A consensual Lok Adalat award may be set aside under Articles 226/227 only for proven fraud or misrepresentation.

The insurer challenged, under Article 227 of the Constitution, an award dated 13 December 2025 passed by the Lok Adalat, Ranipet, in Lok Adalat Case No.260 of 2025.

The claimant was the registered owner of the vehicle involved in the accident.

The insurer had initially been set ex parte in the motor accident claim proceedings; after the ex parte order was set aside, the matter was referred to the Lok Adalat.

The insurer participated in the settlement proceedings and consented to an award for Rs.7,30,000, including a clause requiring payment of interest at 7.5% per annum in case of default or delay.

The insurer subsequently contended that the policy did not cover the registered owner’s loss, that the personal accident cover was limited to Rs.2 lakhs and applicable only to the registered owner-cum-driver, and that the registered owner was not driving the vehicle at the time of the accident.

It alleged that the claimant had obtained the Lok Adalat award by fraud or suppression of material facts.

The claimant/respondent argued that the registered-owner status had been clearly disclosed in the claim petition and that the insurer had voluntarily participated in and consented to the settlement.

Whether the Lok Adalat award could be interfered with under Articles 226/227 of the Constitution on the ground that the claimant had committed fraud or suppressed material facts?

Whether the insurer could challenge its liability, based on the absence of statutory or contractual coverage for the registered owner, after voluntarily participating in and consenting to the Lok Adalat settlement?

Whether the principles applicable to a contested motor accident claim—namely, that an insurer is not ordinarily liable for the personal loss or bodily injury of the vehicle owner—could invalidate a consensual Lok Adalat award?

The Court applied Article 227 of the Constitution, holding that a Lok Adalat award may be challenged before the High Court through Articles 226/227, but such intervention is ordinarily available only where fraud or misrepresentation is pleaded and established, as held in Bhargavi Constructions v. Kothakapu Muthyam Reddy, (2019) 13 SCC 480.

On the merits of insurance liability, the Court relied on Dhanraj v. New India Assurance Co. Ltd., (2004) 8 SCC 553, Oriental Insurance Co. Ltd. v. Rajni Devi, (2008) 5 SCC 736, and New India Assurance Co. Ltd. v. Prabha Devi, (2013) 14 SCC 719, which establish that a compulsory motor insurance policy under Section 147 of the Motor Vehicles Act does not ordinarily cover the owner’s personal death, bodily injury, or personal loss, absent appropriate contractual coverage.

The Court also referred to M/s Tata AIG General Insurance Co. Ltd. v. Shanmugam, CMA No.1395 of 2021, decided on 19 August 2024, for the principle that an owner’s claim, even where personal accident cover exists, is not ordinarily maintainable before the Motor Accident Claims Tribunal as a third-party claim.

However, parties may voluntarily settle proceedings before a Lok Adalat by waiving technical and legal objections otherwise available in a contested adjudication.

The Court accepted that, as a general proposition, the insurer’s liability would not extend to the registered owner’s personal loss where the policy did not provide such coverage.

Nevertheless, the present matter involved a consensual Lok Adalat settlement rather than an award rendered after contested adjudication.

The insurer had notice of the proceedings, had obtained setting aside of the ex parte order, participated in the Lok Adalat proceedings, and consented to the agreed amount and default-interest clause.

The claimant’s status as registered owner was expressly disclosed in the claim petition; therefore, there was no concealment, fraud, or misrepresentation preventing the insurer from making an informed decision.

The insurer could have raised the maintainability and coverage objections before the Lok Adalat and refused to consent, but failed to do so.

Accordingly, the authorities concerning the insurer’s substantive liability in a contested claim did not justify setting aside the voluntary settlement.

Although the insurer’s legal objections might have been relevant in a contested proceeding, they could not be used to invalidate a consensual settlement before the Lok Adalat.

The Civil Revision Petition was therefore dismissed, with no order as to costs, and the connected Civil Miscellaneous Petition was closed.