Saturday, December 31, 2011

United India Insurance Co.Ltd. vs Shila Datta

Motor Vehicles Act, 1988 -  Ss. 149(1), (2) & (7), 147, 158(6), 163-A, 165, 166 and 17 - Whatever be the reason for insurer being made a party, once it is a party, it can raise all contentions that are available to the owner or driver to resist the claim.
Maintainability of a joint appeal by the owner of the vehicle (Insured) and Insurer - the presence of the insurer as a co-appellant will not affect the maintainability of the appeal.

Supreme Court of India
CIVIL APPEAL NOS.6026-6027 OF 2007
Hon'ble Judge(s): R.V. Raveendran, H.L. Dattu, K.S. Radhakrishnan
Date of Judgment: October 13, 2011
United India Insurance Co.Ltd. vs Shila Datta
Citation
2011(10) SCC 509
J U D G M E N T

R.V.RAVEENDRAN, J.

1. A Two Judge Bench of this Court made the following order of reference in this case on 3.12.2007: "One of the contentions raised in these appeals is the correctness of a three-Judge Bench decision of this Court in National Insurance Co. Ltd., Chandigarh vs. Nicolletta Rohtagi and Ors., - 2002 (7) SCC 456, which is said to be pending consideration in a large number of cases before this Court.

Assailing the correctness of the aforesaid decision Mr. Atul Nanda submits that therein the liability of the insurer to reimburse the insured on two premises, namely, (1) just compensation; and (2) whose liability would be to pay, as envisaged under sub-section (1) of section 149 vis-`- vis the right of the aggrieved persons (Which would include the insured) to prefer an appeal in terms of section 173 of the Motor Vehicles Act, had not been considered in the backdrop of the history in which sub-section (1) of section 149 was enacted.

Apart from the question raised by Mr. Nanda, we are of the opinion that the matter may be considered from other angles, namely, whether the insurer shall be wholly without any remedy even if the amount of compensation is determined in violation of the standard formula envisaged under the second schedule of the Act or in clear violation of the ratio (s) laid down by this Court. We, therefore, are of the opinion that it is a fit case where the matter should be referred to larger Bench. We direct accordingly. Let the records of the case be placed before Hon'ble the Chief Justice of India for appropriate orders."

2. On the said reference made, the following questions arise for our consideration, in regard to the position of an Insurer, under the Motor Vehicles Act, 1988 (`Act' for short) : 4(i) Whether the insurer can contest a motor accident claim on merits, in particular, in regard to the quantum, in addition to the grounds mentioned in section 149(2) of the Act for avoiding liability under the policy of insurance? (ii) Whether an insurer can prefer an appeal under section 173 of the Motor Vehicles Act, 1988, against an award of the Motor Accident Claims Tribunal, questioning the quantum of compensation awarded?

3. The insurance companies have urged the following five points for our consideration, which are independent grounds in support of their contention that insurance companies are not barred from questioning the quantum of compensation either before the Motor Accidents Claims Tribunal or in appeals arising from the awards of the Tribunal : (i) There is a significant difference between insurer as a `noticee' (a person to whom a notice is served as required by section 149(2) of the Act) in a claim proceedings and an insurer as a party-respondent in a claim proceedings.

Where an insurer is impleaded by the claimants as a party, it can contest the claim on all grounds, as there are no restrictions or limitations in regard to contest. But where an insurer is not impleaded by the claimant as a party, but is only issued a statutory notice under section 149 (2) of the Act by the Tribunal requiring it to meet the liability, it is entitled to be made a party to deny the liability on the grounds mentioned in section 149(2). (ii) When the owner of the vehicle (insured) and the insurer are aggrieved by the award of the Tribunal, and jointly file an appeal challenging the quantum, the mere presence of the insurer as a co-appellant will not render the appeal, as not maintainable.

When insurer is the person to pay the compensation, any interpretation to say that it is not a `person aggrieved' by the quantum of compensation determined, would be absurd and anomalous. (iii) When an insurer is aggrieved by the quantum of compensation, it is not seeking to avoid or exclude its liability, but merely wants determination of the extent of its liability. The restrictions imposed upon the insurers to defend the action by the claimant or file an appeal against the judgment and award of the Tribunal will apply, only if it wants to file an appeal to avoid liability and not when it admits its liability to pay the amount awarded, but only seeks proper determination of the quantum of compensation to be paid. (iv) Appeal is a continuation of the original claim proceedings.

Section 170 provides that if the person against whom the claim is made, fails to contest the claim, the insurer may be permitted to resist the claim on merits. If and when an award is made by the Tribunal which is excessive, arbitrary or erroneous, the owner of the vehicle has to challenge the same by filing an appeal before the High Court. If the insured (owner of the vehicle) fails to challenge an award even when it is erroneous or arbitrary or fanciful, it can be considered that the insured has failed to contest the same and consequently under section 170, the High Court or the tribunal may permit the insurer to file an appeal and contest the award on merits.

(v) The Motor Vehicles Act, 1988 (`Act' for short) creates a liability upon the insurer to satisfy the judgments and awards against the insured. The Act expressly restricts the right of the insurer to avoid the liability as insurer, only to the grounds specified in section 149(2) of the Act. Though it is impermissible to add to the grounds mentioned in the statute, the insurer has a right, if it has reserved such a right in the policy, to defend the action in the name of the insured. If it opts to step into the shoes of the insured, it can defend the action in the name of the insured and all defences open to the insured will be available to it and can be urged by it.

Its position contesting a claim under section 149(2) of the Act is distinct and different, when it is contesting the claim in the name of or on behalf of the insured owner of the vehicle. In cases, where it is authorized by the policy to defend any claim in the name of the insured, and the insurer does so, it can not be restricted to the grounds mentioned in section 149(2) of the Act, as the defence is on behalf of the owner of the vehicle. Relevant Legal Provisions

4. 4. We may refer to the position of an insurer and insured in the scheme contained in Chapters XI and XII of the Act. 4.1) Section 149 deals with the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-sections (1), (2) and (7) are extracted below : "149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks :

7(1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) [or under the provisions of section 163A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid o cancel or may have avoided or cancelled the policy, the insurer shall,

subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments.

(2) No sum shall be payable by an insurer under sub-section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:-

(a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:-(i) a condition excluding the use of the vehicle- (a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or (b) for organized racing and speed testing, or (c) for a purpose not allowed by the permit under which the vehicle is used,

where the vehicle is a transport vehicle, or(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or 8 (b) that the policy is void on the ground that it was obtained by the non- disclosure of a material fact or by a representation of fact which was false in some material particular. x x x x (7) No insurer to whom the notice referred to in sub-section (2) or sub- section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (3) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be."4.2) Section 147 prescribes the requirements of policies and limits of liability.

The relevant portion of the said section is extracted below: "147. Requirements of policies and limits of liability.-(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which - (a) is issued by a person who is an authorized insurer; and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)- (i) against any liability which may be incurred by him in respect of the death of or bodily [injury to any person, including owner of the goods or his authorized representative carried in the vehicle] or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:

Provided that a policy shall not be required--" xxx xxx xxx4.3) Section 163A makes special provisions as to payment of compensation on structured formula basis and is extracted below : 9 "163A. Special provisions as to payment of compensation on structured formula basis.-(1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorized insurer shall be liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be." xxx xxx xxx4.4) Section 168 relates to award of the Claims Tribunal and the relevant portion thereof is extracted below :- "168. Award of the Claims Tribunal.-

On receipt of an application for compensation made under section 166, the Claims Tribunal shall, after giving notice of the application to the insurer and after giving the parties (including the insurer) an opportunity of being heard, hold an inquiry into the claim or, as the case may be, each of the claims and, subject to the provisions of section 162 may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid and in making the award the Claims Tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them, as the case may be:"4.5) Section 170 deals with impleading insurer in certain cases and is extracted below :- "170. Impleading insurer in certain cases.-

Where in the course of any inquiry, the Claims Tribunal is satisfied that - (a) there is collusion between the person making the claim and the person against whom the claim is made, or (b) the person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded in writing, direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have, without prejudice to the provisions contained in sub-section (2) of section 149, the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made."Section 173 deals with appeals and relevant part thereof is extracted below :-

"173. Appeals.--(1) Subject to the provisions of sub-section (2) any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court: Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court unless he has deposited with it twenty-five thousand rupees or fifty per cent of the amount so awarded, whichever is less, in the manner directed by the High Court:"Nature of a claim petition under the Motor Vehicles Act, 1988

5. A claim petition for compensation in regard to a motor accident (filed by the injured or in case of death, by the dependant family members) before the Motor Accident Claims Tribunal constituted under section 165 of the Act is neither a suit nor an adversarial lis in the traditional sense. It is a proceedings in terms of and regulated by the provisions of Chapter XII of the Act which is a complete Code in itself.

We may in this context refer to the following significant aspects in regard to the Tribunals and determination of compensation by Tribunals:(i) A proceedings for award of compensation in regard to a motor accident before the Tribunal can be initiated either on an application for compensation made by the persons aggrieved (claimants) under section 166(1) or section 163A of the Act or suo moto by the Tribunal, by treating any report of accident (forwarded to the tribunal under section 158(6) of the Act as an application for compensation under section 166 (4) of the Act.(ii) The rules of pleadings do not strictly apply as the claimant is required to make an application in a form prescribed under the Act.

In fact, there is no pleading where the proceedings are suo moto initiated by the Tribunal. (iii) In a proceedings initiated suo moto by the tribunal, the owner and driver are the respondents. The insurer is not a respondent, but a noticee under section 149(2) of the Act. Where a claim petition is filed by the injured or by the legal representatives of a person dying in a motor accident, the driver and owner have to be impleaded as respondents. The claimants need not inplead the insurer as a party. But they have the choice of impleading the insurer also as a party respondent.

When it is not impleaded as a party, the Tribunal is required to issue a notice under section 149(2) of the Act. If the insurer is impleaded as a party, it is issued as a regular notice of the proceedings. (iv) The words `receipt of an application for compensation' in section 168 refer not only to an application filed by the claimants claiming compensation but also to a suo motu registration of an application for compensation under section 166(4) of the Act on the basis of a report of an accident under section 158(6) of the Act. (v) Though the tribunal adjudicates on a claim and determines the compensation, it does not do so as in an adversarial litigation.

On receipt of 12an application (either from the applicant or suo motu registration), the Tribunal gives notice to the insurer under section 149(2) of the Act, gives an opportunity of being heard to the parties to the claim petition as also the insurer, holds an inquiry into the claim and makes an award determining the amount of compensation which appears to it to be just. (Vide Section 168 of the Act).(vi) The Tribunal is required to follow such summary procedure as it thinks fit. It may choose one or more persons possessing special knowledge of and matters relevant to inquiry, to the assist it in holding the enquiry (vide section 169 of the Act).(vii) The award of the Tribunal should specify the person/s to whom compensation should be paid.

It should also specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them. (Vide section 168 of the Act).(viii) The Tribunal should deliver copies of the award to the parties concerned within 15 days from the date of the award. (Vide section 168 (2) of the Act).We have referred to the aforesaid provisions to show that an award by the tribunal cannot be seen as an adversarial adjudication between the litigating parties to a dispute, but a statutory determination of compensation on the occurrence of an accident, after due enquiry, in accordance with the statute. T he decision in N ICOLLETTA ROHTAGI

6. In National Insurance Co. Ltd. vs. Nicolletta Rohtagi - 2002 (7) SCC 456, a three Judge Bench of this Court considered the following two questions : (i) Non-filing of an appeal by the insured amounted to failure to contest the claim and that the right to contest included the right to file an appeal against the award of the Tribunal. (ii) Where despite the existence of the facts postulated in section 170 of the MV Act, 1988, the Tribunal does not implead the insurance company to contest the claim on grounds available to the insured or the persons against whom claim has been made, or in such a situation rejects the insurer's application for permission to contest the claim on merit or where the claimant has obtained an award by playing fraud, in such cases the insurer has a right of appeal to contest the award on merits.

The three Judge Bench, after referring to the decisions in Shankarrayya vs. United Insurance Co. Ltd. - 1998 (3) SCC 140, Narendra Kumar vs. Yarenissa - 1998 (9) SCC 202, Chinnamma George vs. N. K. Raju - 2000 (4) SCC 130, ad Ritu Devi vs. New Delhi Insurance Co. Ltd. - 2000 (5) SCC 113, held as under : "It was urged by learned counsel appearing for the insurance company that if an insured has not filed any appeal, it means he has failed to contest the claim and that the right to contest include the right to contest by filing an appeal against the award of the Tribunal as well, and in such a situation an appeal by the insurer questioning the quantum of compensation would be maintainable.

We have earlier noticed that motor vehicle accident claim is a tortious claim directed against tort-feasors who are the insured and the driver of the vehicle and the insurer comes to the scene as a result of statutory liability created under the Motor Vehicles Act. The legislature has ensured by enacting Section 149 of the Act that the victims of motor vehicle are fully compensated and protected. It is for that reason the insurer cannot escape from its liability to pay compensation on any exclusionary clause in the insurance policy except those specified in Section 149(2) of the Act or where the condition precedent specified in Section 170 is satisfied. For the aforesaid reasons, an insurer if aggrieved against an award, may file an appeal only on those grounds and no other.

However, by virtue of Section 170 of the 1988 Act, where in course of an enquiry the Claims Tribunal is satisfied that (a) there is a collusion between the person making a claim and the person against whom the claim has been made or (b) the person against whom the claim has been made has failed to contest the claim, the tribunal may, for reasons to be recorded in writing, implead the insurer and in that case it is permissible for the insurer to contest the claim also on the grounds which are available to the insured or to the person against whom the claim has been made.

Thus, unless an order is passed by the tribunal permitting the insurer to avail the grounds available to an insured or any other person against whom a claim has been made on being satisfied of the two conditions specified in Section 170 of the Act, it is not permissible to the insurer to contest the claim on the grounds which are available to the insured or to a person against whom a claim has been made.

Thus where conditions precedent embodied in Section 170 is satisfied and award is adverse to the interest of the insurer, the insurer has a right to file an appeal challenging the quantum of compensation or negligence or contributory negligence of the offending vehicle even if the insured has not filed any appeal against the quantum of compensation. Sections 149, 170 and 173 are part of one Scheme and if we give any different interpretation to Section 172 of the 1988 Act, the same would go contrary to the scheme and object of the Act."A careful reading of the said decision shows that issues (i) and (ii) raised before us did not arise for consideration in Nicolletta Rohtagi, nor were they considered therein. Re: Point No.(i) : The position in cases where the claimants implead the insurer as a respondent in the claim petition.

7. The scheme of the Motor Vehicles Act, 1988 as contained in Chapters XI (Insurance of Motor Vehicles against Third Party risks) and XII (Claim Tribunals) proceeds on the basis that an insurer need not be impleaded as a party to the claim proceedings and it should only be issued a statutory notice under section 149(2) of the Act so that it can be made liable to pay the compensation awarded by the tribunal and also resist the claim on any one of the grounds mentioned in clauses (a) and (b) of sub-section (2) of section 149.

Sub-sections (1), (2) and (7) of section 149 clearly refer to the insurer being merely a notice and not a party. Similarly, sections 158(6), 166(4), 168(1) and 170 clearly provide for and contemplate insurer being merely a noticee for the purposes mentioned in the Act and not being a party-respondent. Section 170 specifically refers to impleading of insurer as a party to the claim proceedings.

8. When an insurer is impleaded as a party - respondent to the claim petition, as contrasted from merely being a noticee under section 149(2) of the Act, its rights are significantly different. If the insurer is only a noticee, it can only raise such of those grounds as are permissible in law under section 149(2). But if he is a party-respondent, it can raise, not only those grounds which are available under section 149(2), but also all other grounds that are available to a person against whom a claim is made. It therefore follows that if a claimant impleads the insurer as a party-respondent, for whatever reason, then as such respondent, the insurer will be entitled to urge all contentions and grounds which may be available to it.

9. The Act does not require the claimants to implead the insurer as a party respondent. But if the claimants choose to implead the insurer as a party, not being a noticee under section 149(2), the insurer can urge all grounds and not necessarily the limited grounds mentioned in section 149(2) of the Act. If the insurer is already a respondent (having been impleaded as a party respondent), it need not seek the permission of the Tribunal under section 170 of the Act to raise grounds other than those mentioned in section 149(2) of the Act.

The entire scheme and structure of Chapters XI and XII is that the claimant files a claim petition only against the owner and driver and the tribunal issues notice to the insurer under section 149(2) so that it can be made liable to pay the amount awarded against the insurer and if necessary, deny liability under the policy of insurance, on any of the grounds mentioned in section 149(2). If an insurer is only a noticee and not a party-respondent, having regard to the decision in Nicolletta Rohtagi,

it can defend the claim only on the grounds mentioned in section 149(2) and not any of the other grounds relating to merits available to the insured-respondent. This is the position even where the claim proceedings are initiated suo moto under sections 149(7) and 158(6) of the Act, without any formal application by the claimants, as the insurer is only a noticee under section 149(2) of the Act.

10. Section 170 of the Act does not contemplate an insurer making an application for impleadment. Nor does it contemplate the insurer, if he is already impleaded as a party respondent by the claimants, making any application seeking permission to contest the matter on merits. Section 170 proceeds on the assumption that a claim petition is filed by the claimants, or is registered suo moto by the tribunal, with only the owner and driver of the vehicle as the respondents.

It also proceeds on the basis that in such a proceeding, a statutory notice would have been issued by the tribunal to the insurer so that the insurer may know about its future liability in the claim petition and also resist the claim, on any of the grounds mentioned in section 149(2). Section 170 of the Act also assumes that the tribunal will hold an inquiry into the claim, where only the claimants and the owner and driver will be the parties.

Section 170 provides that if during the course of such inquiry, the tribunal finds and satisfies itself that there is any collusion between the claimant and the owner/driver or where the owner/driver has failed to contest the claim, the tribunal may suo moto, for reasons to be recorded in writing, direct that the insurer who may be liable in respect of the claim, who was till then only a notice, shall be treated as a party to the proceedings. The insurer so impleaded, without prejudice to the provisions of section 149(2), will have the right to contest the claim on all or any of the grounds that are available to the driver/owner.

11. Therefore, where the insurer is a party- respondent, either on account of being impleaded as a party by the tribunal under section 170 or being impleaded as a party-respondent by the claimants in the claim petition voluntarily, it will be entitled to contest the matter by raising all grounds, without being restricted to the grounds available under section 149(2) of the Act. The claim petition is maintainable against the owner and driver without impleading the insurer as a party.

When a statutory notice is issued under section 149(2) by the tribunal, it is clear that such notice is issued not to implead the insurer as a party-respondent but merely to put it on notice that a claim has been made in regard to a policy issued by it and that it will have to bear the liability as and when an award is made in regard to such claim. Therefore, it cannot, as of right, require that it should be impleaded as a party-respondent. But it can however be made a party-respondent either by the claimants voluntarily in the claim petition or by the direction of the Tribunal under section 170 of the Act.

Whatever be the reason or ground for the insurer being impleaded as a party, once it is a party-respondent, it can raise all contentions that are available to resist the claim.Re : Point (ii) : Maintainability of a joint appeal by the owner of the vehicle (Insured) and Insurer

12. There is no dispute that when an award is made by the Tribunal, the owner of the vehicle (insured), being a person aggrieved, can file an appeal challenging his liability on any ground, or challenge the quantum of compensation. An appeal which is "maintainable" when the owner of the vehicle files it, does not become "not maintainable" merely on account of the insurer being a co-appellant with the owner. When the insurer becomes a co-appellant, the owner of the vehicle does not cease to be a person aggrieved.

13. This question came up for consideration of a Two Judge Bench of this Court with reference to the provisions of the Motor Vehicles Act, 1939 (`Old Act' for short) in Narendra Kumar vs. Yarenissa - 1998 (9) SCC 202. This Court held : 20"The question, however, is if such a joint appeal is preferred must it be dismissed in toto or can the tortfeasor, the owner of the offending vehicle, be permitted to pursue the appeal while rejecting or dismissing the appeal of the insurer.

If the award has gone against the tortfeasors it is difficult to accept the contention that the tortfeasor is not "an aggrieved person" as has been held by some of the High Courts vide Kantilal & Bros. v. Ramarani Debi, 1980 ACJ 501, New India Assurance Co. Ltd. v. Shakuntla Bai, 1987 ACJ 224, Nahar Singh v. Manohar Kumar, (1993) 1 ACJ 269, Radha Kishan Sachdeva v. Fit, Lt. L.D. Sharma, (1993) 27 DRJ 18 (Del) merely because under the scheme of Section 96 if a decree or award has been made against the tortfeasors the insurer is liable to answer judgment "as if a judgment-debtor".

That does not snatch away the right of the tortfeasors who are jointly and severally liable to answer judgment from preferring an appeal under Section 110-D of the Act. If for some reason or the other the claimants desire to execute the award against the tortfeasors because they are not in a position to recover the money from the insurer the law does not preclude them from doing so and, therefore, so long as the award or decree makes them liable to pay the amount of compensation they are aggrieved persons within the meaning of Section 110-D and would be entitled to prefer an appeal.

But merely because a joint appeal is preferred and it is found that one of the appellants, namely, the insurer was not competent to prefer an appeal, we fail to see why the appeal by the tortfeasor, the owner of the vehicle, cannot be proceeded with after dismissing or rejecting the appeal of the insurer. To take a view that the owner is not an aggrieved party because the Insurance Company is liable in law to answer judgment would lead to an anomalous situation in that no appeal would lie by the tortfeasors against any award because the same logic applies in the case of a driver of the vehicle.

The question can be decided a little differently. Can a claim application be filed against the Insurance Company alone if the tortfeasors are not the aggrieved parties under Section 110-D of the Act? The answer would obviously be in the negative. If that is so, they are persons against whom the claim application must be preferred and an award sought for otherwise the insurer would not be put to notice and would not be liable to answer judgment as if a judgment-debtor.

Therefore, on first principle it would appear that the contention that the owner of a vehicle is not an aggrieved party is unsustainable. For the reasons stated above, we are of the opinion that even in the case of a joint appeal by insurer and owner of offending vehicle if an award has been made against the tortfeasors as well as the insurer even though an appeal filed by the insurer is not competent, it may not be dismissed as such. The tortfeasor can proceed with the appeal after the cause-title is suitably amended by deleting the name of the insurer."

14. When the issue again came up for consideration before another Two Judge bench of this Court in Chinnama George & Ors. vs. N. K. Raju & Anr. - 2000 (4) SCC 130, with reference to the provisions of the Motor Vehicles Act, 1988, this Court agreed with Narendra Kumar that the owner of the vehicle is an aggrieved person, but held that a joint appeal would not be maintainable. This Court held : "Admittedly, none of the grounds as given in Sub-section (2) of Section 149 exist for the insurer to defend the claims petition. That being so, no right existed in the insurer to file appeal against the award of the Claims Tribunal.

However, by adding N.K. Raju, the owner as co-appellant, an appeal was filed in the High Court which led to the impugned judgment. None of the grounds on which insurer could defend the claims petition was the subject matter of the appeal as far as the insurer is concerned. We have already noticed above that we have not been able to figure out from the impugned judgment as to how the owner felt aggrieved by the award of the Claims Tribunal. The impugned judgment does not reflect any grievance of the owner or even that of the driver of the offending bus against the award of the Claims Tribunal.

The insurer by associating the owner or the driver in the appeal when the owner or the driver is not an aggrieved person cannot be allowed to mock at the law which prohibit the insurer from filing any appeal except on the limited grounds on which it could defend the claims petition. We cannot put our stamp of approval as to the validity of the appeal by the insurer merely by associating the insured. Provision of law cannot be undermined in this way.

We have to give effect to the real purpose to the provision of law relating to the award of compensation in respect of the accident arising out of the use of the motor vehicles and cannot permit the insurer to give him right to defend or appeal on grounds not permitted by law by a backdoor method. Any other interpretation will produce unjust results and open gates for the insurer to challenge any award. We have to adopt purposive approach which would not defeat the broad purpose of the Act. Court has to give effect to true object of the Act by adopting purposive approach. xxxxxxxx

There is no dispute with the proposition so laid by this Court. But the insurer cannot maintain a joint appeal along with the owner or the driver if defence on any ground under Section 149(2) is not available to it. In that situation joint appeal will be incompetent. It is not enough if the insurer is struck out from the array of the appellants.

The appellate court must also 22 be satisfied that a defence which is permitted to be taken by the insurer under the Act was taken in the pleadings and was pressed before the Tribunal. On the appellate court being so satisfied the appeal may be entertained for examination of the correctness or otherwise of the judgment of the Tribunal on the question arising from/relating to such defence taken by the insurer If the appellate court is not satisfied that any such question was raised by the insurer in the pleadings and/or was pressed before the Tribunal, the appeal filed by the insurer has to be dismissed as not maintainable.

The court should take care to ascertain this position on proper consideration so that the statutory bar against the insurer in a proceeding of claim of compensation is not rendered irrelevant by the subterfuge of the insurance company joining the insured as a co- appellant in the appeal filed by it. This position is clear on a harmonious reading of the statutory provisions in Sections 147, 149 and 173 of the Act. Any other interpretation will defeat the provision of Sub-section (2) of Section 149 of the Act and throw the legal representatives of the deceased or the injured in the accident to unnecessary prolonged litigation at the instance of the insurer."This issue did not arise for consideration of the Three Judge Bench decision in Nicolletta Rohtagi, as the question therein was whether an insurer could file an appeal.

15. On a careful consideration, we are of the view that the decision in Chinnamma George to the extent it holds that a joint appeal is not maintainable, does not lay down the correct law. As observed in Narendra Kumar, the owner of the vehicle does not cease to be an aggrieved person, merely because the insurer is ultimately liable under the terms of the policy or under section 149 of the Act. If the owner by himself, can file an appeal as an aggrieved person and such appeal is maintainable, we fail to understand how the presence of the insurer as a co-appellant would make the appeal not maintainable. Whether the owner joins the insurer or the insurer joins the owner, makes no difference to the fact that owner continues to be a person aggrieved.

16. When a joint appeal is filed, to say that the insurer is not an aggrieved person and the owner of the vehicle is also not an aggrieved person, would lead to an anomalous situation and would border on an absurdity. Without entering upon the question whether an insurer is an aggrieved person (which requires to be considered separately), we make it clear that on account of the insurer being a co-appellant, will not affect the maintainability of the appeal. So long as the owner is an appellant and he is a `person aggrieved' in law, the question whether he is independently filing the appeal, or whether he is filing it at the instance of the insurer becomes irrelevant.

When a counsel holds vakalatnama for an insurer and the owner of the vehicle in a joint appeal, the court cannot say his arguments and submissions are only on behalf of the insurer and not on behalf of the owner. There is also no need to examine at the threshold in a joint appeal, whether the insurer should be deleted from the array of appellants. Re : Points (iii) to (v)

17. We may next consider the cases where the insurer is only a noticee under section 149(2) and has not been impleaded as a party to the claim proceedings. The basic premises in Nicolletta Rohtagi is that the insurer can contest a motor-accident claim for compensation only on the grounds mentioned in section 149(2) of the Act. The contention of Insurance Companies is that an Insurer can deny liability under the policy only on the grounds mentioned in section 149(2) of the Act (even though several other grounds may be available under the terms of the policy); and where it does not deny liability or avoid liability under policy of insurance, it can certainly assist the Tribunal in arriving at the just compensation, by contesting any unjust or illegal or erroneous claim by the claimants.

We find considerable force in the contention that where a notice is issued under section 149(2) of the Act, the insurer as `noticee' (as contrasted from a `party') can not `deny' its liability as an insurer on grounds other than those mentioned in section 149(2)(a) and (b) of the Act, but nothing prevents it as a person liable to pay the compensation, from assisting the Tribunal in arriving at the `just' compensation. In this context, we may rely upon the observation of this Court in National Insurance Co. Ltd. v. Jugal Kishore - 1988 (1) SCC 626, referring to section 96(6) of the old Act (Motor Vehicles Act, 1939):

25 "....Secondly, from the words "to avoid his liability" used in Sub-section (6) of Section 96 it is apparent that the restrictions placed with regard to defences available to the insurer specified in Sub-section (2) of Section 96 are applicable to a case where the insurer wants to avoid his liability. In the instant case the appellant is not seeking to avoid its liability but wants a determination of the extent of its liability which is to be determined, in the absence of any contract to the contrary, in accordance with the statutory provision contained in this behalf in Clause (b) of Sub-section (2) of Section 95 of the Act...

"The assumption that as a noticee under section 149(2), the insurer cannot raise any contention other than those mentioned in clauses (a) and (b) of section 149(2) is correct in so far as denial of liability under the policy is concerned. This is because sub-section (1) of section 149 of the Act clearly provides that `notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall subject to the provisions of this section, pay to the person entitled to the benefit.........".

Therefore, an insurer, without seeking to avoid or exclude its liability under the policy, on grounds other than those mentioned in section 149(2)(a) and (b), can contest the claim, in regard to the quantum. All that section 149(2) says is that insurer cannot raise all kinds of contentions based on the terms of policy to avoid the contract of indemnity. But it does not require the insurer to concede wrong claims or false claims or not challenge erroneous determination of compensation.

18. Let us take by way of example, a case where the deceased was aged 20 years and the annual loss of dependency was Rs.1,00,000/- to the dependants. The multiplier applicable would be 18 and the compensation would be Rs.18 lakhs. But if the tribunal holds that as the life expectancy of the deceased was 70 as per evidence and therefore, it would apply a multiplier of 50 (that is 70-20), instead of 18 and as a consequence, awards Rs.50 lakhs as compensation, should the insurer be without remedy if the owner and driver do not care to file an appeal, as the liability under the Act is that of the insurer.

It is only the insurer, who is required to pay the compensation amount, is interested in filing the appeal. It can file an appeal by itself or it can file an appeal jointly with the owner. If it is denied that opportunity, there is a likelihood of huge compensation being awarded without any correction. The fact that the compensation is not likely to be interfered, may also encourage the Motor Accident Claims Tribunal to make awards which may not be fanciful reasonable. We fail to see why the insurance company cannot challenge the judgment of the tribunal, if it is erroneous. The Act nowhere says that the insurer is not a `person aggrieved' with reference to the amount of compensation awarded which he is required to pay.

It is difficult to countenance the submission that a person who is required to a sum of money, from his pocket, has no right even to say : "Look here, the calculation of the amount claimed is wrong". Interests of justice will not be served by allowing obvious errors to remain uncorrected.

19. The Insurers submit that if the owner of the vehicle (Insured) fails to file an appeal when an erroneous award is made, he fails to contest the same and consequently, the insurer should be able to file an appeal, by applying the principle underlying section 170 of the Code. In this behalf, they relied upon the decision in United India Insurance Co. Ltd. vs. Bhushan Sachdeva - 2002 (2) SCC 265, (held to be not good law in Nicolletta Rohtagi) wherein a two Judge Bench of this Court held thus : "The person against whom the claim is made is normally the insured of the vehicle involved in the accident. When he failed to contest that claim made against him the insurer gets the opportunity to contest such claim on all or any of the grounds available to the insured.

Such a provision was absent in the Motor Vehicles Act, 1939 initially and the Parliament inserted it therein only in March 1970. The right of the insured to contest a claim does not stop with the end of the proceedings before the Tribunal. What is meant by the words "failed to contest"? Those words must be interpreted in a realistic manner. Right to contest would include the right to contest by filing an appeal against the award of the Tribunal as well. Hence the insured can continue to context the claim by filing an appeal as provided under Section 173 of the Act.

If the insured fails to prefer an appeal that also would amount to failure to contest that claim effectively. Quite often the insured would lose the desire to contest the claim once he is told that he would not be mulcted with the liability as the same is siphoned off to the insurer. It means that insured had dropped out from contesting a claim midway. In such an eventuality the Act enables the insured to contest it on all grounds available to the insured."

20. In British India General Insurance Co.Ltd. v. Captain Itbar Singh & Ors. - AIR 1959 SC 1331, a three Judge Bench of this Court held as under: "....The Statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it. It is not for us to add to those grounds and therefore to the statute for reasons of hardship.

We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do...." (emphasis supplied)

Nicolletta Rohtagi did not consider the issue with reference to the situation where the insurer is enabled by a specific term in the insurance policy to take over and conduct the defence of the case in the name of the insured, presumably as the insurance policy did not have such an enabling provision. In fact if such a contention had been raised, the court would have noticed that the issue was covered by a binding three-Judge Bench judgment in British India General Insurance. Be that as it may.

21. However, in view of the decision in Nicolletta Rohtagi, we cannot decide points (iii) to (v) in favour of the Insurers. For the aforesaid reasons, in so far as issues (iii) to (v) are concerned, we are of the view that Nicolletta Rohtagi requires reconsideration by a larger bench. Conclusion

22. We accordingly answer the points arising from the reference as under: (i) Points (i) and (ii) are held in favour of the Insurers. The matters covered by points (i) and (ii) are to be placed before the respective benches for consideration accordingly.(ii) Points (iii) to (v) which may come in conflict with Nicolletta Rohtagi, are referred to a larger Bench. We accordingly direct these matters (that is, cases where the insurer alone was the appellant before the High Court and where the insurer was only a noticee under section 149(2) and not an impleaded respondent in the claim petition), to be placed before the Hon'ble Chief Justice for constituting a larger bench to consider points (iii), (iv) and (v) raised by the insurers.

23. The parties to file memos indicating whether their cases are covered by points (i) and (ii) or under points (iii) to (iv) to enable the Registry to place the matters appropriately.

Parimal vs Veena @ Bharti

Code of Civil Procedure- Order 9 Rule 13 - Ex-parte decree against a defendant has to be set aside if the party satisfies the Court that summons had not been duly served or he was prevented by sufficient cause from appearing when the suit was called on for hearing. "Sufficient Cause" is an expression which has been used in large number of Statutes. The meaning of the word "sufficient" is "adequate" or "enough", in as much as may be necessary to answer the purpose intended. Therefore, word "sufficient" embraces no more than that which provides a platitude which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case and duly examined from the view point of a reasonable standard of a cautious man.
In order to determine the application under Order IX, Rule 13 CPC, the test has to be applied is whether the defendant honestly and sincerely intended to remain present when the suit was called on for hearing and did his best to do so. Sufficient cause is thus the cause for which the defendant could not be blamed for his absence. Therefore, the applicant must approach the court with a reasonable defence.

Supreme Court of India
CIVIL APPEAL NO...1467... OF 2011
(Arising out of S.L.P.(C) NO. 19632 of 2007)
Hon'ble Judge(s): P. Sathasivam, B.S. Chauhan
Date of Judgment: 8 February, 2011
Parimal vs Veena @ Bharti
Citation
2011 (2)  SCC 302; JT 2011 (2) SC 597
J U D G M E N T

Dr. B.S. CHAUHAN, J.

1.     Leave granted.

2.     This appeal has been preferred against the judgment and order dated 17.7.2007, passed by the High Court of Delhi at New Delhi, in FAO No.63 of 2002, by which the High Court has allowed the application under Order IX Rule 13 of the Code of Civil Procedure, 1908 (hereinafter called CPC), reversing the judgment and order dated 11.12.2001, passed by the Additional District Judge, Delhi.

3.     FACTS:

A.    Appellant got married to the respondent/wife on 9.12.1986 and out of the said wed lock, a girl was born. The relationship between 1 the parties did not remain cordial. There was acrimony in the marriage on account of various reasons. Thus, the appellant/husband filed a case for divorce on 27.4.1989, under section 13(1)(i-a) and (i-b) of the Hindu Marriage Act, 1955, against the respondent/wife.

B.    Respondent/wife refused to receive the notice of the petition sent to her by the Court on 4.5.1989 vide registered AD cover for the date of hearing on 6.7.1989. Respondent/wife on 28.6.1989 was present at her house when the process server showed the summons to her. She read the same and refused to accept it. Refusal was reported by the process server, which was proved as Ex.OPW1/B.

C.    Again on 7.8.1989, she refused to accept the notice for 8.9.1989, sent by the Court through process server. The Court ordered issuance of fresh notices. One was issued vide ordinary process and the other vide Registered AD cover for 8.9.1989. Registered AD was returned to the Court with report of refusal, as she declined to receive the AD notice. Under the Court's orders, summons were affixed at the house of the respondent/wife, but she chose not to appear.

D.    She was served through public notice on 6.11.1989 published in the newspaper `National Herald' which was sent to her address, 3/47, 2 First Floor, Geeta Colony, Delhi. This was placed on record and was not rebutted by the respondent/wife in any manner.

E.    After service vide publication dated 8.11.1989 as well as by affixation, respondent/wife was proceeded ex- parte in the divorce proceedings. Ex-parte judgment was passed by Addl. District Judge, Delhi on 28.11.1989 in favour of the appellant/husband and the marriage between the parties was dissolved.

F.    Two years after the passing of the decree of divorce, on 16.10.1991, the appellant got married and has two sons aged 17 and 18 years respectively from the said marriage.

G.    The respondent, after the expiry of 4 years of the passing of the ex-parte decree of divorce dated 28.11.1989, moved an application dated 17.12.1993 for setting aside the same basically on the grounds that ex-parte decree had been obtained by fraud and collusion with the postman etc., to get the report of refusal and on the ground that she had not been served notice even by substituted service and also on the ground that even subsequent to obtaining decree of divorce the appellant did not disclose the fact of grant of divorce to her during the proceedings of maintenance under Section 125 of the Code of Criminal Procedure, 1973 (hereinafter called Cr.P.C.). The said 3 application under Order IX, Rule 13 CPC was also accompanied by an application under Section 5 of the Indian Limitation Act, 1963, for condonation of delay.

H.    The trial Court examined the issues involved in the application at length and came to the conclusion that respondent/wife miserably failed to establish the grounds taken by her in the application to set aside the ex-parte decree and dismissed the same vide order dated 11.12.2001.

I.      Being aggrieved, respondent/wife preferred First Appeal No.63 of 2002 before the Delhi High Court which has been allowed vide judgment and order impugned herein. Hence, this appeal. RIVAL SUBMISSIONS:

4.     Shri M.C. Dhingra, Ld. counsel appearing for the appellant has submitted that the service stood completed in terms of statutory provisions of the CPC by the refusal of the respondent to take the summons. Subsequently, the registered post was also not received by her as she refused it. It was only in such circumstances that the trial Court entertained the application of the appellant under Order V, Rule 20 CPC for substituted service.

The summons were served by publication in the daily newspaper `National Herald' published from 4 Delhi which has a very wide circulation and further service of the said newspaper on the respondent/wife by registered post. The High Court committed a grave error by taking into consideration the conduct of the appellant subsequent to the date of decree of divorce which was totally irrelevant and unwarranted for deciding the application under Order IX, Rule 13 CPC. More so, the High Court failed to take note of the hard reality that after two years of the ex-parte decree the appellant got married and now has two major sons from the second wife. Therefore, the appeal deserves to be allowed and the judgment impugned is liable to be set aside.

5.     On the contrary, Ms. Geeta Dhingra, Ld. counsel appearing for the respondent/wife has vehemently opposed the appeal, contending that once the respondent/wife made the allegations of fraud and collusion of the appellant with postman etc. as he succeeded in procuring the false report, the burden of proof would be upon the appellant and not upon the respondent/wife to establish that the allegations of fraud or collusion were false. The conduct of the appellant even subsequent to the date of decree of divorce, i.e. not disclosing this fact to the respondent/wife during the proceedings under Section 125 Cr.P.C., disentitles him from any relief before this court of equity. No interference is required in the matter and the appeal is liable to be dismissed.

6.     We have considered the rival submissions made by learned counsel for the parties and perused the record.

7.     Order IX, R.13 CPC: The aforesaid provisions read as under: "Setting aside decree ex-parte against defendant In any case in which a decree is passed ex-parte against a defendant, he may apply to the Court by which the de- cree was passed for an order to set it aside; and if he sat- is fies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit; xx xx xx

 Provided further that no Court shall set aside a decree passed ex-parte merely on the ground that there has been an irregularity in the service of summons, if it is satisfied that the defendant had notice of the date of hearing and had sufficient time to appear and answer the plaintiff's claim. xx xx xx" (Emphasis added)

8.     It is evident from the above that an ex-parte decree against a 6 defendant has to be set aside if the party satisfies the Court that summons had not been duly served or he was prevented by sufficient cause from appearing when the suit was called on for hearing. However, the court shall not set aside the said decree on mere irregularity in the service of summons or in a case where the defendant had notice of the date and sufficient time to appear in the court. The legislature in its wisdom, made the second proviso, mandatory in nature. Thus, it is not permissible for the court to allow the application in utter disregard of the terms and conditions incorporated in the second proviso herein.

9.     "Sufficient Cause" is an expression which has been used in large number of Statutes. The meaning of the word "sufficient" is "adequate" or "enough", in as much as may be necessary to answer the purpose intended. Therefore, word "sufficient" embraces no more than that which provides a platitude which when the act done suffices to accomplish the purpose intended in the facts and circumstances existing in a case and duly examined from the view point of a reasonable standard of a cautious man. In this context, "sufficient cause" means that party had not acted in a negligent manner or there was a want of bona fide on its part in view of the facts and circumstances of a case or the party cannot be alleged to have been "not acting diligently" or "remaining inactive". However, the facts and circumstances of each case must afford sufficient ground to enable the Court concerned to exercise discretion for the reason that whenever the court exercises discretion, it has to be exercised judiciously. (Vide: Ramlal & Ors. v. Rewa Coalfields Ltd., AIR 1962 SC 361; Sarpanch, Lonand Grampanchayat v. Ramgiri Gosavi & Anr., AIR 1968 SC 222; Surinder Singh Sibia v. Vijay Kumar Sood, AIR 1992 SC 1540; and Oriental Aroma Chemical Industries Limited v. Gujarat Industrial Development Corporation & Another, (2010) 5 SCC 459)

10.  In Arjun Singh v. Mohindra Kumar & Ors., AIR 1964 SC 993, this Court observed that every good cause is a sufficient cause and must offer an explanation for non-appearance. The only difference between a "good cause" and "sufficient cause" is that the requirement of a good cause is complied with on a lesser degree of proof than that of a "sufficient cause". (See also: Brij Indar Singh v. Lala Kanshi Ram & Ors., AIR 1917 P.C. 156; Manindra Land and Building Corporation Ltd. v. Bhutnath Banerjee & Ors., AIR 8 1964 SC 1336; and Mata Din v. A. Narayanan, AIR 1970 SC 1953).

11.  While deciding whether there is a sufficient case or not, the court must bear in mind the object of doing substantial justice to all the parties concerned and that the technicalities of the law should not prevent the court from doing substantial justice and doing away the illegality perpetuated on the basis of the judgment impugned before it. (Vide: State of Bihar & Ors. v. Kameshwar Prasad Singh & Anr., AIR 2000 SC 2306; Madanlal v. Shyamlal, AIR 2002 SC 100; Davinder Pal Sehgal & Anr. v. M/s. Partap Steel Rolling Mills (P) Ltd. & Ors., AIR 2002 SC 451; Ram Nath Sao alias Ram Nath Sao & Ors. v. Gobardhan Sao & Ors., AIR 2002 SC 1201; Kaushalya Devi v. Prem Chand & Anr. (2005) 10 SCC 127; Srei International Finance Ltd., v. Fair growth Financial Services Ltd. & Anr., (2005) 13 SCC 95; and Reena Sadh v. Anjana Enterprises, AIR 2008 SC 2054).

12.  12. In order to determine the application under Order IX, Rule 13 CPC, the test has to be applied is whether the defendant honestly and sincerely intended to remain present when the suit was called on for hearing and did his best to do so. Sufficient cause is thus the cause for which the defendant could not be blamed for his absence. Therefore, the applicant must approach the court with a reasonable defence. Sufficient cause is a question of fact and the court has to exercise its discretion in the varied and special circumstances in the case at hand. There cannot be a strait-jacket formula of universal application. PRESUMPTION OF SERVICE BY REGISTERED POST & BURDEN OF PROOF:

13.  This Court after considering large number of its earlier judgments in Greater Mohali Area Development Authority & Ors. v. Manju Jain & Ors., AIR 2010 SC 3817, held that in view of the provisions of Section 114 Illustration (f) of the Evidence Act, 1872 and Section 27 of the General Clauses Act, 1897 there is a presumption that the addressee has received the letter sent by registered post. However, the presumption is rebuttable on a consideration of evidence of impeccable character. A similar view has been reiterated by this Court in Dr. Sunil Kumar Sambhudayal Gupta & Ors. v. State of Maharashtra, JT 2010 (12) SC 287.

14.  14. In Gujarat Electricity Board & Anr. v. Atmaram Sungomal Poshani, AIR 1989 SC 1433, this Court held as under: "There is presumption of service of a letter sent under registered cover, if the same is returned back with a postal endorsement that the addressee refused to accept the same. No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the Court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same. The burden to rebut the presumption lies on the party, challenging the factum of service." (Emphasis added)

15.  The provisions of Section 101 of the Evidence Act provide that the burden of proof of the facts rests on the party who substantially asserts it and not on the party who denies it. In fact, burden of proof means that a party has to prove an allegation before he is entitled to a judgment in his favour. Section 103 provides that burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any special law that the proof of that fact shall lie on any particular person. The provision of Section 103 amplifies the general rule of Section 101 that the burden of proof lies on the person who asserts the affirmative of the facts in issue. PRESENT CONTROVERSY: 1

16.  The case at hand is required to be considered in the light of the aforesaid settled legal propositions. The trial Court after appreciating the entire evidence on record and pleadings taken by the parties recorded the following findings: "The applicant/wife as per record was served with the notice of the petition, firstly, on 4.5.89 when she had refused to accept the notice of the petition vide registered AD cover for the date of hearing i.e. 6.7.89 and thereafter on 7.8.89 when again she refused to accept the notice for 8.9.89 and thereafter when the notice was published in the newspaper `National Herald' on 6.11.89. The UPC Receipt dated 6.11.89 vide which the newspaper `National Herald' dated 6.11.89 was sent to the respondent/applicant at her address 3/47, First Floor, Geeta Colony, Delhi is on record and has not been rebutted in any manner. In these circumstances, the application u/o 9 Rule 13 CPC filed by the respondent/applicant/wife on 7.1.1994 is hopelessly barred by time and no sufficient ground has been shown by the applicant/wife for condoning the said inordinate delay."

17.  So far as the High Court is concerned, it did not deal with this issue of service of summons or as to whether there was "sufficient cause" for the wife not to appear before the court at all, nor did it set aside the aforesaid findings recorded by the trial Court. The trial Court has dealt with only the aforesaid two issues and nothing else. 1 The High Court has not dealt with these issues in correct perspective. The High Court has recorded the following findings: "The order sheets of the original file also deserve a look. The case was filed on 1.5.1989. It was ordered that respondent be served vide process fee and Regd. AD for 6.7.1989.

The report of process server reveals that process server did not identify the appellant and she was identified by the respondent himself. In next date's report appellant was identified by a witness. The Retd. AD mentions only one word "refused". It does not state that it was tendered to whom and who had refused to accept the notice. The case was adjourned to 8.9.1989. It was recorded that respondent had refused to take the notice. Only one word, "Refused" appears on this registered envelope as well. On 8.9.1989 itself it was reported that respondent had refused notice and permission was sought to move an application under Order 5 Rule 20 of CPC. On 8.9.1989, application under Section 5 Rule 20 CPC was moved and it was ordered that the appellant be served through "National Herald". The presumption of law if any stands rebutted by the statement made by the appellant because she has stated that she was staying in the said house of her brother for a period of eight months. The version given by her stands supported by the statement made by her brother." (Emphasis added)

18.  The High Court held that presumption stood rebutted by a bald statement made by the respondent/wife that she was living at different address with her brother and this was duly supported by her brother 1 who appeared as a witness in the court. The High Court erred in not appreciating the facts in the correct perspective as substituted service is meant to be resorted to serve the notice at the address known to the parties where the party had been residing last. (Vide Rabindra Singh v. Financial Commissioner, Cooperation, Punjab & Ors., (2008) 7 SCC 663).

19.  More so, it is nobody's case that respondent/wife made any attempt to establish that there had been a fraud or collusion between the appellant and the postman. Not a single document had been summoned from the post office. No attempt has been made by the respondent/wife to examine the postman. It is nobody's case that the "National Herald" daily newspaper published from Delhi did not have a wide circulation in Delhi or in the area where the respondent/wife was residing with her brother. In such a fact-situation, the impugned order of the High Court becomes liable to be set aside.

20.  The appellate Court has to decide the appeal preferred under Section 104 CPC following the procedure prescribed under Order XLIII, Rule 2 CPC, which provides that for that purpose, procedure prescribed under Order XLI shall apply, so far as may be, to appeals 1 from orders. In view of the fact that no amendment by Delhi High Court in exercise of its power under Section 122 CPC has been brought to our notice, the procedure prescribed under Order XLI, Rule 31 CPC had to be applied in this case. .

21.  Order XLI, Rule 31 CPC provides for a procedure for deciding the appeal. The law requires substantial compliance of the said provisions. The first appellate Court being the final court of facts has to formulate the points for its consideration and independently weigh the evidence on the issues which arise for adjudication and record reasons for its decision on the said points. The first appeal is a valuable right and the parties have a right to be heard both on question of law and on facts. (vide: Moran Mar Basselios Catholicos & Anr. v. Most Rev. Mar Poulose Athanasius & Ors., AIR 1954 SC 526; Thakur Sukhpal Singh v. Thakur Kalyan Singh & Anr., AIR 1963 SC 146; Santosh Hazari v. Purshottam Tiwari, AIR 2001 SC 965; Madhukar v. Sangram, AIR 2001 SC 2171; G. Amalorpavam & Ors. v. R.C. Diocese of Madurai & Ors., (2006) 3 SCC 224; Shiv Kumar Sharma v. Santosh Kumari, (2007) 8 SCC 600; and Gannmani Anasuya & Ors. v. 1 Parvatini Amarendra Chowdhary & Ors., AIR 2007 SC 2380).

22.  The first appellate Court should not disturb and interfere with the valuable rights of the parties which stood crystallised by the trial Court's judgment without opening the whole case for re-hearing both on question of facts and law. More so, the appellate Court should not modify the decree of the trial Court by a cryptic order without taking note of all relevant aspects, otherwise the order of the appellate Court would fall short of considerations expected from the first appellate Court in view of the provisions of Order XLI, Rule 31 CPC and such judgment and order would be liable to be set aside. (Vide B.V. Nagesh & Anr. v. H.V. Sreenivassa Murthy, JT (2010) 10 SC 551).

23.  In view of the aforesaid statutory requirements, the High Court was duty bound to set aside at least the material findings on the issues, in spite of the fact that approach of the court while dealing with such an application under Order IX, Rule 13 CPC would be liberal and elastic rather than narrow and pedantic. However, in case the matter does not fall within the four corners of Order IX, Rule 13 CPC, the court has no jurisdiction to set aside ex-parte 1 decree. The manner in which the language of the second proviso to Order IX, Rule 13 CPC has been couched by the legislature makes it obligatory on the appellate Court not to interfere with an ex-parte decree unless it meets the statutory requirement.

24.  The High Court has not set aside the material findings recorded by the trial Court in respect of service of summons by process server/registered post and substituted service. The High Court failed to discharge the obligation placed on the first appellate Court as none of the relevant aspects have been dealt with in proper perspective. It was not permissible for the High Court to take into consideration the conduct of the appellant subsequent to passing of the ex-parte decree. More so, the High Court did not consider the grounds on which the trial Court had dismissed the application under Order IX, Rule 13 CPC filed by the respondent/wife. The appeal has been decided in a casual manner.

25.  In view of the above, appeal succeeds and is allowed. The judgment and order dated 17.7.2007 passed by the High Court of Delhi in FAO No. 63 of 2002 is set aside and the judgment and order of the trial Court dated 11.12.2001 is restored. Before parting with the case, it may be pertinent to mention here that the court tried to find out the means of re-conciliation of the dispute and in view of the fact that the appellant got married in 1991 and has two major sons, it would not be possible for him to keep the respondent as a wife. A lump sum amount of Rs. 5 lakhs had been offered by Shri M.C. Dhingra, Ld. counsel for the appellant to settle the issue. However, the demand by the respondent/wife had been of Rs. 50 lakhs. Considering the income of the appellant as he had furnished the pay scales etc., the court feels that awarding a sum of Rs. 10 lakhs to the wife would meet the ends of justice as a lump sum amount of maintenance for the future. The said amount be paid by the appellant to the respondent in two equal installments within a period of six months from today. The first installment be paid within three months.

Friday, December 2, 2011

K.N. Govindan Kutty Menon Vs. C.D. Shaji

Legal Services Authorities Act, 1987 - Section 21 - 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. - Lok Adalat can pass decree in criminal cases. 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 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.
Negotiable Instruments Act, 1881 - Section 138 - Even if a matter is referred by a criminal court under S. 138 of the N.I. Act 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.

Supreme Court of India
Civil Appeal No. 10209 of 2011
[Arising out of SLP (C) No.2798 of 2010]
Hon'ble Judge(s): P. Sathasivam, J. Chelameswar
Date of Judgment: 28 November, 2011
K.N. Govindan Kutty Menon Vs. C.D. Shaji
Citation

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?

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 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 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 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."

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 6authority, 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 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.

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 9maintainable 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. 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 10file 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 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 12Section 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 14well 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 15under 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. 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:

a. 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.

b. The Act does not make out any such distinction between the reference made by a civil court and criminal court.

c. 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.

d. 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.

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.