George Varghese and others v M/S Holy Cross Hospital, Kottiayam, Kollam; Permanent Lok Adalat, Thiruvananthapuram; Union of India (Ministry of Corporate Affairs)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN THURSDAY, THE 18[TH] DAY OF NOVEMBER 2021 / 27TH KARTHIKA, 1943** **WP(C) NO. 12103 OF 2011** ## **PETITIONERS:** 1 GEORGE VARGHESE SENIOR VICE PRESIDENT-DIAGNOSTICS DIVISION,, PIRAMAL HEALTHCARE LTD., `A' WING, 6TH FLOOR,, 247 PARK, LBS MARG, VIKHROLI (WEST),, MUMBAI-400 083. 2 GOPAL KRISHNAN.R GENERAL MANAGER-DIOGNOSTICS DIVISION, PIRAMAL HEALTHCARE LTD.,, `A' WING, 6TH FLOOR, 247 PARK, LBS MARG,, VIKHROLI (WEST), MUMBAI-400 083. 3 VINOD KURIAKOSE THE SALES MANAGER-DIAGNOSTICS FOR THE, STATE OF KERALA, PIRAMAL HEALTHCARE LTD.,, C/O.QUALITY PRODUCTS, 184/185 DD VYPER BHAVAN,, KP VALLOM ROAD, KADAVANTHARA, KOCHI-18. 4 JAMES VARGHESE, DIAGNOSTICS NETWORK & AUTOMATION TC 11/740-2,, NEAR HOTEL PRASANTH, PMG JUNCTION,, THIRUVANANTHAPURAM-33. BY ADVS.SRI.C.V.MANUVILSAN SRI.MANU GEORGE KURUVILLA ## **RESPONDENTS:** 1 M/S.HOLY CROSS HOSPITAL KOTTIYAM, KOLLAM, REPRESENTED BY ITS ADMINISTRATOR-691 001. 2 PERMANENT LOK ADALATH THIRUVANANTHAPURAM-695 001. ADDL.R3 UNION OF INDIA MINISTRY OF COMPANY AND CORPORATE AFFAIRS, NEW DELHI -001, REPRESENTED BY ITS SECRETARY MINISTRY OF COMPANY AND CORPORATE AFFAIRS. **2** ## **W.P.(C).No.12103/2011** (ADDL. R3 IS IMPLEADED AS PER ORDER DATED 25/07/2012 IN IA 9377/2012.) (ADDRESS OF ADDL. R3 IS CORRECTED AS UNION OF INDIA, MINISTRY OF LAW AND JUSTICE, NEW DELHI-1, REPRESENTED BY ITS SECRETARY, MINISTRY OF LAW AND JUSTICE AS PER ORDER DATED 25/07/2012 IN IA 9988/2012) BY ADVS.SRI.JOHNSON GOMEZ FR.JOHNY THOTTAM **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.P.(C).No.12103/2011** **3** **P.V.KUNHIKRISHNAN, J. -------------------------------W.P.(C).No.12103 of 2011 ---------------------------------------------Dated this the 18[th] day of November, 2021** ## **JUDGMENT** This writ petition is filed by the petitioners mainly challenging Ext.P7 award passed by the Permanent Lok Adalath, Thiruvananthapuram, the 2[nd] respondent herein. The 1[st] respondent filed a petition before the 2[nd] respondent under Section 22 of the Legal Services Authorities Act, 1987 (for short, the Act of 1987) with certain grievances. The same was allowed by the 2[nd] respondent as per Ext.P7 award, after deciding the matter on merit. Aggrieved by the same, this writ petition is filed. 2. Heard the counsel for the petitioners and the counsel for the 1[st] respondent. 3. Even though the constitutional validity of the provisions of Section 22 of the the Act of 1987 are challenged in this writ petition, the counsel for the petitioners submitted that in the light of the judgment of this Court dated 07.10.2021 in W.P.(C). No.577 of 2010, Ext.P7 award will not **4** ## **W.P.(C).No.12103/2011** stand. The counsel submitted that the 2[nd] respondent has not followed Section 22(c) of the Act of 1987 in its letter and spirit. The counsel submitted that in the light of the observation made by this Court in the above judgment, the award will not stand. I also heard the counsel for the 1[st] respondent. 4. I think the point raised by the petitioners is covered by the judgment dated 07.10.2021 in W.P.(C). No.577 of 2010. Relevant portion of that judgment is extracted hereunder: “5. I considered the contentions of the petitioners and the contesting respondents. The short point to be decided is about the stage at which a Permanent Lok Adalat can decide a dispute on merit as per Section 22C(8) of the Act, 1987. It will be better to extract Section 22C of the Act 1987. _“22C. Cognizance of cases by Permanent Lok Adalat.—_ _(1) Any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for the settlement of dispute:_ _Provided that the Permanent Lok Adalat shall not have jurisdiction in respect of any matter relating to an offence not compoundable under any law:_ _Provided further that the Permanent Lok Adalat shall also not have jurisdiction in the matter where the value of the property in dispute exceeds ten lakh rupees:_ **5** ## **W.P.(C).No.12103/2011** _Provided also that the Central Government, may, by notification, increase the limit of ten lakh rupees specified in the second proviso in consultation with the Central Authority._ _(2) After an application is made under sub-section (1) to the Permanent Lok Adalat, no party to that application shall invoke jurisdiction of any court in the same dispute._ _(3) Where an application is made to a Permanent Lok Adalat under sub-section (1),it—_ (a) _shall direct each party to the application to file before it a written statement, stating therein the facts and nature of dispute under the application points or issues in such dispute and grounds relied in support of, or in opposition to, such points or issues, as the case may be, and such party may supplement such statement with any document and other evidence which such party deems appropriate in proof of such facts and grounds and shall send a copy of such statement together with a copy of such document and other evidence, if any, to each of the parties to the application;_ (b) _may require any party to the application to file additional statement before it at any stage of the conciliation proceedings;_ (c) _shall communicate any document or statement received by it from any party to the application to the other party, to enable such other party to present reply thereto._ **6** ## **W.P.(C).No.12103/2011** _(4) When statement, additional statement and reply, if any, have been filed under sub-section (3), to the satisfaction of the Permanent Lok Adalat, it shall conduct conciliation proceedings between the parties to the application in such manner as it thinks appropriate taking into account the circumstances of the dispute._ _(5) The Permanent Lok Adalat shall, during conduct of conciliation proceedings under sub-section (4), assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner._ _(6) It shall be the duty of every party to the application to cooperate in good faith with the Permanent Lok Adalat in conciliation of the dispute relating to the application and to comply with the direction of the Permanent Lok Adalat to produce evidence and other related documents before it._ _(7) When a Permanent Lok Adalat, in the aforesaid conciliation proceedings, is of opinion that there exist elements of settlement in such proceedings which may be acceptable to the parties, it may formulate the terms of a possible settlement of the dispute and give to the parties concerned for their observations and in case the parties reach at an agreement on the settlement of the dispute, they shall sign the settlement agreement and the Permanent Lok Adalat shall pass an award in terms thereof and furnish a copy of the same to each of the parties concerned._ _(8) Where the parties fail to reach at an agreement under sub-section (7), the Permanent Lok_ **7** ## **W.P.(C).No.12103/2011** _Adalat shall, if the dispute does not relate to any offence, decide the dispute.”_ 6. Section 22C (4) says that when statement, additional statement, and reply, if any, have been filed under sub-section (3), to the satisfaction of the Permanent Lok Adalat, _it shall conduct conciliation proceedings between the parties to the application in such manner as it thinks appropriate taking into account the circumstances of the dispute_ . Section 22C(5) says that the Permanent Lok Adalat shall, during the conduct of conciliation proceedings under sub-section (4), assist the parties in their attempt to reach an amicable settlement of the dispute in an independent and impartial manner. Section 22C(6) says that it shall be the duty of every party to the application to cooperate in good faith with the Permanent Lok Adalat in conciliation of the dispute relating to the application and to comply with the direction of the Permanent Lok Adalat to produce evidence and other related documents before it. Section 22C(7)says that, When a Permanent Lok Adalat, in the aforesaid conciliation proceedings, is of opinion that there exist elements of settlement in such proceedings which may be acceptable to the parties, it may formulate the terms of a possible settlement of the dispute and give to the parties concerned for their observations and in case the parties reach at an agreement on the settlement of the dispute, they shall sign the settlement **8** ## **W.P.(C).No.12103/2011** agreement and the Permanent Lok Adalat shall pass an award in terms thereof and furnish a copy of the same to each of the parties concerned. Thereafter, Section 22C(8) says that, Where the parties fail to reach at an agreement under sub-section (7), the Permanent Lok Adalat shall, if the dispute does not relate to any offence, decide the dispute. Therefore, a reading of Section 22(C) will show that the Permanent Lok Adalat should reach the stage of Section 22C(7)of the Act 1987 for deciding a dispute under Section 22C(8). 7. In other words the Permanent Lok Adalat can decide the dispute only after reaching the following stages mentioned in Section 22C of the Act 1987. (a) Permanent Lok Adalat is of the opinion that there exist elements of the settlement. (b) If the Permanent Lok Adalat found that there are elements of settlement in such proceedings which may be acceptable to the parties, the Permanent Lok Adalat shall formulate the terms of a possible settlement of the dispute. (c) Thereafter the Permanent Lok Adalat shall give the terms of the possible settlement formulated by it to the parties concerned for their observations. (d) If the parties fail to reach an agreement under sub-section (7) of Section 22C, then only the Permanent Lok Adalat can decide the dispute and that also if the dispute does not relate to any offence. **9** ## **W.P.(C).No.12103/2011** 8. So it is clear that the Permanent Lok Adalat can decide the dispute only after the above four stages. The Heading of Chapter VIA of the Act 1987 itself says that "PRE-LITIGATION CONCILIATION AND SETTLEMENT". Therefore the enthusiasm of the Permanent Lok Adalat should be to settle the matter through conciliation and not to decide the dispute on merit. For deciding a dispute on merit, first of all, the Permanent Lok Adalat should conduct conciliation as provided in Section 22C (4) and (5) and thereafter if the PLA is of the opinion from the aforesaid conciliation that, there is an element of settlement, such settlement is to be formulated and to be served to the parties and if the parties fail to reach at an agreement under subsection (7) of 22C, then only the Permanent Lok Adalat can decide the dispute. Simply because an application is submitted before the Permanent Lok Adalat and a conciliation conducted is failed, the Permanent Lok Adalat can not decide the dispute. Only if the Permanent Lok Adalat is of the opinion that there exists an element of settlement, and the parties failed to reach an agreement, the question of dispute resolution on merit by the Permanent Lok Adalat will arise. The statement of objects and reasons of the Legal Services Authorities (Amendment) Act 2002 by which Chapter VIA was inserted in the Act 1987 also will strengthen this view. The statement of object and reason of the 2002 Amendment Act, reads as under: **10** ## **W.P.(C).No.12103/2011** _'The Legal Services Authorities Act, 1987 was enacted to constitute legal services authorities for providing free and competent legal services to the weaker sections of the society to ensure that opportunities for securing justice were not denied to any citizen by reason of economic or other disabilities and to organize Lok Adalats to ensure that the operation of the legal system promoted justice on a basis of equal opportunity. The system of Lok Adalat, which is an innovative mechanism for alternate dispute resolution, has proved effective for resolving disputes in a spirit of conciliation outside the Court._ _2. However, the major drawback in the existing scheme of organisation of the Lok Adalats under Chapter VI of the said Act is that the system of Lok Adalats is mainly based on compromise or settlement between the parties. If the parties do not arrive at any compromise or settlement, the case is either returned to the Court of law or the parties are advised to seek remedy in a Court of law. This causes unnecessary delay in the dispensation of justice. If Lok Adalats are given power to decide the cases on merits in case parties fails to arrive at any compromise or settlement, this problem can be tackled to a great extent. Further, the cases which arise in relation to public utility services such as Mahanagar Telephone Nigam Limited, Delhi Vidyut Board, etc., need to be settled urgently so that people get justice without delay even at prelitigation stage and thus most of the petty cases which ought not to go in the regular Courts would be settled at the pre- litigation stage itself which would result in reducing the workload of the regular Courts to a great extent. It is, therefore, proposed to amend the Legal_ **11** ## **W.P.(C).No.12103/2011** _Service Authorities Act, 1987 to set up Permanent Lok Adalats for providing compulsory pre -litigative mechanism for conciliation and settlement of cases relating to public utility services._ _3. The salient features of proposed legislation are as follows:_ _(i) to provide for the establishment of Permanent Lok Adalats which shall consists (sic) of a Chairman who is or has been a District Judge or Additional District Judge or has held judicial office higher in rank than that of the District Judge and two other persons having adequate experience in public utility services;_ _(ii) the Permanent Lok Adalat shall exercise jurisdiction in respect of one or more public utility services such as transport services of passengers of goods by air, road and water, postal, telegraph or telephone services, supply of power, light or water to the public by any establishment, public conservancy or sanitation, services in hospitals or dispensaries, and insurance services;_ _(iii) the pecuniary jurisdiction of the Permanent Lok Adalat shall be up to Rupees Ten Lakhs. However, the Central Government may increase the said pecuniary jurisdiction from time to time. It shall have no jurisdiction in respect of any matter relating to an offence not compoundable under any law;_ _(iv) it also provides that before the dispute is brought before any Court, any party to the dispute may make an application to the Permanent Lok Adalat for settlement of the dispute;_ _(v) where it appears to the Permanent Lok Adalat that there exist elements of a settlement, which may be acceptable to the parties, it shall formulate the_ **12** ## **W.P.(C).No.12103/2011** _terms of a possible settlement and submit them to the parties for their observations and in case the parties reach an agreement, the Permanent Lok Adalat shall pass an award in terms thereof. In case parties to the dispute fail to reach an agreement, the Permanent Lok Adalat shall decide the dispute on merits; and_ _(vi) every award made by the Permanent Lok Adalat shall be final and binding on all the parties thereto and shall be by a majority of the persons constituting the Permanent Lok Adalat.' (Underline supplied)_ 9. The Apex Court in _Bar Council of India v. Union of India[2012 KHC 4412]_ observed that the dispute resolution by Permanent Lok Adalat will arise only if conciliation and settlement fail. The relevant portion of the above judgment is extracted hereunder: _“24. 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 S.22C 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 the parties in matters of public utility services is the main theme. However, where despite the endeavours and efforts of the Permanent Lok_ **13** ## **W.P.(C).No.12103/2011** _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, the Parliament has intervened and conferred power of adjudication upon the Permanent Lok Adalat. Can the power conferred on Permanent Lok Adalats to adjudicate the disputes between the parties concerning public utility service upto a specific pecuniary limit, if they do not relate to any offence, as provided under S.22C(8), be said to be unconstitutional and irrational? We think not. It is settled law that an authority empowered to adjudicate the disputes between the parties and act as a tribunal may not necessarily have all the trappings of the Court. What is essential is that it must be a creature of statute and should adjudicate the dispute between the parties before it after giving reasonable opportunity to them consistent with the principles of fair play and natural justice. It is not a constitutional right of any person to have the dispute adjudicated by means of a Court only. Chapter VI-A has been enacted to provide for an institutional mechanism, through the establishment of Permanent Lok Adalats for settlement of disputes concerning public utility service before the matter is brought to the Court and in the event of failure to reach any settlement, empowering the Permanent Lok Adalat to adjudicate such dispute if it does not relate to any offence.”_ **14** ## **W.P.(C).No.12103/2011** 10. Moreover this court also in New India Assurance Company Ltd. V Jebby M Aliyar and others(2018(4)KHC 199) observed that PLA can decide a dispute only when there is an element of settlement referable to the pre-existing rights and obligations. So it is clear that PLA can decide a dispute only if it thinks that there is an element of settlement in the dispute and the PLA reached the stage of Section 22C(7) of the Act 1987 and further the parties failed to reach at an agreement. In the light of the above discussion, the facts of the present case are to be considered. I perused Ext.P6 award. Paragraph No.5 of Ext.P6 award deals with the attempt taken by the Permanent Lok Adalat for conciliation, and the same is extracted hereunder: “5) Conciliation proceedings were arranged and initially the respondents expressed willingness to settle the dispute. But later they have withdrawn from participating in the conciliation. So the dispute could not be settled. Thereupon the Permanent Lok Adalat has proceeded to decide the dispute on merits guided by the principles of natural justice, objectivity, fair play, equity and other principles of justice u/s 22C(8) r/w 22D of the Legal Services Authorities Act, 1987.” 11. A reading of the above finding in Ext.P6 award will show that the Permanent Lok Adalat has not followed the procedure in Section 22C of the Act, 1987. By observing that the respondents expressed **15** ## **W.P.(C).No.12103/2011** their willingness to settle the dispute in the beginning, but later withdrew from participating in the conciliation, the Permanent Lok Adalat can not go to the stage of deciding the dispute as per Section 22C(8) of the Act, 1987. The learned counsel for the petitioners submitted that the above observation of PLA is factually not correct. I need not decide the correctness of the above statement in this judgment. But, according to me, there are several stages to reach Section 22C(8) of the Act, 1987. First Section 22C(4) and then 22C(5) and thereafter 22C(6) and then Section 22C(7). After that, if the parties fail to reach an agreement under Section 22C(7), the Permanent Lok Adalat shall, if the dispute does not relate to any offence, decide the dispute. Here is a case where the procedure adopted by the Permanent Lok Adalat is not correct and is against the provisions of the Act, 1987. _”_ 5. In the light of the above dictum laid down by this Court, I think the 2[nd] respondent has to reconsider the matter. For facilitating the 2[nd] respondent to reconsider the matter afresh in accordance to Section 22 (c) of the Act of 1987, I think the award can be set aside and the matter can be sent back for fresh consideration. Therefore, this writ petition is allowed in the following manner: ## **W.P.(C).No.12103/2011** ## **16** 1. Ext.P7 award is set aside. 2. The Permanent Lok Adalath, Thiruvananthapuram is directed to reconsider O.P. No.427 of 2009 afresh in accordance to Section 22(c) of the Legal Services Authorities Act, as explained by this Court in the judgment dated 7.10.2021 in W.P.(C). No.577 of 2010. 3. All other contentions raised by the petitioners and the 1[st] respondent are left open. JV Sd/- **P.V.KUNHIKRISHNAN JUDGE** **17** ## **W.P.(C).No.12103/2011** ## **APPENDIX OF WP(C) 12103/2011** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |EXHIBIT P1|COPY OF TEH OFFER LETTER DATED| ||16.03.2006| |EXHIBIT P2|COPY OF THE LETTER DATED 20.01.2009,| ||ISSUED BY SIS MAGGIE, THE LAB IN| ||CHARGE OF THE 1ST RESPONDENT TO THE| ||1ST PETITIONER| |EXHIBIT P3|COPY OF THE REPLY LEETER DATED| ||27.01.2009| |EXHIBIT P4|COPY OF THE LAWYER NOTICE DATED| ||24.2.2009| |EXHIBIT P5|COPY OF THE MEMORANDUM OF ORIGINAL| ||PETITION AS OP NO.427/2009| |EXHIBIT P6|COPY OF HTE WRITTEN STATEMENT FILED BY| ||THE PETITIONERS IN OP NO.427/2009| |EXHIBIT P7|COPY OF THE AWARD DATED 25.05.2010,| ||PASSED BY THE 2ND RESPONDENT| |EXHIBIT P8|COPY OF THE LAWYER'S NOTICE DATED| ||22.12.2010| |RESPONDENTS' EXHIBITS:|| |EXHIBIT R1(A)|COPY OF THW AWARD PASSED BY THE| ||PERMANENT LOK ADALATH AT| ||THIRUVANANTHAPURAM DATED 25.05.2010| |EXHIBIT R1(B)|COPY OF THE PLAINT IN OS NO.10/2010| ||FILED AT THE SUB COURT, KOLLAM DATED| ||22.12.2009| |EXHIBIT R1(C)|COPY OF THE LETTER GIVEN BY THE| ||PETITIONER DATED 9.9.2010, 10.9.10,| ||8.10.10, 8.9.10, 23.11.10|