Introduction:

In this case Sivan and Anr. v. Raju P.V. and Anr. [MFA (ECC) No. 27 of 2024; 2025 LiveLaw (Ker) 609], the Kerala High Court recently addressed an important legal issue concerning the jurisdiction of Permanent Lok Adalats in claims for compensation under the Employees Compensation Act, 1923 (EC Act). The case arose when the parents of a deceased employee, who died in a quarry accident while working for the first respondent, challenged an order of the Employee’s Compensation Commissioner. The Commissioner had awarded ₹8,61,120 as compensation but non-suited the appellants on the ground that they had earlier approached the Permanent Lok Adalat through a pre-litigation petition (PLP), where the matter was settled for ₹10 lakhs. The appellants argued that their claim under the EC Act should still be entertained, while the respondents contended that the settlement through the Lok Adalat was final and binding. Justice M.A. Abdul Hakhim, presiding over the matter, was tasked with resolving two key questions: (i) whether a compensation claim under the EC Act can be settled by the Permanent Lok Adalat in view of the bar under Section 8(1) of the Act, and (ii) whether dependents who have already received compensation from Lok Adalat can subsequently seek remedies under the EC Act.

Arguments of the Appellants:

The appellants, represented by counsel A.N. Santhosh, argued that the settlement before the Permanent Lok Adalat should not bar them from pursuing remedies under the EC Act. They contended that Section 8(1) of the EC Act places a bar on agreements that allow compensation to be settled outside the statutory mechanism of the Commissioner. This provision, according to them, was enacted to safeguard dependents of deceased employees from coercion, undue influence, fraud, or misrepresentation by employers. The appellants highlighted that the very purpose of Section 8(1) was to ensure that weaker parties like dependents of deceased workers are not exploited by employers into settling for lesser compensation. By this reasoning, they claimed that the settlement through the Lok Adalat was in violation of the statutory protection given under the EC Act and could not be held binding against them. They further argued that their fundamental rights under Article 14 would be violated if they were denied a chance to pursue compensation under the EC Act simply because they had approached Lok Adalat. The appellants insisted that the Employees Compensation Commissioner should adjudicate the claim independently, without being restricted by the earlier settlement.

Arguments of the Respondents:

The respondents, represented by counsel Dinesh Mathew J. Maricken for R2, opposed the appeal and contended that the matter had already been conclusively settled before the Permanent Lok Adalat. They argued that Section 22C of the Legal Services Authorities Act, 1987 (LSA Act), which governs the jurisdiction of Permanent Lok Adalats, permits parties to approach the forum before taking the dispute to court. Once the parties invoke this mechanism, the jurisdiction of civil courts or other forums stands barred in respect of the same dispute. They further emphasized that Section 25 of the LSA Act provides an overriding effect over inconsistent provisions in other enactments, including the EC Act. Thus, according to the respondents, the settlement reached before the Permanent Lok Adalat was valid and binding, and the appellants were barred from reopening the issue before the Employees Compensation Commissioner. The respondents also pointed out that the settlement before the Lok Adalat was not an informal compromise but an adjudicated resolution by a statutory body vested with quasi-judicial powers, thereby safeguarding the interests of the dependents and ensuring there was no coercion or fraud. They asserted that permitting the appellants to reopen claims after having received higher compensation through Lok Adalat would defeat the purpose of finality in alternative dispute resolution mechanisms.

Court’s Judgment:

Justice M.A. Abdul Hakhim, after a detailed consideration of the statutory framework and precedents, held that Permanent Lok Adalats are empowered to settle or adjudicate compensation claims against employers arising from the death of employees, and the bar under Section 8(1) of the EC Act does not apply to such proceedings. The Court observed that Section 25 of the Legal Services Authorities Act expressly provides that its provisions override other laws that are inconsistent with it. This meant that the provisions of the EC Act, including Section 8(1), could not be read to exclude the jurisdiction of Permanent Lok Adalats. Justice Hakhim emphasized that Section 22C(1) of the LSA Act allows any party to approach the Permanent Lok Adalat for settlement of disputes, except for matters relating to non-compoundable offences. Importantly, the statute does not exclude disputes under the EC Act. Once a party invokes Section 22C, Section 22C(2) further bars them from approaching any other court for the same dispute. Thus, by filing a pre-litigation petition before the Lok Adalat and settling the matter for ₹10 lakhs, the appellants had exhausted their remedy, and they were barred from re-agitating the matter before the Commissioner.

The Court addressed the concern about Section 8(1) of the EC Act, which prohibits agreements that could potentially allow employers to exploit dependents by settling for lesser compensation. Justice Hakhim clarified that the purpose of Section 8(1) is to prevent coercion, undue influence, or fraudulent settlements outside judicial scrutiny. However, when the dispute is adjudicated or mediated by a Permanent Lok Adalat, which is itself a judicial body under the Legal Services Authorities Act, the safeguards are preserved. The Court observed that the interests of weaker parties, such as dependents of deceased employees, are protected in Lok Adalat proceedings, and therefore, the mischief that Section 8(1) sought to prevent is not present. The settlement through Lok Adalat, in fact, served the purpose of speedy justice, avoiding prolonged litigation, and ensuring that compensation reached dependents without delay.

Further, the Court noted that denial of the benefits under the Legal Services Authorities Act to the dependents would amount to a violation of their fundamental rights under Article 14 of the Constitution. The provision ensures equal access to justice and speedy disposal of disputes, and barring dependents from Lok Adalat remedies would discriminate against them vis-à-vis other litigants. On these grounds, the Court answered the two substantial questions of law in the affirmative, holding that (i) compensation claims under the EC Act can indeed be settled or adjudicated by Permanent Lok Adalats, and (ii) once such settlement has taken place, dependents cannot re-approach the Employees Compensation Commissioner for further relief. Consequently, the Court dismissed the appeal of the parents of the deceased employee, upholding the settlement made through the Lok Adalat as final and binding.

The judgment underscores the broader principle that the Legal Services Authorities Act, by virtue of its overriding clause, enhances access to justice and provides a legitimate avenue for resolution of disputes including compensation claims under the EC Act. It clarifies the harmonious interpretation of both statutes, ensuring that dependents of employees are protected while also reinforcing the finality and binding nature of Lok Adalat settlements.