Employees Compensation Act Does Not Bar Lok Adalat From Adjudicating Compensation Claim Upon Employee's Death: Kerala High Court

The Kerala High Court recently held that Permanent Lok Adalats can settle or adjudicate the claims for compensation against employers upon the death of employees. It found that the bar under the Employees Compensation (EC) Act do not apply to the proceedings under Section 22C of the Legal Services Authorities Act.

Justice M.A. Abdul Hakhim was considering an appeal preferred by the parents of the deceased employee against the decision of the Employee's Compensation Commissioner.

The deceased had died during an accident while working at the quarry of the first respondent. The Commissioner awarded a compensation of Rs. 8, 61,120/- after finding that there was an employer-employee relationship between the deceased and the first respondent. However, the applicants were non-suited since they had filed a pre-litigation petition (PLP) before the Lok Adalat, which had settled the matter for Rs. 10 lakhs. The Commissioner's order is challenged in appeal.

The Court considered two substantial questions of law, which in brief are: (i) Whether a claim for compensation under the EC Act can be settled by PLP before the Lok Adalat and the compensation can be received by dependents in view of the bar under Section 8(1); (ii) Whether the dependents could be non-suited from receiving compensation from the Commissioner if they have approached Lok Adalat and received compensation?

It found that since Section 25 of the Legal Services Authorities Act provides it would have overriding effect over other enactments, including the prior law under EC Act.

It observed:

"The provisions of the Legal Services Authorities Act, 1987 have overriding effect on the provisions in the EC Act, which are inconsistent with the same. Section 22C(1) of the Legal Services Authorities Act, 1987, provides that any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for the settlement of the dispute. Under the First Proviso to Section 22C(1), any matter relating to an offence not compoundable under any law alone is excluded from the jurisdiction of the Permanent Lok Adalat. Section 22C of the Legal Services Authorities Act, 1987, does not exclude the proceedings under the EC Act. Section 22C(2) of the Legal Services Authorities Act, 1987, provides that after an application is made under sub-section (1) to the Permanent Lok Adalat, no party to that application shall invoke jurisdiction of any Court in the same subject."

The Court, thus, found that the appellants had no right to approach the Employee's Compensation Commissioner since they already invoked the remedy under the Legal Services Authorities Act.

It also referred to the purpose behind Section 8(1) of the EC Act, which is to prevent employers from exerting undue influence or duress, from defrauding, from misrepresenting the dependents of the deceased employees, or from exploiting their weakness and persuading them to settle the dispute by accepting a lesser compensation. It opined that this purpose would not be defeated by an adjudication of the Lok Adalat.

It further observed:

"When the dispute with respect to the compensation for death between the employer and the dependents of the deceased employee is settled in the mediation/adjudication of the Permanent Lok Adalat, which is also a judicial body, there is no question of any undue influence, duress, defrauding, misrepresentation or exploitation on the part of the employer. The interests of the weaker party would be taken care of by the Permanent Lok Adalat. Even in the absence of Section 8 of the EC Act, its purpose would be well served in the proceedings under Section 22C of the Legal Services Authorities Act. The interests of the dependents of the deceased employee would be protected in the proceedings under Section 22C of the Legal Services Authorities Act. Hence, the bar under Section 8(1) of the EC Act will not be applicable to the proceedings under Section 22C of the Legal Services Authorities Act."

It, thus, held that claim for compensation of deceased employee can be adjudicated and settled by the Permanent Lok Adalat as per Section 22C of the Legal Services Authorities Act.

It also found that if denial of benefits under the Legal Services Authorities Act would amount to a violation of fundamental rights under Article 14 of the Constitution of India.

Thus, answering the substantial questions in the affirmative, the Court dismissed the appeal.

Case No: MFA (ECC) No. 27 of 2024

Case Title: Sivan and Anr. v. Raju P.V. and Anr.

Citation: 2025 LiveLaw (Ker) 609

Counsel for the petitioners: A.N. Santhosh

Counsel for the respondents: Dinesh Mathew J. Maricken - R2

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