of Judicial Magistrate,

First Class, Akkalkot under Section 138 of the N.I. Act. Later,

the said criminal case was transferred to Lok Adalat. The

matter was compromised before the Lok Adalat and an award

was passed accordingly for Rs. 4 lakhs. The respondent

therein filed a Darkhast proceeding No. 17 of 2006 in the

Court of C.J.J.D. for execution of the award passed by the Lok

Adalat in the criminal case as there was no compliance of the

compromised order/award. The learned C.J.J.D., issued a

notice under Order XXVII Rule 22 of the Code of Civil

Procedure, 1908 (in short `the Code’). The petitioner therein

raised an objection stating that the Darkhast proceeding is not
9
maintainable as the award has been passed in criminal case.

By order dated 18.07.2007, the learned Civil Judge, (Jr.

Division) disposed off the objection and directed to proceed

with the execution by the Judgment and order. Aggrieved by

the same, the petitioners therein filed a revision before the

High Court. After adverting to Section 20 and other provisions

of the Act, the learned single Judge has concluded thus:-
“16. The parties were fully aware that under the Act, the

District Legal Services Authority may explore the possibility

of holding pre-litigation Lok Adalats in respect of the cheque

bouncing cases. The compromise in such cases would be

treated as Award having force of a decree. All objections as

raised with regard to the execution in view of above statutory

provisions itself is rightly rejected. Having settled the matter

in Lok Adalat and now after more than 3 years raising such

plea is untenable. Having obtained the award from Lok

Adalat, the party is not permitted to resile from the same. It

attains finality to the dispute between the parties finally and

binds all. Therefore, the order in this regard needs no

interference.

17. Once the parties entered into compromise before the Lok

Adalat, & at that time no question of any pecuniary

jurisdiction raised and or required to be considered by the

Lok Adalat. Therefore, once the award is passed, it is

executable under C.P.C…..”

11) In M/s Valarmathi Oil Industries & Anr. vs. M/s
Saradhi Ginning Factory, AIR 2009 Madras 180, the
admitted facts were that C.C. No. 308 of 2006 was taken on

10
file by the learned Judicial Magistrate No. I, Salem on the

complaint given by the respondent therein that the cheque

was issued by the second petitioner therein on behalf of the

first petitioner as partner of the firm, however, the same was

dishonoured by the bank due to insufficient funds. According

to the respondent, after issuance of the legal notice to the

petitioner, the complaint was given under Section 138 of the

N. I. Act against the petitioners. During the pendency of the

criminal case, at the request of both the parties, the matter

was referred to Lok Adalat for settlement. Both the parties

were present before the Lok Adalat and as per the award, they

agreed for the settlement and accordingly, the

petitioner/accused agreed to pay Rs. 3,75,000/- to the

respondent on or before 03.09.2007. It was signed by the

respondent/complainant, petitioners/accused and their

respective counsel. In view of the compromise arrived at

between both the parties, the amount payable was fixed at Rs.

3,75,000/- towards full quit of the claim and that the

petitioners therein agreed to pay the above-said amount on or

before 03.09.2007 and accordingly, the award was passed and
11
placed before the Judicial Magistrate Court for further orders.

When the said award was placed before the learned Judicial

Magistrate, by judgment dated 17.10.2007, based on the

award held that the petitioners therein guilty and convicted

under Section 138 of N.I. Act, accordingly, imposed sentence

of one year simple imprisonment and directed the petitioners

therein to pay a sum of Rs. 3,75,000/- as compensation to the

respondent. Aggrieved by which, the petitioners/accused

preferred appeal in C.S.No.167 of 2007 before the Sessions

Judge, Salem. Learned Sessions Judge, while suspending the

sentence of imprisonment till 16.12.2007, directed the

petitioners/accused to deposit the sum of Rs. 3,75,000/-

before the trial court and clarified that in case of failure of

depositing the amount, the order of suspension of sentence

would stand cancelled automatically and the petitioners were

also directed to execute a bond for Rs. 10,000/- with two

sureties each for the like sum to the satisfaction of the trial

court. Aggrieved by the same, the accused preferred criminal

revision case before the High Court. It was contended on

behalf of the petitioners before the High Court that as per
12
Section 21 of the Act, every award of the Lok Adalat shall be

deemed to be a decree of a civil court and, therefore, after the

award passed by the Lok Adalat, the respondent/complainant

was entitled to execute the award like a decree of the civil

court, however, in the instant case, the learned Magistrate, by

his Judgment has found the petitioners guilty under Section

138 of N.I. Act and also convicted and sentenced them to

undergo simple imprisonment for one year and to pay the

compensation of Rs. 3,75,000/-. The question formulated by

the High Court is whether the Magistrate can convict the

petitioners/accused under Section 138 of N.I. Act after the

award was passed in the Lok Adalat. Learned single Judge,

after adverting to Section 21(1) of the Act and the order of the

learned Magistrate has concluded as under:-
“13. Had there been no settlement in the Lok Adalat, the

learned Magistrate could have proceeded with the trial and

deliver his Judgment, for which, there is no bar. In the

instant case, as admitted by both the learned Counsel, there

was an award passed in the Lok Adalat, based on the

consensus arrived at between the parties. As per the award,

the petitioners/accused had to pay Rs. 3,75,000/- to the

respondent/complainant on or before 03.09.2007. As it is an

award made by Lok Adalat, it is final and binding on the

parties to the criminal revision and as contemplated under

Section 21(2) of the Act, no appeal shall lie to any court

against the award.
13
14. In such circumstances, the petitioners could have filed

the Execution Petition before the appropriate court, seeking

the award amount to be paid with interest and costs. In such

circumstances, it is clear that the learned Judicial

Magistrate became functus officio, to decide the case after

the award passed by Lok Adalat, to convict the accused

under Section 138 of Negotiable Instruments Act, hence, the

impugned order passed by the learned Sessions Judge is

also not sustainable in law, however, it is clear that the

petitioners/accused herein after having given consent for

Lok Adalat award being passed and also the award amount

agreed to pay Rs. 3,75,000/- on or before 03.09.2007 to the

respondent, have not complied with their undertaking made

before the Lok Adalat, which cannot be justified. However,

the order passed by the learned Judicial Magistrate under

Section 138 of Negotiable Instruments Act has to be set

aside, in view of the Lok Adalat award passed under Section

20(1)(i)(b), 20(1)(ii) of Legal Services Authorities Act (Act,

39/1987), as the Judicial Magistrate became functus officio

and the award is an executable decree in the eye of law, as

per Section 21 of the Act.”

After arriving at such conclusion, learned single Judge made it

clear that as per the award passed by the Lok Adalat, the

respondent/complainant is at liberty to file Execution Petition

before the appropriate court to get the award amount of Rs.

3,75,000/- reimbursed with subsequent interest and costs, as

per procedure known to law.

12) In Bhavnagar University vs. Palitana Sugar Mill (P)
Ltd. and Others, (2003) 2 SCC 111, it was held that the
purpose and object of creating a legal fiction in the statute is

14
well known and when a legal fiction is created, it must be

given its full effect.

13) In Ittianam and Others vs. Cherichi @ Padmini (2010)

8 SCC 612, it was held that when the Legislature uses a

deeming provision to create a legal fiction, it is always used to

achieve a purpose.

14) A statutory support as evidenced in the statement of

Objects and reasons of the Act would not only reduce the

burden of arrears of work in regular courts, but would also

take justice to the door steps of the poor and the needy and

make justice quicker and less expensive. In the case on hand,

the Courts below erred in holding that only if the matter was

one which was referred by a civil court it could be a decree

and if the matter was referred by a criminal court it will only

be an order of the criminal court and not a decree under

Section 21 of the Act. The Act does not make out any such

distinction between the reference made by a civil court and

criminal court. There is no restriction on the power of Lok

Adalat to pass an award based on the compromise arrived at

between the parties in a case referred by a criminal court
15
under Section 138 of the N.I. Act, and by virtue of the deeming

provision it has to be treated as a decree capable of execution

by a civil court. In this regard, the view taken in Subhash
Narasappa Mangrule (supra) and M/s Valarmathi Oil
Industries (supra) supports this contention and we fully
accept the same.

15) It is useful to refer the judgment of this Court in State of
Punjab & Anr. vs. Jalour Singh and Ors. (2008) 2 SCC 660.
The ratio that decision was that 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 the parties in the

presence of the Lok Adalat, in the form of an executable order

under the signature and seal of the Lok Adalat. This judgment

was followed in B.P. Moideen Sevamandir and Anr. vs. A.M.
Kutty Hassan (2009) 2 SCC 198.

16
16) In P.T. Thomas vs. Thomas Job, (2005) 6 SCC 478, Lok

Adalat, its benefits, Award and its finality has been extensively

discussed.

17) From the above discussion, the following propositions

emerge:

1) In view of the unambiguous language of Section 21 of
the Act, every award of the Lok Adalat shall be deemed
to be a decree of a civil court and as such it is
executable by that Court.
2) The Act does not make out any such distinction
between the reference made by a civil court and
criminal court.
3) There is no restriction on the power of the Lok Adalat
to pass an award based on the compromise arrived at
between the parties in respect of cases referred to by
various Courts (both civil and criminal), Tribunals,
Family court, Rent Control Court, Consumer Redressal
Forum, Motor Accidents Claims Tribunal and other
Forums of similar nature.
4) Even if a matter is referred by a criminal court under
Section 138 of the Negotiable Instruments Act, 1881
and by virtue of the deeming provisions, the award
passed by the Lok Adalat based on a compromise has

17
to be treated as a decree capable of execution by a civil
court.
18) In view of the above discussion and ultimate conclusion,

we set aside the order dated 23.09.2009 passed by the

Principal Munsiff Judge in an unnumbered execution petition

of 2009 in CC No. 1216 of 2007 and the order of the High

Court dated 24.11.2009 in Writ Petition (C) No. 33013 of 2009.

Consequently, we direct the execution court to restore the

execution petition and to proceed further in accordance with

law.

19) Before parting with this case, we would like to record our

deep appreciation for the valuable assistance rendered by the

learned amicus curiae.

20) The civil appeal is allowed. There shall be no order as to

costs.
………………………………………….J.

(P. SATHASIVAM)

………………………………………..J.

(J. CHELAMESWAR)

NEW DELHI;

NOVEMBER 28, 2011.

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