Fraud Vitiates Any Judicial Act: Telangana High Court Sets Aside Lok Adalat Award Obtained Through Wilful Suppression Of Pending Litigation

"It is well settled that any judgment, decree or order obtained by fraud cannot be sustained as a valid adjudication in the eyes of law." Telangana High Court, in a significant ruling, held that a Lok Adalat award obtained through the wilful suppression of pre-existing, competing litigation involving the same subject property is a nullity and must be set aside.

A division bench of Justice Moushumi Bhattacharya and Justice Renuka Yara observed that such collusive settlements, used to defeat the rights of third parties, cannot be protected by the status of a "deemed decree" under the Legal Services Authorities Act, 1987.

Fraud Vitiates All Judicial Acts

The court underscored that the respondents, specifically the vendor who was a party to both the challenged suit and a previously pending suit filed by the petitioner, had a clear duty to disclose the existence of the earlier proceedings. By failing to inform the Lok Adalat of the prior suit, the respondents committed a fraud on the court. Relying on the Supreme Court precedent in A.V. Papayya Sastry & Ors. vs. Government of A.P. & Ors., the bench reiterated that "fraud avoids all judicial acts, ecclesiastical or temporal," rendering such awards void.

Suppression Constitutes Collusion

The court found that the familial relationship between the parties to the Lok Adalat settlement, who were father-in-law and son-in-law, further raised a strong presumption of a collusive, non-genuine arrangement. The bench noted that the respondent vendor had no explanation for accepting substantial advance consideration from the petitioner in 2016 while simultaneously entering into a separate, later-dated collusive suit for the same property. The court observed that the "fraudulent conduct" of the respondents vitiated the entire process, confirming that the award was not a bona fide compromise under Section 20 of the 1987 Act.

Writ Jurisdiction As The Only Efficacious Remedy

The court clarified the procedural position regarding challenges to Lok Adalat awards, relying on the Supreme Court’s ruling in Dilip Mehta v. Rakesh Gupta. It held that a civil suit to set aside such an award is not maintainable, and the only efficacious remedy for an aggrieved person is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. The bench stated that the executing court is not authorized to reopen a settlement or examine the validity of the award as a void decree, thus making the writ petition the appropriate forum for redress.

"The petitioner’s Decree remains a valid Decree as on date, in the absence of any order of stay granted by the High Court."

Executing Courts Cannot Re-examine Award Validity

The court further noted that the dismissal of the petitioner’s execution application by the lower court was incorrect in its reasoning, as the executing court lacks the jurisdiction to go behind an award to declare it void. The High Court clarified that the mere pendency of an appeal against the petitioner's own decree, without an express order of stay, did not diminish his rights as a decree-holder. Ultimately, the bench concluded that the petitioner had established a strong case of fraud, and as such, the impugned Lok Adalat award was liable to be set aside.

Final Order Setting Aside The Award

The High Court allowed the writ petition and formally set aside the Lok Adalat award dated March 12, 2022, which had arisen out of the collusive suit. By this order, the court effectively cleared the path for the petitioner to pursue his valid decree, ensuring that the suppression of material facts and the orchestration of sham litigation do not override legal rights acquired through legitimate, earlier-in-time transactions.

Date of Decision: 18 September 2026