HC upholds Lok Adalat award in cheque bounce case, dismisses plea

29/04/2026

SRINAGAR, Apr 28: The Jammu & Kashmir and Ladakh High Court has upheld a Lok Adalat award in a cheque dishonour case, ruling that a settlement voluntarily entered into by parties is final, binding and enforceable as a civil decree.
Dismissing a petition filed by Riyaz Ahmad Wani, Justice Wasim Sadiq Nargal held that no interference was warranted under Article 227 of the Constitution as the petitioner failed to establish any illegality, coercion or jurisdictional error in the award.
The case arose from a complaint under Section 138 of the Negotiable Instruments Act filed by Abdul Hamid Dar after two cheques of ?50,000 each issued by the petitioner were dishonoured due to insufficient funds.
During proceedings before the trial court, the matter was referred to Lok Adalat where the parties reached a settlement on March 8, 2025. The petitioner agreed to pay ?3.8 lakh in full and final settlement within a stipulated time.
However, upon failure to comply with the terms, execution proceedings were initiated, prompting the petitioner to challenge the Lok Adalat award before the High Court.
Rejecting the plea, the court observed that an award passed on the basis of a voluntary settlement attains finality under Section 21 of the Legal Services Authorities Act and cannot be lightly interfered with.
The court noted that the petitioner had actively participated in the proceedings, acknowledged liability, and consciously agreed to the settlement, and therefore could not later resile from the same merely due to non-compliance.
Addressing the contention that the award contained penal clauses, including imprisonment and enhanced payment upon default, the court clarified that Lok Adalats do not exercise criminal jurisdiction. It held that such stipulations are part of mutually agreed settlement terms and their enforcement is governed by civil execution proceedings in accordance with law.
The bench further ruled that absence of a specific challenge to the execution proceedings rendered the petition legally untenable, adding that the plea lacked bona fides and appeared to be an attempt to delay compliance.
Emphasising the objective of Lok Adalats, the court observed that they are meant to provide speedy, cost-effective dispute resolution through voluntary settlements and warned against the growing tendency of parties to challenge such awards after consenting to them.
"The sanctity of settlements must be preserved to ensure credibility of the alternative dispute resolution mechanism," the court said while dismissing the petition as devoid of merit.

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