Lok Adalat Settlement Invalid Without Parties’ Presence Or Written Authority To Counsel: Gauhati High Court
The writ petition challenged a settlement recorded in a National Lok Adalat during the pendency of a consumer appeal.
The Gauhati High Court has held that a settlement recorded in a National Lok Adalat under the Legal Services Authorities Act, 1987 is valid only when it is arrived at by the parties themselves with their free and informed consent, and set aside an order based on a compromise signed by counsel, in the absence of any written authority from the party.
A writ petition was filed under Article 226 of the Constitution, challenging an order passed in a National Lok Adalat. The matter originated from an appeal pending before the Assam State Consumer Disputes Redressal Commission, which arose out of an ex parte order of the District Consumer Forum, Goalpara, directing the petitioners to pay a certain amount to the complainant. While the appeal was pending, it was taken up in a National Lok Adalat, where a settlement was recorded.
A Bench of Justice Sanjay Kumar Medhi noted, “The objective of the Act is to bring disputes to a final settlement for which the presence of the parties and their free consent is mandatory. This Court has also carefully gone through the records of the learned Commission which were requisitioned by this Court on 11.12.2025 on the specific issue as to whether any authority was given to the learned lawyer to act and sign the compromise.”
The Court added, “On a careful examination of the records of the learned Commission, this Court has not come across any such authority letter. In any case, the requirement of the Act is for arriving at a settlement by the parties which implicitly requires the presence of the parties. In the instant case, the petitioner no. 1 being a Company, it would be the authorized representative, who is duly competent to enter into such settlement, which apparently does not appear to be done in the instant case.”
In the present case, the Court found that no authorised officer or representative of the petitioner company had participated in the Lok Adalat proceedings, and therefore, the alleged settlement did not satisfy the statutory requirements.
Advocate JK Bhuyan appeared for the Petitioners and Advocate S. Hoque appeared for the Respondents.
The petitioners challenged the Lok Adalat order on the ground that no authorised officer of the company was present during the proceedings and that their counsel had allegedly made concessions without any authority to do so. They argued that such a settlement could not be treated as one under the Legal Services Authorities Act, as it was not arrived at between the parties themselves and defeated the very purpose of the legislation.
On the other hand, the respondent contended that although no officer of the company was present, the counsel had sufficient instructions to settle the matter, allegedly supported by messages exchanged, and further argued that the liability had otherwise been admitted.
The High Court rejected the respondent’s submissions and held that it had no option but to interfere with the order passed by the National Lok Adalat. Accordingly, the Court set aside the Lok Adalat settlement and directed that the appeal be considered and decided by the Consumer Commission on its own merits, in accordance with law.
The Court also noted that the appeal had been pending since 2018 and observed that the Commission should take appropriate steps to ensure its expeditious disposal. The writ petition was disposed of.
Cause Title: Mahindra and Mahindra Financial Services Ltd. & Anr. v Hakim Uddin & Anr., [2026:GAU-AS:268]
Appearance:
Petitioners: Advocates U K Barman, H Ali, R Konwar, B Gogoi, J K Bhuyan
Respondents: Advocates S Hoque, R P Das
