K. Srinivasappa & Ors. vs M. Mallamma & Ors.
Background
In a family partition suit over properties left by M. Krishnappa, the plaintiffs and defendants entered into a compromise in 2012 under which the plaintiffs (including plaintiff nos. 4-6) relinquished their share in the suit properties in exchange for lump-sum payments (Rs. 30 lakh each to plaintiff nos. 4-6), and this compromise was recorded as a decree by the Lok Adalat. Two days later, plaintiff nos. 4-6 alleged the defendants had committed fraud in obtaining their signatures, but the Lok Adalat rejected this objection twice. The Karnataka High Court, in a brief and unreasoned order, nonetheless recalled the Lok Adalat's compromise order and sent the case back for fresh adjudication, prompting the defendants to appeal to the Supreme Court.
Decision Breakdown
The Supreme Court held that a Lok Adalat award has the force of a civil court decree under Section 21 of the Legal Services Authorities Act, 1987, and carries an element of finality that cannot be undone by a writ court acting in a "casual manner" without discussing the record or giving reasons, recording reasons is essential to any adjudicatory decision. On the facts, the Court found the plaintiffs had never returned the substantial sums (Rs. 30 lakh each) they received under the compromise, had admitted before the Lok Adalat that its terms were true and correct after being explained in Kannada, and had offered no explanation for staying silent about the alleged fraud at the time: allegations of fraud must be strictly proved to invalidate an agreement or a consent decree, and no such proof existed here. The Court set aside the High Court's judgment, restored the Lok Adalat's compromise order, allowed the appeals, and directed each side to bear its own costs given the family relationship between the parties.
Lesson Learnt
A compromise recorded before a Lok Adalat is as binding and final as a civil court decree, and a party who has accepted and retained the monetary benefits of such a settlement cannot later disown it by a bare, unproven allegation of fraud, and courts reviewing such settlements must give reasoned findings before disturbing them.