When a criminal case filed U/S 138 of Negotiable Instruments Act, referred to by Magistrate Court to Lok Adalat is settled by the parties and an award is drawn, can it be considered as a Decree and executable? Yes.

(SUPREME COURT OF INDIA) in K.N. Govindan Kutty Menon Versus C.D. Shaji [(2011) 13 SCALE 232]

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 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.

12. In Bhavnagar University v. Palitana Sugar Mill (P) Ltd. and Ors., (2003) 2 SCC 111, it was held that the purpose and object of creating a legal fiction in the statute is well known and when a legal fiction is created, it must be given its full effect.

13. In Ittianam and Ors. v. 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 under Section 138 of the Negotiable Instruments 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 and Anr. v. 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. v. A.M. Kutty Hassan, (2009) 2 SCC 198.

16. In P.T. Thomas v. 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 to be treated as a Decree capable of execution by a civil court.