Consent Is the Foundation of Lok Adalat Proceedings — Gauhati High Court
The Gauhati High Court has clearly held that a settlement recorded in a National Lok Adalat is invalid if it is made without the presence of the concerned party and without written authorisation allowing the advocate to compromise. The Court stressed that consent is the foundation of Lok Adalat proceedings and cannot be assumed or implied.
Background of the Case
The case arose from a consumer complaint filed in 2017 before the District Consumer Disputes Redressal Forum at Goalpara. The District Forum passed an ex parte order against Mahindra & Mahindra Financial Services Ltd, directing payment to the complainant.
The finance company challenged this order before the Assam State Consumer Disputes Redressal Commission by filing an appeal in 2018. While the appeal was still pending, it was listed before a National Lok Adalat on 14 September 2024. On that date, the appeal was disposed of on the basis of a so-called settlement.
Challenge Before the High Court
The finance company approached the High Court under Article 226 of the Constitution. It argued that no authorised officer of the company was present during the Lok Adalat proceedings. It further submitted that the advocate who appeared had no written authority to enter into a settlement or make concessions on behalf of the company.
According to the company, any settlement recorded under such circumstances was not lawful and could not bind it.
Main Legal Issue
The Court examined a simple but important question:
“Can a Lok Adalat record a valid settlement when the party is absent and the advocate has no written authority to compromise?”
Law on Lok Adalat Settlements
The Court referred to Section 21 of the Legal Services Authorities Act, 1987, which states that a Lok Adalat award is final and has the force of a civil court decree. However, the Court clarified that this finality does not prevent the High Court from exercising its writ jurisdiction where the basic requirement of consent is missing.
The Court explained that Lok Adalats do not decide disputes like regular courts. They function only to record settlements voluntarily arrived at by the parties.
Role and Limits of an Advocate
The High Court made it clear that an advocate’s authority to represent a client in court does not automatically include the authority to settle a dispute. For a settlement, specific and written authorisation is required.
In this case, the Court called for and examined the original records of the Consumer Commission. It found that there was no authority letter permitting the advocate to settle the matter or sign a compromise on behalf of the company.
The Court rejected the argument that informal instructions or electronic messages could replace a proper written authorisation, especially when the party involved is a company.
Importance of Party Consent
The Court emphasised that the very purpose of the Legal Services Authorities Act is to promote voluntary and informed settlements. The presence and consent of the parties are not formalities but essential conditions.
If settlements are allowed without party participation or proper authorisation, Lok Adalats would lose their character as forums of consensual justice.
Decision of the Court
The High Court held that the settlement recorded on 14 September 2024 was legally unsustainable. It therefore set aside the Lok Adalat order.
The appeal pending before the Assam State Consumer Disputes Redressal Commission was restored and directed to be decided on its own merits. Since the appeal has been pending since 2018, the Commission was asked to dispose of it expeditiously.
Significance of the Ruling
This judgment sends a clear message that consent cannot be presumed in Lok Adalat proceedings. Advocates cannot bind parties to settlements without clear written authority. Courts and tribunals must ensure that settlements are genuine, voluntary, and properly authorised.
The ruling strengthens fairness in alternative dispute resolution and protects parties from unauthorised compromises.
Case Details
Case Title: Mahindra & Mahindra Financial Services Ltd. v. Hakim Uddin & Anr. WP(C) No. 4029 of 2025
Court: Gauhati High Court
Judge: Justice Sanjay Kumar Medhi