Court Rules No Separate Memorandum of Compromise Needed if Settlement Recorded in Award; Signature of Authorized General Power of Attorney Holder Sufficient; Pecuniary Limits Under Section 22C Not Applicable to Lok Adalat Under Section 19
In a significant judgment delivered on October 13, 2026, the Telangana High Court (Division Bench comprising Justices Moushumi Bhattacharya and Renuka Yara) dismissed a writ petition challenging a Lok Adalat Award dated March 30, 2013, concerning a property dispute in Cyberabad. The petitioners, Smt. M. Nagalakshmi and another, had sought to invalidate the Award passed by the Lok Adalat at Kukatpally, alleging procedural irregularities, fraud, and lack of pecuniary jurisdiction.
The dispute arose from an Agreement of Sale-cum-General Power of Attorney (ASGPA) executed on October 31, 2011, involving a land parcel measuring 4 acres at Raidurg Nava Khalsa Village, Serilingampally Mandal, Ranga Reddy District. Respondent No.2 had entered into an agreement with M. Ganga Raju, who held an irrevocable General Power of Attorney (GPA) from the original owners (respondent Nos.3 to 5). The respondent had paid Rs. 85 lakhs as earnest money and agreed to pay the balance Rs. 15 lakhs upon registration of the sale deed.
The Lok Adalat Award recorded a settlement wherein respondent Nos.3 to 5 and M. Ganga Raju agreed to execute a Registered Sale Deed in favor of respondent No.2 within two months, with the latter agreeing to pay the balance sale consideration and bear stamp duty and registration charges. The petitioners challenged the Award on three primary grounds:
- 1. The Award did not contain a separate memorandum of compromise signed by all parties.
- 2. Allegations of fraud concerning the settlement recorded in the Award.
- 3. The Lok Adalat lacked pecuniary jurisdiction to adjudicate the matter, as the subject matter exceeded Rs. 15 lakhs.
The High Court meticulously examined the facts and legal provisions. It observed that the Legal Services Authorities Act, 1987 ("the 1987 Act") and the National Legal Services Authority (Lok Adalat) Regulations, 2009 do not mandate a separate signed memorandum of compromise if the settlement is recorded in the Award itself, signed before the Lok Adalat by the parties, and countersigned by the members of the Lok Adalat. The drawing up of the Award is an administrative act incorporating the terms of the settlement arrived at by the parties.
Regarding the fraud allegation, the Court emphasized that fraud must be pleaded with full particulars specifying the who, what, where, when, and how. The petitioners had failed to do so. Importantly, both the petitioners and their predecessor had received and retained the entire sale consideration, issuing receipts acknowledging these payments as part of the sale consideration. The Court held that a party who accepts and retains benefits under a compromise cannot later challenge the Award on grounds of fraud.
On the question of signatures, the Court found that the presence and signature of M. Ganga Raju, acting as the authorized irrevocable GPA holder, was sufficient to constitute the deemed presence of all parties before the Lok Adalat. The petitioners themselves had admitted his signature and described him as the absolute owner in earlier proceedings, precluding them from disputing his authority later.
Addressing the pecuniary jurisdiction objection, the Court clarified that Section 22C of the 1987 Act applies to Permanent Lok Adalats (under Chapter VIA) and not to Lok Adalats constituted under Section 19 of the Act (under Chapter VI). Lok Adalats under Section 19 do not have pecuniary limits for resolving disputes based on compromise or settlement. Furthermore, objections to pecuniary jurisdiction must be raised at the earliest opportunity; here, the petitioners raised it belatedly after ten years, without showing any failure of justice.
The Court also noted that no statutory infraction under the 1987 Act or the 2009 Regulations was made out, and the writ petition lacked merit. The petitioners' contention that the Award was invalid due to lack of a separate signed compromise and a single signature was rejected. The petitioners were also disentitled from challenging the Award on grounds of fraud after having accepted and retained the consideration.
The Court dismissed the writ petition and all connected applications, refusing to allow the late impleadment of an additional party claiming to be a protected tenant, noting that such party could pursue separate pending proceedings.
This judgment reinforces the validity and finality of Lok Adalat Awards where compromise is duly recorded and signed before the forum, emphasizes the procedural safeguards against frivolous challenges based on alleged fraud or technical defects, and clarifies the scope of pecuniary jurisdiction for Lok Adalats under the Legal Services Authorities Act.
Bottom Line:
Legal Services Authorities Act, 1987 - Lok Adalat Award - Validity - Separate signed memorandum of compromise is not mandatory if settlement is recorded in the award itself and signed before Lok Adalat - Signature of duly authorised GPA holder is sufficient - Challenge on ground of fraud not maintainable where challengers received and retained sale consideration - Pecuniary limits under Section 22C apply to Permanent Lok Adalat and not to Lok Adalat under Section 19.
Statutory provision(s): Legal Services Authorities Act, 1987 Sections 19, 20, 21, 22C; Code of Civil Procedure, 1908 Section 21; National Legal Services Authority (Lok Adalat) Regulations, 2009 Regulations 15, 17
