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An Award passed by the Lok Adalat cannot be treated as a compromise decree by a Civil Court

In NEW OKHLA INDUSTRIAL DEVELOPMENT AUTHORITY (NOIDA) v. YUNUS & ORS, the question before the Supreme Court was whether the Award passed by a Lok Adalat under Section 20 of the Legal Services Authorities Act, 1987 can form the basis for redetermination of compensation as contemplated under Section 28A of the the Land Acquisition Act, 1894.

Background

Noida had issued a notification in March 1983 for acquisition of lands in villages situated in Tehsil Dadri for planned industrial development. Land owners were given compensation at the rate of Rs 20 per square yard in November 1984. None of the land owners questioned the rate of compensation and all accepted the amounts due to them.

One Fateh Mohammed filed an application seeking reference against the Award of November 28, 1984 and it was made over to a Lok Adalat, where NOIDA settled with Fateh Mohammed in 2016 and agreed to pay Rs 297 per square yard, almost 15 times more than the original compensation more than 30 years later.

The other landowners saw the opportunity and successfully pleaded before the Allahabad HC for grant of compensation at the rate of Rs 297 per square yard on the ground that Lok Adalat awarded decrees had precedential value. NOIDA challenged the HC order in SC.

Judgement

The Supreme Court court observed that this issue has produced divergent views among various High Courts.

The Court finally arrived at the following conclusions :-

1) By no stretch of imagination, it could be held that an Award passed by the Lok Adalat despite the legal fiction created in Section 21 of the Legal Services Authorities Act, 1987 could be treated as a compromise decree passed by a Civil Court.

2) Lok Adalat is not a Court; the Lok Adalat only certifies an agreement. 

3) Settlement decrees issued by Lok Adalat cannot be cited as a precedent before a court of law to claim similar reliefs by others who were not party to the compromise before the Lok Adalat.

4) Civil Court cannot vary the terms of the Award or extend the time agreed to between the parties to an Award.

5) The Award passed by the Lok Adalat in itself without anything more is to be treated by the deeming fiction to be a decree. It is not a case where a compromise is arrived at under Order XXIII of the Code of Civil Procedure, 1908, between the parties and the court is expected to look into the compromise and satisfy itself that it is lawful before it assumes efficacy by virtue of Section 21. Without anything more, the award passed by Lok Adalat becomes a decree. The enhancement of the compensation is determined purely on the basis of compromise which is arrived at and not as a result of any decision of a Court as defined in the Act. 

6) An Award passed by the Lok Adalat is not a compromise decree. An Award passed by the Lok Adalat without anything more, is to be treated as a decree inter alia. We would approve the view of the learned Single Judge of the Kerala High Court in P.T. Thomas (supra). An award unless it is successfully questioned in appropriate proceedings, becomes unalterable and non-violable. In the case of a compromise falling under Order XXIII Code of Civil Procedure, it becomes a duty of the Court to apply its mind to the terms of the compromise. Without anything more, the mere compromise arrived at between the parties does not have the imprimatur of the Court. It becomes a compromise decree only when the procedures in the Code are undergone.

7) An Award passed under Section 19 of the 1987 Act is a product of compromise. Sans compromise, the Lok Adalat loses jurisdiction. The matter goes back to the Court for adjudication. Pursuant to the compromise and the terms being reduced to writing with the approval of the parties it assumes the garb of an Award which in turn is again deemed to be a decree without anything more. We would think that it may not be legislative intention to treat such an award passed under Section 19 of the 1987 Act to be equivalent to an award of the Court which is defined in the Act as already noted by us and made under Part III of the Act. An award of the Court in Section 28A of the Land Acquisition Act, 1894 is also treated as a decree. Such an Award becomes executable. It is also appealable. Part III of the Act contains a definite scheme which necessarily involves adjudication by the Court and arriving at the compensation. It is this which can form the basis for any others pressing claim under the same notification by invoking Section 28A. We cannot be entirely oblivious to the prospect of an unholy compromise in a matter of this nature forming the basis for redetermination as a matter of right given under Section 28A.

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