Hamza P v. Canara Bank

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE THE ACTING CHIEF JUSTICE MR.ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU MONDAY, THE 11TH DAY OF DECEMBER 2017/20TH AGRAHAYANA, 1939 WA.No.2514 of 2017 IN WP(C)22073/2017 --------------------------------------AGAINST THE JUDGMENT IN WP(C) 22073/2017 of HIGH COURT OF KERALA DATED 15.11.2017 APPELLANT/PETITIONER: -------------------- HAMZA P, IX 344, AL AKBAR BUILDINGS, CHOORAKODE P O VALLAPUZHA, PALAKKAD KERALA 679 336. BY ADVS.SRI.S.EASWARAN SRI.P.MURALEEDHARAN (IRIMPANAM) SRI.M.A.AUGUSTINE SRI.P.SREEKUMAR (THOTTAKKATTUKARA) SMT.SOUMYA JAMES RESPONDENT/RESPONDENT: ---------------------- CANARA BANK, HAVING ITS HEAD OFFICE AT BANGALORE AND BRANCH AMONG OTHER PLACES AT SHORNUR BRANCH, PALAKKAD, KERALA 670 121. R1 BY ADV. SMT.THANKOM.G R1 BY ADV. SRI.E.M.MURUGAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11-12-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **ANTONY DOMINIC, Ag.C.J. & DAMA SESHADRI NAIDU, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Writ Appeal No.2514 of 2017** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 11[th] day of December, 2017** ## **JUDGMENT** ## _**Antony Dominic, Ag.C.J.**_ This appeal is filed by the petitioner in W.P.(C)No.22073/17. In the said writ petition, his prayer was to quash Ext.P3 and to restrain the respondent from proceeding further on the strength of Ext.P3. The writ petition having been dismissed, this appeal is filed. 2. We heard the counsel for the appellant and the learned counsel appearing for the respondent bank. 3. The facts in short are that, the appellant had availed a loan from the respondent bank, with security offered by way of mortgage of immovable properties. Default was committed and thereupon the bank approached the Lok Adalat constituted at Ottapalam with a petition under Section 19 of the Legal Services Authorities Act, 1987 (in short 'LSA Act'). The appellant appeared W.A.No.2514 of 2017 : 2 : at the Adalath and on mutual agreement, against a total amount of Rs.30,11,068/- that was due to the bank, the parties settled the dispute for an amount of Rs.21,00,000/-. The amount was agreed to be paid on or before 5.11.2015. Accordingly, Ext.P3 award was passed by the Lok Adalat, incorporating the further agreement that in the event default is committed, the bank would be entitled to recover the entire dues with interest at the rate of 12% per annum from the date of the award. 4. The appellant defaulted in paying the award amount and thereupon the bank approached the Debt Recovery Tribunal (in short 'DRT'), which passed Ext.P4 order deeming the award passed by the Lok Adalat to be a decree as provided under Section 20(1) of the LSA Act. It was in these circumstances, the writ petition was filed seeking to quash Ext.P3 award. The contention which raised before the learned Single Judge and before this court was that in view of the provisions contained in Sections 18 and 34 of the Recovery of Debts due to Banks and Financial Institutions Act, W.A.No.2514 of 2017 : 3 : 1993 since the dispute between the parties falls entirely within the jurisdiction of the Debt Recovery Tribunal, the Lok Adalat constituted at the Sub Court, Ottapalam did not have jurisdiction to even entertain the petition filed by the bank under Section 19 of the LSA Act or to pass Ext.P3 award. It is the case of the appellant that consent cannot confer jurisdiction on the Tribunal which, in law, otherwise does not have jurisdiction. According to the counsel, therefore, Ext.P4 order passed by the DRT deeming Ext.P3 award as a decree under Section 20(1) of the LSA Act, is also clearly illegal and the learned Single Judge ought to have upheld the challenge. 5. In support of this plea, counsel placed reliance on the judgments of the Apex Court in _Allahabad Bank v. Canara Bank and Another [(2000) 4 SCC 406], Unique Butyle Tube Industries (P) Limited v. U.P.Financial Corporation and others [(2003) 2 SCC 455], KSL and Industries Limited v. Arihant Threads Limited and Others [(2015) 1 SCC 166], Bank of India v. Ketan Parekh and others (2008) 8 SCC 148, State Bank of Patiala v. Mukesh Jain and Another [(2017)_ W.A.No.2514 of 2017 : 4 : _1 SCC 53,] Bar Council of India v. Union of Inida [(2012) 8 SCC 243], Raghunath Rai Bareja and another v. Punjab National Bank and Others [(2007) 2 SCC 230 ], Kanti Devi v. The State of Bihar and others in CWJC No.18500 of 2011, Jagmittar Sain Bhagat and others v. Director, Health Services, Haryana and others [(2013) 10 SCC 135] and P.Dasa Muni Reddy v. P.Appa Rao [(1974) 2 SCC 725]._ 6. Having considered the submissions made, we are unable to agree with the learned counsel for the appellant. Section 19 of the LSA Act occurring in Chapter VI provides for _the organisation of Lok Adalats_ . Sub Section (5) of Section 19 provides that a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of-- (i) any case pending before; or (ii) any matter which is falling within the jurisdiction of, and is not brought before; any court for which the Lok Adalat is organised. The term 'Court' empowered in this Section has been defined in Section 2(aaa) as a civil, criminal or revenue court and includes any tribunal or any W.A.No.2514 of 2017 : 5 : other authority constituted under any law for the time being in force, to exercise judicial or quasi-judicial functions. 7. Section 19(5), therefore, contains two parts - the first part in Clause (i) brings within the jurisdiction of the Lok Adalat any case pending before any court for which the Lok Adalat is organised. The second part as contained in Clause (ii) thereof brings within its jurisdiction any matter which is falling within the jurisdiction of, and is not brought before any court for which Lok Adalat is organised. 8. Therefore, the first part deals with cases which are pending before courts and the second part deals with pre litigation petitions. In the case of pre litigation petitions filed before the Lok Adalat, all that the Lok Adalat does is to ensure the appearance of both sides and if the parties agree to settle the disputes to the satisfaction of both, to record such settlement and pass award in terms of the agreed terms and conditions. Once such a settlement is arrived at and an award is passed, necessarily, that will be an W.A.No.2514 of 2017 : 6 : award of the Lok Adalat as provided under Section 20(1) which shall be deemed to be a decree of the civil court. 9. Insofar as this case is concerned, it is the admitted case of the appellant that a petition was filed by the bank before the Lok Adalat at Ottapalam. This undoubtedly is under Section 19(5)(ii) of the LSA Act. The appellant appeared before the Lok Adalat and on agreed terms, the dispute was compromised and recording the compromise the award was passed, which is to be deemed to be a decree under Section 20(1) of the Act. Necessarily, when the appellant committed default in honouring the terms of the award, the bank moved the DRT and the DRT passed Ext.P4 final order, treating the award of the Lok Adalat as a decree passed by a civil court. 10. As we have already stated, the contention raised by the learned counsel for the appellant was that so long as the civil court does not have jurisdiction to entertain the claim of the bank if a suit were filed before it, the Lok Adalat could not have entertained even W.A.No.2514 of 2017 : 7 : the pre litigation petition filed by the bank. According to us, for the reasons stated above and in the light of the provisions contained in Section 19(5) of the LSA Act, this contention raised before us is only to be rejected and we do so. This view that we have taken is fortified by the principles laid down by a Division Bench of this court in the judgment in W.A.854/2005, where it was held thus: _“6. Legal Services Authorities Act 1987 was enacted to provide free and competent legal services to the weaker sections of the society and to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities, and to organise Lok Adalats to secure that the operation of the legal system promotes justice on the basis of equal opportunity. Lok Adalats are also being constituted under the Act in various places in the country for the disposal, in a summary way and through the process of arbitration and settlement between the parties, of a large number of cases expeditiously and with a lesser costs. System is working effectively and large number of cases are being disposed of expeditiously. Consequently it was felt that there must be some statutory backing with regard to the various awards passed by Lok Adalats. It was felt that such a statutory support would not only reduce the burden of arrears of work in regular courts, but would also take justice to the door-steps of the poor and the needy and make justice quicker and less expensive. Consequently Legal Services Authorities Act_ W.A.No.2514 of 2017 : 8 : _was amended by Legal Services Authorities (Amendment) Act, 1954 (59 of 1994). Section 19 of the Act deals with organisation of Lok Adalats. Section 19(5) states that Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties to a dispute in respect of any case pending before or any matter which is falling within the jurisdiction of and is not brought before any court for which the Lok Adalat is organised. Section 20 of the Legal Services Authorities Act deals with cognizance of cases by Lok Adalats. Section 20(4) stipulates that every Lok Adalat shall, while determining any reference before it under this Act, act with utmost expedition to arrive at a compromise or settlement between the parties and shall be guided by the principles of justice, equity, fair play and other legal principles. Section 21 stipulates that every award of the Lok Adalat shall be deemed to be a decree of a civil court and that every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award. Section 25 states that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act._ _7. Banks and other financial institutions are also invoking the provisions of the Legal Services Authorities Act to seek for speedy inexpensive remedies. Consequently, the bank preferred applications 299 and 300 of 1999 before the Lok Adalat at Ernakulam and a compromise was reached between the parties and an award was passed under Section 21 of the Legal Services_ W.A.No.2514 of 2017 : 9 : _Authorities Act. Such a decree under Section 21(2) of the Act shall be final and binding on all the parties to the dispute and no appeal shall lie to any court against the award. The bank in our view has got a legal right to get that award executed. After coming into force of the DRT Act the bank can get the decree executed only by filing an application under Section 19 before the DRT. Section 19 (22) enables the Tribunal to issue a certificate to the recovery officer for recovery of the amount of debt specified in the certificate. Section 31A enables the Tribunal to issue certificate for recovery of any decree or order. DRT therefore in exercise of the powers conferred under those provisions passed the final order on 6[th] August 2004, which in our view, is valid and enforceable._ _8. Debt Recovery Tribunal has been established in the State of Kerala under Section 3(1) of the Act on 4-111996. Section 1(4) of the Act states that the provisions of the Act shall not apply where the amount of debt due to any bank or financial institution or to a consortium of banks or financial institutions is less than ten lakh rupees or such other amount, being not less than one lakh rupees, as the Central Government may by notification specify. Section 17 of the Act deals with jurisdiction, powers and authority of Tribunals which says that a Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain any decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. Section 18 of the Act also states that on and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority in relation to the matter_ W.A.No.2514 of 2017 : 10 : _specified in Section 17 except the Supreme Court and a High Court exercising jurisdiction under Articles 226 and 227 of the Constitution. Therefore on establishment of Tribunal the civil courts have no jurisdiction in those matters covered by the Act. Consequently District Court, Ernakulam have no jurisdiction to entertain any suit for recovery of any amount due above the specified limit on and from 4.11.1996. Remedy of bank or financial institutions therefore lies only before the DRT in respect of matters which falls under sections 17 and 18 read with section 1(4) of the DRT Act._ _9. Lok Adalats however, are not resolving any suits on merits. It has jurisdiction to arrive at a compromise or settlement between the parties. Lok Adalats cannot compel or coerse or force to reach a compromise or settlement. Parties in dispute has to come to a decision entirely without any compulsion or coercion. Lok Adalat is guided by the principles of justice, equity, fair play and other legal principles. Considerable sanctity has been given to the award passed by a Lok Adalat since award is passed on the basis of a compromise and hence rendered final. The principle laid down by the apex court in Allahabad Bank v. Canara Bank, AIR 2000 SC 1535 holding that jurisdiction of the civil court and Company Court is ousted since the formation of DRT would not apply to the Lok Adalat constituted under the Legal Services Authorities Act. Section 21(2) specifically stipulates that every award made by a Lok Adalat shall be final and binding on all the parties to the dispute and no appeal shall lie to any court against the award. We have already indicated that Sections 17 and 18 read with section 1(4) cannot and will not over ride the award_ W.A.No.2514 of 2017 : 11 : _passed by the Lok Adalat under section 21 of the Act and can be enforced through DRT._ _10. We may point out there is no inconsistency in the provisions of the Legal Services Authorities Act and the DRT Act. Section 25 of the Legal Services Authorities Act specifically stipulates that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. Section 34 of the DRT Act states that the Act shall have over-riding effect. The section says that the provision of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. We are of the view there is no inconsistency between any of the provisions of the DRT Act and that of the Legal Services Authorities Act. Further, a Lok Adalat shall have jurisdiction to determine and to arrive at a compromise or settlement between the parties in any case before any forum and shall have no jurisdiction in respect of any case or matter relating to an offence not compoundable under any law. The purpose and object of the Act is to see that all possible disputes be resolved by settlement or compromise guided by the principles of justice, equity, fair play and other legal principles. We are in full agreement with the DRT that it has got jurisdiction to enforce the award passed by the Legal Services Authorities Act under Section 21 of the Act. The application preferred under section 19 read with section 31A of the Act is perfectly maintainable._ W.A.No.2514 of 2017 : 12 : _11. We may also hold that writ petition styled as filed Article 226 and 227, itself is not maintainable, since the petitioner has an effective remedy of filing an appeal as held by the apex court in Punjab National Bank v. O.C.Krishnan, AIR 2001 SC 3208. Further, this court in Union of India v. Vijaya Mohini Mills, 1992 (1) KLT 404 held hat no appeal under Section 5 of the Kerala High Court Act would lie to the Division Bench against the judgment rendered under Article 227 of the Constitution of India. We therefore find no reason to entertain this appeal and the same would stand dismissed._ _Writ appeal lacks merits and the same would stand dismissed.”_ 11. The learned counsel for the appellant relied on the Apex Court judgments, which we have made reference in the earlier part of the judgment. We have gone through the judgments and what was noticed is that those judgments were rendered in the context of challenge against recovery proceedings initiated at the instance of the bank when exclusive jurisdiction of the Debt Recovery Tribunal has been upheld. According to us, the principles laid down in these judgments have no applicability insofar as the present case is concerned where all that the Lok Adalat has done W.A.No.2514 of 2017 : 13 : was only to record the terms of compromise arrived at between the appellant and the bank and nothing more. Therefore, we are not satisfied that the principles laid down by the Apex Court in the judgments relied on by the learned counsel for the appellant would improve his case any further. 12. We are not satisfied that the learned Single Judge has committed any illegality justifying interference. However, having regard to the peculiar circumstances pointed out, the cost imposed is reduced to Rs.10,000/- and in modification of the direction of the learned Single Judge, we direct that the cost be paid to the Kerala State Legal Services Authority within two weeks. Appeal fails and it is dismissed accordingly. _sd/-_ **ANTONY DOMINIC, ACTING CHIEF JUSTICE** _sd/-_ **DAMA SESHADRI NAIDU, JUDGE** _jes_