In a significant procedural challenge touching the very foundation of Lok Adalat settlements, the Gauhati High Court stepped in to scrutinize whether a compromise recorded during a National Lok Adalat can stand when one party was absent and only its counsel was present, raising serious concerns about consent, authority, and the integrity of alternative dispute resolution mechanisms. The case arose from a consumer dispute appeal where a settlement was shown to have been reached, even though no authorised representative of the petitioning company was physically present before the Lok Adalat.
The controversy began when an appeal pending since 2018 before the Assam State Consumer Disputes Redressal Commission, filed against an ex parte consumer forum order directing payment, was taken up during a National Lok Adalat held on 14 September 2024. Counsel for the petitioners argued before the High Court that while a settlement was purportedly recorded that day, the company was neither represented by any authorised officer nor had it given written authority to its lawyer to enter into a compromise.
The petitioners alleged that the lawyer made concessions beyond instructions, thereby defeating the very object of consensual settlement under the Legal Services Authorities Act, 1987. The respondent, however, countered that the counsel acted on instructions conveyed through WhatsApp messages and that liability had otherwise been admitted on record.
Examining the issue, the High Court zeroed in on a fundamental requirement under the 1987 Act, free and informed consent of the parties. The Bench underscored that while Lok Adalat awards are ordinarily final and binding under Section 21 of the Act, this finality does not bar judicial review under Article 226 on limited grounds. Strikingly, after calling for and perusing the Commission’s records, the Court found no written authority empowering the counsel to sign or consent on behalf of the company.
Emphasising the statutory scheme, the Court observed that “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.” It further noted that, in the case of a company, such consent must come through a duly authorised representative, something that was “apparently not done in the instant case.”
Consequently, the High Court interfered with the Lok Adalat order dated 14.09.2024, set it aside, and directed the Consumer Commission to hear and decide the appeal on merits expeditiously.
Case Title: Mahindra & Mahindra Financial Services Ltd. and ors. vs. Hakim Uddin & and ors .
Case No.: WP(C)/4029/2025
Coram: Hon’ble MR. Justice Sanjay Kumar Medhi
Advocate for the Petitioner: Adv. JK Bhuyan Adv. U K Barman, Adv H Ali, Adv. R Konwar, Adv B Gogoi
Advocate for the Respondent: Adv S. Hoque, Adv. R P Das,
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