K. SRINIVASAPPA & ORS. versus M. MALLAMMA & ORS. on 18 May 2022

SUPREME COURT REPORTS

[2022] 4 S.C.R.

K. SRINIVASAPPA & ORS.

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M. MALLAMMA & ORS.

(Civil Appeal No. 3486-3488 of 2022)

BMAY 18, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Code of Civil Procedure, 1908: Or. XXIII r. 3 – Compromiseof suit – Compromise recorded by the Lok Adalat, between the partiesto the suit – Recall of said order by the High Court in writ petitionsCfiled there against – Sustainability of – Held: Writ court cannot, ina casual manner, de hors any reasoning, set aside the order of theLok Adalat – Strong reasons are required to recall a compromiserecorded – Compromise ultimately results into a decree of a courtwhich can be enforced just as a decree and such decree shall beDfinal and binding upon the parties – Writ petition would only bemaintainable against an award of the Lok Adalat, on allegation offraud in the manner of obtaining the award of compromise – Termsof a compromise decree, cannot be avoided, unless the allegationof fraud has been proved – In the absence of any conclusive proofas to fraud on the part of the objectors, the High Court could notEhave set aside the compromise decree – High Court’s decision to setaside the order of the Lok Adalat, without entering into a discussionas to the findings in such order, cannot be sustained – Such decisionof the High Court is against the principle of protecting the sanctityand finality of orders based on a compromise or consent betweenFparties – Judgment of the High Court is set aside and that of theLok Adalat is restored – Legal Services Authorities Act, 1987 – s.21.

Allowing the appeals, the Court

HELD: 1.1 There are no reasons forthcoming from theGjudgment of the High court while setting aside the order of theLok Adalat whereby the terms of the compromise were recorded.To recall a compromise that has been recorded would call forstrong reasons. This is because a compromise would resultultimately into a decree of a Court which can be enforced just asHa decree passed on an adjudication of a case. This is also true in the case of a compromise recorded before a Lok Adalat. Section21 of the Legal Services Authorities Act, 1987 equates an awardof the Lok Adalat, to a decree of a Civil Court and imputes anelement of finality to an award of compromise passed by the LokAdalat. When the Lok Adalat disposes cases in terms of acompromise arrived at between the parties to a suit, after followingprinciples of equity and natural justice, every such award of theLok Adalat shall be deemed to be a decree of a Civil Court andsuch decree shall be final and binding upon the parties. Giventhe element of finality attached to an award of the Lok Adalat, italso follows that no appeal would lie, under Section 96 CPCagainst such award. [Paras 27, 28][202-H; 203-A-B, E-F]

1.2 While a writ petition would be maintainable against anaward of the Lok Adalat, especially when such writ petition hasbeen filed alleging fraud in the manner of obtaining the award ofcompromise, a writ court cannot, in a casual manner, de hors anyreasoning, set aside the order of the Lok Adalat. The award of aLok Adalat cannot be reversed or set aside without setting asidethe facts recorded in such award as being fraudulent arrived at.[Para 29][203-G]

1.3 The Latin maxim “cessante ratione legis cessat ipsa lex”meaning “reason is the soul of the law, and when the reason ofany particular law ceases, so does the law itself”. There is a dutyto accord reasons for a decision arrived at by a court, or for thatmatter, even a quasi-judicial authority. [Para 30-31][204-A-B]

H H Sri Swamiji of Sri Admar Mutt v. the Commissioner,Hindu Religious and Charitable Endowments Dept.(1979) 4 SCC 642 : [1980] 1 SCR 368; KrantiAssociates Private Limited & Anr. Vs. Masood AhmedKhan & Ors. (2010) 9 SCC 496 : [2010] 10 SCR 1070

– relied on.

1.4 The Lok Adalat, in its award dated 07th July, 2012recorded that the parties had admitted that the contents of thecompromise petition were true and correct, after the terms thereofhad been read over and explained to them in Kannada language.Further, it was also noted that the compromise was entered into AB

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Aby plaintiff no. 1, on behalf of, and for the benefit of his two minorchildren, in order to protect their shares. The same was allowedby the Lok Adalat on recognising the terms of the compromise,would protect the interests plaintiff no. 1’s minor children. Thereis no objection raised on behalf of plaintiff no. 1 in the instantcase. The Lok Adalat, in its order dated 27th April, 2013, rejectedBthe allegations of fraud raised by plaintiff nos. 4-6, against thedefendants and recorded that plaintiff nos. 4-6 had offered noexplanation as to why no objection was raised by any of them on07th July, 2012 before the Lok Adalat. It was further observedthat plaintiff nos. 4-6, could not, after having accepted huge sumsCof money in terms of the compromise, rescind from the termsthereof. It is not the case of plaintiff nos. 4-6 that they had notreceived an amount of Rs. 30,00,000/- (rupees thirty lakhs) each,in terms of the compromise. Further, it is not their case that suchsum has been returned, in whole or in part, to the defendants.That although plaintiff no. 4, stated that on learning that theDproceedings conducted on 07th July, 2012 before the Lok Adalatwere in relation to a compromise, she had not signed the ordersheet, she failed to provide any explanation as to why she did notinform the Lok Adalat on the said date that her signature on thecompromise petition was obtained by fraud. That plaintiff nos. 4-E6 had admitted before the Lok Adalat on 07th July, 2012 that thecontents of the compromise petition were true and correct, whenthe same had been read over and explained to them in Kannada.That plaintiff nos. 4-6 specifically admitted that they had receiveda sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as mentionedin the compromise petition in lieu of relinquishing their rights,Ftitle and interest in the other suit schedule properties. That if, infact, the signatures of plaintiff nos. 4-6 had been obtained by fraud,they ought to have returned the amount of Rs. 30,00,000/- (rupeesthirty lakhs) each, paid to them in accordance with the terms ofthe compromise. Having not done so, plaintiff nos. 4-6 had failedGto establish that any fraud was practiced upon them, by thedefendants, with a view to obtain their signatures on thecompromise petition. On a perusal of the plaint, it is noted thatthere were 13 items of the suit schedule property having differentvaluation and therefore, the plaintiffs would have had theirrespective shares in the suit schedule properties taken together.H

However, plaintiff nos.4-6 accepted a sum of Rs.30 lakhs each byrelinquishing their right, title and interest in all the suit scheduleproperties. Having received a monetary share in respect of thesuit items, the plaintiffs had decided to relinquish their right, titleand interest in respect of all the suit items. The Single Judge ofthe High Court in the impugned judgment has not consideredthe said facts of the case in the context of setting aside the awardof the Lok Adalat dated 07th July, 2012. The Single Judge hasalso not considered the reasoning given in the order dated 27thApril, 2013 by which the objections raised by plaintiff nos.4-6 tothe decree of the Lok Adalat had been rejected. [Para 32][205-G-H; 206-A-H; 207-A-D]

1.5 Where an allegation of fraud is made against a party toan agreement, the said allegation would have to be proved strictly,in order to avoid the agreement on the ground that fraud waspracticed on a party in order to induce such party to enter intothe agreement. Similarly, the terms of a compromise decree,cannot be avoided, unless the allegation of fraud has been proved.In the absence of any conclusive proof as to fraud on the part ofthe objectors, the High Court could not have set aside thecompromise decree in the instant case. [Para 35][208-A-B]

1.6 No ground was made out warranting the decision of theHigh Court to set aside the order of the Lok Adalat whereincompromise was recorded between the parties. The High Court’sdecision to set aside the order of the Lok Adalat, without enteringinto a discussion as to the findings in such order, cannot besustained. Such decision of the High Court runs contrary toestablished principles of law which seek to protect the sanctityand finality of orders based on a compromise or consent betweenparties. Hence the impugned judgment of the High Court, is setaside and the order of the Lok Adalat, whereby the compromisebetween the parties to the suit was recorded, is restored. [Para36, 37][208-C-E]

Smt. Sawarni v. Smt. Inder Kaur and Ors. (1996) 6 SCC223 : [1996] 5 Suppl. SCR 165; Ruby Sales and ServicesPvt. Ltd. v. State of Maharashtra (1994) 1 SCC 531 :[1993] 3 Suppl. SCR 473; Pushpa Devi Bhagat (dead)

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Athrough LR. Sadhna Rai v. Rajinder Singh and Ors.(2006) 5 SCC 566 : [2006] 3 Suppl. SCR 370 – referredto.

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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3486-3488 of 2022.

From the Judgment and Order dated 17.04.2015 of the High Courtof Karnataka at Bangalore in Writ Petition Nos. 20607-09 of 2013.

DMs. Pritha Srikumar, Anirudh Gotety, Abhinav Ramanand, Advs.for the Appellants.

Ms. Manju Jetley, Adv. for the Respondents.

The Judgment of the Court was delivered by ENAGARATHNA J.

1. These appeals assail the judgment and order dated 17[th] April,2015, passed by the High Court of Karnataka at Bengaluru in Writ Petitionnos.20607, 20608 and 20609 of 2013, whereby the High Court disposedof the Writ Petitions filed by plaintiff nos. 4 to 6 and has recalled orderFdated 7[th] July, 2012 by which the compromise had been recorded by theLok Adalat, between the parties to Original Suit No. 876 of 2004, beinga suit for partition and separate possession instituted by plaintiff nos. 1 to6 on the file of the Court of the Civil Judge (Junior Division), RuralDistrict, Bangalore.

G2. For the sake of convenience, the parties shall be referred to interms of their rank and status in O.S. No. 876 of 2004.

3. Briefly stated, the facts giving rise to the present appeal arethat plaintiff nos. 1, 4, 5, 6 and defendant nos. 2 to 5 are children ofM. Krishnappa and M. Mallamma, defendant no. 1. Plaintiff nos. 2 andH3 are the sons of plaintiff no. 1, namely, K. Devraj. The Plaintiffs filed a suit for partition and separate possession, being O.S. 876 of 2004 on thefile of the Court of the Civil Judge, Junior Division, Rural DistrictBangalore stating that the suit schedule properties were acquired by M.Krishnappa and were in joint possession and enjoyment of the plaintiffsand defendants, until the demise of M. Krishnappa. That following thedeath of M. Krishnappa, defendant no. 1 was in possession of the suitschedule properties and was acting in a manner detrimental to the interestsof the plaintiffs and had attempted to alienate the properties withouteffecting a partition so as to crystallise the rights of each of the partiesto the suit. That requests of the plaintiffs to effect a partition of theproperty, were met with threats by the defendants to alienate the same.

With the aforesaid averments the plaintiffs had sought partitionand separate possession of their shares in the suit schedule properties.

4. During the pendency of the suit, on 30[th] June, 2012, acompromise petition was filed jointly by the plaintiffs and the defendantsunder Order XXIII Rule 3 of the Code of Civil Procedure, 1908(hereinafter “CPC”, for short), before the Trial Court stating thereinthat the parties to the suit had, on intervention of relatives and well-wishers there was a mediation of their disputes as to partition and settledtheir disputes inter-se, in the following manner:

i.That the plaintiffs would relinquish their right, title, interestand claim in respect of the suit schedule properties, and inconsideration for the same, the defendants had paid to theplaintiffs the following amounts:

a)Rs. 1,10,00,000/- (rupees one crore, ten lakhs) paid infavour of K. Devaraj, plaintiff no. 1.

b)Rs. 30,00,000/- (rupees thirty lakhs) paid in favour ofK. Sugunamma, plaintiff no. 4, by way of two chequesfor amounts of Rs. 2,50,000/- (rupees two lakhs andfifty thousands) and Rs. 27,50,000/- (rupees twentyseven lakhs and fifty thousands), respectively.

c)Rs. 30,00,000/- (rupees thirty lakhs) paid in favour ofK. Shanthamma, plaintiff no. 5 by way of two chequesfor amounts of Rs. 2,50,000/- (rupees two lakhs andfifty thousands) and Rs. 27,50,000/- (rupees twentyseven lakhs and fifty thousands), respectively.

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Ad)Rs. 30,00,000/- (rupees thirty lakhs) paid in favour ofK. Geetha, plaintiff no. 6, by way of two cheques foramounts of Rs. 2,50,000/- (rupees two lakhs and fiftythousands) and Rs. 27,50,000/- (rupees twenty sevenlakhs and fifty thousands), respectively.

e)Rs. 4,00,000/- (rupees four lakhs) paid in favour ofMallamma, defendant no. 1.

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ii.That the defendants would be entitled, jointly and severally,to enjoy absolute right, title and interest over the suit scheduleproperties.

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iii.That defendant nos. 2 to 5 would be entitled to get the khata,mutation and record of rights transferred in their names, inrespect of the suit schedule properties.

iv.That the suit schedule properties would be retained bydefendant nos. 2 to 5, who shall hold the same as joint ownersDthereof, until a division is effected inter-se between the saiddefendants. That the said property would not be availablefor partition, so far as the plaintiffs were concerned as theirright over the suit property was conveyed in favour ofdefendant nos. 2 to 5, for consideration.

Ev.That the plaintiffs undertake not to initiate any action orproceedings by themselves or through their successors-in-interest or heirs, as regards their right, title and interest overthe suit schedule properties.

vi.That the compromise was entered into by plaintiff no. 1, onFbehalf of, and for the benefit of his two minor children, inorder to protect their shares.

5. On 26[th] June, 2012, plaintiff no. 4 encashed two chequesreceived by her as a part of the compromise entered into between theplaintiffs and the defendants, as detailed above.G

6. In view of the inter-se compromise between the parties, thematter was referred by the Trial Court to the Lok Adalat. After hearingthe parties, the Lok Adalat passed an order dated 07[th] July, 2012,decreeing the suit for partition and separate possession, in terms of thememo of compromise presented before it. The Lok Adalat recorded theHfollowing findings:

i.That all the parties to the dispute had agreed to amicablysettle the dispute as regards the partition of the suit scheduleproperty, in terms of the memo of compromise;

ii.That the terms of compromise had been read over andexplained to the parties in a language known and understoodby them, in the presence of their Advocates and the partieshad admitted the same to be true and correct;

iii.That since the compromise was in favour of the minorchildren of plaintiff no. 1, he was permitted to enter into thecompromise on their behalf.

In view of the aforestated findings, the application filed by theparties under Order XXXII Rule 3 of the CPC, was allowed and accepted.

7. Two days later, on 09[th] July, 2012, only plaintiff nos.4-6 filed anaffidavit before the Lok Adalat stating that the defendants had playedfraud on them and misled them in order to obtain their consent to theterms of compromise.

8. The Lok Adalat considered the affidavit submitted by plaintiffnos.4-6 and by an order dated 13[th] July, 2012, rejected the prayer madetherein, to set aside the order recording compromise of the parties. TheLok Adalat noted that the order recording compromise was passed afterduly recording the consent of all parties to the compromise and therefore,the prayer to set aside the compromise could not be entertained.

9. Aggrieved by the order of the Lok Adalat dated 13[th] July, 2012,plaintiff no. 4 filed a Writ Petition, being W.P. No. 25989 of 2012, beforethe High Court of Karnataka, praying, inter-alia, that the order of theLok Adalat dated 07[th] July, 2012 whereby compromise of the partieswas recorded, be set aside. Plaintiff no. 4 submitted before the learnedSingle Judge of the High Court that although she had signed thecompromise petition presented before the Trial Court and thereafterreferred to the Lok Adalat, the order sheet dated 07[th] July, 2012, whichwas drawn up in terms of the compromise petition was not signed byher. That the compromise petition was signed by plaintiff no. 4 as aresult of fraud practiced by the defendants.

10. In light of the allegation of fraud on the part of the defendants,the High Court, by an order dated 24[th] January, 2013 disposed of W.P.No. 25989 of 2012, by remanding the matter to the Civil Judge (Junior A

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ADivision), Bangalore, to refer the matter to the Lok Adalat to hold anenquiry and record a finding on the allegation of fraud levelled againstthe defendants. The High Court directed that such an exercise ought tobe completed by the Lok Adalat within a period of three months.

11. In accordance with the directions issued by the High CourtBvide order dated 24[th] January, 2013, the matter was referred by the TrialCourt to the Lok Adalat, Rural District, Bangalore. Plaintiff nos. 4-6filed their objections to the compromise stating that their signatures onthe compromise petition were obtained by fraud on the part of thedefendants. It was stated that during the pendency of O.S. No. 876 of2004, one property included in the schedule of properties to be partitioned,Cwas sold in favour of M/s. Trishul Buildtech and Infrastructure Pvt.Ltd., by way of a registered sale deed dated 23[rd] June, 2012 for aconsideration of Rs. 2,70,00,000/- (rupees two crores and seventy lakhs.That the amount of Rs. 30,00,000/- (rupees thirty lakhs), paid to plaintiffnos. 4-6, was their share of consideration for the said sale. That on theDdate of sale of the said property, several papers were signed by plaintiffnos. 4-6, at the behest of the defendants, under the guise that the samewere required to be submitted to the tax authorities. That plaintiff no. 1and the defendants had conspired together and engaged the services ofadvocates to represent plaintiff nos. 4-6, without their knowledge. Itwas further alleged that the defendants had caused plaintiff nos.4-6 toEbelieve that they were appearing before the tax authorities, in relation tothe sale carried out on 23[rd] June, 2012, when in fact, they were appearingbefore the Lok Adalat in connection with the compromise petition. Plaintiffno. 4 stated that on realising before the Lok Adalat that the proceedingsrelated to a compromise petition, she refused to sign the order sheetFdated 07[th] July, 2012, wherein the terms of compromise had been recordedby the Lok Adalat. Plaintiff nos.5 and 6 stated that they were misled intosigning both, the compromise petition, as well as the order sheet dated07[th] July, 2012.12. On hearing the parties, the Lok Adalat, by an order datedG27[th] April, 2013, rejected the objections filed by plaintiff nos.4-6 and theorder of the Lok Adalat dated 07[th] July, 2012, wherein the terms ofcompromise had been recorded, was confirmed.

13. Aggrieved by the order of the Lok Adalat dated 27[th] April,2013, plaintiff nos. 4-6 filed Writ Petitions, being W.P. Nos. 20607-20609Hof 2013, before the High Court of Karnataka, praying, inter-alia, that the entire records pertaining to O.S. No. 876 of 2004 be called for andthe orders of the Lok Adalat dated 07[th] July, 2012 and 27[th] April, 2013,be quashed.

14. By the impugned judgment dated 17[th] April, 2015, the learnedSingle Judge of the High Court of Karnataka, Bengaluru disposed of theWrit Petition filed by plaintiff nos.4-6 by recalling the order of compromisepassed by the Lok Adalat on 07[th] July, 2012. The High Court remandedthe matter to the Civil Judge (Junior Division), Bengaluru, to dispose ofthe matter in accordance with law, as if no compromise was enteredinto between the parties. Aggrieved by the judgment of the High Courtwhereby the order of the Lok Adalat recording compromise, was setaside, defendant nos. 2-5 have preferred the present appeals.

15. We have heard Mr. Anirudh Gotety, learned counsel for theappellants and Ms. Manju Jetly, learned counsel for the respondents,and perused the material on record.

16. Learned counsel for the appellants at the outset contendedthat the High Court was not right in setting aside the order of the LokAdalat dated 07[th] July, 2012, whereby the compromise of the partieswas recorded. Elaborating the said contention, it was submitted that theLok Adalat had, in its order dated 07[th] July, 2012 noted that every partyto the compromise had consented to the terms thereof, and had admittedthat the contents of the compromise petition were true and correct, whenthe same had been read over and explained to them in Kannada language.That the Lok Adalat in its order dated 27[th] April, 2013 had upheld thevalidity of the compromise between the parties, after considering, indetail the objections raised by plaintiff nos. 4-6 and rejecting the same. Itwas urged that the Lok Adalat’s order dated 27[th] April, 2013 had beenpassed after detailed examination of the contentions of the parties andthe Lok Adalat had rightly rejected the objections raised by plaintiff nos.4-6. However, the learned Single Judge of the High Court, in the absenceof any reasoning, and in a casual and cryptic manner, had reversed theorder of the Lok Adalat wherein the compromise of the parties wasrecorded.

17. It was next contended that every award of a Lok Adalat isdeemed to be a decree of a Civil Court as provided under Section 21 ofthe Legal Services Authorities Act, 1987 and cannot therefore be setaside by a cryptic order of the High Court sans reasons. Learned counsel A

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Afor the appellants relied on Smt. Sawarni vs. Smt. Inder Kaur andOrs. – [1996 (6) SCC 223] to contend that when a Civil Court hadcome to a conclusion after elaborate discussion of the evidence on record,an Appellate Court could not set aside the decree of the Civil Courtwithout a reasoned decision to reverse the findings of the Civil Court. Inthat context, it was further submitted that the award of the Lok Adalat,Bdated 07[th] July, 2012, being in the nature of a decree of the Civil Court,could not have been set aside by the High Court, without a reasoneddecision to reverse the findings of the Lok Adalat.

18. Learned counsel for the appellants submitted that plaintiff nos.4-6 having taken advantage of the terms of the compromise by acceptingCa sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as consideration forrelinquishing all their rights of title and interest in the suit scheduleproperties in favour of the defendants, could not, at a later juncture rescindfrom the terms of the compromise, after encashing the cheques issuedto them. That these objectors could not approbate and reprobate at theDsame time. That the High Court had erred in setting aside the compromise,without issuing any direction requiring plaintiff nos.4-6 to return theamounts paid to them in terms of the compromise.

19. It was averred that the Lok Adalat, had, in its orders dated07[th] July, 2012 and 27[th] April, 2013 recorded several findings of factEwhich ought not to have been interfered with by the High Court in exerciseof its writ jurisdiction under Article 227 of the Constitution of India.

20. That plaintiff nos. 4-6 had not made any effort to explain whythey did not state before the Lok Adalat on 07[th] July, 2012 that theirsignatures were obtained by fraud. That this aspect of the matter wasFrightly recognised by the Lok Adalat in rejecting the allegations of fraudraised against the defendants. However, the High Court, made noreference to any of the findings of the Lok Adalat, in passing the impugnedjudgment.

With the aforesaid contentions, it was prayed that the impugnedGjudgment of the High Court may be set aside and the order of the LokAdalat, dated 07[th] July, 2012, whereby the compromise between theparties was recorded, be restored.

21. Per contra, Ms. Manju Jetly, learned counsel for therespondents submitted that the impugned judgment of the High Courtdoes not suffer from any infirmity warranting interference by this Court.H

That the High Court rightly set aside the Order dated 07[th] July, 2012,passed by the Lok Adalat, after appreciating that the consent of plaintiffnos.4-6 to the terms of compromise had been obtained by practicingfraud.

22. It was submitted that the High Court passed the impugnedjudgment after taking note of the fact that plaintiff no. 4 had not signedthe order sheet dated 07[th] July, 2012, wherein the Lok Adalat had recordedthe compromise of the parties, although she had signed the compromisepetition presented before the Lok Adalat.

23. It was next contended by learned counsel for the respondentsthat the amount of Rs.30,00,000/- (rupees thirty lakhs), paid to plaintiffnos. 4-6, was their share of consideration for the sale of one propertywhich was included in the schedule of the properties to be divided betweenthe parties. That such amount was not received in relation to thecompromise between the parties and therefore, could not form the basisfor rejecting their objections to the order recording compromise.

24. Ms. Manju Jetly further submitted that the fact that plaintiffno.4 had refused to sign the order sheet dated 07[th] July, 2012, havingsigned the compromise petition, would establish that she realised at thatjuncture that the defendants had fraudulently obtained her signature onthe compromise petition, under the guise that such signatures were beingtaken on documents to be submitted to the tax authorities.

As regards plaintiff nos.5 and 6, it was submitted that they weremisled into signing both, the compromise petition, as well as the ordersheet dated 07[th] July, 2012.

25. It was averred that plaintiff nos.4-6, on 09[th] July, 2012 hadsubmitted an affidavit before the Lok Adalat, stating therein that thedefendants had played fraud on them and misled them in order to obtaintheir consent to the terms of compromise. The fact that such an affidavitwas submitted within a short span of two days after the order of the LokAdalat dated 07[th] July, 2012 would establish that plaintiff nos. 4-6 tookimmediate steps to bring to the notice of the Lok Adalat, the fraud on thepart of the defendants. Therefore, the fact that plaintiff nos. 4-6 did notstate before the Lok Adalat on 07[th] July, 2012 that their signatures wereobtained by fraud, could not form the basis for rejecting their allegationsof fraud on the part of the defendants.

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AWith the aforesaid contentions, it was submitted that the impugnedorder of the High Court, whereby the order of the Lok Adalat dated 07[th]July, 2012 was set aside, did not call for interference by this Court.

26. Having regard to the contention of the learned counsel forappellant that the impugned judgment of the High Court set aside theBorder of the Lok Adalat dated 07[th] July, 2012, in a very cursory andcryptic manner, without assigning any reasons for doing so, the impugnedjudgment dated 17[th] April, 2015 in its entirety has been extractedhereinunder:

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In these writ petitions, petitioners have challenged the ordersheet of the Lok Adalath, dated 7.7.2012. Being aggrieved by therejection of the objections to the compromise petition raised bythe petitioners and orders passed by the Learned Judicial and nonJudicial Members of the Lok Adalath, Bangalore Rural, BangaloreDon 27.04.2013 passed in O.S. No. 876/2004, petitioners are beforethis Court. The learned counsel requests the court, under the factsand circumstances of the case, order of compromise passed is tobe set aside.

2. As against this, learned counsel appearing for the respondentsEsupport the order passed by the Lok Adalat and prays to dismissthese writ petitions.

Petitioners are the defendants no. 6 to 9 and it is submittedby the learned counsel for the petitioners that by playing fraudcompromise petition was filed. Petitioner No. 1 submits that sheFhas not at all signed the compromise petition entered into betweenthe parties.

3. Under the facts and circumstances of the case, I deem it properto recall the order of the compromise. Order dated 7.7.2012 passedby the Lok Adalat is set aside. The matter is referred to the learnedCivil Judge (Jr.Dn.) Bengaluru and is hereby directed to disposeGof the matter in accordance with law, as if no compromise isentered into between the parties.

Accordingly, these petitions are disposed of.”

27. At the outset, we observe that we do not find any reasonHforthcoming from the judgment of the High court while setting aside the order of the Lok Adalat dated 07[th] July, 2012 whereby the terms of thecompromise were recorded. To recall a compromise that has beenrecorded would call for strong reasons. This is because a compromisewould result ultimately into a decree of a Court which can be enforcedjust as a decree passed on an adjudication of a case. This is also true inthe case of a compromise recorded before a Lok Adalat. In this regard,it may be apposite to refer to Section 21 of the Legal Services AuthoritiesAct, 1987, which is extracted as under:

“21. Award of Lok Adalat.— (1) Every award of the Lok Adalatshall be deemed to be a decree of a civil court or, as the case maybe, an order of any other court and where a compromise orsettlement has been arrived at, by a Lok Adalat in a case referredto it under sub-section (1) of section 20, the court-fee paid in suchcase shall be refunded in the manner provided under the Court-fees Act, 1870 (7 of 1870).

(2) Every award made by a Lok Adalat shall be final and bindingon all the parties to the dispute, and no appeal shall lie to any courtagainst the award.”

28. Section 21 of the Legal Services Authorities Act, 1987 equatesan award of the Lok Adalat, to a decree of a Civil Court and imputes anelement of finality to an award of compromise passed by the Lok Adalat.When the Lok Adalat disposes cases in terms of a compromise arrivedat between the parties to a suit, after following principles of equity andnatural justice, every such award of the Lok Adalat shall be deemed tobe a decree of a Civil Court and such decree shall be final and bindingupon the parties. Given the element of finality attached to an award ofthe Lok Adalat, it also follows that no appeal would lie, under Section 96of the CPC against such award, vide P.T. Thomas vs. Thomas Job -[(2005) 6 SCC 478].

29. While we recognise that a Writ Petition would be maintainableagainst an award of the Lok Adalat, especially when such writ petitionhas been filed alleging fraud in the manner of obtaining the award ofcompromise, a writ court cannot, in a casual manner, de hors anyreasoning, set aside the order of the Lok Adalat. The award of a LokAdalat cannot be reversed or set aside without setting aside the factsrecorded in such award as being fraudulent arrived at.

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A30. The Latin maxim “cessante ratione legis cessat ipsa lex”meaning “reason is the soul of the law, and when the reason of anyparticular law ceases, so does the law itself” vide H H Sri Swamiji ofSri Admar Mutt vs. the Commissioner, Hindu Religious andCharitable Endowments Dept.– [(1979) 4 SCC 642], is also apposite.

B31. On the aspect of the duty to accord reasons for a decisionarrived at by a court, or for that matter, even a quasi-judicial authority, itwould be useful to refer to a judgment of this Court in Kranti AssociatesPrivate Limited & Anr. Vs. Masood Ahmed Khan & Ors. – (2010) 9SCC 496, wherein after referring to a number of judgments, this Courtsummarised at paragraph 47 of the judgment the law on the point. TheCrelevant principles for the purpose of this case are extracted as under:

(a) Insistence on recording of reasons is meant to serve thewider principle of justice that justice must not only be doneit must also appear to be done as well.

(b) Recording of reasons also operates as a valid restraint onany possible arbitrary exercise of judicial and quasi-judicialor even administrative power.

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(c) Reasons reassure that discretion has been exercised by thedecision-maker on relevant grounds and by disregardingextraneous considerations.E

(d) Reasons have virtually become as indispensable acomponent of a decision-making process as observingprinciples of natural justice by judicial, quasi-judicial andeven by administrative bodies.

F(e)Reasons facilitate the process of judicial review by superiorcourts.

(f) The ongoing judicial trend in all countries committed to ruleof law and constitutional governance is in favour ofreasoned decisions based on relevant facts. This is virtuallyGthe lifeblood of judicial decision-making justifying theprinciple that reason is the soul of justice.

(g) Judicial or even quasi-judicial opinions these days can beas different as the judges and authorities who deliver them.All these decisions serve one common purpose which is toHdemonstrate by reason that the relevant factors have been

K. SRINIVASAPPA & ORS. v. M. MALLAMMA & ORS.[B. V. NAGARATHNA]

objectively considered. This is important for sustaining thelitigants’ faith in the justice delivery system.

A

(h) Insistence on reason is a requirement for both judicialaccountability and transparency.

(i) If a judge or a quasi-judicial authority is not candid enoughBabout his/her decision-making process then it is impossibleto know whether the person deciding is faithful to thedoctrine of precedent or to principles of incrementalism.

(j) Reasons in support of decisions must be cogent, clear andsuccinct. A pretence of reasons or “rubber-stamp reasons”Cis not to be equated with a valid decision-making process.

(k) It cannot be doubted that transparency is the sine qua nonof restraint on abuse of judicial powers. Transparency indecision-making not only makes the judges and decision-makers less prone to errors but also makes them subject tobroader scrutiny. (See David Shapiro in Defence ofJudicial Candor [(1987) 100 Harvard Law Review 731-37)

D

(l) In all common law jurisdictions judgments play a vital rolein setting up precedents for the future. Therefore, fordevelopment of law, requirement of giving reasons for thedecision is of the essence and is virtually a part of “dueprocess”.

E

(m) The requirement to record reasons emanates from the broaddoctrine of fairness in decision-making i.e. adequate andintelligible reasons must be given for judicial decisions.

F

Though the aforesaid judgment was rendered in the context of adismissal of a revision petition by a cryptic order by the NationalConsumer Disputes Redressal Commission, reliance could be placed onthe said judgment on the need to give reasons while deciding a matterparticularly as it arises in the instant case.

G

32. In view of the aforesaid discussion, we shall now consider thefacts of the present case. The details as to the terms of the compromiseas well as the contentions raised at the Bar have been narrated above.On a consideration of the same, the following aspects would emerge:

H

A(a) The Lok Adalat, in its award dated 07[th] July, 2012 recordedthat the parties had admitted that the contents of the compromise petitionwere true and correct, after the terms thereof had been read over andexplained to them in Kannada language. Further, it was also noted thatthe compromise was entered into by plaintiff no. 1, on behalf of, and forthe benefit of his two minor children, in order to protect their shares.BThe same was allowed by the Lok Adalat on recognising the terms ofthe compromise, would protect the interests plaintiff no. 1’s minor children.There is no objection raised on behalf of plaintiff no. 1 in the instantcase.

A

(b) The Lok Adalat, in its order dated 27[th] April, 2013, rejectedCthe allegations of fraud raised by plaintiff nos. 4-6, against the defendantsand recorded that plaintiff nos. 4-6 had offered no explanation as to whyno objection was raised by any of them on 07[th] July, 2012 before the LokAdalat. It was further observed that plaintiff nos. 4-6, could not, afterhaving accepted huge sums of money in terms of the compromise, rescindDfrom the terms thereof.

(c) It is not the case of plaintiff nos. 4-6 that they had not receivedan amount of Rs. 30,00,000/- (rupees thirty lakhs) each, in terms of thecompromise. Further, it is not their case that such sum has been returned,in whole or in part, to the defendants.

E

(d) That although plaintiff no. 4, stated that on learning that theproceedings conducted on 07[th] July, 2012 before the Lok Adalat were inrelation to a compromise, she had not signed the order sheet, she failedto provide any explanation as to why she did not inform the Lok Adalaton the said date that her signature on the compromise petition wasFobtained by fraud.

(e) That plaintiff nos. 4-6 had admitted before the Lok Adalat on07[th] July, 2012 that the contents of the compromise petition were trueand correct, when the same had been read over and explained to themin Kannada.G(f) That plaintiff nos. 4-6 specifically admitted that they had received (f) That plaintiff nos. 4-6 specifically admitted that they had receiveda sum of Rs. 30,00,000/- (rupees thirty lakhs) each, as mentioned in thecompromise petition in lieu of relinquishing their rights, title and interestin the other suit schedule properties.

(g) That if, in fact, the signatures of plaintiff nos. 4-6 had beenHobtained by fraud, they ought to have returned the amount of Rs.

30,00,000/- (rupees thirty lakhs) each, paid to them in accordance withthe terms of the compromise. Having not done so, plaintiff nos. 4-6 hadfailed to establish that any fraud was practiced upon them, by thedefendants, with a view to obtain their signatures on the compromisepetition.

(h) On a perusal of the plaint, it is noted that there were 13 itemsof the suit schedule property having different valuation and therefore,the plaintiffs would have had their respective shares in the suit scheduleproperties taken together. However, plaintiff nos.4-6 accepted a sum ofRs.30 lakhs each by relinquishing their right, title and interest in all thesuit schedule properties. Having received a monetary share in respectof the suit items, the plaintiffs had decided to relinquish their right, titleand interest in respect of all the suit items.

The learned Single Judge of the High Court in the impugnedjudgment has not considered the aforesaid facts of the case in the contextof setting aside the award of the Lok Adalat dated 07[th] July, 2012. LearnedSingle Judge has also not considered the reasoning given in the orderdated 27[th] April, 2013 by which the objections raised by plaintiff nos.4-6 to the decree of the Lok Adalat had been rejected.

33. This Court in Ruby Sales and Services Pvt. Ltd. vs. State ofMaharashtra- [(1994) 1 SCC 531] observed that a consent decree isa creature of an agreement and is liable to be set aside on any of thegrounds which will invalidate an agreement. Therefore, it would followthat the level of circumspection, which a Court of law ought to exercisewhile setting aside a consent decree or a decree based on a memo ofcompromise, would be atleast of the same degree, which is to be observedwhile declaring an agreement as invalid.

34. In Pushpa Devi Bhagat (dead) through LR. Sadhna Raivs. Rajinder Singh and Ors. – [(2006) 5 SCC 566], this Court heldthat since no appeal would lie against a compromise decree, the onlyoption available to a party seeking to avoid such a decree would be tochallenge the consent decree before the Court that passed the same andto prove that the agreement forming the basis for the decree was invalid.It is therefore imperative that a party seeking to avoid the terms of aconsent decree has to establish, before the Court that passed the same,that the agreement on which the consent decree is based, is invalid orillegal.

A

BC

D

E

F

G

H

A35. It is a settled position of law that where an allegation of fraudis made against a party to an agreement, the said allegation would haveto be proved strictly, in order to avoid the agreement on the ground thatfraud was practiced on a party in order to induce such party to enter intothe agreement. Similarly, the terms of a compromise decree, cannot beavoided, unless the allegation of fraud has been proved. In the absenceBof any conclusive proof as to fraud on the part of the objectors, the HighCourt could not have set aside the compromise decree in the instantcase.

36. Having considered the aforesaid facts of the present case,we are of the view that no ground was made out warranting the decisionCof the High Court to set aside the order of the Lok Adalat dated 07[th]July, 2012, wherein compromise was recorded between the parties. TheHigh Court’s decision to set aside the order of the Lok Adalat, withoutentering into a discussion as to the findings in such order, cannot besustained. Such decision of the High Court runs contrary to established Dprinciples of law which seek to protect the sanctity and finality of ordersbased on a compromise or consent between parties.

37. Hence the impugned judgment of the High Court of Karnataka,dated 17[th] April, 2015 is set aside and the order of the Lok Adalat, dated07[th] July, 2012 whereby the compromise between the parties to O.S.ENo. 876 of 2004 was recorded, is restored. The appeals are allowed.

38. Having regard to the relationship between the parties, theparties are directed to bear their respective costs.

Nidhi Jain

F(Assisted by : Tamana, LCRA)

Appeals allowed.

G

H