Court’s Decision
The Kerala High Court, presided over by Justice M.A. Abdul Hakhim, dismissed an appeal filed by the parents of a deceased quarry worker challenging the order of the Commissioner for Employees’ Compensation. The appellants had earlier received ₹10 lakh compensation in a settlement before the Lok Adalat under the Legal Services Authorities Act, 1987, for the death of their son in a quarry accident.
The Court held that once compensation is received through a Lok Adalat award under Section 22C of the Legal Services Authorities Act, a subsequent claim under the Employees’ Compensation Act, 1923, is barred by the doctrine of election of remedies. The judgment emphasized that the bar under Section 8(1) of the Employees’ Compensation Act does not extend to settlements reached under the Legal Services Authorities Act, as the latter is a subsequent enactment with an overriding effect.
“When dependents of a deceased employee settle the compensation dispute before a Lok Adalat, they cannot thereafter approach the Employees’ Compensation Commissioner seeking the same relief.”
Facts
The appellants, parents of a deceased quarry worker, filed a claim before the Employees’ Compensation Commissioner seeking compensation under the Employees’ Compensation Act, 1923, after their son died in a quarry accident while operating a hydraulic lift. The Commissioner found that there existed an employer–employee relationship and calculated compensation of ₹8,61,120 payable to the dependents.
However, the Commissioner rejected the claim on the ground that the dependents had already settled the dispute through a Pre-Litigation Petition (P.L.P. No. 4/2015) filed before the Lok Adalat at Muvattupuzha Taluk Legal Services Authority and had received ₹10 lakh from the employer under Ext. X1 Award dated 14 February 2015.
The appellants admitted to having received ₹10 lakh but contended that it was paid pursuant to a private agreement (Ext. D1) executed before the Lok Adalat proceedings. They argued that the Lok Adalat’s award should not preclude their claim under the Employees’ Compensation Act, as direct payment by employers is barred under Section 8(1) of that Act.
Aggrieved by the Commissioner’s finding, the parents filed the present appeal before the Kerala High Court.
Issues
- Whether a claim for compensation under the Employees’ Compensation Act, 1923, can be settled by filing a Pre-Litigation Petition under Section 22C of the Legal Services Authorities Act, 1987?
- Whether dependents of a deceased employee can be barred from receiving compensation under the Employees’ Compensation Act after having received an award from a Lok Adalat?
Petitioner’s Arguments
Counsel for the appellants argued that the Commissioner erred in rejecting their claim merely on the basis of the Lok Adalat settlement. It was contended that Section 8(1) of the Employees’ Compensation Act prohibits any direct payment by an employer to dependents of a deceased employee without depositing the amount before the Commissioner. The appellants maintained that the ₹10 lakh received from the employer could not be treated as payment of compensation under the Act since it was not made through the statutory channel.
The appellants relied heavily on two Division Bench judgments of the Kerala High Court—Shah v. Rajankutty (2006 ACJ 793) and Varghese K.M. v. Thankamma @ Ponnamma (2012 (2) KHC 661)—which held that an employer cannot discharge liability for compensation except through deposit before the Commissioner, and any private payment is legally ineffective. They argued that these precedents rendered the Lok Adalat settlement insufficient to bar their claim.
Respondent’s Arguments
The insurer and the employer, through counsel, contended that the dependents had voluntarily filed a Pre-Litigation Petition before the Lok Adalat and had received ₹10 lakh under the Lok Adalat award, which has the status of a civil court decree. It was argued that since the appellants had chosen to pursue and accept compensation under the Legal Services Authorities Act, 1987, they could not later invoke the Employees’ Compensation Act for the same cause of action, as this would violate the doctrine of election of remedies.
The respondents cited several Supreme Court decisions to substantiate the binding and final nature of Lok Adalat awards:
- P.T. Thomas v. Thomas Job (2005) 6 SCC 478
- K.N. Govindan Kutty Menon v. C.D. Shaji (2012) 2 SCC 51
- M.P. State Legal Services Authority v. Prateek Jain (2014) 10 SCC 690
They also relied on National Insurance Co. Ltd. v. Mastan (2006) 2 SCC 641, where the Supreme Court held that a claimant who has opted for one remedy (under either the Motor Vehicles Act or the Workmen’s Compensation Act) cannot subsequently pursue the other.
Analysis of the Law
The High Court examined the interplay between Section 8(1) of the Employees’ Compensation Act, 1923, which prohibits direct payment of compensation, and Sections 22C and 25 of the Legal Services Authorities Act, 1987, which empower Lok Adalats to settle pre-litigation disputes and grant awards having binding force equivalent to a decree of a civil court.
Justice Abdul Hakhim noted that Section 25 of the Legal Services Authorities Act provides for an overriding effect over other laws, meaning its provisions prevail over any inconsistent provisions of prior statutes, including the Employees’ Compensation Act. Thus, the bar under Section 8(1) could not negate settlements arrived at under the Legal Services Authorities Act.
The Court further analyzed that Section 22C(2) explicitly bars parties who have invoked the jurisdiction of the Lok Adalat from initiating parallel proceedings before any other court regarding the same subject matter. Therefore, the appellants, having already received compensation through a valid legal process, could not re-approach the Employees’ Compensation Commissioner for additional relief.
Precedent Analysis
- Shah v. Rajankutty (2006 ACJ 793) and Varghese K.M. v. Thankamma (2012 (2) KHC 661) – These Division Bench decisions emphasized the non-permissibility of private settlements under Section 8(1) of the Employees’ Compensation Act. The present case distinguished these rulings, clarifying that Lok Adalat awards are not “private payments” but judicial settlements sanctioned by law.
- National Insurance Co. Ltd. v. Mastan (2006) 2 SCC 641) – The Supreme Court laid down the doctrine of election, holding that when two remedies exist, a claimant must elect one and cannot pursue both. The Kerala High Court adopted this principle to bar a second claim under the Employees’ Compensation Act after acceptance of compensation through the Legal Services Authorities Act.
- P.T. Thomas v. Thomas Job (2005) 6 SCC 478) – Recognized the Lok Adalat system as a judicial forum offering procedural flexibility, binding awards, and speedy justice. The High Court relied on this precedent to affirm that Lok Adalat awards carry the force of law and ensure protection against exploitation or undue influence.
- K.N. Govindan Kutty Menon v. C.D. Shaji (2012) 2 SCC 51) – Clarified that the Legal Services Authorities Act aims to benefit marginalized groups, including industrial workmen, thus reinforcing the legitimacy of compensation settlements under Lok Adalats.
Court’s Reasoning
The Court acknowledged that the appellants had indeed received ₹10 lakh as compensation for their son’s death, and this amount exceeded the ₹8,61,120 fixed by the Commissioner. The Court reasoned that Section 8(1) of the Employees’ Compensation Act seeks to prevent employers from exploiting dependents by forcing private settlements. However, when a settlement occurs through a Permanent Lok Adalat, which functions as a statutory quasi-judicial body, such concerns of coercion or exploitation do not arise.
Justice Abdul Hakhim held:
“The interests of the weaker party would be adequately safeguarded by the Permanent Lok Adalat. Hence, the bar under Section 8(1) of the Employees’ Compensation Act does not apply to settlements under the Legal Services Authorities Act.” He further observed that allowing multiple proceedings would defeat the object of speedy dispute resolution under the Legal Services Authorities Act and could lead to double compensation.
Conclusion
The Kerala High Court dismissed the appeal, upholding the Lok Adalat award and the Commissioner’s decision. It conclusively held that once compensation is accepted under the Legal Services Authorities Act, dependents cannot invoke the Employees’ Compensation Act for the same cause of action.
“In view of the doctrine of election and the overriding effect of the Legal Services Authorities Act, the dependents cannot seek compensation afresh under the Employees’ Compensation Act after receiving compensation from the Lok Adalat.”
Implications
This decision reinforces the finality and binding nature of Lok Adalat awards and clarifies that the Employees’ Compensation Act cannot be invoked after a valid Lok Adalat settlement. It ensures legal certainty, prevents multiplicity of claims, and upholds the integrity of the legal aid system. The judgment also harmonizes the operation of two social welfare legislations by recognizing the Legal Services Authorities Act as having overriding authority in cases of inconsistency.
FAQs
1. Can an employee’s dependents file a fresh claim after receiving compensation from a Lok Adalat?
No. Once compensation is received under a Lok Adalat award, a subsequent claim under the Employees’ Compensation Act is barred by the doctrine of election.
2. Does Section 8(1) of the Employees’ Compensation Act prohibit Lok Adalat settlements?
No. The Kerala High Court clarified that Section 8(1) applies only to private settlements, not to judicial settlements made through a Lok Adalat under the Legal Services Authorities Act.
3. Why does the Legal Services Authorities Act override the Employees’ Compensation Act?
Section 25 of the Legal Services Authorities Act expressly provides it has an overriding effect over inconsistent laws, making its provisions superior where conflicts arise.
