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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision:13.08.2025 DHFL PRAMERICA LIFE INSURANCE CO. LTD ...PETITIONER VS.

THE PERMANENT LOK ADALAT & ANR ...RESPONDENTS CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL Present: Mr. Karan Nehra, Advocate and Mr. Harvinder Thakur, Advocate for the petitioner.

Mr. Ajaivir Singh, Advocate for respondent No.2.

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SUVIR SEHGAL, J.

1. Instant petition has been filed under Articles 226/227 of Constitution of India inter alia for issuance of a writ in the nature of certiorari quashing award dated 21.03.2016, Annexure P-4, passed by the Permanent Lok Adalat (Public Utility Services) (for short “PLA (PUS)”), Jalandhar.

2. Respondent No.2 filed an application under Section 22-C of the Legal Services Authorities Act, 1987, (for short “the Act”) before PLA (PUS) alleging that Balwinder Singh (deceased) had obtained a life insurance policy from the petitioner on 04.06.2012 for Rs.32 lacs for a period of 17 years. Balwinder Singh suffered a massive heart attack and died on 18.06.2013. Being the nominee, his widow, respondent No.2 lodged a claim under the policy, which was repudiated on 25.07.2014 on the ground that the deceased had withheld material information that he had a pre- existing disease of “DM, Alcoholic Liver Disease, Cirrhosis and PHT” at the time of purchasing the insurance policy. Although, the policy was for a higher amount, respondent No.2 filed an application, Annexure P-2, under Section 22-C of the Act, for a claim of Rs.25 lacs. Upon appearance, petitioner contested the claim and filed a reply, Annexure P-3, stated that deceased was taking treatment from Dayanand Medical College and Hospital, Ludhiana, but did not disclose it in the proposal form. A stand was taken that the deceased had suppressed material facts from the petitioner. After both the parties led their respective evidence, vide Annexure P-4, PLA(PUS) passed an award of Rs.20 lacs in favour of respondent No.2 with interest @ 9% from the date of filing of the petition.

3. Counsel for the petitioner has argued that PLA(PUS) did not adhere to the procedure prescribed for adjudicating a claim under the Act. He has made a reference to Sections 22-C to 22-E, ibid, to contend that PLA(PUS) failed to formulate the terms of settlement before determining the dispute on merits.

4. Per contra, counsel for respondent No.2 has supported the impugned award and asserts that PLA(PUS) has decided the dispute on merits after settlement could not be arrived at between the parties.

5. Having heard counsel for the parties, this Court is of the view that there is substance in the argument raised by counsel for the petitioner. A perusal of order dated 12.08.2015, Annexure P-7, shows that after both the sides filed their respective response, PLA(PUS) considered the arguments addressed by counsel for the parties and came to the conclusion that the repudiation of the claim by the petitioner is illegal. PLA(PUS) proceeded to record that in its considered opinion, dispute can be settled, in case, petitioner agrees to pay death claim without interest as claimed in the petition. Proposed terms of settlement were formulated and served them upon the parties. It is evident from this order that at the first instance PLA(PUS) heard the parties on merits; rejected the stand taken by the petitioner and then framed the terms of settlement. In other words, PLA(PUS) adjudicated the dispute on merits before proposing a settlement between the parties. This is in clear breach of the procedure laid down under the Act.

6. In Vijay Pal Verma Vs. Permanent Lok Adalat and others 2017 (1) PLR 311, a Coordinate Bench of this Court has observed as under:-

“7. Section 22C of the Act categorically provides that the application under Section 22C(1) can be filed only before the dispute is brought to the Court, meaning thereby it would not be maintainable if the same dispute is pending between the parties in the Court. It further provides