Code of Civil Procedure, 1908: Or. XXIII r. 3 – Compromise of suit – Compromise recorded by the Lok Adalat, between the parties to the suit – Recall of said order by the High Court in writ petitions filed there against – Sustainability of – Held: Writ court cannot, in a casual manner, de hors any reasoning, set aside the order of the Lok Adalat – Strong reasons are required to recall a compromise recorded – Compromise ultimately results into a decree of a court which can be enforced just as a decree and such decree shall be final and binding upon the parties – Writ petition would only be maintainable against an award of the Lok Adalat, on allegation of fraud in the manner of obtaining the award of compromise – Terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved – In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree – High Court’s decision to set aside the order of the Lok Adalat, without entering into a discussion as to the findings in such order, cannot be sustained – Such decision of the High Court is against the principle of protecting the sanctity and finality of orders based on a compromise or consent between parties – Judgment of the High Court is set aside and that of the Lok Adalat is restored – Legal Services Authorities Act, 1987 – s.
21. Allowing the appeals, the Court
HELD: 1.1 There are no reasons forthcoming from the judgment of the High court while setting aside the order of the Lok Adalat whereby the terms of the compromise were recorded. To recall a compromise that has been recorded would call for strong reasons. This is because a compromise would result ultimately into a decree of a Court which can be enforced just as a decree passed on an adjudication of a case. This is also true in the case of a compromise recorded before a Lok Adalat. Section
21 of the Legal Services Authorities Act, 1987 equates an award of the Lok Adalat, to a decree of a Civil Court and imputes an element of finality to an award of compromise passed by the Lok Adalat. When the Lok Adalat disposes cases in terms of a compromise arrived at between the parties to a suit, after following principles of equity and natural justice, every such award of the Lok Adalat shall be deemed to be a decree of a Civil Court and such decree shall be final and binding upon the parties. Given the element of finality attached to an award of the Lok Adalat, it also follows that no appeal would lie, under Section 96 CPC against such award. [Paras 27, 28][202-H; 203-A-B, E-F]
1.2 While a writ petition would be maintainable against an award of the Lok Adalat, especially when such writ petition has been filed alleging fraud in the manner of obtaining the award of compromise, a writ court cannot, in a casual manner, de hors any reasoning, set aside the order of the Lok Adalat. The award of a Lok Adalat cannot be reversed or set aside without setting aside the facts recorded in such award as being fraudulent arrived at. [Para 29][203-G]
1.3 The Latin maxim “cessante ratione legis cessat ipsa lex” meaning “reason is the soul of the law, and when the reason of any particular law ceases, so does the law itself”. There is a duty to accord reasons for a decision arrived at by a court, or for that matter, even a quasi-judicial authority. [Para 30-31][204-A-B] H H Sri Swamiji of Sri Admar Mutt v. the Commissioner, Hindu Religious and Charitable Endowments Dept. (1979) 4 SCC 642 : [1980] 1 SCR 368; Kranti
Associates Private Limited & Anr. Vs. Masood Ahmed Khan & Ors. (2010) 9 SCC 496 : [2010] 10 SCR 1070 – relied on.
1.4 The Lok Adalat, in its award dated 07th July, 2012 recorded that the parties had admitted that the contents of the compromise petition were true and correct, after the terms thereof had been read over and explained to them in Kannada language. Further, it was also noted that the compromise was entered into by plaintiff no. 1, on behalf of, and for the benefit of his two minor children, in order to protect their shares. The same was allowed by the Lok Adalat on recognising the terms of the compromise, would protect the interests plaintiff no. 1’s minor children. There is no objection raised on behalf of plaintiff no. 1 in the instant case. The Lok Adalat, in its order dated 27th April, 2013, rejected the allegations of fraud raised by plaintiff nos. 4-6, against the defendants and recorded that plaintiff nos. 4-6 had offered no explanation as to why no objection was raised by any of them on 07th July, 2012 before the Lok Adalat. It was further observed that plaintiff nos. 4-6, could not, after having accepted huge sums of money in terms of the compromise, rescind from the terms thereof. It is not the case of plaintiff nos. 4-6 that they had not received an amount of Rs. 30,00,000/- (rupees thirty lakhs) each, in terms of the compromise. Further, it is not their case that such sum has been returned, in whole or in part, to the defendants. That although plaintiff no. 4, stated that on learning that the proceedings conducted on 07th July, 2012 before the Lok Adalat were in relation to a compromise, she had not signed the order sheet, she failed to provide any explanation as to why she did not inform the Lok Adalat on the said date that her signature on the compromise petition was obtained by fraud. That plaintiff nos. 46 had admitted before the Lok Adalat on 07th July, 2012 that the contents of the compromise petition were true and correct, when the same had been read over and explained to them in Kannada. That plaintiff nos. 4-6 specifically admitted that they had received a sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as mentioned in the compromise petition in lieu of relinquishing their rights, title and interest in the other suit schedule properties. That if, in fact, the signatures of plaintiff nos. 4-6 had been obtained by fraud, they ought to have returned the amount of Rs. 30,00,000/- (rupees thirty lakhs) each, paid to them in accordance with the terms of the compromise. Having not done so, plaintiff nos. 4-6 had failed to establish that any fraud was practiced upon them, by the defendants, with a view to obtain their signatures on the compromise petition. On a perusal of the plaint, it is noted that there were 13 items of the suit schedule property having different valuation and therefore, the plaintiffs would have had their respective shares in the suit schedule properties taken together. However, plaintiff nos.4-6 accepted a sum of Rs.30 lakhs each by relinquishing their right, title and interest in all the suit schedule properties. Having received a monetary share in respect of the suit items, the plaintiffs had decided to relinquish their right, title and interest in respect of all the suit items. The Single Judge of the High Court in the impugned judgment has not considered the said facts of the case in the context of setting aside the award of the Lok Adalat dated 07th July, 2012. The Single Judge has also not considered the reasoning given in the order dated 27th April, 2013 by which the objections raised by plaintiff nos.4-6 to the decree of the Lok Adalat had been rejected. [Para 32][205G-H; 206-A-H; 207-A-D]
1.5 Where an allegation of fraud is made against a party to an agreement, the said allegation would have to be proved strictly, in order to avoid the agreement on the ground that fraud was practiced on a party in order to induce such party to enter into the agreement. Similarly, the terms of a compromise decree, cannot be avoided, unless the allegation of fraud has been proved. In the absence of any conclusive proof as to fraud on the part of the objectors, the High Court could not have set aside the compromise decree in the instant case. [Para 35][208-A-B]
1.6 No ground was made out warranting the decision of the High Court to set aside the order of the Lok Adalat wherein compromise was recorded between the parties. The High Court’s decision to set aside the order of the Lok Adalat, without entering into a discussion as to the findings in such order, cannot be sustained. Such decision of the High Court runs contrary to established principles of law which seek to protect the sanctity and finality of orders based on a compromise or consent between parties. Hence the impugned judgment of the High Court, is set aside and the order of the Lok Adalat, whereby the compromise between the parties to the suit was recorded, is restored. [Para 36, 37][208-C-E]
Smt. Sawarni v. Smt. Inder Kaur and Ors. (1996) 6 SCC
223 : [1996] 5 Suppl. SCR 165; Ruby Sales and Services Pvt. Ltd. v. State of Maharashtra (1994) 1 SCC 531 : [1993] 3 Suppl. SCR 473; Pushpa Devi Bhagat (dead) through LR. Sadhna Rai v. Rajinder Singh and Ors. (2006) 5 SCC 566 : [2006] 3 Suppl. SCR 370 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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