Lok Adalat Award Cannot Bind Claimants Who Were Not Parties or Signatories, Supreme Court Holds
A bench of Justices J.B. Pardiwala and Manoj Misra sets aside Lok Adalat awards in a land acquisition dispute, holding that non-signatories cannot be bound and enjoyment surveys cannot determine compensation entitlement.
The Supreme Court has set aside sixteen Lok Adalat awards passed in a land acquisition dispute involving Acre 489.04 guntas acquired for Singareni Collieries Company Ltd. in Khammam, Telangana. A division bench of Justice J.B. Pardiwala and Justice Manoj Misra held that the awards were legally infirm because all disputing claimants were neither made parties to the settlement nor were they signatories to the awards. The Court also ruled that an “enjoyment survey” capturing mere physical occupation of land cannot determine legal entitlement to compensation. The High Court of Telangana's judgment upholding the awards was set aside and the matter remitted to the Principal District Judge, Khammam, for a fresh hearing of the Section 30 reference within six months.
How the Dispute Reached the Supreme Court
On 19 December 2010, notifications under Section 4(1) of the Land Acquisition Act, 1894 were issued for land within Kommepalli, Sathuapalli Mandal. The Land Acquisition Officer passed Award No. 04/2013-2014 on 30 December 2013, fixing compensation at Rs. 3,48,935 per acre. Because disputes existed as to title and apportionment, the matter was referred to the Principal District Judge, Khammam under Sections 30 and 31 of the Act, 1894, and numbered LAOP No. 619 of 2014.
Numerous pattadars and landowners challenged the acquisition and the award before the High Court in W.P. No. 13942 of 2013. During the pendency of that petition, Singareni Collieries proposed enhanced compensation of Rs. 10,95,000 per acre. The matter was referred to the High Court Legal Services Committee. A Coordination Meeting was convened on 30 May 2015 where representatives of the claimants, officials of Singareni Collieries, and the Land Acquisition Officer agreed to conduct an enjoyment survey and to resolve the dispute through a Lok Adalat.
On 29 March 2016, the Lok Adalat Bench at Khammam passed sixteen awards covering Acre 363 guntas forming part of LAOP No. 619 of 2014. The first writ petition was accordingly disposed of by the High Court on 7 April 2016, recording that claims had been settled in the Lok Adalat. The appellants then filed a second writ petition, W.P. No. 21315 of 2017, challenging those sixteen awards on the ground that the Land Acquisition Officer had passed the awards without ascertaining who was entitled to compensation and to what extent, and that the appellants had not signed or consented to the awards.
The situation was further complicated by a third batch of writ petitions filed by other claimants seeking disbursement of the settled compensation. On 13 April 2018, the High Court directed the Principal District Judge to disburse amounts deposited in LAOP No. 619 of 2014 upon proper identification of parties. The second writ petition was dismissed by the High Court on 17 August 2022, which affirmed the Lok Adalat awards and treated the proceedings as equivalent to a class action settlement under Order I Rule 8 of the Civil Procedure Code, 1908. The appellants came to the Supreme Court challenging that dismissal. By order dated 4 November 2022, the Supreme Court stayed apportionment and disbursement of the compensation amount.
The Core Infirmity: Awards Passed Without All Claimants as Parties
The Principal District Judge, Khammam, had himself written to the High Court on 28 November 2017 acknowledging the problem. His letter stated that all disputed title holders were neither made parties to the settlement before the Lok Adalat nor were they signatories to the awards. He recorded that the awards were passed “as if the dispute was between the Land Acquisition Officer and individual interest holder” rather than between the competing claimants. He also stated that the direction from the Coordination Meeting had been misunderstood.
The Supreme Court found this letter to encapsulate the root of the dispute. The Court examined the scheme of Sections 29, 30, and 31 of the Act, 1894. Section 29 permits persons interested to agree on apportionment, with that agreement then becoming conclusive between those consenting parties. Section 30 allows the Collector to refer any dispute as to apportionment or as to persons entitled to compensation to the civil court. The Court held that the very act of making a reference under Section 30 is an acknowledgment by the Collector that a contest exists as to entitlement which he is not empowered to resolve.
The Court identified only two permissible modes of resolving apportionment: an agreement under Section 29 among all persons interested, or adjudication through a Section 30 reference before the civil court. It held that a partial or truncated consensus, where some claimants are involved and others are excluded, cannot constitute an “agreement” within the meaning of Section 29. The Court relied on Sharda Devi v. State of Bihar, (2003) 3 SCC 128, for the proposition that the award drawn by the Collector is conclusive only between the persons who expressed their agreement in the apportionment.
The Court also relied on G.H. Grant (Dr) v. State of Bihar, reported in 1965 SCC OnLine SC 51, which had held that the Collector has no power to finally adjudicate the conflicting rights of persons interested in the compensation amount, and that such disputes must be resolved either in a reference under Section 18 or Section 30 or in a separate suit.
Applying these principles, the Court held that the Lok Adalat awards did not reflect a genuine agreement under Section 29, since all disputing claimants were neither parties nor signatories. Regulation 17(2) of the National Legal Services Authority (Lok Adalat) Regulations, 2009, mandates that an award must bear the signatures of the parties between whom the settlement has been arrived at. That requirement was not met.
Enjoyment Survey Cannot Determine Entitlement to Compensation
The Coordination Meeting had decided that an enjoyment survey would be conducted to record the state of physical occupation of the acquired land, and the Lok Adalat awards were then passed on the basis of that survey. The Supreme Court rejected this approach squarely.
The Court held that an enjoyment survey captures nothing more than the fact of physical occupation at the time it is conducted. It does not examine legal title, right, or interest. Physical possession may be held under any number of capacities — as an owner, assignee, trespasser, or encroacher — and such a survey is incapable of distinguishing between these. The Court said it could not permit an enjoyment survey to determine who is entitled to receive compensation from public funds.
No legal basis was placed before the Court by the respondents that would authorise the State to resort to an enjoyment survey as the basis for determining entitlement to compensation. The Court referred to Gudala Pentamma v. State of Telangana, 2026 SCC OnLine TS 6654, where the High Court of Telangana had held that an enjoyment survey during land acquisition proceedings is intended only to capture the state of physical occupation and cannot by itself determine legal title or entitlement to compensation. The Court also referred to Kottamula Mallaiah v. The State of Telangana, W.P. No. 2118/2023, where the Telangana High Court had declined to recognise the practice of enjoyment survey as having any legal basis and directed payment of compensation in accordance with law.
Order I Rule 8 Cannot Apply Where Claimants Have Adverse Interests
The High Court had characterised the Lok Adalat proceedings as equivalent to a representative suit under Order I Rule 8 of the CPC, treating the awards as a class action settlement. The Supreme Court rejected this characterisation as both legally wrong and compounding the infirmity rather than curing it.
The Court explained that Order I Rule 8 presupposes a community of interest among the persons represented. The interest of those being represented must be adequately protected by those representing them. In the present case, the very subject matter of the dispute — apportionment of compensation — was the bone of contention between the claimants themselves. They were not “two parties” arriving at a settlement. They had no common interest capable of representation. The claimants did not share a common adversary in Singareni Collieries; there was a conflict amongst them over entitlement to compensation.
The Court held that to treat rival and adverse claims to compensation as a single class is to “elide the very dispute that the reference under Section 30 of the Act, 1894, was intended to resolve.” The Lok Adalat awards addressed only one part of the overall dispute — the quantum of compensation payable by the acquiring body — and did not resolve the inter se dispute between the competing claimants at all.
The Court also relied on its own order in Vasant Nanaji Patre v. Vidarbha Irrigation Development Corporation & Ors., Civil Appeal No. 5305/2025, where it had held that a Lok Adalat award is binding only on the parties who entered into the settlement accepted by both sides, and a person who did not agree to the settlement and pursued his legal remedy cannot be bound by it.
Outcome
The Supreme Court allowed the civil appeal and set aside the judgment and order of the High Court of Telangana dated 17 August 2022. The Court remitted the matter to the Court of the Principal District Judge, Khammam, for a de novo hearing of the Section 30 reference. The Principal District Judge is directed to complete the hearing within six months from the date of the judgment, duly putting all parties to notice in accordance with law, and must decide the apportionment reference uninfluenced by any observations made in the proceedings so far. The Supreme Court Registry was directed to forward a copy of the judgment to all High Courts.