Lok Adalat Award Can Formalise Settlement Reached Before It Without Prior Memorandum: Telangana High Court
The Court held that the settlement, its signing by the parties and its countersigning by the Lok Adalat members may occur simultaneously as a single event.
The Telangana High Court has held that a Lok Adalat award need not contain or be preceded by a separately executed memorandum of settlement or compromise.
The High Court clarified that the award may itself formalise a settlement reached before the Lok Adalat, provided the parties sign it and the Lok Adalat members countersign it.
The Court was hearing a writ petition challenging a 2013 Lok Adalat award recording a compromise for the execution of a registered sale deed. The petitioners contended, among other grounds, that the award was invalid because it was not accompanied by a separately signed memorandum of compromise.
A Bench of Justice Moushumi Bhattacharya and Justice Renuka Yara observed: “… there is no statutory requirement for the Lok Adalat Award to consist of a Memorandum of Settlement of Compromise which is executed between the parties prior to approaching the Lok Adalat or for the Lok Adalat Award to contain a company of such Memorandum/Compromise. In other words, the Act and the Regulations indicate that the Lok Adalat Award can also be an act of formalising the Settlement/Compromise arrived at by the parties before/in front of the Lok Adalat; and the parties signing the same in the presence of/before the Lok Adalat and the Lok Adalat counter-signing the same.”
The Bench added: “Settlement/Compromise of the disputes between the parties, signing of the same by the parties and counter-signing of the settlement by the members of the Lok Adalat may be done as a simultaneous single event all at one go; without being separated by time.”
Senior Advocate B. Mayur Reddy appeared for the petitioners. Standing Counsel Pusuluri Shashi Kiran represented the Mandal Legal Services Committee, while Senior Advocate Vivek Reddy appeared for the second respondent.
Background
The dispute concerned an agreement for the sale of land for ₹1 crore. The purchaser had paid ₹85 lakh, while the remaining ₹15 lakh was to be paid when the sale deed was registered.
In 2013, the Lok Adalat passed an award recording that the parties had compromised the dispute. Under its terms, the sellers agreed to execute the registered sale deed within two months, while the purchaser agreed to pay the remaining consideration and bear the stamp duty and registration charges.
The petitioners, who were the wife and daughter of the person who represented the sellers before the Lok Adalat, were not parties to those proceedings. They challenged the award on the grounds that it was allegedly affected by fraud, did not contain a separate compromise signed by the parties and was passed without pecuniary jurisdiction.
The purchaser submitted that the award had been signed in the parties’ presence and bore the signature of the petitioners’ predecessor, who held the general power of attorney for the sellers. It was also contended that the petitioners had received and retained the sale consideration.
Court’s Observations
The Court examined Regulations 15 and 17 of the National Legal Services Authority (Lok Adalat) Regulations, 2009. It observed that Regulation 15 allows the Lok Adalat to propose a settlement at any stage, while Regulation 17 treats the drawing up of an award as an administrative act incorporating the terms agreed upon by the parties.
The Bench explained that under Regulation 17(2), a settlement becomes an award when the parties sign or affix their thumb impressions and the Lok Adalat members countersign it. Regulation 17(6) permits the members to sign only a settlement reached before them.
The Court held that the parties must determine the settlement terms, while the Lok Adalat’s role is to guide and assist them. The parties sign the settlement first, after which the Lok Adalat countersigns it and places its seal of finality upon it.
Referring to Section 20 of the Legal Services Authorities Act, 1987, the Court observed: “The 1987 Act does not require the Award passed by the Lok Adalat to be legalised or legitimised by the recording of a separate compromise or a signed settlement decree between the parties. In essence, there is nothing in the 1987 Act which prohibits a compromise or settlement from being reflected in the Award which is duly signed by the parties. A compromise or settlement between the parties can also be reached in front of the Lok Adalat and signed by the parties before the Lok Adalat.”
The Court noted that the opening portion of the impugned award expressly stated that the parties had compromised and settled the dispute and that the award was being passed in terms of that settlement. It held that this recital and the award’s contents satisfied Section 20(4).
The Court found that the award recorded the settlement terms, bore the relevant signature and had been countersigned by the Lok Adalat members. It therefore fulfilled the essential statutory requirements under the 1987 Act and the 2009 Regulations.
The Bench rejected the argument that the absence of an independently executed compromise document rendered the award invalid. It noted that the petitioners had not identified any provision requiring a separate memorandum to be executed before the parties approached the Lok Adalat or annexed to its award.
The Court also rejected the allegations of fraud and absence of authority. Referring to K. Srinivasappa v. Mallanna (2022) and Bhakti Vinaykumar Khatu v. Jayanti Bhaskar Shirsat (2026), the Bench observed that parties who receive and retain consideration under a compromise cannot subsequently challenge the Lok Adalat award on allegations of fraud. It found that the petitioners had retained the consideration and had admitted their predecessor’s signature.
The Court further held that the pecuniary restriction under Section 22C applies to Permanent Lok Adalats and not to Lok Adalats organised under Section 19. Referring to Canara Bank v. G.S. Jayarama (2022), it distinguished the statutory functions of the two bodies and noted that a Lok Adalat under Section 19 resolves disputes through compromise rather than adjudication.
Conclusion
The High Court held that the petitioners had established no statutory or factual ground for interfering with the Lok Adalat award. It found no violation of the Legal Services Authorities Act, 1987 or the 2009 Regulations and rejected the allegations of fraud and lack of pecuniary jurisdiction.
The writ petition and all connected applications were dismissed without costs.
Cause Title: Smt. M. Nagalakshmi and Another v. Chairman, Mandal Legal Services Committee, Cyberabad and Others
Appearances
Petitioners: Senior Advocate B. Mayur Reddy; Advocate Sanjay Kumar Agarwal
Respondents: Standing Counsel Pusuluri Shashi Kiran, Senior Advocate Vivek Reddy; Advocate Soubhagyavalli Vedantam