The Senior Manager/Branch Manager, Central Bank of India, Incharge v. The State of Bihar

Patna High Court CWJC No.15625 of 2008 (4) dt.08-11-2012 decided to proceed against the borrower as well as the guarantors by invoking the provisions of the SARFAESI Act.

3. With a proceeding looming large and imminent against respondent No.2 he decided to approach the Permanent Lok Adalat, Muzaffarpur and filed an application under the so-called provisions of Legal Services Authorities Act, 1987 for settlement of the dispute with the bank. The application in question is Annexure-1 to the writ application.

4. Notices came to be issued to the Bank who did appear to defend their interest but it was not a case of succumbing or giving into the jurisdiction of the Permanent Lok Adalat. However, taking the appearance of the Bank before the Lok Adalat as consent, the Lok Adalat took up the opportunity to decide the matter by passing an award against the interest of the bank and in favour of the respondent No.2, by quantifying the total outstanding liability to the tune of Rs.3,50,000/- only when the total sum at the time of N.P.A. as per the Bank was Rs.7,30,858/-.

5. A pointed submission on behalf of the counsel for the Bank is that the Lok Adalat in question had no business to entertain an application of such kind as the banking service does not come within the ambit of the powers of adjudication vested in Chapter-VI A of the Legal Services Authorities Act, 1987. The 3 Patna High Court CWJC No.15625 of 2008 (4) dt.08-11-2012 attention of the Court has been drawn to section 22A wherein the services which have been subjected to the jurisdiction of a Permanent Lok Adalat has been clearly laid down. Section 22 A is reproduced herein below: “22-A. Definitions – In this Chapter and for the purposes of section 22 and 23, unless the context otherwise requires – (a) “Permanent Lok Adalat” means a Permanent Lok Adalat established under sub-section(1) of section 22-B; (b) “public utility service” means any – (i) transport service for the carriage of passengers or goods by air, road or water; or (ii) postal, telegraph or telephone service; or (iii) supply of power, light or water to the public by any establishment; or (iv) system of public conservancy or sanitation; or (v) service in hospital or dispensary; or (vi) 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.”

6. Stand of the counsel for the Bank is that the borrower or the respondent No.2 had approached the Lok Adalat on his own and not on a case of reference of any pending adjudication from any quarter. Despite knowing this position very well, the so- called Permanent Lok Adalat, which is a misnomer, initiated the Pre Litigation Case No. 131 of 2006 and passed the necessary 4 Patna High Court CWJC No.15625 of 2008 (4) dt.08-11-2012 order, which is being challenged.

7. Counsel for respondent No.2 submits that he had approached the Lok Adalat bonafidely. The Bank did appear. They were given an opportunity of hearing and after taking into consideration the rival submissions and the legal position, the outstanding dues of the borrower was quantified and the reason for such quantification emerges from the concluding part of the order. The bank to overcome such an order which is otherwise not assailable has filed the present writ application.

8. The court is not going to delve on the legal advice which may have been rendered the borrower or circumstances under which he approached the Permanent Lok Adalat. Root question which arises for consideration is whether the Permanent Lok Adalat had the power to preempt, nullify or override any proceeding which may be contemplated or initiated under SARFAESI Act, which is a special Act in this regard. More so, since none of the services indicated in section 22A indicate that the banking services also come within the ambit of the jurisdiction of the Lok Adalat, obviously, the award rendered by them is a nullity and is required to be interfered with.

9. This Court had occasion to examine many such matters and has expressed its opinion in the manner in which services of 5 Patna High Court CWJC No.15625 of 2008 (4) dt.08-11-2012 Lok Adalat is being utilized by the dishonest litigants and without verifying the honesty of such claims or its maintainability awards are being passed by the Permanent Lok Adalats which are manned by retired judicial officers.

10. The matter therefore surely requires interference to correct the aberration in law as well as to ensure that nobody walks away with a benefit by virtue of an award which has no legal sanctity in the eye of law.

11. In the totality therefore, since the proceeding in question could not be maintained before the Permanent Lok Adalat, the award rendered in Pre Litigation Case No. 131 of 2006 passed on 26.5.2008 is hereby quashed and the writ allowed. (Ajay Kumar Tripathi, J) R.K.Pathak/-