The Telangana High Court has dismissed a challenge to a 2013 Lok Adalat award in a ₹1-crore land dispute, holding that the petitioners could not retain sale consideration received under the transaction and subsequently challenge the settlement by alleging fraud.
A division bench of Justice Moushumi Bhattacharya and Justice Renuka Yara observed:
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“In essence, it is impermissible to take advantage of transaction and thereafter turn around to deny its validity…Hence we are constrained to hold that the petitioners’ allegation with regard to the impugned Award being vitiated by fraud, lacks basis and the allegation of fraud, even if accepted, would be is neutralized by the petitioners retaining the entire consideration amount paid by the respondent No.2 to M.Ganga Raju as well as the petitioners.”
The dispute concerned four acres of land covered by an Agreement of Sale-cum-General Power of Attorney dated October 31, 2011, for a total consideration of ₹1 crore. The Lok Adalat award dated March 30, 2013, recorded an agreement to execute the registered sale deed within two months, with ₹15 lakh remaining payable at registration.
After the death of the seller in 2014, his wife and daughter received a further ₹30 lakh from the purchaser and issued receipts describing the payments as “part sale consideration”. They later challenged the award, alleging fraud and questioning the absence of a separate signed compromise memorandum and the Lok Adalat’s pecuniary jurisdiction.
Rejecting the fraud allegation, the Court held that mere use of the word fraud/fraudulently will not satisfy the test of fraud and stressed that allegations of fraud must be supported by specific particulars.
The bench also ruled that the Legal Services Authorities Act, 1987, does not require a separate compromise memorandum to be executed before approaching the Lok Adalat, provided the settlement is properly recorded in the award. It further held that the pecuniary restriction cited by the petitioners applied to Permanent Lok Adalats, not ordinary Lok Adalats.
Finding no grounds to interfere with the award, the Court dismissed the writ petition without costs.
