REPORTABLE        

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  10209  OF 2011 (Arising out of SLP (C) No.2798 of 2010)

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

Versus

C.D. Shaji                               .... Respondent(s)

J U D G M E N T  

P. Sathasivam, J.

1) Leave granted.

2) This  appeal  raises  an  important  question  as  to  the  

interpretation of Section 21 of the Legal Services Authorities  

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

consideration is that when a criminal case filed under Section  

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

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

award is passed recording the settlement, can it be considered  

as a decree of a civil court and thus executable?

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3) This  appeal  is  directed against  the final  judgment and  

order dated 24.11.2009 passed by the High Court of Kerala at  

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

High  Court  dismissed  the  petition  filed  by  the  appellant  

herein.

4) Brief facts:

(a) The  appellant  herein  filed  a  complaint  being  C.C.  No.  

1216 of 2007 before the Judicial Ist Class Magistrate Court  

No.1, Ernakulam against the respondent herein under Section  

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

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

Ernakulam District Legal Service Authority for trying the case  

for settlement between the parties in the Lok Adalat.   

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

Adalat and the matter was settled and an award was passed  

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

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

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

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

of  every  month  starting  from  June,  2009  and,  in  case  of  

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default, the appellant herein can recover the balance amount  

due from the respondent in lump sum.   

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

per the settlement, the appellant filed execution petition being  

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

Principal Munsiff, Ernakulam for seeking the execution of the  

award.    On  23.09.2009,  the  Principal  Munsiff  Judge,  

Ernakulam  dismissed  the  petition  holding  that  the  award  

passed by  the  Lok Adalat  on reference  from the  Magistrate  

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

civil court.    

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

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

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

24.11.2009, dismissed the writ petition.  

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

appeal by way of special leave before this Court.

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

not chosen to contest the matter either by appearing in person  

or through counsel.  Heard Mr. Prashanth P., learned counsel  

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for the appellant and Mr. V. Giri, learned senior counsel, who,  

on our request, assisted this Court as amicus curiae.   

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

is useful to refer the Statement of Objects and Reasons and  

certain provisions of the Act applicable to the question posed  

before us.

“Statement of  objects and Reasons.- Article  39-A of  the  Constitution provides  that  the  State  shall  secure  that  the  operation of the legal system promotes justice on the basis of  equal opportunity, and shall, in particular, provide free legal  aid, by suitable legislation or schemes or in any other way,  to  ensure  that  opportunities  for  securing  justice  are  not  denied  to  any  citizen  by  reason  of  economic  or  other  disabilities.  

2.  With the object  of  providing free legal  aid,  Government  had,  by  Resolution  dated  the  26th September,  1980  appointed  the  “Committee  for  Implementing  Legal  Aid  Schemes”  (CILAS)  under  the  Chairmanship  of  Mr.  Justice  P.N. Bhagwati (as he then was) to monitor and implement  legal aid programmes on a uniform basis in all the States  and Union territories.   CILAS evolved a model scheme for  legal aid programme applicable throughout the country by  which several legal aid and advice boards have been set up  in the States and Union territories.  CILAS is funded wholly  by grants from the Central Government.  The Government is  accordingly concerned with the programme of legal aid as it  is the implementation of a constitutional mandate.  But on a  review of the working of the CILAS, certain deficiencies have  come to the fore.  It is, therefore, felt that it will be desirable  to  constitute  statutory  legal  service  authorities  at  the  National,  State and District  levels so as to provide for the  effective  monitoring  of  legal  aid  programmes.   The  Bill  provides for the composition of such authorities and for the  funding  of  these  authorities  by  means of  grants  from the  Central Government and the State Governments.  Power has  been also  given  to  the  National  Committee  and the  State  

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Committees to supervise the effective implementation of legal  aid schemes.   For  some time now,  Lok Adalats  are  being  constituted at  various places in the country for the disposal, in a summary  way and through the process of arbitration and settlement  between the parties, of a large number of cases expeditiously  and with lesser costs.  The institution of Lok Adalats is at  present functioning as a voluntary and conciliatory agency  without  any  statutory  backing  for  its  decisions.   It  has  proved to be very popular in providing for a speedier system  of  administration  of  justice.   In  view  of  its  growing  popularity,  there  has  been  a  demand  for  providing  a  statutory backing to this institution and the awards given by  Lok Adalats.  It is felt that such a statutory support would  not  only  reduce  the  burden of  arrears  of  work in  regular  Courts, but would also take justice to the door-steps of the  poor  and  the  needy  and  make  justice  quicker  and  less  expensive.”

“2. (aaa) “Court” means a civil,  criminal or revenue Court  and includes any Tribunal or any other authority constituted  under any law for the time being in force, to exercise judicial  or quasi-judicial functions;”

“2(c) “legal service” includes the rendering of any service in  the conduct of any case or other legal proceeding before any  Court or other authority or Tribunal and the giving of advice  on any legal matter;”

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

“21. Award of Lok Adalat.- (1) Every award of Lok Adalat  shall be deemed to be a decree of a Civil Court or, as the  case  may  be,  an  order  of  any  other  Court  and  where  a  compromise  or  settlement  has  been  arrived  at,  by  a  Lok  Adalat in a case referred to it under sub-section (1) of section  20, the Court-fee paid in such case shall be refunded in the  manner provided under the Court-Fee Act, 1870 (7 of 1870).

(2)  Every  award made by a Lok Adalat  shall  be final  and  binding on all the parties to the dispute, and no appeal shall  lie to any Court against the award.”

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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  

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authority,  tribunal  and  so  on,  and  giving  advice  on  legal  

matters.   Promoting  legal  literacy  and  conducing  legal  

awareness  programmes  are  the  functions  of  legal  services  

institutions.   The  Act  provides  for  a  machinery  to  ensure  

access to justice to all through the institutions of legal services  

authorities and committees.  These institutions are manned by  

Judges  and  judicial  officers.   Parliament  entrusted  the  

judiciary with the task of implementing the provisions of the  

Act.   

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

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

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

In  the  case  on  hand,  the  question  posed  for  consideration  

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

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

and  award  is  passed  recording  the  settlement,  can  it  be  

considered as a decree of civil court and thus executable by  

that  court?”   After  highlighting  the  relevant  provisions,  

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

High Court that every award passed by the Lok Adalat has to  

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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.   

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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  

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maintainable as the award has been passed in criminal case.  

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

Division)  disposed off  the  objection and directed to  proceed  

with the execution by the Judgment and order.  Aggrieved by  

the  same,  the  petitioners  therein filed a revision before  the  

High Court.  After adverting to Section 20 and other provisions  

of the Act, the learned single Judge has concluded thus:-

“16.  The  parties  were fully  aware  that  under  the  Act,  the  District Legal Services Authority may explore the possibility  of holding pre-litigation Lok Adalats in respect of the cheque  bouncing  cases.  The  compromise  in  such cases  would be  treated as Award having force of a decree. All objections as  raised with regard to the execution in view of above statutory  provisions itself is rightly rejected. Having settled the matter  in Lok Adalat and now after more than 3 years raising such  plea  is  untenable.  Having  obtained  the  award  from  Lok  Adalat, the party is not permitted to resile from the same. It  attains finality to the dispute between the parties finally and  binds  all.  Therefore,  the  order  in  this  regard  needs  no  interference.

17. Once the parties entered into compromise before the Lok  Adalat,  &  at  that  time  no  question  of  any  pecuniary  jurisdiction raised and or required to be considered by the  Lok  Adalat.  Therefore,  once  the  award  is  passed,  it  is  executable under C.P.C…..”  

 11)   In  M/s  Valarmathi  Oil  Industries  &  Anr. vs.  M/s  

Saradhi  Ginning  Factory, AIR  2009  Madras  180,  the  

admitted facts were that C.C. No. 308 of 2006 was taken on  

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

complaint  given by  the  respondent  therein that  the  cheque  

was issued by the second petitioner therein on behalf of the  

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

dishonoured by the bank due to insufficient funds. According  

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

petitioner, the complaint was given under Section 138 of the  

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

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

was referred to Lok Adalat for settlement.  Both the parties  

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

agreed  for  the  settlement  and  accordingly,  the  

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

respondent  on  or  before  03.09.2007.  It  was  signed  by  the  

respondent/complainant,  petitioners/accused  and  their  

respective  counsel.  In  view  of  the  compromise  arrived  at  

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

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

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

before 03.09.2007 and accordingly, the award was passed and  

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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  

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Section 21 of the Act, every award of the Lok Adalat shall be  

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

award passed by the Lok Adalat, the respondent/complainant  

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

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

his Judgment has found the petitioners guilty under Section  

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

undergo  simple  imprisonment  for  one  year  and  to  pay  the  

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

the  High  Court  is  whether  the  Magistrate  can  convict  the  

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

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

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

learned Magistrate has concluded as under:-

“13.  Had there been no settlement in the Lok Adalat,  the  learned Magistrate could have proceeded with the trial and  deliver  his  Judgment,  for  which,  there  is  no  bar.  In  the  instant case, as admitted by both the learned Counsel, there  was  an  award  passed  in  the  Lok  Adalat,  based  on  the  consensus arrived at between the parties. As per the award,  the  petitioners/accused had to  pay  Rs.  3,75,000/-  to  the  respondent/complainant on or before 03.09.2007. As it is an  award made by Lok Adalat, it  is final  and binding on the  parties to the criminal revision and as contemplated under  Section 21(2)  of  the  Act,  no appeal  shall  lie  to  any court  against the award.

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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  

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

given its full effect.   

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

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

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

achieve a purpose.  

14) A  statutory  support  as  evidenced  in  the  statement  of  

Objects  and  reasons  of  the  Act  would  not  only  reduce  the  

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

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

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

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

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

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

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

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

distinction between the reference made by a civil  court and  

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

Adalat to pass an award based on the compromise arrived at  

between the  parties  in  a  case  referred  by  a  criminal  court  

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under Section 138 of the N.I. Act, and by virtue of the deeming  

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

by a civil court.  In this regard, the view taken in  Subhash  

Narasappa  Mangrule  (supra)  and  M/s  Valarmathi  Oil  

Industries  (supra) supports  this  contention  and  we  fully  

accept the same.

15)  It is useful to refer the judgment of this Court in State of  

Punjab & Anr. vs. Jalour Singh and Ors. (2008) 2 SCC 660.  

The ratio that decision was that the “award” of the Lok Adalat  

does not mean any independent verdict or opinion arrived at  

by any decision making process.  The making of the award is  

merely  an  administrative  act  of  incorporating  the  terms  of  

settlement  or  compromise  agreed  by  the  parties  in  the  

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

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

was followed in B.P. Moideen Sevamandir and Anr. vs. A.M.  

Kutty Hassan (2009) 2 SCC 198.     

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

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

discussed.  

17) From  the  above  discussion,  the  following  propositions  

emerge:

1) In view of the unambiguous language of Section 21 of  

the Act, every award of the Lok Adalat shall be deemed  

to  be  a  decree  of  a  civil  court  and  as  such  it  is  

executable by that Court.

2) The  Act  does  not  make  out  any  such  distinction  

between  the  reference  made  by  a  civil  court  and  

criminal court.

3) There is no restriction on the power of the Lok Adalat  

to pass an award based on the compromise arrived at  

between the parties in respect of cases referred to by  

various  Courts  (both  civil  and  criminal),  Tribunals,  

Family court, Rent Control Court, Consumer Redressal  

Forum,  Motor  Accidents  Claims  Tribunal  and  other  

Forums of similar nature.

4) Even if a matter is referred by a criminal court under  

Section 138 of the Negotiable Instruments Act, 1881  

and by  virtue  of  the  deeming provisions,  the  award  

passed by the Lok Adalat based on a compromise has  

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to be treated as a decree capable of execution by a civil  

court.

18)  In view of the above discussion and ultimate conclusion,  

we  set  aside  the  order  dated  23.09.2009  passed  by  the  

Principal Munsiff Judge  in an unnumbered execution petition  

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

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

Consequently,  we  direct  the  execution  court  to  restore  the  

execution petition and to proceed further in accordance with  

law.

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

deep appreciation for the valuable assistance rendered by the  

learned amicus curiae.

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

costs.   

...…………….…………………………J.            (P. SATHASIVAM)                                   

  .…....…………………………………J.    (J. CHELAMESWAR)  

NEW DELHI; NOVEMBER 28, 2011.

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