What Is a Lok Adalat?

Lok Adalats (People’s Courts) are alternative dispute resolution forums established under the Legal Services Authorities Act, 1987. They provide a unique mechanism for the settlement of disputes in a conciliatory and amicable manner, without the formality, expense, and delays associated with regular court proceedings. For debt recovery matters, Lok Adalats have proven to be remarkably effective, particularly for smaller claims and cases where both parties have a genuine desire to settle.

Key Features of Lok Adalat

No court fees are charged for matters settled in Lok Adalat. Awards passed by Lok Adalat are deemed decrees of civil courts and are final, binding, and non-appealable. The proceedings are informal and conciliatory. Cases pending in courts can be referred to Lok Adalat by mutual consent. Pre-litigation disputes can also be referred to Lok Adalat. No legal representation is mandatory, though parties may be assisted by advocates.

Lok Adalat for Bank and NBFC Debt Settlement

The National Legal Services Authority (NALSA) and State Legal Services Authorities regularly organize special Lok Adalats for bank and financial institution cases. Banks and NBFCs frequently participate in these Lok Adalats to settle outstanding loans, credit card dues, and NPA accounts on mutually agreed terms.

The typical settlement in a bank Lok Adalat involves waiver of penal interest and charges, reduction in the total outstanding amount, payment in installments or lump sum, and withdrawal of pending legal proceedings.

Advantages Over Court Proceedings

Speed is the primary advantage — matters can be settled in a single sitting. There are no court fees, saving significant costs for both parties. The non-appealable nature of Lok Adalat awards provides finality. The conciliatory process preserves business relationships better than adversarial litigation.

How to Access Lok Adalat

Parties can request referral of pending cases to Lok Adalat through the court. For pre-litigation disputes, applications can be made to the Legal Services Authority having jurisdiction. Many District Legal Services Authorities maintain permanent Lok Adalat benches that hear cases regularly. Information about upcoming Lok Adalat sittings is available on the National Legal Services Authority website and through district courts.