‘Impracticable terms sow seeds for further disputes’
Parties, members accountable for lawful settlements
Mohinder Verma
JAMMU, Apr 28: In a significant judgment with far-reaching implications for alternative dispute resolution, the High Court of Jammu & Kashmir and Ladakh has underscored that the efficacy and credibility of Lok Adalat awards lie in their workability and enforceability, cautioning that impracticable and vague settlement terms defeat the very purpose of the mechanism and lead to further litigation.
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These observations were made by bench of Justice Wasim Sadiq Nargal while dismissing a petition filed by Riyaz Ahmad Wani challenging a Lok Adalat award dated March 8, 2025, passed in a cheque dishonour case under Section 138 of the Negotiable Instruments Act.
The Legal Services Authorities Act, 1987 envisages Lok Adalats as an efficacious mechanism of alternate dispute resolution, intended to foster amicable settlements, reduce adversarial litigation and consequently ease the mounting burden on regular courts, thereby conserving valuable judicial time, the High Court said.
“Instead of acting as an effective instrument for reducing pendency, Lok Adalats, on occasion, appear to have contributed to further litigation, thereby frustrating the very purpose for which they were conceived”, Justice Nargal said, adding “day in and day out, the High Court is coming across cases where parties seek to challenge awards passed by Lok Adalats. This growing tendency leads to the unnecessary invocation of the writ jurisdiction of this court and results in a waste of valuable judicial time, which ought to be devoted to genuine and deserving matters”.
“The very object behind the establishment of Lok Adalats, that is, to ensure expeditious, amicable and cost-effective resolution of disputes and to reduce the burden on regular courts, is defeated when such awards are routinely and indiscriminately brought under challenge”, the High Court said, adding “this leads to the moot question as to what has gone awry in the functioning of Lok Adalats so as to render their foundational objective, that is, amicable settlement and reduction of judicial burden, largely illusory”.
Stating that the parties are expected to approach the Lok Adalat with bona fides and a genuine intent to resolve their disputes, the High Court said, “equally, the members constituting the Lok Adalat are under a solemn duty to ensure that the settlement arrived at is voluntary, informed and lawful and not the result of any coercion, undue influence or misapprehension”.
Emphasising that Lok Adalats, while facilitating settlements and passing awards, must exercise due care to ensure that the terms and conditions incorporated therein are unambiguous, practicable and capable of effective enforcement, Justice Nargal said, “any stipulation that is inherently impracticable, or incapable of execution is bound to generate further disputes, thereby defeating the very object of settlement and giving rise to avoidable rounds of litigation”.
“The members of the Lok Adalat must, therefore, ensure that the terms embodied in the award are precise, realistic and capable of compliance within the framework of law. Directions which the parties cannot reasonably perform, or which are inherently incapable of enforcement, ought not to find place in the award. What is unenforceable in law should not be stipulated in the first instance”, the High Court further emphasised.
Mentioning that the efficacy and credibility of a Lok Adalat award lie in its workability and enforceability, the High Court suggested that the members should do well to confine the settlement to lawful, practicable and executable terms, so that the award achieves its intended purpose of bringing finality to the dispute, rather than engendering further litigation.
“It is, therefore, incumbent upon both the parties participating in the Lok Adalat proceedings and the members constituting the Lok Adalat to remain conscious of the nature and limits of the proceedings. While the parties must ensure that any settlement entered into is voluntary, lawful and capable of enforcement, the members constituting the Lok Adalat are equally obliged to confine themselves strictly to recording such settlement as arrived at, without superimposing any extraneous, coercive or legally impermissible conditions. Any deviation on either count not only renders the award susceptible to judicial scrutiny but also erodes the credibility and efficacy of the Lok Adalat mechanism as an effective forum for alternative dispute resolution”, Justice Nargal concluded.
Regarding the case in hand, the High Court said that the scope of interference under Articles 226 and 227 of the Constitution is extremely limited and can be invoked only on grounds such as absence of free consent, fraud, or jurisdictional error. It found that no such ground had been established in the present case.
Rejecting the plea that the default clause in the Lok Adalat award was illegal, the High Court clarified that while a Lok Adalat does not exercise adjudicatory or penal jurisdiction, this statutory limitation does not imply that parties are precluded from incorporating deterrent or default clauses within the terms of their settlement. It held that such stipulations are recognized incidents of a binding settlement and are enforceable in law.
Finding the petition devoid of merit, the High Court upheld the Lok Adalat award and allowed its execution to proceed in accordance with law.
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