Recently, the Jammu and Kashmir and Ladakh High Court made it crystal clear that settlements before Lok Adalats are not casual arrangements that parties can walk away from at will. In a cheque dishonour dispute, the Court refused to interfere with a settlement award, stressing that once parties voluntarily agree to resolve their dispute, they are bound by it, and any attempt to resile later strikes at the very foundation of alternative dispute resolution.
Brief Facts:
The dispute arose from cheque dishonour proceedings after two cheques issued by the accused were returned unpaid due to insufficient funds. The liability originated from a failed business transaction involving an advance payment, which was not fulfilled as agreed. The accused thereafter issued cheques to discharge the liability. During the proceedings before the Magistrate, the accused appeared and acknowledged the cheque amount, though he attempted to attribute the liability to his brother. The matter was subsequently referred to Lok Adalat after an undertaking regarding payment was recorded. Before the Lok Adalat, a settlement was reached wherein the accused agreed to pay a consolidated amount in full and final settlement within a stipulated period. However, upon failure to comply with the settlement terms, execution proceedings were initiated, prompting the accused to challenge the award before the High Court.
Contentions of the Petitioners :
The counsel for the Petitioner contended that the Lok Adalat award was illegal and beyond jurisdiction, arguing that it imposed penal consequences such as imprisonment and enhanced monetary liability, which are outside the scope of powers conferred upon a Lok Adalat. It was further argued that the settlement was not voluntary and was obtained under pressure without providing a proper opportunity to understand the terms, thereby vitiating consent. It was also submitted that the proceedings violated principles of natural justice, as the petitioner was denied a fair hearing. Additionally, the Petitioner argued that a criminal complaint had been improperly converted into civil liability through execution proceedings, and that the executing court acted mechanically by issuing coercive processes without following due procedure.
Contentions of the Respondents:
The Respondent’s position, as reflected from the record, was that the dispute had been amicably settled before the Lok Adalat with the consent of both parties, and the award merely recorded the agreed terms, thereby attaining the status of a binding civil decree. It was asserted that the Petitioner had voluntarily participated in the proceedings and undertaken to pay the settled amount, and therefore could not be permitted to challenge the award at a later stage. The Respondent justified the initiation of execution proceedings on the ground that they were a natural consequence of non-compliance with the settlement. It was emphasized that allowing such challenges after settlement would defeat the object of Lok Adalats, which is to provide speedy and final resolution of disputes.
Observation of the Court :
The Court strongly reaffirmed the binding nature of Lok Adalat settlements and emphasized that once parties consciously enter into a compromise, they cannot later evade its consequences. It categorically observed that “Once a settlement has been voluntarily arrived at and an award has been passed in terms thereof, the same attains finality and becomes binding upon the parties, being executable as a decree of a civil court.”
Highlighting the limited scope of judicial interference, the Court held that “The grounds on which such an award can be interfered with… are extremely limited, namely absence of free consent, fraud, or jurisdictional error.”
Rejecting the argument that non-compliance could invalidate the award, the Court made it clear that “Mere subsequent failure… to adhere to the terms of settlement cannot be a ground to invalidate an otherwise lawful and binding Lok Adalat Award.”
On the issue of consent, the Court found no material to support allegations of coercion or lack of voluntariness and noted that the petitioner had actively participated in the proceedings and consciously agreed to the settlement. It further emphasized that a party cannot approbate and reprobate by accepting the benefit of settlement and later challenging its burden.
Addressing the argument regarding penal consequences, the Court clarified that Lok Adalats do not exercise criminal jurisdiction, but settlement terms may include deterrent clauses to secure compliance. It observed that such stipulations are civil in nature and do not render the award illegal.
The Court also made a broader institutional remark, cautioning against the growing trend of challenging Lok Adalat awards that “The very object behind the establishment of Lok Adalats… is defeated when such awards are routinely and indiscriminately brought under challenge.”
The decision of the Court :
The High Court upheld the Lok Adalat award and dismissed the petition as devoid of merit. It held that the petitioner, having voluntarily entered into the settlement and participated in the process without objection, was bound by its terms and could not subsequently challenge it due to non-compliance. The award was declared final, binding, and enforceable in accordance with law, and no interference was warranted under the Court’s supervisory jurisdiction.
Case Title: Riyaz Ahmad Wani vs Abdul Hamid Dar
Case No.: CM(M) No. 118/2026
Coram: Hon’ble Mr. Justice Wasim Sadiq Nargal
Advocate for the Appellant/Petitioner: Mr. Parvaiz Nazir, Advocate
Advocate for the Respondent: Not mentioned
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