Holding

A Lok Adalat can dispose of a matter only by effecting a compromise or settlement; since none existed, its order could not merge with the High Court order and the matter must be remitted for fresh adjudication.

Summary

The respondent filed a writ petition seeking appointment of an arbitrator under Section 8(1)(b) of the Requisition and Acquisition of Immovable Properties Act, 1952. Before the High Court heard the petition, the matter was referred to a Lok Adalat, which directed the Union of India to appoint an arbitrator. The Union applied to recall the order; the Lok Adalat withdrew its direction and sent the case back to the High Court, which again ordered the appointment of an arbitrator. The Union appealed, arguing that the Lok Adalat could not have disposed of the case because no compromise or settlement was possible, and that the High Court’s order was therefore untenable. The Supreme Court held that under Section 20 of the National Legal Services Authorities Act a Lok Adalat can dispose of a case only by achieving a compromise or settlement, which was absent here, so its order could not merge with the High Court order. Consequently, the matter was remitted to the High Court for fresh adjudication, with reference to the Munsha and Ganpat Raj judgments, and the appeal was partly allowed.

Issues considered

Whether a Lok Adalat can dispose of a case that does not involve compromise or settlement under Section 20 of the National Legal Services Authorities Act, 1987.
Whether an order of a Lok Adalat merges with a High Court order when the Lok Adalat has not made a settlement award.
Whether the High Court’s direction to appoint an arbitrator under Section 8(1)(b) of the Requisition and Acquisition of Immovable Properties Act, 1952, is tenable in the absence of a Lok Adalat settlement.
Whether the case should be remitted to the High Court for fresh adjudication in view of the Supreme Court’s earlier decisions in Union of India v. Munsha and State of Punjab v. Ganpat Raj.

Subjects

Lok AdalatArbitrationLand acquisitionCompromiseSettlementSection 20Appointment of arbitratorMerger of ordersWrit petition

Judgment

UNION OF INDIA A
v.
ANANTO (DEAD) AND ANR.

MARCH 9, 2007
B
[DR.ARIJITPASAYAT AND LOKESHWARSINGHPANTA,JJ.]

National Legal Service Authorities Act, 1987; S.20/Requisition and
Acquisition of Immovable Properties Act, 1952; S.8(J)(b):
·c
Land acquisition-Appointment of an arbitrator-Lok Ada/a/-
Jurisdiction of-Held: In terms of Section 20 of 1987 Act, Lok Ada/at could
dispose of a matter by way of compromise or settlement between the parties-
/nstant case could not have been disposed of by Lok Ada/at since it did not
involve compromise or settlement-Hence, the matter is remitted to High
Court for decision afresh taking into consideration effect and relevance of D
judgment of Supreme Court in Union of India & Anr. v. Munsha and Ors.

A writ petition was filed by the respondent No.I before the High Court
praying for appointment of an abribtrator in terms of Section 8(1 )(b) of the
Requisition and Acquisition of Immovable Properties Act, 1952. Before the
writ petition was taken up for hearing by the High Court, the matter was E
referred to Lok Ada lat. The Lok Adalat issued directions to Union of India
to appoint an arbitrator. Union of India filed an application for recalling the
order of the Lok Adalat. Lok Adalat recalled the order and sent the matter
back to the High Court for adjudication. Single Judge of the High Court
disposed of the petition directing Union oflndia to appoint an arbitrator. The p
Letters Patent Appeal filed by the Union of India was dismissed by the High
Court observing that the order of the Lok Adalat had merged with the order
of Single Judge of the High Court and had therefore, become operative. Hence
the present appeal.

Appellant-Union oflndia contended that the direction of the High Court G
,. ~ for appointment of an arbitrator was clearly untenable.

Partly allowing the appeal, the Court

877 H
878 SUPREME COURT REPORTS [2007) 3 S.C.R.

A HELD: 1.1. The specific language used in sub-section (3) of Section 20
of the National Legal Services Authorities Act makes it clear that the Lok
Ada lat can dispose of a matter by way of a compromise or settlement between
the parties. Two crucial terms in sub-sections (3) and (5) of Section 20 are
"compromise" and "settlement". The former expression means settlement
B of differences by mutual concessions. It is an agreement reached by adjustment
of conflicting or opposing claims by reciprocal modi.fication of demands. The
word "compromise" implies some element of accommodation on each side. It
is not apt to describe total surrender. A compromise is always bilateral and
means mutual adjustment. "Settlement" is termination of legal proceedings
C by mutual consent The case at hand did not involve compromise or settlement,
therefor, it could not have been disposed of by Lok Adalat. If no compromise
or settlement is or could be arrived at, no order can be passed by the Lok
Ada lat. Therefore, question of merger of Lok Ada lats order does not arise.
(Para 7) (881-F-G-H; 882-AJ

D Re NFU Development Trust Ltd, (1973) 1 All ER 135, referred to.

1.2. Both the Single Judge and the Division Bench of the High Court
failed to take note of what has been stated by this Court in the decided case of
State of Punjab & Ors. v. Shri Ganpat Raj. In the fitness of things, therefore,
E the matter is remitted to the High Court to hear the writ petition afresh.
While doing so, the effect and relevance of judgment in Munsha's case shall
also be considered. It is clarified that no opnion has been expressed on merits
of the case. (Para 8) [882-B, CJ

Union of India & Anr. v. Munsha & Ors., [1995) Supp. 4 SCC 660,
F referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1234 of2007

From the Judgment and Order dated 9.7.2002 of the High Court of
Punjab & Haryana at Chandigarh in LPA No. 714 of 2002 of in Civil Writ
G Petition No. 134511986.
P.P. Malhotra, ASG, Vineet Malhotra, R.C. Katiyar and Sushma Suri for
the Appellant.

Sanjay Sain, Manjusha Wadhwa and Ashok Mathur for the Respondents.
H
U. 0.1. v. ANANTO(DEAD)[PASAYAT . .I.) 879
The Judgment of the Court was delivered by A
DR. ARIJIT PASAY AT, J. I. Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench
of the Punjab and Haryana High Court dismissing the Letters Patent Appeal,
filed by the appellant - Union of India and its functionaries. By the impugned B
order the view expressed by a learned Single Judge was affirmed.

3. The background facts in a nutshell are as follows:

A writ petition was filed by the respondent No. I which was numbered
as Civil Writ Petition No. 1345 of 1986. When the writ petition was heard there C
was no appearance on behalf of the present appellant. It appears that before
the writ petition was taken up for hearing by the learned Single Judge the
matter was referred to Lok Adalat where an order dated 29.5.2000 was passed.
Prayer in the writ petition was to appoint an arbitrator in terms of Section
8(i)(b) of the Requisition and Acquisition of Immovable Properties Act, 1952
(in short the 'Act'). Jn the writ petition it was stated that the land was D
acquired on 20.3.1970 and a notice in the fonn J was issued. The Notification
for acquisition was published in the Official Gazette on 27.3.1970. Writ
petitioner claimed to have filed an application to appoint an arbitrator on
11.4.1971. The writ petition was filed after about 16 years i.e. on 6.3.1986
praying for appointment of an arbitrator. On 29.5.2000 a direction was issued E
by the Lok Adalat to appoint an arbitrator. In the order it was stated that
if the Union of!ndia had any objection then an appropriate application could
be filed before the High Court for fresh adjudication. On 16.8.2000 an application
for recalling the order of the Lok Adalat was filed before the Lok Adalat. The
earlier order was recalled and by order dated 25.9.2000 the matter was sent
to the High Court for adjudication on merits. As noted above on 23 .11.2000 F
learned Single Judge passed the order directing appointment of an arbitrator
in the line of what has been directed earlier by the Lok Adalat. The Letters
Patent Appeal was dismissed on the ground that when the matter is referred
to Lok Adalat and when after series of discussions before the Lok Ada lat and
when considerable time was spent and certain terms of settlement were found G
reasonable by the Lok. Adalat, that formed basis of order of learned Single
Judge and same was perfectly in order. The appeal was accordingly dismissed.

4. The Division Bench also noted that the order of the Lok Ada lat had
merged into order of learned Single Judge and had therefore, become operative.
H
880 SUPREME COURT REPORTS [2007] 3 S.C.R.

A 5. In support of the appeal, learned counsel for the appellant submitted
that the view of the High Court is clearly untenable. Reliance is placed on
a decision of this Court on Union of India & Anr. v. Munsha & Ors., [1995]
Supp 4 SCC 660, to contend that the direction for appointment of an arbitrator
••
-
was clearly untenable.

B 6. The matters which can be taken up by the Lok Adalat for disposal
are enumerated in Section 20 of the National Legal Services Authorities Act,
1987 ( in short the 'Legal Services Act") which reads as follows: •

"20.Cognizance of cases by Lok Adalats:-

C (I) Where in any case referred to in clause
(i) of sub-section (5) of Section 19-

(i)(a) the parties thereof agree; or
(b) one of the parties thereof makes an application to the Court,
for referring the case to the Lok Adalat for settlement and if such
D
Court is prima facie satisfied that there are chances of such
settlement; or
(ii) the Court is satisfied that the matter is an appropriate one to be
taken cognizance of by the Lok Adalat,
E The Court shall refer the case to the Lok Adalat:\

Provided that no case shall be referred to the Lok Adalat under
sub-clause (b) of clause (i) or clause (ii) by such Court except after
giving a reasonable opportunity of being heard to the parties.

F (2) Notwithstanding anything contained in any other law for the time
being in force, the Authority or Committee organizing the Lok
Adalat under sub-section (I) of Section 19 may, on receipt of an
application from any one of the parties to any matter referred to
in clause (ii) of sub-section (5) of section 19 that such matter
needs to be determined by a Lok Adalat, refer such matter to the
G Lok Adalat, for determination:
Provided that no matter shall be referred to the Lok Adalat except
after giving a reasonable opportunity of being heard to the other
party.

H
U. 0.1. v. ANANTO(DEAD) [PASAY AT, J.] 881
.J, (3) Where any case is referred to a Lok Ada lat under sub-section (I)
~ A
or whefe a reference has been made to it under sub-section (2),
the Lok Ada lat shall proceed to dispose of the case or matter and
arrive at a compromise or settlement between the parties.
(4) Every Lok Adalat shall, while determining any reference before it
under this Act, act with utmost expedition to arrive at a compromisP. B
or settlement between the parties and shall be guided by the
. principles of justice, equity, fair play and other legal principles .
),.. (5) Where no award is made by the Lok Adalat on the ground that
no compromise or settlement could be arrived at between the
parties, the record of the case shall be returned by it to the Court,
from which the reference has been received under sub-section (1)
c
for disposal in accordance with law.
(6) Where no award is made by the Lok Adalat on the ground that
no compromise or settlement could be arrived at between the
parties, in a matter referred to in sub-section (2), that Lok Adalat
D
shall advice the parties to seek remedy in a Court.
(7) Where the record of the case is returned under sub-section (5) to
the Colllt, such Court shall proceed to deal with such case from
the stage which was reached before such reference under sub-
section ( 1)."
E
7. The specific language used in sub-section (3) of Section 20 makes it
clear that the Lok Adalat can dispose of a matter by way of a compromise
or settlement between the parties. Two crucial terms in sub-sections (3) and
(5) of Section 20 are "compromise" and "settlement". The former expression
means settlement of differences by mutual concessions. It is an agreement
F
reached by adjustment of conflicting or opposing claims by reciprocal
modification of demands. As per Termes de la Ley, "compromise is a mutual
promise of two or more parties that are at controversy". As per Bouvier it
is "an agreement between two or more persons, who, to avoid a law suit,
amicably settle their differences, on such terms as they can agree upon". The
word "compromise" implies some element of accommodation on each side. It G
~:--
is not apt to describe total surrender. [See Re NFU Development Trust Ltd.
[1973] I All ER 135(Ch.D)]. A compromise is always bilateral and means
mutual adjustment. "Settlement" is termination of legal proceedings by mutual
consent. The case at hand did not involve compromise or settlement and
H
882 SUPREME COURT REPORTS (2007] 3 S.C.R.

A could not have been dispo..sed of by Lok Adalat. If no compromise or ·+
settlement is or could be arrived at, no order can be passed by the Lok Adalat.
Therefore, question of merger of Lok Adalats order does not arise.

8. Both learned Single Judge and the Division Bench failed to take note
of what has been stated by this Court in State of Punjab & Ors. v. Shri
B Ganpat Raj (2006] 8 sec 364, In the fitness of things, therefore, we remit
the matter to the High Court to hear the writ petition afresh. Since the matter
is pending since long, we request the High Court to dispose of the matter
within four months from the date of receipt of the copy of the judgment.
While doing so, the effect and relevance of judgment in Munsha's case
C (supra) shall be considered. It is made clear that we have not expressed any
opinion on merits of the case.

9. The appeal is allowed to the aforesaid extent without any orders as
to costs.

D S.K.S. Appeal partly allowed.