Where can a Lok Adalat decree be challenged? Supreme Court answers

The Supreme Court recently held that a Lok Adalat decree cannot be challenged before an executing court and that the only remedy to assail such an award is through a writ petition before the High Court [Dilip Mehta vs. Rakesh Gupta & Ors.].

A Bench of Justices Vikram Nath and Sandeep Mehta made the observation while allowing an appeal filed by a property purchaser who alleged that a Lok Adalat decree affecting his land was obtained by fraud and behind his back.

The Court set aside concurrent orders of the Madhya Pradesh High Court, which had dismissed his writ petition and appeal on the ground that he had already filed objections before the executing court.

The case stemmed from a long property dispute in Jabalpur over land originally owned by one Siya Bai. In 2008, she executed a power of attorney in favour of a man named Virendra Patel. The following year, Patel entered into an agreement to sell the property to two others, Rakesh Gupta and Neeraj Jain. Later, Patel also sold the same property to another person, Ganga Prasad Kurariya, leading to multiple civil and criminal cases.

In 2016, after Siya Bai’s death, her husband, claiming to be her sole heir, sold the property for ₹4.2 crore to a real estate firm, M/s Rajul Builders, owned by the appellant, Dilip Mehta. He claimed that he was in lawful possession ever since.

However, Rakesh Gupta and Neeraj Jain later filed a suit for specific performance of their 2009 sale agreement against Patel alone, without impleading either Siya Bai’s heirs or the appellant. That suit was settled before a Lok Adalat in May 2022, where a decree was passed in their favour. On the strength of that decree, they executed a sale deed and began proceedings to take possession of the property through execution.

Mehta said he came to know of the Lok Adalat decree only when the police arrived to enforce possession warrants. He immediately filed objections before the executing court, claiming the decree was obtained by fraud. He also filed a writ petition before the Madhya Pradesh High Court challenging the award.

The single-judge dismissed the petition, holding that since Mehta had already filed objections in execution, he could pursue his remedy there. The Division Bench upheld that view.

Before the Supreme Court, Senior Advocate Siddharth Bhatnagar appearing for Mehta, argued that the execution court had no power to annul a Lok Adalat award and that the only proper forum to challenge such an award was under Articles 226 or 227 of the Constitution. He said the Lok Adalat decree was based on a fraudulent, unregistered and backdated agreement that was never acted upon.

Senior Advocate Ravindra Shrivastava, appearing for the respondents, contended that Mehta was a third party to the original proceedings and that the executing court could decide all questions of title and fraud under Order XXI of the Civil Procedure Code.

After taking note of the submissions, the Supreme Court disagreed with the High Court’s reasoning.

The top court clarified that the executing court’s powers are limited to enforcing a Lok Adalat decree - it cannot question or set aside the award itself.

“The role of the Executing Court is confined to giving effect to that award in terms of execution. It has no authority to annul or set aside the award itself, or the decree drawn in its terms, nor can it sit in judgment over the validity of the compromise on which the Lok Adalat proceeded,” the Court said.

It further held that filing objections before the executing court, when faced with imminent dispossession, could not be treated as an “alternative remedy” that barred writ jurisdiction.

“The form of the pleading cannot enlarge the jurisdiction of the Executing Court beyond what the Legal Services Authorities Act and the CPC permit, nor can it convert a limited execution forum into a court of appeal over a Lok Adalat award,” the bench said.

Therefore, the Court set aside the orders of both the single-judge and Division Bench and remanded the matter to the Madhya Pradesh High Court for fresh consideration of Mehta’s writ petition on merits.

To preserve the subject matter of the dispute, the bench directed that Mehta shall not be dispossessed of the property till the High Court finally decides the case. It also required him to withdraw his execution objections within four weeks.

“All questions, including the allegations of fraud and collusion, are left open to be considered by the High Court,” the Court said.

The appellant was represented by Bhatnagar along with advocates Siddharth R Gupta, Sankalp Kochar, Siddhant Kochar, Mrigank Prabhakar, Aman Agarwal, Uddaish Palya, Aditya Sidhra, Surbhi Saxena, Siddharth Sahu, Astha Singh and NR Shwetabh.

The respondents were represented by Shrivastava along with Senior Advocates Pallav Sishodiya and AK Sanghi assisted by advocates Abhijeet Shrivastava, Anshuman Shrivastava, Malik Arjun Khare, Shruti Verma, Ananya Sahu, Boudhik Garg, Shashank S Dwivedi, Atharva Joshi, Kavya Verma, Kunal Verma, Yugandhara Pawar Jha, Yasha Goyal, Swati Mishra, V Sridhar Reddy, Abhijit Sengupta, Hardeep and Deepak Bahl.

[Read Judgment]