The Delhi High Court has made it clear that a party cannot later distance itself from statements made by its own counsel in court and use an alleged lack of instructions as a way to undo an order based on those submissions.
Justice Saurabh Banerjee was dealing with a petition filed by Equitas Small Finance Bank challenging a September 2024 Lok Adalat award that brought a cheque-bounce dispute to an end.
The bank had advanced a loan of ₹14.5 lakh to borrowers in 2021. After the loan account turned into a non-performing asset, the borrowers issued a cheque towards the outstanding dues. When the cheque was dishonoured, proceedings were initiated under Section 138 of the Negotiable Instruments Act.
During the proceedings, the bank’s counsel informed the trial court that the dispute had been settled after the outstanding amount was received in full. The matter was subsequently placed before the National Lok Adalat, where the same position was reiterated.
Acting on those submissions, the Lok Adalat compounded the case and the accused borrowers were acquitted on September 14, 2024.
The bank subsequently attempted to revive the proceedings, arguing that its counsel had stated that the matter was settled without proper authority and amid confusion. It sought the setting aside of the Lok Adalat award.
The High Court declined to interfere.
The Court observed that allowing litigants to retract statements on the ground that their counsel lacked instructions would seriously disrupt the judicial process.
It held that a party cannot resile from an order passed on the basis of submissions made by its own counsel, warning that such a practice could lead to a “chaotic situation” and effectively give a litigant another opportunity to reopen a matter already concluded.
The Court also stressed the importance of the advocate-client relationship. A counsel holding a valid vakalatnama is not merely a mechanical agent of the client but also an officer of the court who assists in the adjudicatory process.
In this case, the bank had remained silent for around 13 months after the settlement and Lok Adalat proceedings. The Court noted that no action had been taken against the counsel during that period and the bank had continued to engage the same lawyer in other proceedings.
According to the Court, that conduct weakened the bank’s later claim that the settlement statement had been made without authority.
The Court noted that both the trial court and the Lok Adalat had proceeded on the basis of statements made by the bank’s own counsel, and those statements had not been disputed at the relevant time.
The High Court consequently dismissed the petition, leaving the Lok Adalat’s decision undisturbed.
