Cannot retain sale consideration and later allege fraud to challenge Lok Adalat award: Telangana High Court

The Telangana High Court recently said that a litigant cannot claim that a Lok Adalat award was vitiated by fraud after accepting and retaining a substantial amount of the sale consideration [Smt. M Nagalakshmi and Another vs The Chairman, Mandal Legal Services Committee, Cyberabad and Five Others].

A bench of Justice Moushumi Bhattacharya and Justice Renuka Yara made the observation while dismissing a plea challenging a 2013 Lok Adalat award concerning a prime parcel of land in Raidurg.

The Court observed that a party who takes advantage of a transaction and enjoys its fruits is precluded from questioning its validity at a later stage.

"It is impermissible to take advantage of transaction and thereafter turn around to deny its validity. This would particularly hold true if the party fully enjoys one part of the contract and on near-completion of such enjoyment, questions the other part," the bench observed.

The dispute pertained to four acres of land in Raidurg Nava Khalsa village, of Ranga Reddy district.

In 2011, one M Ganga Raju, acting as an agreement of sale-cum-general power of attorney (ASGPA) holder, executed an agreement to sell the property for ₹1 crore. He received ₹85 lakh as advance.

Subsequently, in 2013, the Lok Adalat at Kukatpally recorded an award settling the matter, as per which the remaining balance of ₹15 lakh was to be paid at the time of sale deed registration.

Following Ganga Raju's demise in 2014, his wife and daughter received ₹30 lakh between April and September 2015. They acknowledged the payments as "part sale consideration".

However, after prolonged unsuccessful civil suits, the legal heirs approached the High Court under Article 226, claiming that the award was vitiated by fraud, lacked a separate signed settlement deed and violated pecuniary limits.

Rejecting the plea of fraud, the Court said that the allegation must be pleaded with material particulars. It underscored that retaining the sale consideration completely negated any allegation of fraud.

The Court also said that Legal Services Authorities Act, 1987 does not require the parties to execute a prior memorandum of settlement or a compromise before approaching the Lok Adalat.

"The petitioners have not shown any statutory infraction of the conditions of a valid Lok Adalat Award either under the 1987 Act or the 2009 Regulations. We have already held that the 1987 Act does not require all parties to execute a Memorandum of Settlement/Compromise prior to approaching the Lok Adalat," the Court said.

The Court also ruled that objections to pecuniary jurisdiction must be pleaded at the very outset.

"The present Writ Petition was filed 10 years after the impugned Award; the petitioners have not taken this objection to pecuniary jurisdiction of the Lok Adalat in the Writ Petition. The petitioners raised the objection for the first time in its Rejoinder on 13.08.2026 and after conclusion of oral arguments," it noted.

Senior counsel B Mayur Reddy appeared for the petitioners.

Senior Counsel Vivek Reddy represented other respondents.

Standing Counsel Pusuluri Shashi Kiran appeared for Mandal Legal Services Committee, Cyberabad

[Read Judgment]