The court emphasizes the necessity of authorized representation in corporate settlements, overturning a 2024 Lok Adalat decision.
In a significant judgment, the Gauhati High Court on January 8, 2026, invalidated a settlement reached in the National Lok Adalat involving Mahindra And Mahindra Financial Services Ltd and Hakim Uddin, citing the absence of an authorized representative from the corporate entity. The court held that the presence and free consent of the parties involved are crucial, especially for corporate entities, where an authorized representative must be present to validate any settlement agreement.
The case arose from a settlement reached in a National Lok Adalat on September 14, 2024, concerning an appeal (FA No. 76/2018) against an ex parte order by the District Consumer Forum, Goalpara. Mahindra And Mahindra Financial Services Ltd challenged the Lok Adalat's decision, arguing that their legal counsel made concessions without proper authorization, as no authorized officer was present during the proceedings.
Justice Sanjay Kumar Medhi, presiding over the case, underscored the finality of Lok Adalat awards under Section 21 of the Legal Services Authorities Act, 1987. However, he clarified that such awards could be challenged under Article 226/227 of the Constitution on limited grounds, such as the absence of lawful authority or consent. The court referenced previous Supreme Court judgments, including the Bharvagi Constructions and State of Punjab cases, to support its decision that the absence of an authorized representative invalidated the settlement.
The court's ruling mandates that the appeal be reconsidered by the Assam State Consumer Disputes Redressal Commission on its merits. Justice Medhi stressed the importance of expeditious disposal of the case, given its prolonged pendency since 2018.
This judgment highlights the critical role of authorized representation in corporate legal proceedings, reinforcing the necessity for companies to ensure proper authorization during settlement negotiations to avoid legal complications.
Bottom Line:
Settlement in Lok Adalat must involve the free consent and presence of the parties, and in the case of a corporate entity, the authorized representative must be present and authorized to enter into such settlement.
Statutory provision(s): Legal Services Authorities Act, 1987 Section 21, Article 226/227 of the Constitution of India
Mahindra And Mahindra Financial Services Ltd v. Hakim Uddin, (Gauhati) : Law Finder Doc Id # 2834645
