A party cannot accept and retain money arising from a property transaction for years and then seek to invalidate the settlement by alleging fraud, the Telangana High Court has ruled while dismissing a challenge brought a decade after a Lok Adalat award.
A division bench of Justice Moushumi Bhattacharya and Justice Renuka Yara delivered the ruling in Smt. M Nagalakshmi and Another v. The Chairman, Mandal Legal Services Committee, Cyberabad and Five Others. The dispute concerned four acres of land in Raidurg Nava Khalsa village in Telangana’s Ranga Reddy district.
The case stemmed from a 2011 agreement to sell the property for ₹1 crore. M Ganga Raju, acting as the agreement of sale-cum-general power of attorney holder, received ₹85 lakh as an advance.
In 2013, a Lok Adalat at Kukatpally recorded an award settling the dispute, under which the remaining ₹15 lakh was to be paid when the sale deed was registered.
After Ganga Raju died in 2014, his wife and daughter received another ₹30 lakh between April and September 2015. The payments were acknowledged as part of the sale consideration.
Despite receiving the money, the legal heirs later sought to set aside the Lok Adalat award. Following unsuccessful attempts through civil proceedings, they approached the High Court under Article 226 of the Constitution, alleging fraud and arguing that the settlement lacked a separately signed compromise document and exceeded the Lok Adalat’s pecuniary jurisdiction.
The bench found the attempt to challenge the transaction difficult to reconcile with the petitioners’ acceptance of its financial benefits.
A party, the Court observed, cannot take advantage of a transaction and subsequently deny its validity. The principle applies particularly when one side has substantially enjoyed the benefits of an agreement before questioning the remaining obligations.
The Court also rejected the fraud allegation, stressing that such a claim must be supported by specific material particulars. Retaining the sale consideration, it observed, was fundamentally inconsistent with the petitioners’ attempt to portray the transaction as fraudulent.
Separate settlement document not mandatory
The bench also addressed the argument that the Lok Adalat award was invalid because the parties had not executed a separate memorandum of settlement or compromise beforehand.
It clarified that the Legal Services Authorities Act, 1987 does not require parties to sign such a document before approaching a Lok Adalat. The petitioners had also failed to establish any violation of the statutory requirements governing a valid award or the applicable regulations.
Jurisdiction objection raised too late
The challenge faced another hurdle: its timing.
The award dated back to 2013, but the writ petition was filed only a decade later. The petitioners raised the objection concerning the Lok Adalat’s pecuniary jurisdiction for the first time in a rejoinder dated August 13, 2026, after oral arguments had concluded.
The Court held that an objection of this nature must be raised at the outset rather than introduced at such a late stage.
Finding no sufficient grounds to invalidate the award, the Telangana High Court dismissed the petition.
The ruling reinforces a clear principle in settlement disputes: accepting the benefits of an agreement while allowing it to stand for years can seriously undermine a subsequent attempt to challenge its validity.