SC: Lok Adalat Has No Jurisdiction to Settle Dispute on Merits When No Compromise Or Settlement Could Be Reached

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The SC concluded that Lok Adalat has no jurisdiction to decide the matter on merits Once it is determined that no compromise or settlement could be reached between the parties.

Facts of the Case 

A writ petition submitted to the Madhya Pradesh High Court was referred to the High Court’s Lok Adalat. After considering the merits of the writ petition, the Lok Adalat dismissed it. The High Court later dismissed the restoration application regarding restoring the main writ petition, contending that the order passed by the Lok Adalat was beyond the authority of its jurisdiction.

In its appeal, the Apex Court was asked whether the members of the Lok Adalat, held by the High Court, could enter into the merits of the writ petition and dismiss it on merits in the absence of any settlement between the parties?

Arguments Advanced 

It was contended by the appellants that if the matter is placed before the Lok Adalat with consent, the entire matter is now before the Lok Adalat and, therefore, the Lok Adalat has a right to dispose of the matter.

The respondents submitted that as per Section 20 sub-section (3) states that when a case is referred to a Lok Adalat under sub-section (1) or when a reference is made under sub-section (2), it shall proceed to dispose of the case or matter and reach a compromise or settlement between the parties. 

Further, Section 20 provides that when a Lok Adalat does not award a settlement or compromise because there is no compromise between the parties, the record of the case shall be returned to the court that received the reference under subsection (1) for disposal under law.

Observation Made by the Court 

Once it is determined that no compromise or settlement could be reached between the parties, the Supreme Court concluded that Lok Adalat has no jurisdiction to decide the matter on merits.

According to the bench of Justices MR Shah and AS Bopanna, the Lok Adalat’s role will be to determine and reach a compromise or settlement between the disputing parties. Upon failure of the settlement/compromise, the Lok Adalat must return the case to the Court from which the reference originated.

Court’s Order 

As a result of the foregoing provisions of the Legal Services Authorities Act, 1987, it is clear that the Lok Adalat is empowered only to determine and to reach a compromise or a settlement between disputing parties. If the parties could not come to any compromise or settlement, the Lok Adalat has to return the case to the court with which it was referred, for disposal of the case by that court. In any case, Lok Adalat has no authority to resolve a matter on merit once it is found that compromise or settlement cannot be reached.

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