The Gauhati High Court made a significant ruling recently. It clarified that lawyers alone cannot settle cases in Lok Adalats without their clients present. The court specifically quashed a settlement order from September 2024 because no authorized company representative attended the proceedings.
Court Questions Finality of Lok Adalat Award
Justice Sanjay Kumar Medhi heard an appeal from Mahindra and Mahindra Financial Services Ltd. The company challenged a National Lok Adalat order from September 2024. Their lawyer had attended without any company officer present. The lawyer allegedly made concessions without proper written authority from the company.
The high court examined the case carefully. It found no written authority letter existed. This letter would have permitted the lawyer to sign or enter into a settlement on the company's behalf. More importantly, no authorized representative appeared before the Lok Adalat when the settlement order passed.
Legal Requirements for Valid Settlements
The court referenced the Legal Services Authorities Act. It emphasized that settlements require parties' presence. For companies, this means an authorized representative must attend. The court stated clearly that lawyers alone do not satisfy this requirement.
"This court has not come across any such authority letter," Justice Medhi noted. "The requirement of the Act is for arriving at a settlement by the parties, which implicitly requires the presence of the parties."
He further explained that for companies, only authorized representatives can enter settlements. The court found no evidence this happened in this particular case.
Final Nature of Lok Adalat Awards
The court acknowledged that Lok Adalat awards are typically final. Section 21 of the Legal Services Authorities Act makes them binding on all parties. No appeals should normally follow such awards.
However, Justice Medhi identified a critical problem here. The settlement lacked proper authorization. This absence violated the Act's fundamental objectives. The Act aims to bring disputes to final settlement through parties' free consent.
Arguments from Both Sides
Company advocate J K Bhuyan presented strong arguments. He claimed the September 2024 settlement could not qualify under the Legal Services Authorities Act. No authorized officer attended the Lok Adalat. The lawyer made arguments beyond client instructions.
Bhuyan argued the settlement defeated the Act's entire essence. It happened without the parties' presence. Therefore, the high court should interfere with the order.
Opposing advocate S Hoque admitted no company officer was present. However, he claimed their lawyer had appropriate instructions. These instructions came through WhatsApp messages displayed during proceedings. Hoque maintained the September 2024 order contained no illegality.
Court's Decision and Directions
The Gauhati High Court reached a clear conclusion. It found no alternative but to interfere with the National Lok Adalat order. The settlement lacked proper authorization from the company.
The court made specific observations about this case:
- The settlement at the National Lok Adalat was final in nature
- The Legal Services Authorities Act requires parties' presence and free consent
- No authority letter existed for the lawyer regarding this settlement
- For companies, authorized representatives must enter settlements
- No such authority existed in this particular case
The court also directed the Assam State Consumer Disputes Redressal Commission. It should consider and dispose of the appeal on its own merits quickly.
Background of the Case
This matter originated from an appeal before the State Consumer Disputes Redressal Commission. The company challenged an ex parte order from a district consumer forum. That order directed payment to another party.
The appeal came before the National Lok Adalat in September 2024. The settlement order passed without any authorized company officer present. The company argued their counsel made concessions without proper authority.
This ruling establishes important precedent. It reinforces that Lok Adalat settlements require proper party representation. Companies cannot rely solely on lawyers without explicit authorization.
