Holding

The PLA lacks jurisdiction to entertain the claim because the dispute "relates to" a non‑compoundable offence, and the proviso to Section 22‑C(1) must be interpreted broadly.

Summary

The respondents, owners of insured goods, claimed insurance reimbursement after a burglary, which the insurer denied. The dispute was taken to the Permanent Lok Adalat (PLA) under the Legal Services Authorities Act, 1987, despite a pending criminal case for the alleged non‑compoundable offence of burglary. The PLA held it could decide the claim, but the High Court initially ruled otherwise, and the Division Bench later reversed that decision. The Supreme Court examined the scope of Section 22‑C of the Act, interpreting the proviso "relating to an offence" broadly to include disputes arising from non‑compoundable offences. It held that the PLA cannot entertain such matters, as doing so would exceed its jurisdiction. Consequently, the High Court’s order granting jurisdiction to the PLA was set aside and the appeal was allowed.

Issues considered

The PLA’s jurisdiction under Section 22‑C(1) of the Legal Services Authorities Act, 1987 to entertain a claim arising from a non‑compoundable offence.
Whether the phrase "relating to an offence" in the proviso to Section 22‑C(1) should be given a broad meaning to exclude the present dispute.
Whether an insurance claim falls within the definition of a public utility service for purposes of the PLA.
Whether the PLA can decide the civil liability without determining the criminal aspect of the alleged burglary.

Legislation cited

Arbitration and Conciliation Act, 1996s. 67, s. 73
Code of Civil Procedure, 1908s. 89, s. 9
Indian Penal Code, 1860s. 461, s. 479
Legal Services Authorities Act, 1987s. 22-A, s. 22-B, s. 22-C(1), s. 22-C(2), s. 22-C(8), s. 22-D, s. 22-E

Subjects

Permanent Lok AdalatLegal Services Authorities Actjurisdictionnon‑compoundable offenceinsurance claimpublic utility serviceconciliationadjudicationstatutory interpretation

Judgment

'.
[2008] 8 S.C.R. 509

UNITED INDIA INSURANCE CO. LTD. A
V.
AJAY SINHA AND ANOTHER
(Civil Appeal No. 3537 Of 2008)

MAY 13, 2008
B
[S.B. SINHA AND V.S.SIRPURKAR, JJ.]
t-
Legal Services Authorities Act, 1987 - s. 22-C proviso
and s. 22-C(B) - Cognizance of cases by Permanent Lok
'·
Ada/at (PLA) - Power of - Case of burglary - Goods of com- c
plainant insured with Insurance Company - Claim of, before
PLA- Criminal case u!s 4791461 pending before criminal court
- Jurisdiction of PLA - Held: Terms 'relating to an offence' in
proviso 1 to s. 22 C is to be broadly interpreted - Since PLA is
,~ to determine whether non-compoundable offence has been
D
committed or not, PLA has no jurisdiction to entertain such
claim - Construction of statute conferring wide power in PLA
must be guarded - PLA must at the outset formulate ques-
tions - It must exercise its power with due care and caution - It
cannot be said that it has adjudicatory role to play in relation
to its jurisdiction without going into the statutory provisions and E
restrictions imposed thereunder - Thus, order of Division
Bench of High Court that PLA had jurisdiction to decide the
claim not sustainable and set aside.
• f- The goods of the first respondent were insured with F
the appellant company for the period 29.08.2001 -
31.08.2002. It is alleged that on the night of 18/19.08.2002
burglary took place in his godown. FIR was lodged. Re-
spondent raised a claim with the appellant-insurance com-
pany that in the burglary, goods worth Rs 11,14,597/-were
G
stolen and the same was rejected. A criminal case was
filed. The Investigating Officer filed a report. However, the
insurance company denied the same. Aggrieved, respon-
dents filed application before the District Consumer Fo-
509 H
510 SUPREME COURT REPORTS [2008] 8 S.C.R.

A rum claiming a sum of Rs 18,45,697.50 from the appel-
lant. Application was not entertained. The First respon-
dent then filed application before the Permanent Lok
Adalat (PLA) claiming a sum of Rs 9,80,000/-. The PLA held
that it had the pecuniary jurisdiction over the matter and
B pendency of a criminal case was not relevant. Appellant
challenged the order. The Single Judge of the High Court
allowed the same holding that offence u/ss. 469/461 IPC -+
not being compoundable, the PLA did not have jurisdic-
tion to entertain the 1.laim. In appeal, the Division Bench
c of the High Court held that the PLA had jurisdiction to
decide the claim made by the parties. The pendency of a
criminal case had nothing to do with the exercise of juris-
diction by PLA as it was not concerned as to who had
committed the burglary but whether the burglary had
taken place or not. It was not required to determine
0
whether offence committed by accused was compound-
able or not. Hence the present appeal.
Allowing the appeal, the Court
HELD: 1.1. Section 89 of CPC inter alia was enacted
E to promote resolution of disputes through mutual settle-
ment. Chapter VI-A of the Act seeks to achieve a different
purpose. It not only speaks of conciliation qua concilia-
tion but conciliation qua determination. Jurisdiction of
Permanent Lok Adalat, although is limited but they are of -\
F wide amplitude. The two provisos appended to Section •
22-C (1) of the Act curtail the jurisdiction of the Perma-
nent Lok Adalat. It states that PLA will not have jurisdic-
tion in respect of any matter relating to an offence not
compoundable under any law and in the matter where the
G value of the property in dispute exceeds Rupees ten
lakhs. [Para 22] [525-E-G] 1
1.2 Chapter VI-A stands independently. Whereas, the
heading of the Chapter talks of pre-litigation, conciliation
H and settlement, Section 22-C(8) of the Act speaks of de- 1-
UNITED INDIA INSURANCE CO. LTD. v. AJAY 511
SINHA AND ANOTHER

termination. It creates another adjudicatory authority, the A
decision of which by a legal fiction would be a decision
of a civil court. It has the right to decide a case. The term·
'decide' means to determine; to form a definite opinion;
to render judgment. [Para 23] [525-H; 526-A-B]
Advanced Law Lexicon 3rd Edition 2005 p 1253 - re- B
t ferred to.
1.3 Any award made by the Permanent Lok Adalat is
executable as a decree. No appeal thereagainst shall lie.
The decision of the Permanent LokAdalat is final and bind- c
ing on parties. Whereas on the one hand, keeping in view
the Parliamentary intent, settlement of all disputes through
negotiation, conciliation, mediation, Lok Adalat and Judi-
cial Settlement are required to be encouraged, it is equally
"-.i<
well settled that where the jurisdiction of a court is sought
D
to be taken away, the statutory provisions deserve strict
construction. A balance is thus required to be struck. A
court of law can be created under a statute. It must have
the requisite infrastructure therefor. Independence and
impartiality of Tribunal being a part of human right is re-
quired to be taken into consideration for construction of E
such a provision. When a court is created, the incumbents
must be eligible to determine the lis.[Para 23] [526-B-E]

+-- 1.4 An option is given to any party to a dispute. It may
-;'
be a public utility service provider or a public utility ser- F
vice recipient. The service must have some relation with
public utility. Ordinarily insurance service would not come
within the public utility service. But having regard to the
statutory scheme, it must be held to be included thereun-
der. It is one thing to say that an authority is created under
G
a statute to bring about a settlement through Alternate Dis-
pute Resolution mechanism but it is other thing to say that
an adjudicatory power is conferred on it. Chapter VI-A, thus,
deserves a closure scrutiny. It a case of this nature, the
level of scrutiny must also be high. [Para 24] [526-E-G]
H
512 SUPREME COURT REPORTS [2008] 8 S.C.R.

-4 ,...-!',
A Anuj Garg & Ors. vs. Hotel Association of India & Ors y-

(2008) 3 sec 1 - relied on.
1.5 Section 22-C(1) speaks of settlement of disputes.
The authority has to take recourse to conciliation mecha-
nism. One of the essential ingredients of the conciliation
B proceeding is that nobody shall be forced to take part
therein. It has to be voluntary in nature. The scope of vol-
untary settlement through the mechanism of conciliation
+
is also limited. If the parties in such a case can agree to
'\
come to settlement in relation to the principal issues, no
c exception can be taken thereto as the parties have a right t
;~
of self determination of the forum, which shall help them
to resolve the conflict, but when it comes to some formal
differences between the parties, they may leave the mat- ' ""'
ter to the jurisdiction of the conciliator. The conciliation
D only at the final stage of the proceedings would adopt :<.-,
the role of an arbitrator. However, the PLA does not sim-
ply adopt the role of an Arbitrator whose award could be
the subject matter of challenge but the role of an adjudi-
cator. The Parliament has given the authority to the PLA
E to decide the matter. It has an adjudicating role to play.
The construction of such a provision must be given in
such a manner so as make it prima facie reasonable. The
meaning of the word "retating to an offence" is consid-
ered. It is assumed that in a given case the dispute be- ,..,
F tween the service provider and the service recipient may
"
not have anything to do with the ultimate result of the crimi-
nal case but there are cases and cases. [Paras 25, 26 and
27] [526-H; 527-A,D-H; 528-A]
1.6 In the instant case, the genuineness of the claim
G itself is in dispute. Where the parties have taken extreme
positions, the same prima facie may not be the subject
matter of conciliation which provides for a non binding
i
settlement. For the said purpose, the dispute under the
criminal procedure and/or the nature thereof would also
H play an important role. Whereas Respondent states that
UNITED INDIA INSURANCE CO. LTD. v. AJAY 513
SINHA AND ANOTHER

the burglary has taken place, the appellant denies and A
disputes the same. In a criminal case, the accused shall
be entitled to raise a contention that no offence has taken
place. If the criminal court form an opinion that an offence
had taken place, which otherwise is a non-compoundable
one, the term "relating to an offence" should be given wider B
meaning. The first proviso appended to section 22-B of the
Act may not be of much relevance. This aspect of the mat-
ter was not argued before the Division Bench of the High
Court. The counsel appearing were remiss in bringing the
same to the notice of the Court the binding precedents, as C
regards the jurisdictional aspect of the Civil Court in the
light of s. 9 of CPC. [Paras 28, 29 and 30] [528-A-E]
Dhuiabf i and Ors. vs. The State of Madhya Pradesh
and Anr. AIR 1969 SC 78 ; Dwarka Prasad Agarwal (OJ by Lrs.
and Anr. vs. Ramesh Chander Agarwal and Ors. (2003) 6 D
SCC 220; BhAgubhai Ohanabhai Khalasi and Anr. vs. The
State of Gujarat and Ors. 2007 (5) SCALE 357 - referred to.
1.7 It is a fundamental presumption in statutory in-
terpretation that ordinary civil courts have jurisdiction to
decide all matters of a civil nature. As a corollary, (i) provi- E
sions excluding jurisdiction of civil courts should receive
strict construction; and (ii) provisions conferring jurisdic-
tion on authorities and tribunals other than civil courts have
to be strictly construed. [Para 32] [529-G-H; 530-A-C]
F
Bhagwat Singh vs. State of Rajasthan AIR 1964 SC 444;
Raichand vs. Union of India AIR 1964 SC 1268; Kasturi and
Sons vs. Salivateswaran AIR 1958 SC 507; UpperOoab Sugar
Mills vs. Shahdara (Delhi) Saharanpur Light Railway AIR 1963
SC 217 - relied on.
G
r 1.8 Section 22-C(1) read with Section 22-C(2), Sec-
tion 22-C(8) and Section 22-E of the AC't, exclude the juris-
diction of the civil courts by providing that when an appli-
cation is made by either party to· the Permanent Lok Ada lat
to settle a dispute at the pre-litigation stage, the PLA shall H
514 SUPREME COURT REPORTS [2008] 8 S.C.R.

A .......
A do so, and the other party ~s precluded from approaching
the civil court in s1,1ch a case. Section 22-C(1) contains
certain provisos which limit the jurisdiction o·f the PLA.
Given the principle of statutory interpretation, these pro-
. visos, as a corollary, must be interpreted in an {.;xpansiw~
B marn~er. [Para 36 and 37] [530-H; 531-A-B] ·
1.9 With respect of public utility services, the rfl(lin
purpose behind Section 22-C(8) seems to be that "mos~.
of the petty cases which ought not to go in the regular
Courts would be settled in the pre-litigation SL~1ge itself."..
C Therefore, in the instant case, the terms "relating to" an
"offenca" appearing in proviso 1 must be interp~eted
broadly, and as the determination bGfore thz- PLA will in··
volve the question as.to whether or not an offence, which
is non-compoundable in nature, has indeed been Gorn-
D mitted, this case falls outside the jurisdiction of the Per- A,
manent Lok AClal~.t. [Paras 38 and 39] [531 ..C-D)
1.'lO The construction o'f a statute which would con-
fer such a wide power in the Permc.i1ent Lok A.dalat hav-
ing· regard to sub-section (8) of Section 22-Cof the Ac·(
E mustbe guarded. The Permanent Lok Adalat must at the
outset formulate the questions. However, there is no in-
tention to lay down a law, as at ~resent advised, that Per·-
manent Lok Adalat would refuse to exercise its jurisdic,.
tion to entertain such cases but emphasise that it must
F exercise its power with due care and caution. It must not
give an impression to any of the disputants that it from
the very beginning has an adjudicatory role to play in re-
lation. to its jurisdiction without going !nto the statutory
provisions and restrictions imposed ti;mew1der. Thei'e·
G fore, the order of the High Court cannot be sustained a11d
is set aside. [Paras 40 and 41] {531-E-G]
Swamy Atmananda .:incl Ors. 1/.0. Sri Ramakrishnr.;
Tapovanam and Ors. AIR 2005 SC :Z~'.J92; State of Punjab anc.:
another vs. Jg/our Singh and others JT 2008 (2) SC 83 - re-
H
UNITED !NOIA INSURANCE CO. LTD. v. AJAY 515
llliiii...
SINHA AND ANOTHER [S.B. SINHA, J.]

4il ferred to A
Principles of Statutory Interpretation by G.P Singh, Ninth
Edition, p 630 - referred to.

CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3537
of 2008 B
From the final Judgment and Order dated 19.6.2006 of
t the High Court of Jharkhand at Ranchi in Letters Patent Appeal
No. 523 of 2005
Raju Ramachandran, M.K. Dua and Kishore Rawat forthe c
Appellant.
Nitish Massey, Ajit Kumar Sinha, Am.it Kumar and Riiesh
Ratnam for the Respondents.
The Judgment of the Court was deliverd by
D
6). S.B. SINHA, J. Leave granted.

1. Legal Services Authorities Act, '1987 (the Act) was en··
acted to constitute Legal Services Authorities to provide for free
and competent legal service to the weaker sections of the soci-
E
ety, to ensure that opportunities for securing justice are not C:e-
nied to any citizen by reason of economic or other disabilities,
and to organize Lok Ada lats to secure that the operaiion of the
legal system promotes justice on a basis of equal opportunity.

... ;. 2. The Act was enacted with a view to give effect to the F
provisions of Article 39Aofthe Constitution of India which man-·
dates that State shall secure that the operation of the legal sys-
tern promotes justice on a basis of equal opportunity, and shall
in particular, provide free legal aid, by suitable legislation or
schemes or in any other way, to E·nsure that opportunities for G
securing justice are not denied to any citizen by reason of eco-
nomic or other disability.
3. lfwe are to look at the history of grant of legal aid, it may
be noticed that the Law Commiss:on of India in its 14th report
on 'reform of Judicial Administration' published in 1958, strongly H
~

)-
516 SUPREME COURT REPORTS [2008] 8 S.C.R.
~

4f!j
A advocated the need for rendering legal aid to poor litigants and I
;r_¥
categorically stated that' the rendering of legal aid to the poor
litigants is not a minor problem of procedural law but a question h
of fundamental character'. \'.-·:.

4. The committee under the Chairmanship of Hon'ble Mr
B Justice V.R. Krishna Iyer, then a Member of the Law Commis-
r ;;•

\';'\
r~·:'.
f.i;.~

sion, constituted by the Government of India Order dated 27th \ii
October, 1972 to. consider the question of making available to i
the weaker sections of the community and persons of limited I~ ..
means in general and citizens belonging to the socially and
c educationally backward class in particular, facilities for ·
...
(a) legal advice so as to make them aware of their
constitutional and legal rights and obligations; and
!~~~

(b) legal aid in proceedings before Civil, Criminal and
D Revenue Courts so as to make justice more easily 4.,
available to all sections of the community.
With a view to implement the report of the Bhagwati Com-
mittee and in fulfillment of its constitutional obligations under
Article 39-Aof the Constitution, a committee ~nown as the ".Com-
E mittee for Implementing Legal Aid Schemes (CILAS) was be-
ing constituted by the Government of India at the very.beginning .......
under the Chairmanship of Hon'ble Mr. Justice P.N. Bhagwati.
This Committee formulated .. a broad pattern of ttie legal aid
programme to be set up in the country.. It gave stress on pre- A ..
F ventive legal aid programme with a view to.creating legal aware-
ness amongst the. people. It also suggested dynamic and ac-
· tivist programmes to carry legal services to the doorsteps of
the rural population, to promote community mobilization and
rights. enforcement through public interest litigations and other
' ' ·-,

G statutes. The Committee also framed a model.scheme for es~
tablishment of State Legal Aid and Advice Boards, as also,
1i
Committees at the High Court, District and Tahasil levels to cater
legal services to the people at large.
5. In the year 1987 the Legal Services Authorities Act was
H

II
UNITED INDIA INSURANCE CO. LTD. v. AJAY 517
SINHA AND ANOTHER [S.B.· SINHA, J.]

enacted by the parliament with a view to provide free and A
competent legal services and to ensure opportunity for
securing justice to the downtrodden class of the society.
The Statement of Objects and Reasons for enacting the
Amendment Act is as under :-

"The Legal Services Authorities Act, 1987 was enacted to 8
constitute legal services authorities for providing free and
competent legal services to the weaker sections of the
society to ensure that opportunities for securing justice
were not denied to any citizen by reason of economic or
other disabilities and to organize Lok Adalats to ensure C
that the operation of the legal system promoted justice on
a basis of equal opportunity. The system of Lok Adalat,
which is an innovative mechanism for alternate dispute
resolution, has proved effective for resolving disputes in a
spirit of conciliation outside the courts." D
6. We may have a look to the relevant statutory provisions
for the purpose of this case.
7. Section 22-A of the Act defines "Permanent Lok Ada lat"
to mean a Permanent Lok Adalat established under sub-sec- E
tion (1) of Section 22 B. "Public utility service"" inter alia means
insurance service, and includes any service which the Central
Government or the State Government, as the case may be, may,
in the public interest, by notification, declare to be a public utility
service for the purposes of this Chapter. Section 22-8. pro- F
vi des for establishment of Permanent Lok Ada lats. Section 22-
C delineates the jurisdiction of Permanent Lok Adalat to take
cognizance of cases filed before it, the relevant provisions
whereof are as under :-
"22-C.- Cognizance of cases by Permanent Lok Adalat :- G
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 H
518 SUPREME COURT REPORTS [2008] 8 S.C.R

A jurisdiction in respect of any matter relating to an offence
not compoundable under any law:
Provided further that the Permanent Lok Ada lat shall also
not have jurisdiction in the matter where the value of the
property in dispute exceeds ten lakh rupees:
B
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.
•
C (2) After an application is made under sub-section (1) to
the Permanent Lok Adalat, no party to ·that application
shall invoke jurisdiction of any court in the same dispute.
(3)
D (4)

(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 C:ispute in an independent and impartial manner.
E
(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 th~ direction of the Permanent Lok Adalat to
F 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
G possible settlement of the dispute and give to the parties
concerned for their observations and in c£ise the parties
..... )

reach at an agreement on the settlement of the dispute,
they shall sign the settlement agreement '.'Ind ·the
Permanent LokAdalat shall pass an aware! in terms thereof
H and furnish a copy of the same to each of the parties
UNITED INDIA INSURANCE CO. LTD. v. AJAY 519
SINHA AND ANOTHER [S.8. SINHA, J.]

concerned. A
(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."

8. The Permanent LokAdalat, in terms of Section 22-D of B
the Act, while conducting conciliation proceedings or deciding
a dispute on merit is not bound by the provisions of the Code of
Civil Procedure, 1908 and the Indian Evidence Act, 1872 but
guided by the principles of natural justice, objectivity, fair play,
equity and other principles of justice. c
9. Section 22-E of the Act makes an Award of Permanent
LokAdalat to be final and binding on all the parties, which would
be deemed to be a decree of a civil court. Jurisdiction of the
civil court to call in question any Award made by the Permanent
Lok Adalat is barred. It has the jurisdiction to transfer any Award D
• ~ to a dvil court and such civil court is mandated to execute the
order as if it were the decree by the court.
10. Interpretation of the aforesaid provisions in the light of
the Statement of Objects and Reasons for which they have been E
enacted calls for our consideration.
11. Before, however, we embark thereupon we may briefly
notice the factual matrix involved herein.
12. First respondent carries on business in electrical
goods. He is an authorized distributor of Sony products. He F
entered into a contract of insurance with the appellant company;
the period covered thereunder being 29th August, 2001 to 31st
August, 2002. Allegedly, a burglary took place in his godown in
the night of 18th /19th August, 2002. He lodged a First Informa-
tion Report with Doranda Police Station, Ranchi. He also sub- G
mitted a claim with the appellant alleging that in the said bur-
glary, goods worth Rs.11, 14,597/- had been stolen away.
13. Appellant denied and disputed the said claim wh;ch
refuted the claims by a letter dated 12th August, 2004 interlia H
520 SUPREME COURT REPORTS [2008) 8 S.C.R.

A stating :- ,. '
a) The surveyor has observed that the loss cannot
be assessed since the quantity claimed by you
...
•'
is not verifiable especially as the authenticity of
the documents provided by you creates doubt.
B
b) The surveyor has noticed that there is movement
of stock from the godown without proper billing
and proper entry which was found by the
surveyor on their random inspection of the
c godown on 27.7.2003.

c)

d)

e) The Chartered Accountant who accompanied
D the surveyor had made an inspection of the
financial statements as provided by you and
. found various discrepancies in your accounts.
" ....

For these reasons the accounts provided by
you cannot be relied upon. It was found by the
E said Chartered Accountant that there was
difference in closing stock, Opening Balance
of Sundry Debtors etc. and such the credibility
of the accounts submitted by you is doubtful.

f) The Dy. Superintendent of Police in his .....
F supervision note has recorded that the alleged •
· crime has been done by people who are closely
associated with the Company under a high
hatched conspiracy and also having the
capacity to sell the alleged stolen products in
G the market.
g) It is a/so observed that neither the FIR nor
during investigation by the police you ever
-
disclosed that there was a common watchman
in that area where the godown is located which
H
UNITED INDIA INSURANCE CO. LTD. v. AJAY 521
SINHA AND ANOTHER [S.B. SINHA, J.]

creates doubt about the genuineness of the A
incident. Furthermore not providing any
security/watchman with respect to the said
godown also amounts to violation of the terms
of the Policy coupled with misrepresentation."
(Emphasis supplied) B

14. The Investigating Offi'cer in the criminal case filed a
final report. It was, however, opposed by the insurance com-
pany. We have not been informed as to whether the cognizance
of the alleged offence has been taken by a competent court or c
not.

15. We may, however, notice that respondent being ag-
grieved by and dissatisfied with the purported repudiation of
his claim filed an application before the District Consumer Fo-
rum claiming a sum of Rs ..18,45,697.50 from the appellant. It D
was not entertained on the premise that deficiency in service
had occurred in connection with a commercial contract.

16. First respondent, thereafter, filed an application for the
Permanent Lok Adalat claiming a sum of Rs.9,80,000/-. Ap-
pellant filed an objection raising the question of jurisdiction of E
the Permanent Lok Adalat. By reason of an order dated 4111
January, 2005, the said objection was overruled stating that it
had the pecuniary jurisdiction over the matter and only because
a criminal case is pending in the Court of Chief Judicial Magis-
trate, Ranchi, the same was not relevant stating :- F
"However, the finding of criminal court is not binding on
this court and this court has to decide as to whether
burglary had taken place or not. After taking independent
evidences of the parties, so far finding of Surveyor is G
concerned, it is regarding merit of the claim which this
J- P.L.A. has to decide after taking evidence. If the claim
cannot be refused on the basis of surveyor report at this
stage."

17. Appellant filed a writ application challenging the valid- H
522 SUPREME COURT REPORTS [2008] 8 S.C.R.

A ity of the said order before the Jharkhand High Court. A learned
Single Judge of the High Court allowed the said writ applica-
tion opining that as Sections 479/461 of the Indian Penal Code
being not compoundable, the Permanent Lok Adalat had no
jurisdiction to entertain the claim opining:-
B "9 In my considered opinion, the Permanent Lok Adalat .
. has committed great error of law in holding that it has
jurisdiction inspite of the fact that the matter relates to an ir
offence not compoundable under any law. The Permanent
Lok Ada lat has further committed serious error in holding
c that the finding of the criminal Court in non-compoundable
offence is not binding on it.

10. No doubt Chapter VI-A has been inserted in the Legal
Services Authority Act, 1987 by Amendment Act of 2002
for constitution of Permanent Lok Adalat for the purpose
D
of pre-litigation, conciliation and settlement, but the whole >-..,
object of the Act is to provide free legal cind competent
legal services to the weaker section of ihe Socieiy to
ensure that opportunities for securing justice are not denied
to any citizen by reason of economic or other disability.
E The amended provision of the Act does not confer power
to the Permanent LokAdalat even to entertain the disputes
which related to a criminal offence non compoundable in
law."

F 18. An intra court appeal was preferred thereagainst. The .~.
Division Bench of the High Court by reason of the impugned
judgment and order dated 291h March, 2006 allowed the appeal
of the first respondent holding that the pendency of a criminal
case has nothing to do with the exercise of jurisdiction by the
G Permanent Lok Ada lat as it was not concerned as to who had
committed the burglary but was only concerned with the fact 2s
to whether burglary had taken place or not stating :-. -t
"So far as the case Defore the Permanent Lok Acialat is
concerned, the Adalat is to det::~rmine whether burglary
H had taken place or not, after taking into consideration the
UNITED INDIA INSURANCE CO. LTD. v. AJAY 523
SINHA AND ANOTHER [S.B. SINHA, J.]
- -.l
independent evidence of the parties. It is not required to A
determine as to who has committed burglary nor it is
required to determine whether an accused is guilty for the
charges or not. Therefore, for the purpose of determination
of the issue and claim in question, the Permanent Lok
Adalat is not required to determine whether offence B
committed by an accused is 'compoundable' or not. Thus,
as in this case such issue is not required to be determined
by the Permanent Lok Ada lat, we hold that the Permanent
Lok Adalat has jurisdiction to decide the claim as made
by the appellant, on merit, after hearing the parties and on c
appreciation of evidence on record. Learned Single Judge
has failed to notice the aforesaid facts while determining
the issue in question."

19. Mr. Raju Ramachandran, learned Senior counsel ap-
•· ;.j pearing on behalf of the appellant would submit:- D
(i) Chapter VI-A of the Act will have no application
in a case of this n_ature which involves
complicated questions of fact and law.
(ii) The question as to whether the burglary has E
been committed or not being pending before
the criminal court, Permanent Lok Adalat had
no jurisdiction in relation thereto.
.. j
(iii) As the contract of insurance had been
F
repudiated, it was not a case which was fit for
settlement within the meaning of Section 22-B
of the Act.
(iv) Claim of first respondent is mala fide as he had
artificially reduced the claim to bring the same
,._ within the jurisdiction of the Permanent Lok
G

Adalat, although initially he claimed a sum
higher than Rs. 10 lakhs.
20. Mr. Amit Kumar, learned counsel appearing on behalf
of the respondent, on the other hand, would urge:- H
524 . SUPREME COURT REPORTS [2008] 8 S.C.R.
'
.J..-~
A (i) That the value of the property being less than
Rs.10 lakhs, the Permanent Lok Ada lat had
jurisdiction in regard to the dispute in question.
(ii) The restrictions imposed in regard to the
offences cannot be applied to civil dispute
B between the parties arising out of any offence
as the same relates to the claim of the
· respondent against the appeilant.
-...
(iii) Jurisdiction of the Permanent Lok Ada lat being •
c confined to determination of the amount of loss
caused to the first respondent on account of
burglary, Permanent LokAdalat is not required
to decide the case between the accused of
burglary and the State.
D (iv) For invoking the jurisdiction of Permanent Lok )": .,
Adalat. the question as to whether the offence
is compoundable or not is not relevant.
(v) Proviso appended to sub-section (5) of Section
22 of the Act should be construed in a manner
E which would widen the scope and ambit of the
Act, rather accentuate the same.
(vi) The object of the legislation is to promote
resolution of the dispute by conciliation and,
\-
F therefore, it is for the welfare of the general public •
that construction which would achieve the object
of the beneficial legislation should be preferred.
21. The term "conciliation" is not defined under the Act. It
should, therefore, be consideCed from the perspective of Arbi-
G tration and Conciliation Act, 1996. In order to understand what
Parliament meant by 'Conciliation', we have necessarily to re-
_.,,_
fer to the functions of a 'Conciliator' as visualized by Part Ill of
the 1996 Act. Section 67 describes the role of a conciliator.
Sub-section (1) states that he shall assist parties in an inde-
H pendent and impartial manner. Subsection (2) states that he
UNITED INDIA INSURANCE CO. LTD. v. AJAY 525
SINHA AND ANOTHER [S.B. SINHA, J.]

- ->-- shall be guided by principles of objectivity, fairness and justice, A
giving consideration, among other things, to the rights and obli-
gations of the parties, the usages of th~ trade concerned and
r·
the circumstances surrounding the dispute, including any-previ-
ous business practices between the parties. Sub-section (3)
states that he shall take into account "the circumstances of the B
case, the wishes the parties may express, including a request
for oral statements''. Sub-section (4) is important and permits
the 'conciliator' to make proposals for a settlement. This sec-
tion is based on Article 7 of UNICTRAL Conciliation Rules.

Section 73, which is important, states that the conciliator c
can formulate terms of a possible settlement if he feels that there
exists elements of settlement. He is also entitled to 'reformulate
the terms' after receiving the obseNations of the parties. The above

.,.. provisions in the 1996 Act make it clear that the 'Conciliator' un-
der the said Act, apart from assisting the parties to arrive at a
settlement, is also permitted to make "proposals for a settlement"
and "formulate the terms of a possible settlement" or "reformu-
D

late the terms". This is indeed the UNCITRAL concept.
22. Section 89 of the Code of Civil Procedure inter alia was
enacted to promote resolution of disputes through mutual settle- E
ment. Chapter VI-A of the Act seeks to achieve a different pur-
pose. It not only speaks of conciliation qua conciliation but con-
ciliation qua determination. Jurisdiction of Permanent LokAdalat,
although is limited but they are of wide amplitude. The two provi-
-~
• sos appended to Section 22-C (1) of the Act curtail the jurisdic- F
tion of the Permanent Lok Adalat which are as under :-
Provided that the Permanent Lok Adalat shall not have
jurisdiction in respect of any matter relating to an offence
not compoundable under any law:
G
Provided further that the Permanent Lok Ada lat shall also
not have jurisdiction in the matter where the value of the
property in dispute ~xceeds ten lak~ rupees:
23. Chapter VI-A stands independently. Whereas, the
H
526 SUPREME COURT REPORTS [2008] 8 S.C.R.

A heading of the Chapter talks of pre-litigation, conciliation and
settlement, Section 22-C(B) of the Act speaks of determina-
tion. It creates another adjudicatory authority, the decision of
which by a legal fiction would be a decision of a civil court. It has
the right to decide a case. The term 'decide' means .to deter-
8 mine ; to for;-n a definite opinion ; to render judgment. (See Ad-
vanced Law Lexicon 3rd Edition 2005 at 1253). Any award made
by the Permanent Lok Adalat is executable as a decree. No
appeal thereagainst shall lie. The decision of the Permanent
Lok Adalat is final and binding on parties. Whereas on the one
c hand, keeping in view the Parliamentary intent, settlement of all
disputes through negotiation, conciliation, medication, Lok
Adalat and Judicial Settlement are required to be encouraged,
it is equally well settled that where the jurisdiction of a court is
sought to be taken away, the statutory provisions deserve strict
construction. A balance is thus required to be struck. A court of
0
law can be created under a statute. It must have the requisiie
infrastructure therefor. Independence and impartiality ofTribu··
nal being a part of human right is required to be taken into con-
sideration for construction of such a provision. When a court is
created, the incumbents must be eligible to determine the lis.
E
24. An option is given to any party to a dispute. It may be a
public utility service provider or a public utility service recipient.
The service must have some relation with public utility. Ordinarily
insurance service would not come within the public utility service.
F But having regard to the statutory scheme, it must be held to be
included thereunder. It is one thing to say that an authority is cre-
ated under a statute to bring about a settlement through Alternate
Dispute Resolution mechanism but it is other thing to say that an
adjudicatory power is conferred on it. Chapter VI-A, therefore, in
G our opinion, deserves a closure scrutiny. It a case of this nature,
the level of scrutiny must also be high. {See Amlj Garg & ors. vs.
Hotel Association of India & Ors. [(2008) 3 SCC 1]}
25. St:b-section (1) of Section 22-C speaks of settlement
of disputes. The authority has to take recourse to conciliation
H mechanism. One of the essential ingredients of the concilia-
UNITED INDIA INSURANCE CO. LTD. v. AJAY 527
SINHA AND ANOTHER [S.B. SINHA, J.]

tion proceeding is that nobody shall be forced to take part therein. A
It has to be voluntary in nature. The proceedings are akin to one
of the recognized ADR mechanism which is made of Medola. It
may be treated at par with Conciliation and Arbitration. In such
a case the parties agree for settlement of dispute by negotia-
tion, conciliation or mediation. The proceedings adopted are B
not bending ones, whereas the arbitration is a binding proce-
dure. Even in relation to arbitration, an award can be the sub-
ject matter of challenge. The provisions of the Arbitration and
Conciliation Act, 1~.96 shall apply thereto. The jurisdiction in
terms of Section 34 of the Arbitration and Conciliation Act, 1996 c
is wide. The court in exercise of the said jurisdiction may not
enter into the merit of the case but would be entitled to consider
as to whether the arbitrator was guilty of misconduct. If he is
found to be biased, his award would be set aside. The scope
of voluntary settlement through the mechanism of conciliation is D
also limited. If the parties in such a case can agree to come to
settlement in relation to the principal issues, no exception can
be taken thereto as the parties have a right of self determina-
tion of the forum, which shall help them to resolve the conflict,
but when it comes to some formal differences between the par-
ties, they may leave the matter to the jurisdiction of the concilia- E
tor. The conciliation only at the final stage of the proceedings
would adopt the role of an arbitrator.
26. Here, however, the Permanent Lok Adalat does not
simply adopt the role of an Arbitrator whose award cou Id be the F
subject matter of challenge but the role of an adjudicator. The
Parliament has given the authority to the Permanent LokAdalat
to decide the matter. It has an adjudicating role to play.
27. The validity of the said provision is not in question.
But then construction of such a provision must be given in such G
a manner so as make it prima facie reasonable. With that end
in view let us consider the meaning of the word "relating to an,
offence". We will assume that in a given case the dispute be-
tween the service provider and the service recipient may not
have anything to do with the ultimate result of thP. criminal case H
528 SUPREME COURT REPORTS [2008] 8 S.C.R.

A but there are cases and cases.

28. In this case, as noticed above, the genuineness of the
claim itself is in dispute. Where the parties have taken extreme
positions, the same prima facie may not be the subject matter
of conciliation which provides for a non binding settlement.
B
29. For the said purpose, the dispute under the criminal
procedure and/or the nature thereof would also play an impor-
tant role. Whereas Respondent states that the burglary has
taken place, the appellant denies and disputes the same. In a
c criminal case, the accused shall be entitled to raise a conten-
tion that no offence has taken place. If the criminal court form
an opinion that an offence had taken place, which otherwise is
a non-compoundable one, the term "relating to an offence"
should be.given wider meaning. The first proviso appended to
section 22•8 ~f the Act may not be of much relevance.
0
30. This aspectof the matter har:l not been argued before .the
Division Bench of the High CoLJrt. The counsel appearing were
remiss in bringing the same to the notice oqhe Court the binding
precedents, ;:is regards the jurisdictional aspect of the Civil Court
E in the light of Section 9 of the Code of Civil Procedure.

31. In Dhulabhai and Ors. vs. The State of Madhya
Pradesh and Anr. : AIR 1969 SC 78, the Court discussed the
ambit of S.9:ofthe CPC and laid down the following principles:

F " ... (1) Where the statute gives a finality to the orders of the
.• special tribunals the Civil Court's jurisdiction must be held
to be excluded if there is adequate remedy to do what the
Civil Courts would normally do in a suit. Such provision,
however, does not exclude those cases where the
provisions of the particular Act have not been complied
G
with or the statutory tribunal has not acted in conformity
with the fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the
court, an examination of the scheme of the particular Act
H · to find the adequacy or the s~fficiency of the remedies
UNITED INDIA INSURANCE CO. LTD. v. AJAY 529
SINHA AND ANOTHER [S.B. SINHA, J.]

provided may be relevant but is not decisive to sustain the A
jurisdiction of the civil court.

Where there is no express exclusion the examination of
the remedies and the scheme of the particular Act to find
out the intendment becomes necessary and the result of
the inquiry may be decisive. In the latter case it is necessary B
. """ to see if the statute creates a special right or a liability and
provides for the determination of the right or liability and
further lays down that all questions about the said right
and liability shall be determined by the tribunals so
constituted, ·and whether remedies normally associated C
with actions in Civil Courts are prescribed by the said
statue or not. .. "

32. In Dwarka Prasad Agarwal (D) by Lrs. and Anr vs.
Ramesh Chander Agarwal and Ors. : (2003) 6 SCC 220 , this
.o
Court held:
" ... The dispute between the parties was eminently a civil
dispute and not a dispute under the provisions of the
Companies Act. Section ~of the Code of Civil Procedure
confers jurisdiction upon the civil courts to determine all £:
disputes of civil nature unless the same is barred under a
statute either expressly or by necessary implication. Bar
of jurisdiction of a civil court is not to be readily inferred.
A provision seeking to bar jurisdiction of a civil court
requires strict interpretation. The court, it is well settled, F
would normally lean in favour of construction, which would
uphold retention of jurisdiction of the civil court ... "
This case was cited with approval in Bhagubhai
Dhanabhai Khalasi and Anr vs. The State of Gujarat and Ors.,
2007 (5) SCALE 357. G

32. Therefore, it is a fundamental presumption in statutory
interpretation that ordinary civil courts have jurisdiction to de-
cide all matters of a civil nature. As a corollary,
(i) provisions excluding jurisdiction of civil courts H
530 SUPREME COURT REPORTS [2008] 8 S.C.R.

..+- '
should receive strict construction. (See Bhagwat
Singh vs. State of Rajasthan : AIR 1964 SC
.· 444; Raichand vs. Union of India : AIR 1964
SC 1268), and

(ii) · provisions conferring jurisdiction on authorities
B and tribunals other than civil courts (See
Kasturi and Sons vs. Salivateswaran : AIR
1958 SC 507; Upper Doab Sugar Mills vs .
. Shahdara (Delhi) Saharanpur Light Railway :
AIR 1963 SC 217)

have to be strictly construed.

34. This principle, taken from Principles of Statutory Inter-
pretation by G.P. Singh, Ninth Edition, page 630, was citedwith
approval in Swamy Atmananda and Ors. vs. Sri Ramakrishna
D Tapovanam and Ors. : AIR 2005 SC 2392 .

.35. We .must also take notice of a recent decisipn of this
Court in State otPunjab and another vs. Jalour Singh and oth-
ers : JT 2008 (2) SC 83 where this Court expressed its dismay
.. with the manner in which the Lok-Ada lat matters are dealt with.
E · Chief.Justice of India speaking for the Bench, upon noticing the
provisions of the Legal Services Authority Act, 1987, observed
that whereas Lok Adalat had tp arrive at a just settlement in
their conciliatory role guided by the principles of justice, equity,
. fair play and other legal principles, but in that case it assumed a
F ' judicicil role, he.ard parties, ignored the absence of consen-
sus, and increased the compensation to an extent it consid-
ered just and reasonable, by a reasoned order which is adjudi-
catory in nature'. It arrogated to itself the appellate powers of the
High Court and·'allowed' the appea4;ind 'directed' the respon-
G:. dents in the appeal to pay the enhariced compensation within a
period fixed by it Jt was held that.such an order is not an Award.
36. Section 22-C(1) read with Section 22-C(2), Section
22-C(8) and Section 22-E of the Act, exclude the jurisdiction of
the civil courts by providing that when an application is made by
H.
UNITED INDIA INSURANCE CO. LTD. v. AJAY 531
SINHA AND ANOTHER [S.B SINHA, J.]
-+ either party to the Permanent Lok Adalat to settle a dispute at A
the pre-litigation stage, the PLA shall do so, and the other party
is precluded from approaching the civil court in such a case.

37. Section 22-C(1) contains certain Provisos which limit
the jurisdiction of the PLA. Given the principle of statutory inter-
pretation stated earlier, these Provisos, as a corollary, must be B

~-1- interpreted in an expansive manner.

38. What is important to note is that with respect of public
utility services, the main purpose behind Section 22-C(8) seems
to be that "most of the petty cases which ought not to go in the c
regular Courts would be settled in the pre-litigation stage itself."

39. Therefore, in the instant case, the terms "relating to"
an "offence" appearing in Proviso 1 must be interpreted broadly,
and as the determination before the Permanent Lok Adalat will
~ -.. involve the question as to whether or not an offence, which is D
non-compoundable in nature, has indeed been committed, this
case falls outside the jurisdiction of the Permanent Lok Adalat.

40. We must guard against construction of a statute which
would confer such a wide power in the Permanent LokAdalat hav-
ing regard to sub-section (8) of Section 22-Cof the Act. The Per-
E
manent LokAdalat must at the outset formulate the questions. We
however, do not intend to lay down a law, as at present advised,
that Permanent LokAdalat would refuse to exercise its jurisdiction
, .. to entertain such cases but emphasise that it must exercise its
F
power with due care and caution. It must not give an impression to
any of the disputants that it from the very beginning has an adjudi-
catory role to play in relation to its jurisdiction without going into the
statutory provisions and restrictions imposed thereunder.

41. For the reasons abovementioned the order of thE) High
G
Court cannot be sustained and is set aside accordingly. The
}-
appeal is allowed. In the facts and circumstances of the case,
there shall be no order as to costs.
N.J. Appeal allowed.
H