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Issues: (i) Whether a Lok Adalat can determine an appeal by adjudicating the merits in the absence of a compromise or settlement between the parties; (ii) Whether an order passed by a Lok Adalat without consent or settlement is a valid award and can be treated as final, leaving the aggrieved party to challenge it only under Article 227.
Issue (i): Whether a Lok Adalat can determine an appeal by adjudicating the merits in the absence of a compromise or settlement between the parties
Analysis: The statutory scheme of Sections 19 and 20 of the Legal Services Authorities Act, 1987 makes Lok Adalats conciliatory bodies. Their role is to secure a compromise or settlement and not to exercise adjudicatory power. Where no compromise is reached, the matter must be returned to the court for disposal in accordance with law. An order based on the Lok Adalat's own view of what is just and reasonable, without consensus of the parties, is beyond its authority.
Conclusion: A Lok Adalat cannot decide the merits of an appeal in the absence of a compromise or settlement; such adjudication is outside its jurisdiction.
Issue (ii): Whether an order passed by a Lok Adalat without consent or settlement is a valid award and can be treated as final, leaving the aggrieved party to challenge it only under Article 227
Analysis: An award of a Lok Adalat acquires finality only when it embodies a settlement signed by the parties. If the order merely records an enhanced liability without any compromise, it is not an award in the eye of law and does not finally dispose of the pending appeal. In such a situation, the proper course is for the High Court to hear the appeal on merits, and a challenge under Article 227 is not the exclusive remedy.
Conclusion: An order passed without settlement is not a valid Lok Adalat award and cannot be treated as final; the High Court must decide the pending appeal on merits.
Final Conclusion: The impugned Lok Adalat order and the High Court orders were quashed, and the appeal was restored for decision on merits in accordance with law.
Ratio Decidendi: A Lok Adalat has only a conciliatory jurisdiction, and an order is binding and final only when it records a lawful compromise or settlement between the parties; an adjudicatory order passed without settlement is without jurisdiction and void.
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