MAHINDRA AND MAHINDRA FINANCIAL SERVICES LTD. & ANR. V HAKIM UDDIN & ANR [2026:GAU-AS:268]:

DATE: 08/01/2026

COURT: High Court of Guahati

BENCH: Justice Sanjay Kumar Medhi

FACTS:

The present case arose from an appeal pending before the Assam State Consumer Disputes Redressal Commission, being FA No. 76/2018, which challenged an ex parte order passed by the District Consumer Forum, Goalpara, in CP Case No. 02/2017. By that ex parte order, the present petitioners were directed to pay a certain amount to respondent no. 1. While the appeal was pending, it was taken up during the National Lok Adalat held on 14.09.2024, where a purported settlement was recorded and the appeal was disposed of accordingly.

The petitioners challenged the Lok Adalat order by filing a writ petition under Article 226 of the Constitution of India. Their principal grievance was that no authorised officer or representative of the petitioner company was present before the National Lok Adalat. It was contended that the counsel appearing on their behalf made concessions and agreed to a settlement without any written authority or instructions to do so. According to the petitioners, such a settlement, allegedly arrived at only through counsel and without the parties’ presence or consent, defeated the very purpose of the Legal Services Authorities Act, 1987

ISSUES:

The primary issue before the High Court was whether a valid and binding settlement could be arrived at in a National Lok Adalat in the absence of one of the parties, solely on the basis of statements or concessions made by the counsel, without any written authorisation or express consent from the concerned party.

JUDGEMENT WITH REASONING:

The High Court allowed the writ petition and set aside the order dated 14.09.2024 passed in the National Lok Adalat in FA No. 76/2018. It directed that the appeal be restored and decided by the Assam State Consumer Disputes Redressal Commission on its own merits. The Court further instructed the Commission to ensure expeditious disposal of the appeal, noting that it had been pending since 2018.

The Court acknowledged that, under Section 21 of the Legal Services Authorities Act, 1987, an award passed by a Lok Adalat is final and binding, and ordinarily not subject to challenge. However, relying on settled Supreme Court jurisprudence, including State of Punjab v. Jalour Singh and Bharvagi Constructions v. Kothakapu Muthyam Reddy, the Court held that such finality does not bar the High Court’s writ jurisdiction under Article 226, albeit on limited grounds. One such ground is the absence of a genuine settlement arrived at with the free consent of the parties.

On examining the records of the Consumer Commission, the Court found no written authority empowering the petitioners’ counsel to enter into or sign a compromise on their behalf. The Court emphasised that the very objective of the Legal Services Authorities Act is consensual dispute resolution, which necessarily requires the presence and free consent of the parties themselves. In the case of a company, this consent must come through a duly authorised representative. Since no such authorisation or participation was evident, the purported settlement could not be treated as valid in law, warranting interference with the Lok Adalat order.

ANALYSIS:

This decision reinforces the foundational principle that Lok Adalats function on the basis of voluntary, informed, and consensual settlement between the parties to a dispute. While the Legal Services Authorities Act, 1987 accords finality and binding force to Lok Adalat awards, the judgment makes it clear that such finality is conditional upon the existence of a lawful and genuine settlement. The Court’s intervention highlights that a settlement cannot be presumed merely because counsel was present or concessions were recorded. Particularly in cases involving corporate entities, the requirement of express authorisation assumes critical importance, as companies can act only through duly empowered representatives. Allowing counsel to bind a party without written authority would undermine procedural fairness and could expose litigants to unintended liabilities.

The ruling also strikes a careful balance between respecting the efficiency-driven objectives of Lok Adalats and safeguarding constitutional remedies. By relying on Supreme Court precedents, the High Court affirmed that writ jurisdiction under Article 226 remains available to correct jurisdictional errors or violations of consent, even against Lok Adalat awards. This ensures that alternative dispute resolution mechanisms do not become tools of coercion or procedural shortcuts at the cost of substantive justice. At the same time, the Court refrained from examining the merits of the consumer dispute itself, instead restoring the appeal for adjudication on merits, thereby preserving both the integrity of the Lok Adalat system and the rights of parties to a fair hearing.