# HDFC Standard Life Insurance Co. Ltd v. Permanent Lok Adalat Moradabad & Anr

- **Citation:** (2023) 1 ILRA 411
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-11-10
- **Case number:** Writ-C No. 27289 of 2022
- **Bench:** Prakash Padia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/hdfc-standard-life-insurance-co-ltd-v-permanent-lok-adalat-moradabad-anr-49144
- **Pages:** 9

## Headnote

(A) Civil law - Companies Act, 1956 - The
Insurance Act, 1938 - Section 3 , The
Insurance Regulatory and Development
Authority of India (Protection of Policy
Holder's Interest) Regulations, 2002 -
Clause
8
(3),
The
Legal
Services
Authorities Act, 1987 - Section 22 -
Powers of Lok Adalats , Section 22(C) -
Cognizance of cases by Permanent Lok
Adalat - In the absence of following the
prescribed procedure as specially provided
under Section 22(C)(7) of the Legal
Services Authorities Amendment Act by
the
Permanent
Lok
Adalat,
the
order/award is vitiated . (Para - 19)

Quashing of award - order passed by Permanent
Lok Adalat - without providing opportunity of
hearing to petitioner - no reasons given while
allowing petition filed by claimant-respondent -
Permanent Lok Adalat does not follow procedure
- provided under the Legal Services Authorities
Amendment Act.(Para -15)

(B) The Legal Services Authorities Act,
1987 - Section 22-C(7) & 22-C(8) -
Section 22-C(8) comes into effect once an
agreement under Section 22-C(7) has
failed - proposed terms of settlement
under
Section
22-C(7),
and
the
conciliation proceedings preceding it, are
mandatory - If Permanent Lok Adalats are
allowed to bypass this step just because a
party is absent, it would be tantamount to
deciding disputes on their merit ex parte
and issuing awards which will be final,
binding and will be deemed to be decrees
of civil courts - Conciliation proceedings
under Section 22-C of the Legal Services
Authorities
Amendment
Act
are
mandatory in nature. (Para -18)

HELD:-Permanent Lok Adalat does not follow
the procedure as provided under the Legal
Services Authorities Amendment Act, therefore,
the award is vitiated and illegal in the eyes of
law, the same is liable to be set aside and is
hereby set aside. Direction to Permanent lok
Adalat to pass fresh order after following the
complete procedure under the law as well as the
law laid down by the Hon'ble Apex Court in the
case of Canara Bank. (Para -20,22 )

Petition Allowed. (E-7)

List of Cases cited:

## Text

1 All. HDFC Standard Life Insurance Co. Ltd. Vs. Permanent Lok Adalat Moradabad & Anr.
411
favour of the appellant were rejected, which
materially affected the result of the election.
Learned counsel for the respondent submitted
that the appellant has not set forth the concise
statement of material fact with regard to the
allegation of counting invalid votes in favour of
the respondent No. 1 nor has given any
particulars of such invalid votes which are
alleged to have been counted in favour of
respondent No. 1 He also submitted that
similarly there are no particulars with regard to
the rejection of valid votes in favour of the
appellant nor number of such votes in order to
support the allegation that such rejection of
valid votes in favour of the appellant materially
affected the result of the election. In our opinion
there is no substance in these submissions made
by the learned counsel for the appellant. In fact
the appellant has neither pleaded the details
and the number of such invalid votes which
were counted in favour of respondent No. 1 nor
has given the particulars of the number of such
valid votes in favour of die, appellant which
were wrongfully rejected during the course of
counting. This apart, the Returning Officer,
Supervisors and other officials were also
present in the counting hall throughout the
process of counting and the observers also
visited the counting hall, but neither the
appellant nor any of his counting agents
pointed out or objected either orally or in
writing that invalid votes were counted in
favour of the respondent No. 1 or valid votes in
favour of the appellant were rejected. The
evidence of the Returning Officer, PW 16
clearly goes to show that no such complaint
was made by any one during the course of
counting. In these facts and circumstances it is
difficult to accept the allegations made by the
appellant which seem to be only an after
thought and without any evidence or material to
support the same."

16. It is settled that order of recounting
cannot be passed only for the sake of it and on
the basis of vague allegation without specifying
any particular irregularity in counting as well as
how it would affect election result materially. In
the present case in the body of election petition
vague assertions have been made regarding
illegal rejection of valid votes which are not
substantiated either in examination of election
petitioner or otherwise on the basis of record
available. Parties have to take proper pleadings
by adducing evidence that by particular
irregularity of illegality result of election has
been materially affected. There is no dispute to
the settled legal proposition that as a rule relief
not founded in pleadings should not be granted
[See, Arikala Narasa Reddy (supra)].

17. In the present case, Sub-Divisional
Magistrate has exercised its jurisdiction of
recounting only on the basis of roving inquiry
without substantial ground or evidence on
record. Conclusions arrived by Sub-Divisional
Magistrate are based on vague submissions and
without any substantial material produced by the
election petitioner, therefore, the order impugned
suffers from illegality and liable to be set aside.

18. In the result, writ petition is allowed.
Impugned order dated 23.12.2022 passed by
Sub-Divisional Magistrate, Kairana, District
Shamli, is hereby quashed.
----------
(2023) 1 ILRA 411
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.11.2022

BEFORE

THE HON'BLE PRAKASH PADIA, J.

Writ-C No. 27289 of 2022

HDFC Standard Life Insurance Co. Ltd.
 ...Petitioner
Versus
Permanent Lok Adalat Moradabad & Anr.
 ...Respondents
412 INDIAN LAW REPORTS ALLAHABAD SERIES
Counsel for the Petitioner:
Sri Aditya Bhardwaj

Counsel for the Respondents:

(A) Civil law - Companies Act, 1956 - The
Insurance Act, 1938 - Section 3 , The
Insurance Regulatory and Development
Authority of India (Protection of Policy
Holder's Interest) Regulations, 2002 -
Clause
8
(3),
The
Legal
Services
Authorities Act, 1987 - Section 22 -
Powers of Lok Adalats , Section 22(C) -
Cognizance of cases by Permanent Lok
Adalat - In the absence of following the
prescribed procedure as specially provided
under Section 22(C)(7) of the Legal
Services Authorities Amendment Act by
the
Permanent
Lok
Adalat,
the
order/award is vitiated . (Para - 19)

Quashing of award - order passed by Permanent
Lok Adalat - without providing opportunity of
hearing to petitioner - no reasons given while
allowing petition filed by claimant-respondent -
Permanent Lok Adalat does not follow procedure
- provided under the Legal Services Authorities
Amendment Act.(Para -15)

(B) The Legal Services Authorities Act,
1987 - Section 22-C(7) & 22-C(8) -
Section 22-C(8) comes into effect once an
agreement under Section 22-C(7) has
failed - proposed terms of settlement
under
Section
22-C(7),
and
the
conciliation proceedings preceding it, are
mandatory - If Permanent Lok Adalats are
allowed to bypass this step just because a
party is absent, it would be tantamount to
deciding disputes on their merit ex parte
and issuing awards which will be final,
binding and will be deemed to be decrees
of civil courts - Conciliation proceedings
under Section 22-C of the Legal Services
Authorities
Amendment
Act
are
mandatory in nature. (Para -18)

HELD:-Permanent Lok Adalat does not follow
the procedure as provided under the Legal
Services Authorities Amendment Act, therefore,
the award is vitiated and illegal in the eyes of
law, the same is liable to be set aside and is
hereby set aside. Direction to Permanent lok
Adalat to pass fresh order after following the
complete procedure under the law as well as the
law laid down by the Hon'ble Apex Court in the
case of Canara Bank. (Para -20,22 )

Petition Allowed. (E-7)

List of Cases cited:

1. L.I.C. of India Vs Asha Goel , (2001) 2 SCC
160

2. P. C. Chacko & anr. Vs Chairman, L.I.C. of
India & ors. , (2008) 1 SCC 321

3. Satwant Kaur Sandhu Vs N.I.A. Co. Ltd.,
(2009) 8 SCC 316

4. R.L.I. Co. Ltd. Vs Rekhaben Nareshbhai
Rathod , (2019) 6 SCC 175

5. Manager, B.A.L.I. Co. Ltd. & ors. Vs Dalbir
Kau , AIR 2020 SC 5210

6. A.I.G.I. Co., Ltd. Vs S. P. Maheshwari , AIR
1960 Mad 484

7. L.I.C. of India, Kanpur Nagar Vs Syed
Zaigham Ali & anr. , 2016 (3) AllLJ289

8. Canara Bank Vs G.S. Jayarama , (2022) 7
SCC 776

(Delivered by Hon'ble Prakash Padia, J.)

1. The petitioner has preferred present
writ petition inter-alia with the prayer to
quash the award dated 08.12.2021 passed
by respondent no.1 namely Permanent Lok
Adalat, Moradabad, U.P.

2. The facts in brief as contained in
the writ petition are that petitioner namely
H.D.F.C. Standard Life Insurance Company
Ltd. is a company registered under
Companies Act, 1956 and as per Section 3
of the Insurance Act, 1938 carrying on life
insurance business. The life assured namely
1 All. HDFC Standard Life Insurance Co. Ltd. Vs. Permanent Lok Adalat Moradabad & Anr.
413
late Ravi Kiran has approached the
petitioner- insurance company for issuance
of insurance policy in the year 2018 and
has submitted the proposal form and other
required documents to obtain the insurance
policy. Upon his instructions and the
declaration made thereunder, the petitioner
considering the same to be true and correct
in all aspect issued the policy. The salient
features of the policy are as under :-

Policy no
20043201
Date of proposal
received
01.02.2018
Date of RCD
02.02.2018
Date of death
27.03.2018
Policy duration
1 month 25 days
Plan
HDFC
Life
ProGrowth Plus
Life Assured
Late Ravi Karan

3. On 04.08.2018 petitioner received
the claim intimation form, from the
respondent No.2 informing that the life
assured died on 27.03.2018. Since the death
of the life assured occurred within two
months from the risk commencement date
of the subject policy, the petitioner has
conducted a statutory investigation as per
Clause 8 (3) of the Insurance Regulatory
and Development Authority of India
(Protection of Policy Holder's Interest)
Regulations, 2002. During investigation it
was revealed that life assured has submitted
incorrect income and occupation in the
proposal form.

4. It is argued that life assured has no
permanent job and was absconding from
home since past two months and he died
due to unknown accident on 27.03.2018.
According to panchanama death was due to
falling from a vehicle & sustaining injury,
leading to death. No FIR was registered
and only a general diary bearing number
GD
No.017,
dated
27.03.2018
was
recorded on the basis of statements of Sunil
Kumar, son-in-law of respondent, alongwith respondent three sons and complainant
went to police station and gave a statement
that insured is a habitual chronic alcoholic
& is always intoxicated and insured never
listened to family member's advice of
giving up alcohol. In the post-mortem
report cause of death was recorded as
hemorrhage & shock. The immediate cause
was mentioned as shock due to antimortem injury. It has been mentioned in the
post-mortem report that stomach contents
smell of alcohol. It is argued that life
assured had taken policy by concealing the
material information from the petitioner.
Due to non disclosure of material facts and
untrue statement contained in the proposal
form petitioner repudiated the claim of the
respondent and refunded the fund value of
Rs.56,521.55/- and intimated the said facts
to the respondent No.2 vide letter dated
30.11.2018.

5. Being aggrieved by the repudiation
of the claim, respondent No.2 filed a
complaint
on
9.7.2019
before
the
respondent
no.1. After
receiving
the
summons petitioner company assigned the
matter to the local counsel. The insurance
company was under the impression that
local counsel is attending the matter
regularly and written arguments were filed
by him. However, on receipt of the
impugned order it was revealed that the
local counsel did not appear in the said
matter, therefore, complaint was decided
ex-parte.

6. A contract of insurance is one of
utmost good faith. A proposer who seeks to
414 INDIAN LAW REPORTS ALLAHABAD SERIES
obtain a policy of life insurance is duty
bound to disclose all material facts bearing
upon the issue as to whether the insurer
would consider it appropriate to assume the
risk which is proposed. It is with this
principle in view that the proposal form
requires a specific disclosure of preexisting ailments, so as to enable the
insurer to arrive at a considered decision
based on the actuarial risk.

7. In the present case as indicated
above, the proposer failed to disclose the
fact that he is habitual chronic alcoholic &
is always intoxicated and insured never
listened to family member's advice of
giving up alcohol. In the post-mortem
report cause of death was recorded as
hemorrhage & shock. The immediate cause
was mentioned as shock due to antimortem injury. It has been mentioned in the
post-mortem report that stomach contents
smelled alcoholic.

8. This brings the ground for
repudiation squarely within the principles
which have been formulated by the Hon'ble
Apex Court in series of decisions. In the
case of Life Insurance Corporation of
India Vs Asha Goel reported in (2001) 2
SCC 160, it was held by the Hon'ble Apex
Court that :-

"12...The
contracts
of
insurance
including the contract of life assurance are
contracts uberrima fides and every fact of
material (sic material fact) must be
disclosed, otherwise, there is good ground
for rescission of the contract. The duty to
disclose material facts continues right up to
the conclusion of the contract and also
implies any material alteration in the
character of risk which may take place
between the proposal and its acceptance. If
there is any misstatements or suppression
of material facts, the policy can be called
into question. For determination of the
question
whether
there
has
been
suppression of any material facts it may be
necessary to also examine whether the
suppression relates to a fact which is in the
exclusive
knowledge
of
the
person
intending to take the policy and it could not
be ascertained by reasonable enquiry by a
prudent person."

9. This has been reiterated by the
Hon'ble Apex Court in the case of P. C.
Chacko & another Vs. Chairman, Life
Insurance Corporation of India and
others reported in (2008) 1 SCC 321. It has
been held by the Hon'ble Apex Court that
proposal can be repudiated if a fraudulent
act is discovered. The relevant paragraph
namely
paragraph
17
is
reproduced
hereinbelow :-

"17. The purpose for taking a policy of
insurance is not, in our opinion, very
material. It may serve the purpose of social
security but then the same should not be
obtained with a fraudulent act by the
insured. Proposal can be repudiated if a
fraudulent act is discovered. The proposer
must show that his intention was bona fide.
It must appear from the face of the record.
In a case of this nature it was not necessary
for the insurer to establish that the
suppression was fraudulently made by the
policy-holder or that he must have been
aware at the time of making the statement
that the same was false or that the fact was
suppressed which was material to disclose.
A deliberate wrong answer which has a
great bearing on the contract of insurance,
if discovered may lead to the police being
vitiated in law."

10. In the case of Satwant Kaur
Sandhu
Vs.
New
India
Assurance
1 All. HDFC Standard Life Insurance Co. Ltd. Vs. Permanent Lok Adalat Moradabad & Anr.
415
Company Ltd., reported in (2009) 8 SCC
316 at the time of obtaining the Mediclaim
policy, the insured suffered from chronic
diabetes and renal failure, but failed to
disclose the details of these illnesses in the
policy proposal form. Upholding the
repudiation of liability by the insurance
company, Hon'ble Apex Court held that :-

"25.
The
upshot
of
the
entire
discussion is that in a contract of
insurance, any fact which would influence
the mind of a prudent insurer in deciding
whether to accept or not to accept the risk
is a "material fact". If the proposer has
knowledge of such fact, he is obliged to
disclose it particularly while answering
questions in the proposal form.

Needless to emphasise that any
inaccurate answer will entitle the insurer to
repudiate his liability because there is clear
presumption that any information sought
for in the proposal form is material for the
purpose of entering into a contract of
insurance."

11. Recently, Hon'ble Apex Court in
the case of Reliance Life Insurance Co.
Ltd. Vs. Rekhaben Nareshbhai Rathod
reported in (2019) 6 SCC 175, has set aside
the judgement of the NCDRC, whereby the
NCDRC had held that the failure of the
insured to disclose a previous insurance
policy as required under the policy
proposal form would not influence the
decision of a prudent insurer to issue the
policy in question and therefore the insurer
was
disentitled
from
repudiating
its
liability.
Hon'ble Apex
Court,
while
allowing the repudiation of the insurance
claim, held that :-

"30. It is standard practice for the
insurer to set out in the application a series
of
specific
questions
regarding
the
applicant's health history and other matters
relevant to insurability. The object of the
proposal form is to gather information
about a potential client, allowing the
insurer to get all information which is
material to the insurer to know in order to
assess the risk and fix the premium for each
potential client. Proposal forms are a
significant part of the disclosure procedure
and warrant accuracy of statements. Utmost
care must be exercised in filling the
proposal form. In a proposal form the
applicant declares that she/he warrants
truth. The contractual duty so imposed is
such that any suppression, untruth or
inaccuracy in the statement in the proposal
form will be considered as a breach of the
duty of good faith and will render the
policy voidable by the insurer. The system
of adequate disclosure helps buyers and
sellers of insurance policies to meet at a
common point and narrow down the gap of
information asymmetries. This allows the
parties to serve their interests better and
understand
the
true
extent
of
the
contractual agreement.

31. The finding of a material
misrepresentation
or
concealment
in
insurance has a significant effect upon both
the insured and the insurer in the event of a
dispute. The fact it would influence the
decision of a prudent insurer in deciding as
to whether or not to accept a risk is a
material fact. As this Court held in Satwant
Kaur (supra) "there is a clear presumption
that any information sought for in the
proposal form is material for the purpose of
entering into a contract of insurance". Each
representation or statement may be material
to the risk. The insurance company may
still offer insurance protection on altered
terms."

12. The same view was again taken
by the Hon'ble Apex Court in the case of
416 INDIAN LAW REPORTS ALLAHABAD SERIES
Branch Manager, Bajaj Allianz Life
Insurance Company Ltd. and others Vs.
Dalbir Kau reported in AIR 2020 SC 5210.

13. The Division Bench of Madras
High Court in All India General Insurance
Co., Ltd. V. S. P. Maheshwari reported in
AIR 1960 Mad 484 after taking into
consideration the history of insurance laws
in United States of America, in England
and in India stated in paragraph 10, which
reads as follows :-

"(10) One great principle of insurance
law is that a contract of insurance is based
upon utmost good faith Uberrima fides; in
fact it is the fundamental basis upon which all
contracts of insurance are made. In this
respect there is no difference between one
contract of insurance and another. Whether it
be life or fire or marine the understanding is
that the contract is uberrima fides and though
there may be certain circumstances from the
peculiar nature of marine insurance which
require to be disclosed, and which do not
apply to other contracts of insurance, that is
rather an illustration of the application of the
principle than a distinction in principle. From
the very fact that the contract involves a risk
and that it purports to shift the risk from one
party to the other, each one is required to be
absolutely innocent of every circumstance
which goes to influence the judgment of the
other while entering into the transaction."

14. A Single Judge Bench of this Court
in the case of Life Insurance Corporation of
India, Kanpur Nagar Vs. Syed Zaigham Ali
and another reported in 2016 (3) AllLJ289
was pleased to held that the provisions
contained under Section 22 (C) of the Act,
1987 are mandatory and it was incumbent
upon the PLA to have conducted conciliation
proceeding to settle the dispute. In paragraph
27 of the aforesaid judgement it was held that
the Court is constrained to observe that PLAs
in the state are not functioning within the
parameter of the 1987 Act, erratic orders are
being passed even on matters which do not
fall within their domain. In paragraph 27
certain guidelines were framed in the
aforesaid judgement, which reads as follows
:-

"(27) This Court is constrained to
observe that the PLAs in the State are not
functioning within the parameter of the
1987 Act, erratic orders are being passed
even on matters which do not fall within
their domain, it is, therefore, expected that
the PLA while exercising power under 1987
Act would observe the following points and
must at the outset formulate the questions
before proceeding to adjudicate. The
guidelines are not exhaustive but merely
illustrative.

(1) Whether PLA has jurisdiction on
the subject matter;

(2) Primary role of PLA is that of
conciliation upon failure of the parties to
reach an agreement, PLA mutates into an
adjudicatory body;

(3) PLA should not give an impression
to the disputants that it from the beginning
has an adjudicatory role;

(4) PLA being a Tribunal lacks the
inherent power of a Court, therefore,
cannot grant injunction/interim orders;

(5) The role assigned to PLA is to
settle/adjudicate "most of the petty cases
which ought not to go in the regular courts
would be settled in the pre-litigation stage
itself";

(6) Matters where genuineness of the
claim itself is in dispute, parties have taken
extreme positions, the same, prima facie,
may
not be
the
subject
matter
of
conciliation/adjudication,

(7) Whether or not an offence, which
is non compoundable or compoundable in
1 All. HDFC Standard Life Insurance Co. Ltd. Vs. Permanent Lok Adalat Moradabad & Anr.
417
nature, has indeed been committed would
fall outside the jurisdiction of PLA;"

15. Apart from the same, from perusal
of the order passed by the Permanent Lok
Adalat, Moradabad, it appears that the
same has been passed without providing
opportunity of hearing to the petitioner.
Further after going through the aforesaid
order, the Court is of the firm opinion that
no reasons whatsoever has been given
while allowing the petition filed by the
claimant-respondent.

16. A complete procedure has been
prescribed under Section 22(C) of the Legal
Services Authorities Act, 1987 (In short "Act,
1987") to decide the dispute by the
Permanent Lok Adalat and Section 22 (C) of
the Act, 1987 provides that conciliation
proceedings are mandatory, thereafter the
Permanent Lok Adalat have adjudicatary
function under Legal Services Authorities
Act, 1987. Section 22 outlines the powers of
the Lok Adalats and Permanent Lok Adalats.
Section 22 is extracted below:

"Section 22. Powers of Lok Adalats.-

(1) The Lok Adalat or Permanent Lok
Adalat shall, for the purposes of holding
any determination under this Act, have the
same powers as are vested in a civil court
under the Code of Civil Procedure, 1908 (5
of 1908) while trying a suit in respect of the
following matters, namely:-

(a) the summoning and enforcing the
attendance of any witness and examining
him on oath;

(b) the discovery and production of
any document;

(c) the reception of evidence on
affidavits;

(d) the requisitioning of any public
record or document or copy of such record
or document from any court or office; and

(e) such other matters as may be
prescribed.

(2) Without prejudice to the generality
of the powers contained in sub-section (1),
every Lok Adalat or Permanent Lok Adalat
shall have the requisite powers to specify
its own procedure for the determination of
any dispute coming before it.

(3) All proceedings before the Lok
Adalat or Permanent Lok Adalat shall be
deemed to be judicial proceedings within
the meaning of Sections, 193, 219 and 228
of the Indian Penal Code (45 of 1860) and
every Lok Adalat shall be deemed to be a
civil court for the purpose of Section 195
and Chapter XXVI of the Code of Criminal
Procedure, 1973 (2 of 1974)."

17. Section 22-C of the Legal Services
Authorities Act, 1987 stipulates the instances
in which Permanent Lok Adalats can take
cognizance of cases. Section 22-C provides
as follows:

"22-C.
Cognizance
of
cases
by
Permanent Lok Adalat.- (1) Any party to a
dispute may, before the dispute is brought
before any court, make an application to the
Permanent Lok Adalat for the settlement of
dispute:

Provided that the Permanent Lok Adalat
shall not have jurisdiction in respect of any
matter
relating
to
an
offence
not
compoundable under any law:

Provided further that the Permanent Lok
Adalat shall also not have jurisdiction in the
matter where the value of the property in
dispute exceeds ten lakh rupees:

Provided
also
that
the
Central
Government, may, by notification, increase
the limit of ten lakh rupees specified in the
second proviso in consultation with the
Central Authority.

(2) After an application is made under
sub-section (1) to the Permanent Lok
418 INDIAN LAW REPORTS ALLAHABAD SERIES
Adalat, no party to that application shall
invoke jurisdiction of any court in the same
dispute.

(3) Where an application is made to a
Permanent Lok Adalat under sub-section
(1), it-

(a) shall direct each party to the
application to file before it a written
statement, stating therein the facts and
nature of dispute under the application,
points or issues in such dispute and
grounds relied in support of, or in
opposition to, such points or issues, as the
case may be, and such party may
supplement
such
statement
with
any
document and other evidence which such
party deems appropriate in proof of such
facts and grounds and shall send a copy of
such statement together with a copy of such
document and other evidence, if any, to
each of the parties to the application;

(b) may require any party to the
application to file additional statement before
it
at
any
stage
of
the
conciliation
proceedings;

(c) shall communicate any document or
statement received by it from any party to the
application to the other party, to enable such
other party to present reply thereto.

(4)
When
statement,
additional
statement and reply, if any,have been filed
under sub-section (3), to the satisfaction of
the Permanent Lok Adalat, it shall conduct
conciliation proceedings between the parties
to the application in such manner as it thinks
appropriate
taking
into
account
the
circumstances of the dispute.

(5) The Permanent Lok Adalat shall,
during conduct of conciliation proceedings
under sub-section (4), assist the parties in
their attempt to reach an amicable settlement
of the dispute in an independent and
impartial manner.

(6) It shall be the duty of every party
to the application to cooperate in good
faith with the Permanent Lok Adalat in
conciliation of the dispute relating to the
application and to comply with the
direction of the Permanent Lok Adalat to
produce
evidence
and
other
related
documents before it.

(7) When a Permanent Lok Adalat, in
the aforesaid conciliation proceedings, is
of opinion that there exist elements of
settlement in such proceedings which may
be acceptable to the parties, it may
formulate
the
terms
of
a
possible
settlement of the dispute and give to the
parties concerned for their observations
and in case the parties reach at an
agreement on the settlement of the
dispute, they shall sign the settlement
agreement and the Permanent Lok Adalat
shall pass an award in terms thereof and
furnish a copy of the same to each of the
parties concerned.

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

18. Taking into consideration the
aforesaid aspect of the matter, very recently
the Hon'ble Supreme Court in the case of
Canara Bank Vs. G.S. Jayarama (2022)
7 SCC 776, it was held that Section 22C(8) is amply clear that it only comes into
effect once an agreement under Section 22C(7) has failed. The corollary of this is that
the proposed terms of settlement under
Section 22-C(7), and the conciliation
proceedings preceding it, are mandatory. If
Permanent Lok Adalats are allowed to
bypass this step just because a party is
absent, it would be tantamount to
deciding disputes on their merit ex parte
and issuing awards which will be final,
binding and will be deemed to be decrees
of civil courts. This was simply not the
1 All. Smt. Anju Agarwal Vs. The State of U.P. & Ors.
419
intention of the Parliament when it
introduced the Legal Services Authorities
Amendment Act. Its main goal was still the
conciliation and settlement of disputes in
relation to public utilities, and a decision on
merits always being the last resort. In this
view of the matter, it was held that
conciliation proceedings under Section 22C of the Legal Services Authorities
Amendment Act are mandatory in nature.
Paragraph 37 of the aforesaid judgement is
reproduced below:-

"37. Section 22-C(8) is amply clear that
it only comes into effect once an agreement
under Section 22-C(7) has failed. The
corollary of this is that the proposed terms of
settlement under Section 22-C(7), and the
conciliation proceedings preceding it, are
mandatory. If Permanent Lok Adalats are
allowed to bypass this step just because a
party is absent, it would be tantamount to
deciding disputes on their merit ex parte and
issuing awards which will be final, binding
and will be deemed to be decrees of civil
courts. This was simply not the intention of
the Parliament when it introduced the Legal
Services Authorities Amendment Act. Its main
goal was still the conciliation and settlement
of disputes in relation to public utilities, with
a decision on merits always being the last
resort. Therefore, we hold that conciliation
proceedings under Section 22-C of the LSA
Act are mandatory in nature."

19. From perusal of the aforesaid, this
Court is of the opinion that the law is now well
settled that in the absence of following the
prescribed procedure as specially provided
under Section 22(C)(7) of the Legal Services
Authorities Amendment Act by the Permanent
Lok Adalat, the order/award is vitiated.

20. In the present case, Permanent Lok
Adalat Moradabad does not follow the
aforesaid procedure as provided under the
Legal Services Authorities Amendment Act,
therefore, the award is vitiated and illegal in
the eyes of law, the same is liable to be set
aside and is hereby set aside.

21. Since no reply has been filed by the
petitioner before the Permanent Lok Adalat,
Moradabad, he is directed to file reply in the
aforesaid case along-with copy of this order
expeditiously.

22.

Permanent
Lok
Adalat
Moradabad is directed to pass fresh order
after following the complete procedure
under the law as well as the law laid down
by the Hon'ble Apex Court in the case of
Canara Bank (supra) most expeditiously
and preferably within a period of four
months from the date reply filed by the
petitioner.

23. In view of the facts as narrated
above, writ petition is liable to be allowed and
the same is hereby allowed.

24. No order as to costs.

25. Registrar (Compliance) is directed to
communicate this order to the Permanent Lok
Adalat, Moradabad immediately.
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(2023) 1 ILRA 419
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 24.11.2022

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J
THE HON'BLE JAYANT BANERJI, J.

Writ-C No. 32992 of 2022

Smt. Anju Agarwal ...Petitioner
Versus
The State of U.P. & Ors. ...Respondents