High Court Cannot Indirectly Neutralise A Lok Adalat Award In Collateral Proceedings Where Its Validity Is Not Under Challenge: Supreme Court

The Supreme Court has observed that a court cannot indirectly neutralise a Lok Adalat award in a proceeding where the award itself is not under challenge and where the question is not whether the award should be set aside.

The Court set aside a Karnataka High Court order that had adjudicated a matrimonial appeal on merits despite a subsisting Lok Adalat settlement.

The Apex Court observed that an award passed by a Lok Adalat carries the status of a civil court decree under Section 21 of the Legal Services Authorities Act, 1987, meaning it remains final, binding, and operational between the parties until it is expressly set aside by a competent forum through appropriate legal proceedings.

Consequently, the Bench directed that the underlying Miscellaneous First Appeal (MFA) must remain stayed so long as the Lok Adalat award subsists, while granting the contesting respondent-wife liberty to seek revival of her appeal only if her separate, ongoing legal challenge to the compromise award succeeds in accordance with law.

The Bench of Justice Vikram Nath and Justice Sandeep Mehta observed, "The difficulty with the impugned judgment is, therefore, not merely procedural. It goes to the root of the jurisdictional propriety of deciding the MFA at that stage. A court cannot indirectly neutralise a Lok Adalat award in a proceeding where the award itself is not under challenge and where the question is not whether the award should be set aside. To permit such a course would defeat the statutory finality attached to Lok Adalat awards under Section 21 of the 1987 Act."

AOR V. N. Raghupathy appeared for the Appellants, while Senior Advocate Rajesh Mahale appeared for the Respondents.

Brief Facts of the Case

The matrimonial dispute traces back to the solemnization of marriage between the husband (now deceased) and the contesting respondent wife. Following marital discord, the parties separated, and the husband instituted a matrimonial petition before the Family Court seeking dissolution of marriage under the Hindu Marriage Act, 1955. The Family Court allowed the petition, dissolved the marriage, and directed the husband to pay permanent alimony to the wife. Aggrieved by the decree of divorce, the wife preferred a Miscellaneous First Appeal ('MFA') before the High Court.

During the pendency of the appeal, parallel maintenance proceedings between the parties were referred to the Lok Adalat. A joint compromise memo was executed between the spouses, resulting in a Lok Adalat award whereby the husband paid a consolidated sum towards full and final settlement. In terms of the compromise, the wife undertook to withdraw all pending litigations, including the MFA challenging the divorce decree.

Subsequently, the wife disputed the compromise and preferred a writ petition before the High Court challenging the validity of the Lok Adalat award. In the interim, the husband passed away. The wife then substituted the legal representatives and pursued the MFA. The High Court proceeded to hear the appeal on merits, ignored the subsisting compromise, and set aside the divorce decree passed by the Family Court. The appellants, claiming succession under the late husband's Will, challenged the said reversal before the Supreme Court.

Observations of the Court

The Court observed that an award passed by the Lok Adalat is deemed to be a decree of a civil court under Section 21 of the Legal Services Authorities Act, 1987. It is final, binding on all parties, and no statutory appeal lies against it.

It said, "At the outset, it is necessary to explicate the legal character of the award of the Lok Adalat dated 22.12.2015. Section 21 of the Legal Services Authorities Act, 1987 (hereinafter referred to as the “1987 Act”) gives a statutory status to an award of the Lok Adalat. Such an award is deemed to be a decree of a civil court. It is final and binding on all parties to the dispute. No appeal lies against such an award."

The Bench noted that a mere pending legal challenge does not dissolve the binding nature of a decree. An award continues to hold the field and operate between the parties unless it is expressly stayed, modified, or set aside by a competent forum through appropriate legal proceedings.

The Court held that the High Court lacked the jurisdictional propriety to decide the MFA on the merits in total disregard of a subsisting award. By doing so, the High Court indirectly neutralised a statutory settlement in a collateral proceeding where the award itself was not under challenge.

"In this backdrop, in our considered opinion, the High Court ought not to have decided MFA No. 8567 of 2015 on merits in disregard of the subsisting award dated 22.12.2015. The appeal before the High Court was one of the proceedings which respondent no. 1 had agreed to withdraw under the compromise. Therefore, the High Court was required to first consider the effect of the Lok Adalat award on the maintainability and continuance of the MFA. By proceeding to adjudicate the appeal on merits, the High Court in substance permitted the MFA to continue despite a subsisting award which recorded its withdrawal", the Court said.

Clarifying that it did not enter into the merits of the divorce or succession disputes, the Apex Court directed that the MFA shall remain stayed so long as the Lok Adalat award subsists. However, liberty was granted to the wife to seek revival of the appeal if the Lok Adalat award is set aside in accordance with law.

Cause Title: TK Dharanesh and Anr. v. HD Bhagya and Anr. [SLP (C) No. 15497 OF 2023]

Appearances:

Appellants: AOR V. N. Raghupathy and Advocate Mythili S

Respondents: Senior Advocate Rajesh Mahale, Advocate on Record Harisha S.R., Advocate Parikshith Maliye, Advocate Shreyas Mahale, Advocate Panchami Mahale, Advocate Anirudh Gupta, Advocate Anuradha Bhat.

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