Award Passed By Lok Adalat In Settlement Is Binding And Executable Via Execution Proceedings- Bombay HC

The Bombay High Court at Aurangabad bench has dismissed two writ petitions wherein it was claimed that a Lok Adalat award was a contract and had to be enforced via a suit for specific performance.

The Bench of Justice Sandeep V. Marne held that the decree passed by the Lok Adalat was executable via execution proceeding as it was equivalent to the decree passed by the Civil Court and observed that "By no stretch of imagination, it can be construed to mean a fresh contract being executed between the parties. Therefore, there is no question of making the respondents/landlord file another suit for specific performance of the terms and conditions of the settlement based upon which the Lok Adalat has passed the decrees."

The Bench further held that "Settlement recorded by Lok Adalat having binding force of decree would not need payment of stamp duty or registration." 

In this case, respondents/landlords had filed a regular Civil Suit for possession of suit property against petitioners/tenants under the provisions of Maharashtra Rent Control Act 1999 ('the Rent Act'). During the pendency of those suits, parties entered into compromise before the Lok Adalat.

When the petitioners/tenants failed to hand over the possession of their shops as per the order of Lok Adalat, execution proceedings were initiated by the landlords and temporary possession was allowed by the executing court. Thereafter, the tenants filed revision petitions before the District Court which was also rejected. Aggrieved by the orders passed by the executing court and the District Court, tenants had filed the petition before this Court.

The issue dealt with was-

Whether defendant in a suit for eviction filed under the provisions of the Maharashtra Rent Control Act, 1999, who compromised it before National Lok Adalat by inviting a decree could subsequently question executability of that decree?

Advocate Sharad V. Natu appeared for the tenants and raised three objections with regard to the execution proceedings, which were-

• Firstly, the decree was a nullity as the decree passed on the basis of compromise without specifying any of the grounds under section 16 of the Rent Act, was not executable.
• Secondly, the compromise decree was a contract and the proper remedy was to file a suit for specific performance of that contract rather than seeking execution of the compromise decree.
• Thirdly, since the compromise was in nature of a contract, the same required payment of requisite stamp duty and registration and the landlords could not seek performance of a compromise decree as the stamp duty was deficit and was not registered.

Advocate R.S. Wani appeared for the respondents and contended that mere compromise arrived between the parties leading to an award passed by the Lok Adalat does not become a compromise decree. It was also contended that the tenants did not approach the court with clean hands as they had simultaneously filed review petition before the District Court as well as the present petition before this Court challenging the same order.

The Court, rejecting the first objection, observed that the compromise decrees neither specified the grounds of eviction nor that the tenants would be evicted from the premises. Rather what it envisaged was redevelopment of the old structure and allotment of shops in the new building, and further held that section 16 of the Rent Act would not render the decrees either nullity or non-executable.

The Court, rejecting the second objection, referred to section 21 of the Legal Authorities Act, 1987, and observed that "every award of Lok Adalat becomes a decree of Civil Court binding on both the parties to the dispute...Therefore, there was no question of a specific performance of the terms and conditions of the settlement based upon which the Lok Adalat had passed the decree" as the Lok adalat decrees are fully executable.

Further, with regard to third objection, the Court rejected the same and observed that since it had already been concluded by the Court that the Lok Adalat awards are decrees and not contracts, it would not need payment of stamp duty or registration.

The Court further condemned the conduct of the tenants and said that the tenants did not approach the Court with clean hands. The adopted simultaneous remedies challenging the same order by seeking review and filing the present petition. Further, the tenants did not even disclose that the review petition was rejected.

The Court condemned the fact that the tenants did not hand over possession of the premises and took a volte-face and said that they raised all sorts of baseless objections to frustrate execution of the decrees and saddled them with the costs of Rs. 25,000/-.

Accordingly, the writ petition was dismissed.  

Cause Title- Shrichand @ Chandanmal Sugnamal Panjwani v. Ahamed Ismayil Valodia & Ors. 

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