Summary
In a partition suit among the heirs of M. Krishnappa, all parties filed a compromise under which the plaintiffs relinquished their shares for cash — three daughters receiving Rs. 30 lakhs each — and the Lok Adalat passed an award on 07.07.2012 decreeing the suit in those terms. Two days later the daughters alleged fraud; the Lok Adalat rejected the plea, and again after an enquiry on remand from the High Court, noting that they had encashed the cheques and offered no explanation for not objecting at the hearing. A Single Judge of the Karnataka High Court nonetheless recalled the compromise by a cryptic order without reasons. The Supreme Court allowed the defendants' appeals: a Lok Adalat award is deemed a decree, final and binding; a writ court may set it aside for fraud only on strict proof and by a reasoned order; the daughters, who kept the money, had not proved fraud.
Issues
- Whether a High Court exercising writ jurisdiction may set aside a Lok Adalat award recording a compromise, deemed a decree under Section 21 of the Legal Services Authorities Act, 1987, by a cryptic order without reasons and without displacing the findings of the Lok Adalat rejecting the allegation of fraud.
- What standard of proof applies to a plea that consent to a compromise decree was obtained by fraud, and whether parties who retained the consideration received under the compromise can avoid it.
Provisions considered
- Sections 20 and 21, Legal Services Authorities Act, 1987An award of a Lok Adalat on a compromise is deemed a decree of a civil court, final and binding, with no appeal (P.T. Thomas v. Thomas Job); while a writ petition alleging fraud is maintainable, the award cannot be reversed without setting aside the facts recorded in it as fraudulently arrived at, and the High Court's unreasoned recall could not stand. (¶¶ 27, 28, 29, 36)
- Order XXIII Rule 3; Section 96(3) (no appeal from consent decree), Code of Civil Procedure, 1908A consent decree is a creature of agreement and may be set aside only on grounds that invalidate an agreement (Ruby Sales); the party must prove before the court that passed it that the underlying agreement was invalid (Pushpa Devi Bhagat), and fraud must be strictly proved. (¶¶ 33, 34, 35)
Held
- Recalling a recorded compromise calls for strong reasons, since it results in an enforceable decree; Section 21 attaches finality to a Lok Adalat award and a writ court cannot set it aside casually, dehors any reasoning, without displacing the facts recorded in the award. Reasons are the soul of justice and indispensable to judicial decision-making (Kranti Associates), and the Single Judge's order recorded none. (¶¶ 26, 27, 28, 29, 30, 31, 32)
- The Lok Adalat had recorded that the terms were read over and explained in Kannada and admitted as correct; its later order rejected the fraud plea because the objectors offered no explanation for not objecting on 07.07.2012 and had accepted large sums. The objectors did not dispute receiving Rs. 30 lakhs each or claim to have returned it; had their signatures truly been obtained by fraud they ought to have refunded the money, and having relinquished their interest in all thirteen suit items for consideration they failed to establish fraud. The High Court considered none of this. (¶ 32)
- A consent decree can be avoided only on grounds that would invalidate the agreement, by proving before the court that passed it that the agreement was invalid, and an allegation of fraud must be strictly proved; absent conclusive proof the High Court could not set aside the compromise decree, and its order ran contrary to the principles protecting the sanctity and finality of consent orders. (¶¶ 33, 34, 35, 36)
Result
Appeals allowed; the Karnataka High Court's judgment of 17.04.2015 in W.P. Nos. 20607–20609 of 2013 set aside and the Lok Adalat's award of 07.07.2012 recording the compromise in O.S. No. 876 of 2004 restored. Parties to bear their own costs.