SRINAGAR: The Jammu Kashmir and Ladakh High Court has upheld a Lok Adalat award directing payment of Rs 3.80 lakh in a cheque bounce dispute, holding that a party who voluntarily enters into a settlement cannot later withdraw from it on technical grounds.
Delivering judgment in CM(M) No. 118/2026, Justice Wasim Sadiq Nargal dismissed a petition filed by Riyaz Ahmad Wani of Rafiabad, Baramulla, who had challenged a Lok Adalat award dated March 8, 2025, along with subsequent execution proceedings.
The dispute arose from a complaint filed by Abdul Hamid Dar under Section 138 of the Negotiable Instruments Act before the Chief Judicial Magistrate, Sopore. The complaint was based on two cheques of Rs 50,000 each issued in 2024, which were dishonoured due to “insufficient funds” and alterations.
According to case records, the complainant had business dealings with the petitioner’s brother involving an advance of Rs 4.50 lakh for apple box supplies. After the transaction failed, the petitioner allegedly agreed to repay the amount and issued the cheques.
Following dishonour of the cheques and non-payment despite notice, criminal proceedings were initiated. During trial, the petitioner acknowledged the cheque amounts but stated that the liability belonged to his brother.
The matter was later referred to the Lok Adalat, where both parties reached a settlement. As per the award, the petitioner agreed to pay Rs 3.80 lakh as full and final settlement by March 2025, with consequences in case of default.
The petitioner challenged the award, arguing that the Lok Adalat lacked jurisdiction to impose penal consequences, that the settlement was not voluntary, and that principles of natural justice were violated. He also questioned the execution proceedings, including arrest warrants.
Rejecting the plea, the High Court held that Lok Adalat awards based on mutual settlement are final, binding, and executable as civil decrees under Section 21 of the Legal Services Authorities Act, 1987.
The court observed that the award was based on a settlement arrived at between the parties and that the petitioner had consciously participated in the process.
It held that such awards can only be challenged on limited grounds such as fraud, coercion, or lack of jurisdiction, none of which were established in the present case.
The court further ruled that non-compliance with settlement terms cannot invalidate an otherwise lawful and binding Lok Adalat award.
On objections regarding penal clauses, the court clarified that Lok Adalats do not exercise criminal jurisdiction but that settlements may include deterrent provisions to ensure compliance, which operate in a civil context.
It also noted that any consequences such as imprisonment would arise only through lawful execution proceedings and not directly from the award.
Finding that the petitioner had not specifically challenged the execution proceedings, the court termed the omission a fatal defect.
The court further observed that the petitioner had accepted the settlement to avoid prosecution but later attempted to evade compliance, holding that he could not “approbate and reprobate”.
Upholding the award dated March 8, 2025, the High Court dismissed the petition as devoid of merit and reaffirmed the binding nature of settlements reached through Lok Adalats.
