UNITED INDIA INSURANCE COMPANY LTD VS. AJAY SINHA & ORS.

SUBMITTED TO: SUBMITTED BY:

MR. ABHIRUP DAS AFREEN HASHMI (1209)

SUMMER SESSION 2018 -19

ACKNOWLEDGMENT

I take this opportunity to express my profound gratitude and deep regards to our teacher and
guide Mr. Abhirup Das for his guidance, monitoring and constant encouragement throughout
the course of this project. The blessing, help and guidance given by him from time to time has
been a constant source of encouragement throughout the course of this work.
I am obliged to staff members of the library and IT department, for the valuable information
provided by them in their respective fields. I am grateful for their cooperation during the
period of my assignment.
Lastly, I thank Almighty, my parents and friends for their constant encouragement without
which this project would not have been possible.

Afreen Hashmi
 PERMANENT LOK ADALATS: ADJUDICATORS OR CONCILIATORS?

The Preamble of the Constitution of India envisages Justice – social, economic and political.1
The constitution makers were aware of the socio-economic backwardness of the Indian
populace and thus, provided it more emphasis than political justice. The resolve of the State,
to achieve this objective was reflected in the 42nd Amendment which introduced Article 39A
in the constitution.2 The Article mandates the States to provide free legal aid and to ensure
that economic or any other disability does not act as a hindrance in attaining its objective of
complete justice. Against this background, the Legal Services Authorities Act, 1987 (“Act”)
was enacted.3 The Act established Lok Adalats4 as an alternative forum for quick and
inexpensive resolution of disputes in an amicable manner. However, it limited the role of Lok
Adalats to bring about a settlement between the parties and if no settlement was reached, the
dispute was referred back to court of law. To remedy this shortcoming, Permanent Lok
Adalats (PLAs) were established under the Act by an amendment in 2002.5 This amendment
empowered the PLAs to decide the given dispute on merit; in case the parties fail to arrive at
an amicable settlement. As per Section 22C of the Act, 6 parties to a dispute can approach a
PLA for settlement of the dispute, provided that the dispute is not related to a non-
compoundable offence and the value of the property is not more than twenty five lakh
rupees.7 Thus, the amendment shifted the role of PLAs from a conciliator to an adjudicator.
The PLAs are not bound by the conventional process of conducting its proceedings as laid
down in the Indian Evidence Act, 1872 and the Code of Civil Procedure, 1908. They are
guided by the principles of natural justice, equity and good conscience. The award passed by
PLA would be final and binding and can be executed as a decree of a civil court.

1
Preamble, Constitution of India.
2
Article 39A inserted by the Constitution (Forty-second Amendment) Act, 1976 provides that the State shall
secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in
particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that
opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.
3
The Legal Services Authorities Act, 1987.
4
Section 19, The Legal Services Authorities Act, 1987.
5
Added by Legal Services Authorities (Amendment) Act No. 37 of 2002 published in Gazette of India vide
notification No. 40 dated 12-6-2002.
6
Section 22C(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 not have jurisdiction in the matter where the value of the
property in dispute exceeds twenty five lakh rupees
Provided also that the Central Government, may, by notification, increase the limit of “twenty five lakh rupees”
specified in the second proviso in consultation with the Central Authority.
7
Substituted vide notification No.S.O. 2083 (E) dated 15.9.2011 by Ministry of Law and Justice Government of
India.
In United India Insurance Company Limited vs Ajay Sinha,8 the Supreme Court curtailed the
jurisdiction of PLAs by failing to differentiate between the offence of burglary and the
insurance claim made by the respondent. The case involved a burglary in the respondent’s
godown, for which an insurance claim was made to appellant company. The court interpreted
the phrase “related to a compoundable offence” as appearing in section 22C of the Act in the
broadest possible manner. The court failed to recognise that the issue for the PLA to decide
was with respect to the insurance claim between the service provider (appellant) and the
service recipient (respondent) – whether there was any liability on the public utility service
provider to pay the insurance amount . It did not involve the question whether a burglary had
taken place or not or who was guilty for the burglary – which would have been non
compoundable in nature and hence, outside the scope of the PLA.
The judgment of the court discusses the important role of PLAs in dispensation of justice. It
further, observes that there should be prima facie case before the PLA and it should not be
barred by the Act. However, the court presumes the outcome of the criminal proceedings
before the subordinate court will be related to the result of the PLA. Adopting such an
approach is a little dicey. An analogy which might be apt to highlight the unreasonable logic
would be – if an insurance claim under Motor Vehicles Act, 1988 is filed by A against B and
there is a proceeding before the PLA and criminal court. The query before the two forums
would be completely different. The PLA has to look into the insurance claim; whereas, the
criminal court will look into the factual matrix to determine who is responsible for the
accident. Thus, the two courts have their own role in resolution of a dispute which should not
be intertwined with each other. If the approach taken by the court is continued, then the PLAs
would not help to resolve disputes amicably but rather act in increasing the already existing
burden on the judiciary.
The changing role of PLAs from a conciliator to an adjudicator and the intention of the
legislature to bring about this change should be respected. The amendments in the Act giving
more power to the PLAs reflect its success in quick and speedy resolution of justice.

8
United India Insurance Company vs Ajay Sinha, AIR 2008 SC 2398.