Parties Who Retain Sale Consideration Cannot Challenge Lok Adalat Award: Telangana HC

Hyderabad: The Telangana High Court has dismissed a writ petition filed by the wife and daughter of a deceased power of attorney holder challenging a Lok Adalat Award that recorded a compromise for execution of a registered sale deed, holding that the petitioners, having received and retained the sale consideration, could not allege fraud, and that neither a separate signed compromise memorandum nor pecuniary jurisdiction objections raised ten years later could invalidate the Award.

A Division Bench of Justice Moushumi Bhattacharya and Justice Renuka Yara, in a judgment authored by Justice Bhattacharya, was hearing W.P.No.16457 of 2026 against the Award dated 30.03.2013 passed by the Lok Adalat at Kukatpally in PLC No.70 of 2012. The petitioners had not been parties before the Lok Adalat. They are the wife and daughter of late M. Ganga Raju, who was a respondent there and died on 27.09.2014.

The Award recorded that the parties compromised a dispute over execution of a registered sale deed based on an Agreement of Sale-cum-General Power of Attorney dated 31.10.2011, concerning four acres in Sy.No.66/2 at Raidurg Nava Khalsa Village, Serilingampally Mandal. The total consideration was Rs.1 crore, of which Rs.85 lakh had been paid as earnest money. Ganga Raju and others agreed to execute the sale deed within two months, with the buyer paying the balance Rs.15 lakh and bearing stamp duty and registration charges.

The petitioners challenged the Award on three grounds: that it was vitiated by fraud, that it contained no separate signed compromise and bore only one unidentified signature, and that the Lok Adalat lacked pecuniary jurisdiction under the Legal Services Authorities Act, 1987. Their earlier writ was disposed of in 2024 with the remedy being a civil suit, and their suit alleging fraud was rejected on 05.03.2026, with the appeal rejected on 28.04.2026, before this writ was filed.

On fraud, the Court reiterated that fraud must be pleaded with full particulars, namely the who, what, where, when and how, and that mere use of the word "fraudulently" does not suffice. It held that a party who receives and retains consideration is precluded from challenging a Lok Adalat Award on the ground of fraud, relying on the Supreme Court's decisions in K. Srinivasappa v. Mallanna (2022 INSC 674) and Bhakti Vinaykumar Khatu v. Jayanti Bhaskar Shirsat. The petitioners had admittedly been paid Rs.30 lakh by cheques and had issued receipts describing the sums as "part sale consideration", while Ganga Raju had earlier received Rs.85 lakh.

The Court said it was impermissible to take advantage of a transaction and then deny its validity, and noted that none of the earlier Division Bench orders contained any finding of fraud.

On the single signature, the Court held that the presence of a GPA holder with power to sell is sufficient, citing the Supreme Court's order in Bhakti Vinaykumar Khatu, which treated the GPA holder's presence as the deemed presence of all parties. It noted that the petitioners' own suit described Ganga Raju as the absolute owner of the land under the 1998 agreement and power of attorney, and that their pleadings and written arguments admitted his signature on the Award. It distinguished K. Kalyani v. State Legal Services Authority, where the GPA holder lacked authority to alienate the property.

Turning to the requirement of a separate compromise, the Court examined Regulations 15 and 17 of the National Legal Services Authority (Lok Adalat) Regulations, 2009 and Sections 20(3) and 20(4) of the 1987 Act. It held that "the drawing up of a Lok Adalat Award is an administrative act" that puts the imprimatur of the forum on a settlement reached by the parties. There is no statutory requirement for a prior memorandum of settlement or for one to be annexed to the Award, and the settlement, signing and counter-signing may occur as one simultaneous event. The first three lines of the Award recorded that the dispute had been compromised and the Award was passed in terms of the settlement, which satisfied Section 20(4).

On pecuniary jurisdiction, the Court held that the petitioners' reliance on Section 22C was misplaced, because that provision governs Permanent Lok Adalats, which are fundamentally different from Lok Adalats under Section 19. It noted that a Lok Adalat can only pass an Award based on compromise or settlement, citing Canara Bank v. G.S. Jayarama (2022) 7 SCC 776 and High Court rulings that a Section 19 Lok Adalat has no pecuniary limitation.

More significantly, the objection had not been pleaded in the writ petition and was raised for the first time in the rejoinder dated 13.08.2026, after oral arguments concluded. The Court observed that "Objections to pecuniary jurisdiction must be pleaded at the very outset." It also noted that Section 21 of the Code of Civil Procedure bars such objections unless taken at the earliest opportunity, and that the petitioners had not claimed any failure of justice. The writ petition was filed ten years after the Award.

Concluding that the petition lacked statutory or factual grounds, the Court dismissed W.P.No.16457 of 2026 along with all connected applications, without costs. A belated impleadment application by a claimed protected tenant had been dismissed on 28.09.2026.

Appearances:

For the Petitioners: Mr. B. Mayur Reddy, Senior Counsel, representing Mr. Sanjay Kumar Agarwal, Counsel on Record.

For Respondent No.1: Mr. Pusuluri Shashi Kiran, Standing Counsel for TSLSA.

For Respondent No.2: Mr. Vivek Reddy, Senior Counsel, representing Ms. Soubhagyavalli Vedantam, Counsel.

Case Title: Smt. M. Nagalakshmi and Another vs. The Chairman, Mandal Legal Services Committee, Cyberabad and Five Others, Writ Petition No. 16457 of 2026