New Delhi: At the request of private and public banks, the National Legal Services Authority (NALSA) and the Supreme Court’s Mediation and Conciliation Project Committee (MCPC) propose to reach out to all State Legal Services Authorities (SLSA) to classify banking services as Public Utility Services (PUS) where this has not yet been done, ThePrint has learnt.
Including banking services in the PUS list would enable these financial institutions to participate in Permanent Lok Adalats (PLA) to settle their disputes with customers.
This will have a bearing on the large number of pending cheque-bounce cases that clog the judicial system in trial courts. At present, 80 lakh cheque-bounce cases are being heard in different subordinate courts.
While NALSA is a national organisation to promote legal awareness and provide free legal services to the marginalised, the MCPC is a mediation body attached to the top court, which serves as an alternative dispute redressal mechanism for the quick resolution of legal conflicts.
ThePrint has learnt that the banks expressed concerns about not being included in the PUS list during a high-level meeting with NALSA and the MCPC chairman, Supreme Court judge Justice Vikram Nath, held two weeks ago.
Permanent Lok Adalats
The meeting aimed at exploring measures that could effectively reduce litigation involving financial institutions and insurance companies. Participants also discussed steps to encourage pre-litigation mediation by banks and insurance companies.
Sources said the chairman-cum-managing directors (CMDs) of all public and private banks were present at the meeting, and they pointed out that several states have not classified banking services as PUS.
They told Justice Nath that this omission was impeding banks from taking up customer disputes, particularly small cheque-bounce cases, for settlement before PLAs.
Under the Legal Services Authority, PLAs are specialised, permanent bodies for compulsory pre-litigative conciliation and settlement of disputes regarding PUS. They handle cases valued at up to Rs 1 crore, providing speedy binding decisions on merit.
Cases that can be referred to Permanent Lok Adalats include disputes between consumers and travel companies, inflated power bills, deficiencies in post office services, builder-flat purchases and clashes between parents and schools.
If a settlement cannot be reached, the lok adalat, which comprises either a sitting District Judge (DJ) and two civil society members, can decide the case on merits. No appeal can be made against this decision under the law.
According to one of the sources mentioned above, NALSA and MCPC will coordinate with the state legal services authorities to amend the Legal Services Authority Act to define banking services as PUS.
“Pursuant to the meeting, an exercise was undertaken by both NALSA and MCPC during which it was found that 12 states have already modified the law to designate banking services as PUS. NALSA and MCPC will pursue with the SLSAs of 17 states and ensure that the process to change the law to incorporate the suggestion of private and public banks is fast-tracked,” the source said.
Another area of concern shared by the banks was that 16 states are yet to establish Permanent Lok Adalats, which is legally mandated. “For this, NALSA and MCPC will request the financial services secretary of the respective states and impress upon them to start work on this,” the source added.
Justice Nath emphasised the importance of mediation and urged banks to develop a standard operating procedure (SOP) for resolving their pending cases through mediation. He recommended that banks opt for pre-litigation mediation as a means to amicably settle cheque-bounce cases.
Banks were also advised to nominate nodal officers for mediation training in the Supreme Court.
The meeting, which included the financial services secretary from the Ministry of Finance, the head of the General Insurance Council and the heads of all non-life insurance companies, discussed a proposed SOP to promote pre-litigation mediation in motor accident claim cases.
Justice Nath stressed during the meeting that the SOP should clearly spell out the criteria for pre-litigation mediation. If a claimant meets these criteria, insurance companies should prioritise resolution instead of waiting for the claimant to approach the courts.
Both banks and insurance companies were also told to identify potential pending cases that could be referred to the ongoing mediation drive.
Sources said Justice Nath is likely to call a review meeting within the next 15 days to assess the progress.