Settling Cases in Lok Adalat: What You Should Know

What is a Lok Adalat and what does it decide?

A Lok Adalat is a forum set up under the Legal Services Authorities Act 1987 to settle disputes by compromise. It is organised by the legal services authorities: the National Legal Services Authority (NALSA), the Delhi State Legal Services Authority and the District Legal Services Authorities in each judicial district, the legal services committees of the High Courts and the Supreme Court, and in UP, the DLSAs at Gautam Buddh Nagar and Ghaziabad. A bench usually has a serving or retired judicial officer and one or two other members, such as an advocate or a social worker.

The important thing to understand is that an ordinary Lok Adalat does not decide who is right. It has no power to adjudicate. Its job is to help the parties reach a compromise, guided by principles of justice, equity and fair play, and to record the compromise as an award. If the parties do not agree, the Lok Adalat cannot impose a result. The Supreme Court has said in clear terms that an award passed without a genuine settlement is not valid.

Once the parties agree and sign, though, the award is powerful. Section 21 makes it a decree of a civil court, or an order of the court concerned, final and binding on all parties, with no appeal to any court. That combination, voluntary on the way in and binding on the way out, is what makes a Lok Adalat both attractive and risky. You should go in willing to compromise, and you should read every line before you sign.

Which cases can be settled in a Lok Adalat?

Almost any civil dispute, and criminal cases involving compoundable offences. Section 19(5) gives a Lok Adalat jurisdiction over any case pending before any court, and over any matter within a court's jurisdiction that has not yet been filed. The only exclusion is a case relating to an offence that is not compoundable under any law. So a cheque bounce case under section 138 of the Negotiable Instruments Act, which is compoundable, can be settled; a cheating case under section 318 of the BNS can be settled to the extent the offence is compoundable under the BNSS; but a murder, rape or dowry death case cannot.

In practice, the cases taken up at National Lok Adalats in Delhi include cheque bounce complaints, motor accident claims, bank recovery suits and pre-litigation bank matters, electricity and water bill disputes (other than theft cases), labour disputes, family disputes such as maintenance and custody arrangements, civil suits for recovery, rent, injunction and partition, revenue matters, compoundable criminal offences, and traffic challans. Consumer commissions and tribunals such as the Debts Recovery Tribunal also hold Lok Adalat sittings for their own pending cases.

Some things need care. A Lok Adalat can record terms on which a couple settles their disputes, but a divorce decree itself still has to come from the family court under the law that governs the marriage, so matrimonial cases are usually listed for settlement of disputes other than the divorce. Our post on mediation in divorce cases in Delhi explains how family courts handle settlements.

Common disputes and whether a Lok Adalat can settle them

General guidance. Whether your case is listed depends on the court and the legal services authority.

National Lok Adalat, regular Lok Adalat and Permanent Lok Adalat: the differences

• National Lok Adalat. Held on fixed Saturdays across the country on dates NALSA announces in its annual calendar, usually several times a year. Courts list thousands of pending cases for that day, and banks and other institutions send pre-litigation notices for it. In Delhi, benches sit in all district court complexes and at the Delhi High Court.
• Regular or continuous Lok Adalats. Legal services authorities also hold Lok Adalats on other days, and some districts run them regularly for particular categories such as motor accident claims or family matters.
• Permanent Lok Adalat for public utility services. Under Chapter VIA of the Act, permanent bodies deal with disputes about transport, postal and telephone services, power and water supply, sanitation, hospitals, insurance, banking, education and housing and real estate, up to a value of ₹1 crore. Unlike an ordinary Lok Adalat, if conciliation fails, a Permanent Lok Adalat can decide the dispute on merits, and that award is also final.
• e-Lok Adalats. Several authorities hold Lok Adalats online or in hybrid form, particularly for pre-litigation and traffic matters. Check the notice you receive for the mode of appearance.

How to get a case into a Lok Adalat

1. If your case is already pending

   Apply to the court where the case is pending to refer it to the Lok Adalat, either jointly with the other side or on your own application. On one party's application, the court refers it if it is satisfied there is a chance of settlement, after hearing the other side. Courts also refer cases on their own before National Lok Adalats.

2. If no case has been filed yet

   Apply to the District Legal Services Authority for a pre-litigation reference. The authority sends notice to the other side to appear. If both appear and agree, an award is passed; if not, you are free to go to court.

3. If you have received a notice

   Read it to see which case or claim it relates to, the date, the venue and the bench number. Banks, finance companies and utilities often send these. You are not obliged to agree to anything, but attending gives you a chance to settle on better terms than a later suit or recovery proceeding.

4. Prepare your figures

   Work out what is actually due, what you can pay or accept, and over what period. Bring proof of payments already made and any documents supporting a reduction.

5. Attend on the date

   Go early, find your bench, and check that your case is in the list. If you are represented by an advocate, you should still attend, because the settlement needs your consent and signature.

6. Negotiate and record the terms

   The bench hears both sides and encourages a settlement. If you agree, the terms are written into the award and signed by the parties and the members of the bench.

7. Collect the award

   Get a copy of the signed award and, for a pending case, an order or certificate for refund of court fee. Keep it safely with your payment records.

What to carry to a Lok Adalat

What happens on the day of the Lok Adalat?

On a National Lok Adalat day, the court complex is crowded and the benches move fast. Each bench has a list of cases. When your case is called, the members ask both sides what they want and whether there is room for a settlement. In a cheque bounce case, the conversation is usually about the amount and the instalments. In a bank matter, the bank officer typically arrives with an approved settlement figure and a limited room to move. In a motor accident claim, the insurer's representative offers a compensation figure.

If the parties agree, the bench writes up the terms, often on a printed form with blanks for the amount, the schedule and the consequences of default. This is the moment to slow down. Make sure the amount, the dates, the mode of payment, what happens on default and which cases are being settled are written exactly as agreed. Ask for corrections before you sign. Once signed by the parties and the bench, the award is final.

If you do not agree, say so. There is no penalty for not settling. In a pending case, the record goes back to the court and the case proceeds from the stage at which it was referred. In a pre-litigation matter, you are free to file or defend a case in court. Courts do not treat a failed Lok Adalat as a mark against either side.

The provisions that govern Lok Adalats

Is a Lok Adalat award final? Can you appeal against it?

It is final, and there is no appeal. Section 21(2) says so expressly. You cannot later file an appeal, a revision or a fresh suit on the same dispute because you have second thoughts about the amount. This is the main reason to take the decision seriously on the day.

The only recognised remedy is a writ petition before the High Court under Article 226 or 227 of the Constitution, and it is available on narrow grounds: that there was no real settlement, that a party's consent was obtained by fraud or misrepresentation, that the person who signed had no authority to do so, or that the award records terms different from those agreed. The Supreme Court has held that a civil suit to set aside a Lok Adalat award is not the proper course; the writ jurisdiction is. Even there, the High Court will not reconsider whether the terms were fair, only whether there was a genuine and lawful compromise.

So if something is wrong on the face of the award, raise it immediately, and if you believe your consent was not real, act quickly. Delay weakens a writ petition, and a party who has accepted payment under the award will find it hard to challenge it later.

What if the other side does not pay after the Lok Adalat settlement?

You execute the award like a decree. Because section 21 makes the award a decree of a civil court, the party entitled to payment files an execution petition before the civil court with jurisdiction, and the court enforces it through attachment of bank accounts, property and salary under Order 21 of the CPC. You do not need to prove the original claim again. The process is similar to executing any money decree, and our post on enforcing an arbitral award as a decree explains how execution works in practice.

The default clause matters a great deal. A well-drafted award says what happens on default: for example, that the whole balance becomes payable at once, with interest, or that a larger agreed figure becomes recoverable. Without such a clause, you can still execute for the unpaid instalments, but the pressure that a default clause creates is lost. Read the clause before signing, and ask for one if the form has none.

When Advocate B.K. Singh is shown an unpaid Lok Adalat settlement, the first thing he checks is exactly how the award was recorded: whether the original case was disposed of on the award, or kept pending until payment, and what the default clause says. That decides whether the remedy is execution, revival of the case, or both.

Settling a cheque bounce case in Lok Adalat

Cheque bounce cases are among the most common matters at National Lok Adalats, because the offence is compoundable under section 147 of the Negotiable Instruments Act and both sides usually want the money question resolved. For the complainant, settlement brings money sooner than a conviction would. For the accused, it ends the risk of a sentence of up to two years and compensation of up to twice the cheque amount.

How the settlement is recorded deserves attention. Where the criminal court refers a section 138 complaint and the Lok Adalat passes an award, the Supreme Court has held that the award is a deemed decree and can be executed as a civil decree. In practice, some settlements dispose of the complaint on the award, and others record the terms and send the matter back so that the case is compounded once payment is complete. Know which one you are signing. A complainant usually prefers the second where large instalments are spread over months, while an accused prefers the first.

Our post on settling and compounding cheque bounce cases covers compounding at different stages, including the costs that courts impose when settlement happens late. For help with a cheque case generally, see our page on cheque bounce cases.

Received a pre-litigation Lok Adalat notice from a bank?

Banks and finance companies send pre-litigation notices for National Lok Adalats to borrowers in default on personal loans, credit cards, vehicle loans and small business loans. The notice is issued by the legal services authority on the bank's request, but it is not a court summons in a case against you, and you will not be convicted or decreed in your absence. It is an invitation to settle.

It is often worth attending. Banks usually come with sanctioned settlement figures that are lower than the full outstanding, and a settlement recorded as a Lok Adalat award gives you certainty that the account is closed on those terms. Before agreeing, ask for a full statement of account, check whether the debt is within limitation, and make sure the award records that the payment is in full and final settlement of the account and that the bank will issue a no-dues certificate and update the credit bureaus.

Do not agree to a schedule you cannot keep. If you default on a Lok Adalat award, the bank can execute it as a decree, and you lose the benefit of the reduced figure if the award says so. Our posts on one-time settlement of bank loans and on credit card and personal loan default explain the other routes banks use.

Do you get the court fee back?

Yes, when a pending case is settled. Section 21(1) provides that where a case referred by a court is settled in the Lok Adalat, the court fee paid in that case is refunded in the manner provided under the Court-fees Act 1870. In a recovery suit where significant ad valorem court fee was paid on the plaint, this is real money.

The refund is not automatic in every court. Usually, the award or the court's order records that the court fee is to be refunded, and the plaintiff then applies for a certificate and follows the refund process. Ask the bench to record the refund in the award, and follow it up with the court registry soon afterwards, because delays in claiming can complicate the refund.

Mistakes people make in Lok Adalat settlements

• Signing a printed form without reading it. The amount, the instalment dates and the default clause are often filled in by hand in a hurry. Check every blank before you sign.
• Settling one case and forgetting the others. If there are cross-cases, counter-claims or a parallel civil suit between the same parties, settle them together or say clearly in the award what happens to them.
• No default clause. Without one, a party who stops paying faces only execution for the unpaid sums, and the pressure to keep paying weakens.
• Agreeing to instalments that cannot be met. A default after a Lok Adalat award can leave you worse off than before, with no appeal.
• Sending someone without authority. A company representative without a written authority may be unable to sign, or may later be said to have signed without authority.
• Not checking the other side's authority. If a bank officer or company representative signs, make sure the authority is shown or recorded.
• Leaving without a copy. Get the signed award, or at least note the bench and serial number and collect it from the authority promptly.

When is a Lok Adalat settlement not the right choice?

When you need a decision rather than a compromise. If your claim is strong, well documented and near final hearing, accepting a large discount in a Lok Adalat may leave money on the table. A Lok Adalat is also not the place to settle a question of principle, such as the validity of a title, the interpretation of a contract that will affect future dealings, or a declaration you need against third parties, because the award binds only the parties and decides nothing on the law.

It is also a poor choice when you are being pressed to agree under time pressure, without the documents or calculations in front of you. You are always free to say that you need time and ask for the case to be listed again, or to continue in court. Many cases that do not settle on National Lok Adalat day settle a few months later, on better-considered terms, in mediation or before the court itself.

Before you sign a Lok Adalat award

• The names of the parties and the case or account number are correct
• The total amount, each instalment and each due date are written in figures and words
• The mode of payment (demand draft, cheque, bank transfer) is stated
• There is a clear default clause saying what becomes payable if any instalment is missed
• All related cases between the parties are dealt with, or expressly left out
• For bank matters: full and final settlement, no-dues certificate and credit bureau update are recorded
• Court fee refund is recorded where a pending suit is being settled
• You have a signed copy, or know where and when to collect it

What to do this week

If you have a notice for a Lok Adalat, find the case or account it relates to, work out what is really owed, and decide the figure and schedule you can live with. If you have a pending case that you think could settle, ask the court to refer it before the next National Lok Adalat, or apply to the District Legal Services Authority for a pre-litigation reference.

A point Advocate B.K. Singh often makes to clients before a Lok Adalat is that the settlement is decided in the room, but its value is decided by the default clause. If you want an advocate to look at your case or notice before the sitting and help you work out the terms, the team at B.K. Singh & Associates can review the papers through our online enquiry. Our page on banking and insurance law covers bank disputes, and our post on the Mediation Act 2023 explains how court-annexed and private mediation now work alongside Lok Adalats.