The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.42019 of 2023 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). The Boudh Cooperative Central Bank Ltd. & Anr. …. Petitioner(s) -versus- Susanta Kumar Nayak & Anr. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: : For Petitioner(s) Mr. Baidhar Sahoo, Adv. For Opposite Party (s) :
Legal Reasoning
Mr. R.K. Sahu, Adv. (for O.P.1 CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-02.05.2024 DATE OF JUDGMENT: -25.06.2024 Dr. S.K. Panigrahi, J. 1. The Petitioners through this Writ Petition have challenged the order dated 19.07.2023 of Permanent Lok Adalat (PUS), Phulbani passed in PLA Case No.09/2023 on the ground that said order is contrary to the provisions under Sub-Section (5) & (6) of Section 20 of the Legal Services Authorities Act, 1987 and without jurisdiction. I. FACTUAL MATRIX OF THE CASE: 2. The brief fact of the case is that: Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 Page 1 of 7 (i) The Permanent Lok Adalat (PUS), Phulbani has passed order dated 19.07.2023 directing to the Boudh C.C. Bank Ltd. to receive Rs.70,000/- from Susanta Kumar Nayak and issue No Dues Certificate in his favour, which is without jurisdiction. The total outstanding against Susanta Kumar Nayak is Rs.1,23,811/- as on 31.07.2023. (ii) The petitioner No.1 is a Central Co-operative Bank (in short called ’Bank’) registered under the Odisha Co-operative Societies Act, 1962 and the said society is governed under the provisions of OCS Act, 1962, OCS Rules, 1965, Bye-laws of the said society and Human Resource Policy for the Central Co-operative Banks in Odisha incorporating the Staff Service Rules, 2011. (iii) The petitioner No.2 was the Respondent and the Opp. Party No.1 was the petitioner in PLA Case No.09/2023. The Opp. Party No.2 is Chairman of PLA Case and his order has been challenged in the present writ petition. (iv) The Opp. Party No.1 Susanta Kumar Nayak had filed PLA Case No.09/2023 before the Opp.Party No.2 to waive off interest, when the value of the dispute is Rs.1,13,767/-. (v) It is submitted that the Opp. Party No.2 without hearing the petitioners, passed an illegal order exonerating interest as well as principal amount to the Opp.Party No.1, which is not only illegal, but also contrary to the provisions of OCS Act, OCS Rules, Bye-laws of the Bank and guidelines of RBI & NABARD. The petitioner No.1 is a Financing Institution, registered under Odisha Co-operative Societies Act and rendering its business in the Boudh & Kandhamal District borrowing money from Page 2 of 7 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 Odisha State Co-operative Bank with interest for the purpose of financing the loanees like the Opposite Party. (vi) There is no provision in the OCS Act to waive off interest in case of loanee. The Odisha Co-operative Societies Act, 1962 is the Special Statute, but the Opp.Party No.1 instead of filing Dispute Case before the Registrar Co-operative Societies U/s 68 of OCS Act, he has preferred PLA case before the Opp.Party No.2 in order to harass the petitioners. In the PLA Case, the Opp.Party No.1 has not impleaded petitioner No.1 (C.E.O.) as party, which is mandatory provision U/R-37 of OCS Rules, 1965. The Opp.Party No.2 has directed the petitioner No.1 to carry out his order vide Memo No.156, dated 27.07.2023 through petitioner No.2. (vii) The total outstanding loan dues against the Opp.Party No.1 is Rs.1,23,811/- as on 31.07.2023 as per statement of account issued by the Boudh C.C. Bank Ltd., Phulbani Main Branch. (viii) Being aggrieved by the order dated 19.07.2023 of Permanent Lok Adalat (PUS), Phulbani passed in PLA Case No.09/2023, the Petitioners Bank have preferred this writ petition. (ix) Hence, this Writ Petition. II. COURT’S REASONING AND ANALYSIS: 3. This issue is clearly resolved from a bare reading of Section 22-C. Section 22C provides a step-by-step scheme on how a matter is to proceed before the Permanent Lok Adalat. The first step is the filing of the application which ousts the jurisdiction of other civil courts, in accordance with sub-Sections (1) and (2). The second step is the parties Page 3 of 7 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 filing requisite submissions and documents before the Permanent Lok Adalat, in accordance with sub-Section (3). 4. On the completion of the third step to its satisfaction, the Permanent Lok Adalat can move to the fourth step of attempting conciliation between the parties, in accordance with sub-Sections (4), (5) and (6). Subsequently, in the fifth step in accordance with sub-Section (7), the Permanent Lok Adalat has to draw up terms of settlement on the basis of the conciliation proceedings, and propose them to the parties. If the parties agree, the Permanent Lok Adalat has to pass an award on the basis of the agreed upon terms of settlement. Only if the parties fail to reach to an agreement on the fifth step, can the Permanent Lok Adalat proceed to the final step and decide the dispute on its merits. 5. Section 22-C(8) is amply clear that it only comes into effect once an agreement under Section 22-C(7) has failed. The corollary of this is that the proposed terms of settlement under Section 22-C(7), and the conciliation proceedings are mandatory. If Permanent Lok Adalats are allowed to bypass this step just because a party is absent, it would be tantamount to deciding disputes on their merit ex parte and issuing awards which will be final, binding and will be deemed to be decrees of civil courts. This was simply not the intention of the Parliament when it introduced the LSA Amendment Act. Its main goal was still the conciliation and settlement of disputes in relation to public utilities, with a decision on merits always being the last resort. Therefore, this Court holds that conciliation proceedings under Section 22-C of the LSA Act are mandatory in nature. Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 Page 4 of 7 6. Such an interpretation is also supported by the Supreme Court in Bar Council of India v. Union of India1, where the constitutionality of Chapter VI-A of the LSA Act was upheld. Speaking for the Bench, Justice R M Lodha highlighted that the Permanent Lok Adalats would proceed to adjudication of a dispute on its merits only after attempting and failing to generate a settlement between the parties: “22. Chapter VI-A inserted by the 2002 Amendment Act in the 1987 Act, as its title suggests, provides for pre-litigation conciliation and settlement procedure... The disputes in relation to public utility service need urgent attention with focus on their resolution at the threshold by conciliation and settlement and if for any reason such effort fails, then to have such disputes adjudicated through an appropriate mechanism as early as may be possible... 23. The Statement of Objects and Reasons itself spells out the salient features of Chapter VI-A. By bringing in this law, the litigation concerning public utility service is sought to be nipped in the bud by first affording the parties to such dispute an opportunity to settle their dispute through the endeavours of the Permanent Lok Adalat and if such effort fails then to have the dispute between the parties adjudicated through the decision of the Permanent Lok Adalat... 26. It is necessary to bear in mind that the disputes relating to public utility services have been entrusted to Permanent Lok Adalats only if the process of conciliation and settlement fails. The emphasis is on settlement in respect of disputes concerning public utility services through the medium of Permanent Lok Adalat. It is for this reason that sub-section (1) of Section 22-C states in no unambiguous terms that any party to a dispute may before the dispute is brought before any court make an application to the Permanent Lok Adalat for settlement of dispute. Thus, settlement of dispute between 1 (2012) 8 SCC 243 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 Page 5 of 7 the parties in matters of public utility services is the main theme. However, where despite the endeavours and efforts of the Permanent Lok Adalat the settlement between the parties is not through and the parties are required to have their dispute determined and adjudicated, to avoid delay in adjudication of disputes relating to public utility services, Parliament has intervened and conferred power of adjudication upon the Permanent Lok Adalat.” 7. In the present case, the Permanent Lok Adalat failed to follow the mandatory conciliation proceedings in the present case. This observation is correct since the award of the Permanent Lok Adalat does not indicate any attempt made by it to propose terms of settlement to the parties and their rejection. It states that once the petitioner did not appear, it adjudicated the dispute on merits in favour of the complainant. For the reasons mentioned earlier in this judgment, the Permanent Lok Adalat could not have done so. 8. Additionally, the first proviso to Section 22(C)(1) of the 1987 Act, provide that the Permanent Lok Adalat shall not have jurisdiction in respect of any matter relating to an offence not compoundable under any law. However, by further referring to the scheme contained in Section 22(C), it is apparent that where the conciliation failed between the parties and no settlement is arrived at, in that contingency, the Permanent Lok Adalat cannot proceed further to adjudicate dispute between the parties on merits, if the dispute relate to any offence. A distinction is made between the two clauses of Section 22 (C), being the first proviso appended to sub-section (1) of Section 22 (C), and between sub-section 8 of Section 22 (C), which imply the term "if the dispute Page 6 of 7 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47 does not relate to any offence". It is in this case, the Permanent Lok Adalat shall not adjudicate the dispute. Meaningfully read, it conveys that, where a dispute brought before the Permanent Lok Adalat effecting a conciliation and settlement, but if the conciliation fail, then it is not within the power of the Permanent Lok Adalat to adjudicate the matter on merits, if it relate to an offence, despite the offence being compoundable. The irresistible conclusion, is that on a conciliation or settlement being not arrived at during the proceedings before the Permanent Lok Adalat, if the dispute relates to any offence, then the Permanent Lok Adalat can neither pass an award, in absence of a settlement being arrived at, nor it can adjudicate the said dispute and will have to stop there. 9. Accordingly, this Court is inclined to accede to the submission of the Petitioner. With respect to the aforesaid discussion and the cases cited hereinabove, this Court is inclined to quash the order dated 19.07.2023 of Permanent Lok Adalat (PUS), Phulbani passed in PLA Case No.09/2023. 10. This Writ Petition is hereby allowed. 11. Interim order, if any, passed earlier stands vacated. Judge (Dr. S.K. Panigrahi) Page 7 of 7 Orissa High Court, Cuttack, Dated the 25th June, 2024/ Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 16-Jul-2024 11:04:47