Lok Adalat Settlement Must Be With Parties' Free Consent, Counsel Cannot Compromise Case Without Written Authority: Gauhati High Court
The Gauhati High Court, while considering the validity of a settlement recorded in a National Lok Adalat, held that settlement under the Legal Services Authorities Act, 1987 must be arrived at by the parties themselves with free consent, and that in the absence of written authority authorising counsel to sign a compromise, such settlement cannot be treated as valid.
Justice Sanjay Kumar Medhi, presiding over the case, observed, “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 further recorded, “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.”
The above ruling was made in a writ petition whereby the Assam State Consumer Disputes Redressal Commission was seized of an appeal, arising out of an ex parte order passed by the District Consumer Forum, Goalpara, directing the petitioners to pay a certain amount to the complainant.
The appeal was taken up in a National Lok Adalat, where a purported settlement was recorded. The petitioners challenged the Lok Adalat order by filing the present writ petition under Article 226 of the Constitution, contending that no authorised officer of the company was present and that their counsel had made concessions without authority.
The petitioners argued that the settlement could not be treated as one under the Act, 1987 as it was not arrived at between the parties themselves and defeated the very object of the Act.
The respondent, however, contended that although no officer was present, the counsel had adequate instructions, allegedly reflected through messages, and that liability had otherwise been admitted.
After examining the records requisitioned from the Commission, the Court held, “this Court has no other alternative but to interfere with the order passed in National Lok Adalat … which is accordingly done. The appeal is required to be considered and disposed of by the Commission on its own merits.”
The Court further observed that since the appeal was pending since 2018, steps should be taken by the Commission for expeditious disposal of the appeal in accordance with law. Accordingly, the writ petition was disposed of.
Case Title: Mahindra and Mahindra Financial Services Ltd & Anr v Hakim Uddin & Anr
LL Citation:
Case Number: WP(C) No. 4029 of 2025