Karnataka HC quashes Lok Adalat settlement over alleged impersonation, holds DLSA must give notice and cannot itself settle disputes without proper referral

Respondent No. 1, D.M. Sharadamma, instituted a pre-litigation case before the District Legal Services Authority, Chikkamagaluru, alleging that the petitioner and Respondent No. 2 had borrowed ₹4,28,000 and failed to repay it.

Notices were issued and, on 25 June 2015, the matter was posted to 6 July 2015 for reference to the Lok Adalat.

On an application by Respondent No. 1, the matter was allegedly preponed to 26 June 2015. On that date, an advocate claiming to represent the petitioner and Respondent No. 2 filed vakalaths and a joint memo agreeing to repayment of ₹4,28,000 within one year from 1 August 2015. The Authority acted upon the joint memo and allowed the petition.

The petitioner subsequently came to know of the proceedings only when execution proceedings were initiated. He alleged that he had neither engaged the advocate nor signed the vakalath or joint memo, and that another person had impersonated him and forged his signatures.

He also contended that the notice had not been personally served, but was shown as served on his “boy”.

The legal representatives of Respondent No. 1 defended the impugned order as a valid compromise and alleged that the writ petition was intended to avoid its consequences.

Whether the District Legal Services Authority could itself take cognizance of and settle a pre-litigation dispute, instead of merely referring it to a properly constituted Lok Adalat in accordance with the Legal Services Authorities Act, 1987.

Whether the impugned order was invalid for want of notice and reasonable opportunity of hearing to the petitioner before referral of the pre-litigation matter to the Lok Adalat.

Whether an alleged compromise based on disputed vakalath and signatures, coupled with allegations of impersonation and forgery, could sustain the impugned order.

The Court applied Sections 19 and 20 of the Legal Services Authorities Act, 1987. Section 19(5) confers jurisdiction on a Lok Adalat to determine and arrive at a compromise or settlement in pending cases or pre-litigation matters, while Section 20 prescribes the manner of reference.

A pre-litigation matter may be referred by the Legal Services Authority or Committee to the Lok Adalat only upon an application by a party and after giving the opposite party a reasonable opportunity of being heard.

Regulations 10 and 12 of the National Legal Services Authority (Lok Adalat) Regulations, 2009 similarly require proper reference, reasonable hearing, and obtaining each party’s version before referral.

The Court relied on H.V. Venkatesh v. Oriental Insurance Co. Ltd., ILR 2002 Kar 3666, for the proposition that reference requires consent or, where consent is absent, hearing and satisfaction regarding the possibility and appropriateness of settlement.

It also relied on State of Punjab v. Jalour Singh, (2008) 2 SCC 660, holding that a Lok Adalat performs conciliatory, not adjudicatory, functions and can make an award only on the basis of a compromise or settlement between the parties.

The Court further distinguished ordinary Lok Adalats from Permanent Lok Adalats under Chapter VI-A of the Act, noting that ordinary Lok Adalats do not possess adjudicatory powers.

The Court found that the Authority’s records did not disclose the statutory provision under which the matter was referred and, in substance, showed that the Authority itself had taken cognizance of and settled the dispute rather than referring it to a separately constituted Lok Adalat.

This procedure was contrary to Sections 19 and 20 of the Act and Regulations 10 and 12, because there was no clear proof that notice and a reasonable opportunity of hearing had been provided to the petitioner.

The Authority could not assume the functions of the Lok Adalat, and the order sheets maintained by the Authority could not substitute for proper proceedings before the Lok Adalat.

The allegations that the petitioner had not engaged the advocate, that his signatures had been forged, and that he had been impersonated further undermined the purported compromise.

Since a Lok Adalat’s award must rest upon a genuine compromise or settlement and cannot result from an adjudicatory determination, the impugned order was legally unsustainable.

The order dated 26 June 2015 passed by the District Legal Services Authority, Chikkamagaluru, in PLC No. 480/2015 was quashed.

The matter was remitted to the District Legal Services Authority.

The parties were directed to appear before the Authority on 29 August 2026 without further notice, and the Authority was directed to afford them an opportunity of hearing and, only after being satisfied that the matter was fit for settlement, refer it to the Lok Adalat strictly in accordance with law.