CENTRAL UNIVERSITY OF SOUTH BIHAR

“Lok adalat and its significance in the ADR system”

Submitted to:-
Mrs. Poonam Kumari ma’am
Faculty of Law,
Central university of South Bihar

Submitted by:-
Atul Ratna
B.A.LL.B (H)
CUB1313125009
(8th semester, 4th year)

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Index

Serial no. Topic Page no.

1. Reason for establishment of

SEBI

2. Role and functions of SEBI

3. Steps of management

4. SEBI guidelines to investor

5. SEBI guidelines to capital

market

6. Conclusion and summary

7. Bibliography

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Methodology adopted
This is a descriptive doctrinal study. I have taken helps from several books of company law
and FMR law, published articles and internet.

Aims and objectives

While doing the research, the research believed that-

1) To know regarding the establishment of SEBI, its functions, methods of working.

2) To study the objectives, functions, importance and limitations of SEBI.

3) To capitulate the SEBI guidelines to the investors.

4) To study the steps of management of SEBI.

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ACKNOWLEDGEMENT

Gratitude and thanks giving are a part of formal protocol, which is indeed to be followed
while preparing a project report.

I feel myself highly delighted, as it gives me incredible pleasure to present a research work on
“SEBI-powers, functions, and investors protection”

I would like to enlighten my readers regarding this topic and I hope I have tried my best to
pave the way for bringing more luminosity to this topic.

For this first and foremost I would like to thank God Almighty.

I express my sincere thanks to ma’am, Dr. P.K.Das (faculty of law) for providing such an
interesting topic.

I am indebted to my parents and siblings for guiding and motivating me all the time.

I am also thankful to my kith and kins. Last but not the least; i would like to thank all concern
for their interest in providing me a good back up for the material.

ATUL RATNA

(STUDENT)

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INTRODUCTION1
The literal translation of the Hindi moniker, Lok Adalat, is ‘People’s Court’- Lok, means
people, and Adalat means court. Hence, simply it means a court for the people, by the people,
and of the people themselves. Indian Judiciary is moving towards a time when it will be
impossible for the courts to cope up with the dockets. If something is not done, the result will
be a production of line of justice that none of us would want to see. The seven hundred years
old clarion call of the Magna Carta- To no one will we sell, to no one will we refuse or delay
the right to justice very pertinently embodies the principle of legal aid.
The institution of Lok Adalat has
evolved as one of the most important modes of alternative dispute resolution. The first instance
of a Lok Adalat system was in 1982, in the village of Una, in the district of Junagarh, Gujarat.
Though this was in its developing stage, a fairly modern version of the Lok Adalat system that
exists till date began in Chennai, in 1986.
The institution has developed, since, by leaps and bounds, by the
people themselves, in order to provide for equitable justice speedily at minimal cost. The crux
of this mode of justice dispensation is that it is contrived to enable the common man to ventilate
his grievances against other citizens or even state agencies, and successfully arrive at an
amicable settlement. Lok Adalats are a blend of all three forms of traditional ADR: arbitration,
mediation, and conciliation. Therefore, the researcher had undertaken this subject for
contributing to the concept and explaining the difficulties in implementation and suggesting
appropriate solutions for effective implementation of Lok adalat system.

1
ATUL RATNA, B.A.LL.B(H), 8TH SEMESTER

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Lok-Adalat means, ‘People's Court’. "Lok" stands for "people" and the term "Adalat" means
court. Lok-Adalat is a system of alternative dispute resolution developed in India.
India has long history of resolving disputes through the mediation of village elders. The system
of Lok-Adalat is based on the principles of the Panch Parmeshwar of Gram Panchayats. The
idea of Lok-Adalat was mainly advocated by Justice P.N. Bhagwati, a former Chief Justice of
India. Lok-Adalat is a non-adversarial system, whereby mock courts (called Lok-Adalat) are
held by the State Authority, District Authority, and Supreme Court Legal Services Committee,
High Court Legal Services Committee, or Taluk Legal Services Committee. They are held
periodically for exercising such jurisdiction as they determine. The clogged courthouses have
become an unpleasant compulsive forum instead of temples of speedy justice. Instead of
waiting in queues for years and passing on litigation by inheritance, people are inclined either
to avoid litigation or to start resorting to extra judicial remedies.2

LOK ADALAT: NEED AND SIGNIFICANCE

The problem of delays and expensive litigation has engaged the attention and consideration of
several legal luminaries, those connected with the management of the judicial system of the
country. As per statistics available in India, it is unable to clear the backlog of cases. Take a
look upon the pendency figures.3

Courts 2008 2009 2010

Supreme court 26,863 30,834 33,352
High Courts 3,743,060 3,874,090 4,060,709
Lower Courts 25,418,165 26,409,011 27,275,953
Total(All 29,207,112 30,333,264 31,391,526
Courts)

The backlog has been increasing at an average rate of 34 percent annually. This huge backlog
of unsolved cases, experts claim, is directly proportional to a lack of judges. Statistics released
by the Supreme court although shows a drop in vacancies of judges in the courts of the country,
the number is still very high. Here are the statistics for past three years and vacancies that
continue to exist.

The vacancies in the Supreme Court have been reduced by new appointments this year and
last year. The High Court’s statistics however, show some concerns. There have been nearly
30 percent vacancies in High Courts as well as lower courts
In Maharashtra state, total pending cases as of 31 December, 2009 in
Lower Courts is 4,158,458, i.e. 15 percent of total pendency and 338,183 in High courts i.e. 8
percent of total pendency and 338,183 in High courts i.e. 8 percent of total pendency

2
Mediation and Case Management- Their co-existence and correlation- A paper presented during Indo-US
Judicial exchange at U.S. Supreme court by Niranjan Bhatt on 15/12/2002.
3
Source: www.supremecourtofindia.nic.in, Bar & Bench News Network Jul 15, 2010

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 Ratio of Judges to Population

Country Ratio of judges to population

(per 10 Lac population)
USA 107 Judges
Canada 75 Judges
Australia 57.7 Judges
England 50.9 Judges
India 10.5 Judges

The United Nations Development Programme reveals that approximately 20 million

legal cases are pending in India. India is a country of 1.1 billion people. Presently it has
approximately 12.5 judges for every million people compared with roughly 107 per million in
the United States and Great Britain have around 150 judges for million of it’s
population.[Google search] In its 120th Report in1988, the Law Commission of India had
recommended that “ the state should immediately increase the ratio from 10.5 judges per
million of Indian population to at least 50 judges per million within within the period of next
five years.”[ 120th Report of the Law Commission of India on Manpower Planning in the
Judiciary: A Blueprint, Ministry of Law, Justice and Company Affairs, Government of India
(1987) 39.] the recommendation is yet to be implemented.
Our justice delivery system is bursting at the seams and may collapse unless
immediate remedial measures are adopted not only by the judiciary but also by the legislature
and executive. It has been said by ford Devlin:
“If our business methods were as antiquated as our legal system, we would have
become a bankrupt nation long back”.
Thereby various Committees were appointed. Law Commission of India also in its
various reports, have considered this problem in all its facets and have suggested some
remedial measures. Accordingly, a few procedural amendments were carried out, a piece of
substantial law emerged and other improvements in the working of the system have also been
introduced. Many tribunals, forums have been created to reduce workload in Courts. Besides,
many mechanisms for harmonious settlement of disputes such as negotiation, conciliation,
mediation, arbitration. Lok Adalat have been set up to provide fast, active and cheap
remedies that can be made available to the people along with Traditional Legal System and to
confirm guarantee of equal access to justice.
Lok Adalats are usually presided over by retired judges, social activists, or other
members of the legal profession. The Lok Adalat can deal with all Civil Cases, Matrimonial
Disputes, Land Disputes, Partition/Property Disputes, Labour Disputes etc., and
compoundable criminal Cases. The first Lok Adalat was held in 1985 in Delhi where more
than 150 cases were solved within a day.
LOK-ADALAT IN INDIA
With 42nd amendment act of constitution of 1976, Article 39-A, has been inserted
which requires the State to 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. The
entire mechanism of Lok Adalat designed and evolved is with the object of promoting justice.
Justice has three connotations namely social, economic and political. ‘Access to Justice’
means an ability to participate in the judicial process. It is that human right which covers not

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only bare court entry but has many dimensions including time consuming factor4

“Lok Adalat” is defined as a “forum where voluntary effort aimed at bringing

about
settlement of disputes between the parties is made through conciliatory and pervasive
efforts”. Though initially, Lok Adalat camps were started at Junagarh District in Gujrat by
1982, the first Lok Adalat was held in Chennai in 1986. Soon this programme was adopted by
several other states, such as Bihar, Haryana, Karnataka, Maharashtra etc. and now gained
popularity throughout the country. The Legal Services Authorities Act, 1987 implemented in
its true spirit has created popularity for and utility of Lok Adalat for speedy resolution of
disputes. It is believed that the "Lok Adalat" is an old form of arbitrating system which had
been prevailing in early India and its validity has not been taken away even in the modern
days too. This system is based on Gandhian Principles. It is one of the components of ADR
system. As the Indian Courts are overburdened with the backlog of cases and the regular
Courts are to decide the cases involve a lengthy, expensive and tedious procedure. The Court
takes years together to settle even petty cases. Lok Adalat therefore provides alternative
resolution or devise for expeditious and inexpensive justice5

THE LEGAL SERVICES AUTHORITIES ACT, 1987

Lok Adalat is a forum where the disputes/cases pending in the court of law or at prelitigation
stage are settled/compromised amicably. The Lok Adalat has been given statutory
status6 under the Legal Services Authorities Act, 1987. Under the said Act, the award made
by the Lok Adalat is deemed to be the decree of a civil court and is final and binding on all
parties and no appeal lies before any court against its award.

Nature of cases to be referred to Lok Adalat

1. Any case pending before any court
2. Any dispute which has not been brought before any court and is likely to be filed
before the court
Provided that any matter relating to an offence not compoundable under the law shall not
be settled in Lok Adalat.
How to get the case referred to the Lok Adalat for settlement
A) Case pending before the court:
1. If the parties agree to settle the dispute in Lok Adalat or
2. One of the parties makes an application to the court or
3. The court is satisfied that that the matter is an appropriate one for settlement in Lok
Adalat
B) Any dispute at pre-litigative stage
The State Legal Services Authority or District Legal Services Authority as the case
may be on receipt of an application from any one of the parties to any pre-litigation stage
matter refer such matter to the Lok Adalat for amicable settlement
The Permanent Lok-Adalat6
is advance version of Lok-Adalat with additional features
of having residuary powers. As, Permanent Lok-Adalat is statutory body and its decision is

4
Law of Arbitration and Conciliation & ADR systems , by Avatar Singh, Eastern Book Company
5
Lok Adalat’by Om Prakash Tewari 2002, Pioneer Books
6
Sections 19,20,21 of the Legal Services Authorities Act 1987

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binding and it can decide the matter even if, the parties fails to arrive at settlement and
compromise. Therefore, the permanent Lok-Adalat has residuary jurisdiction, in addition to
the jurisdiction enjoy by the Lok- Adalat, to decide dispute by virtue of S.22C (8) even if
dispute between parties failed after conciliation. The Amendment has been introduced in
Section 22 of the said Act in 2002, which provides for setting up of Permanent Lok Adalat to
provide compulsory pre-litigative mechanism for conciliation and settlement of cases relating
to public utility services, like postal, telegraph or telephone service etc. Award of the
Permanent Lok-Adalat is open to challenge and subject to judicial review on the following
grounds,
i. Offence of non-compoundable in nature
ii. Permanent Lok-Adalat cannot take cognizance of the case, if it is pending before
any court. Such pending cases could be only referred to Lok Adalat as per S. 20 and not to
Permanent Lok Adalat7 - Order passed by Permanent Lok Adalat would be without
jurisdiction and liable to be set aside.
ADVANTAGES OF LOK ADALAT
1. In Lok Adalat Court fee is not required to be paid and if Court fee is already paid the
amount will be refunded if the dispute is settled at Lok Adalat according to the rules.
2. There is procedural flexibility and speedy trial of the disputes. There is no strict application
of procedural laws like Civil Procedure Code and Evidence Act while assessing the claim by
Lok Adalat.

3. Parties to the dispute have chance of participation and also can directly interact with the
Presiding Officer through their Counsel which is not possible in regular Courts of law.
4. The award by the Lok Adalat is final and binding on the parties and it has the status of a
decree of a Civil Court and it is non-appealable which does not cause the delay in the
settlement of disputes finally.5. Lok Adalat system is a boon to the common man as they can
get their disputes settled fast and free of cost amicably.
6. Though the Lok-Adalat have no adjudicatory or judicial functions, their functions relate
purely to conciliation and try to arrive at compromise and settle the dispute. CRITICAL
ANALYSIS OF LOK ADALAT
Presently, Lok Adalat is considered to be one of the best Alternative Disputes
Resolution Systems. Just like every other system, Lok Adalat is also having several virtues
and it suffers from few ill as well. As it is rightly said that, “Justice delayed is a Justice
denied but Justice hurried is a Justice buried”. Keeping this fact in mind, the higher judiciary
in many of its judgments directed that, the speedy proceeding conducted by way of Lok
Adalat should not impair the right of any party.
The lawyers are sometimes reluctant to refer the matter for settlement in Lok Adalat8.
Sometimes parties may pressurize their lawyer to stick up to the strict process of court. The
High Court7 observed, “In the name of the speedy resolution of disputes, the fair interests of
the parties cannot be sacrificed, more importantly when the petitioners involved are minors,
insane and disabled.” While expressing its lamented remark about the present Lok-Adalat
system, the Kerala High Court pointed out the drawback as –
“However, the major drawback in the existing scheme of organization of the Lok
Adalat under Chapter VI of the Legal Services Authorities Act is that the system of Lok
Adalat is mainly based on compromise or settlement between the parties. If the parties do not
arrive at any compromise or settlement, the case is either returned to the court of law or the

7
AVTAR SINGH, Law of Arbitration & Conciliation, Ninth Edition(2010), Easter Book Company
8
Manju Gupta V National Insurance Company,I (1994) ACC 242, 1994 ACJ 1036

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parties are advised to seek remedy in a court of law. This causes unnecessary delay in the
dispensation of justice. If Lok Adalat has given power to decide the cases on merits in case
parties fail to arrive at any compromise or settlement, this problem can be tackled to a great
extent”. However this defect has been removed in permanent Lok-Adalat. It has also been
observed that since the forum of Lok-Adalat are headed by the person from judiciary, they
assume the role of Lok-Adalat as judicial forum and deviate from the basic objectives for
which it has been formed. The Supreme Court has also lamented on this issue.
SUGGESTIONS FOR EFFECTIVE IMPLEMENTATION OF LOK ADALAT
1. Legal literacy and legal aid programmes need to expand to take care of poor and ignorant
by organizing awareness camps at grass-root level besides, the mass media like newspapers,
television, radios can also be desirable for this purpose.
2. To increase its utility, the concerned Legal services Authority or Committee should
disseminate information to the public about the holding of various Lok Adalat by it and
success achieved thereby in providing speedy, equitable and inexpensive justice.

3. There is need for improvement in quality of legal aid provided by lawyers and advocates.
The remunerations offered from legal services authorities to lawyers should be revised and
thus encouraged to render effective legal assistance to needy persons.
3. It is observed that, there is need for enactment of more statutory provisions allowing
justice through Lok Adalat.
4. The Lok Adalat Movement can be successful only if the people participate on voluntary
basis in the functioning of Lok Adalat. This can be achieved by restraining themselves from
invoking the jurisdiction of traditional Courts in trifle disputes.
CONCLUSION
The Legal Service Authority Act, 1987, which provides for the Lok Adalat for speedy
and early settlement of dispute among the parties, is boom for Indian legal system. Majority
of India population which is illiterate seek justice through regular court which is
disadvantageous to both, the parties as well as to the courts as such on which an amicable
settlement can be reached overburdens the courts and the procedure at the courts are
expensive, ineffective and time consuming. With respect to the present condition prevailing
in the society and the gap between the economic conditions of the people of the society asks
for an effective and strong legal service for poor and needy people. The system of Lok Adalat
are no more new to the legal system of India, it has become an effective part of Indian legal
system and now is the time to bring such matters under the jurisdiction of Lok Adalat which
do not fall under its domain. It is high time for law makers, jurists, lawyers and judges to help
modifying the current model law governing Lok Adalat and include such areas under its
jurisdiction like business disputes or conflicts where public at large is involved and the
matters where government is involved in one or the other way.
It will go a long way in strengthening our diverse, democratic values and rule of Law.
The working of Lok Adalat seems to be both fruitful and successful and has achieved those
objectives, for which it has been meant. The overall functioning and achievement of Lok
Adalat appears to be appreciable though not remarkable.. So there is a need strengthen the
system of Lok Adalat in recent context, which in turn, help to realize the Constitutional goals
of ‘equal and social justice’ to its fullest extent. It will, in turn, helpful to regain to reaffirm
the public confidence in the judiciary.
REFERENCES
1. Minor research project on A study of Lok Adalat with special reference to Satara city
submitted to UGC, New Delhi, by Dr. Deepa P. Patil, Assistant Professor,
Ismailsaheb Mulla Law College, Satara.
2. Manju Gupta V National Insurance Company,I (1994) ACC 242, 1994 ACJ 1036

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3. AVTAR SINGH, Law of Arbitration & Conciliation, Ninth Edition(2010), Easter
Book Company.
4. ‘Lok Adalat’by Om Prakash Tewari 2002, Pioneer Books
5. Arbitration and Conciliation Law of India, 7th Edn. (Reprint) by Kwatra G. K.
6. Sections 19,20,21 of the Legal Services Authorities Act 1987
7. Law of Arbitration and Conciliation & ADR systems , by Avatar Singh, Eastern Book
Company
8. www.supremecourtofindia.nic.in

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