Writ jurisdiction permits third-party challenges to Lok Adalat awards on grounds of fraud, collusion, or misrepresentation.

The 1st Petitioner is a minor whose father, Bhairu Shinde, died in a road traffic accident on 09-03-2019.

Following his death, two separate claim petitions were filed: MVC No. 2324/2019 by the paternal grandmother (2nd Petitioner) and MVC No. 1567/2020 by the maternal grandmother (1st Respondent).

Despite the subsistence of the first petition, the 1st Respondent entered into a compromise with the insurance companies (Respondents 3 and 5) before the Lok Adalat in MVC No. 1567/2020 for a sum of ₹12,00,000.

Consequently, the first claim petition (MVC No. 2324/2019) was dismissed as unnecessary.

The Petitioners challenged the Lok Adalat award and the dismissal of the original claim, alleging that the 1st Respondent was not the legal guardian, the settlement was collusive, and the compensation was grossly inadequate.

1. Whether the award of the Lok Adalat requires to be set aside?

2. Whether the compensation to be payable to the 1st petitioner, a minor child, is to be modified in accordance with law?

The court primarily applied the principles governing the finality of Lok Adalat awards under the Legal Services Authorities Act, 1987, as interpreted in State of Punjab v. Jalour Singh and Bhargavi Constructions v. Kothakapu Muthyam Reddy, which establish that an award can only be challenged via Articles 226 or 227 of the Constitution on limited grounds such as fraud or collusion.

Regarding the quantum of compensation, the court relied on the Constitution Bench decision in National Insurance Company Limited v. Pranay Sethi, which standardized the calculation for future prospects (40% for deceased under 40 years) and conventional heads.

It further applied Magma General Insurance Company Limited v. Nanu Ram regarding the award of parental consortium for minor children.

Regarding Issue 1, the court determined that while Lok Adalat awards are generally binding, they may be set aside in extraordinary circumstances involving fraud, misrepresentation, or collusion.

The court found that the 1st Respondent settled the matter for ₹12,00,000 without a detailed breakdown and while a prior claim petition by the paternal grandmother was pending; this settlement occurred without hearing the original claimant.

The court characterized this as a deliberate attempt to settle for a lower amount, failing the requirement that compensation must be "just and proper".

Regarding Issue 2, the court found the settlement amount inadequate. Using the 2019 notional income of ₹14,000 per month (per the High Court Legal Services Authority chart), the court added 40% for future prospects (₹5,600), deducted 1/3rd for personal expenses, and applied a multiplier of 16 based on the deceased's age of 31.

This resulted in a total "just compensation" of ₹25,78,864, significantly higher than the Lok Adalat award.

It allowed the Writ Petition, quashing the Lok Adalat award in MVC No. 1567/2020. It further allowed the MFA, setting aside the dismissal of the original claim and determining the final compensation at ₹25,78,864 with 6% interest per annum. The court directed the insurance companies to pay the balance of ₹13,78,864 and ordered the entire compensation amount to be placed in a fixed deposit in the minor’s name until she attains majority, with interest to be utilized for her development by her mother or grandmother.