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Recovery through award of LOK ADALAT

Recovery through award of LOK ADALAT

Recovery through award of Lok Adalat is the easiest and fastest mode of recovery. The literal meaning of Lok Adalat is people’s Court. The concept comes under the ‘Alternative Disputes Redressal Mechanism’ like arbitration, conciliation etc. The pre-litigation up to Rs.20 lacs and suit filed accounts where plaint amount does not exceed Rs.20 lacs can be settled through Award of Lok Adalat. The Lok Adalat  is constituted under section 19 of Legal Services Authority Act,1987. There are different layers of Legal service authorities namely

  1.  State Legal Service Authority.
  2. Supreme Court Legal Services Committee.
  3. High Court Legal Services Committee.
  4. District Legal Services Authorities.
  5. Taluk Legal Services Committees.

The members of Lok Adalat are from:

  1. Serving or retired Judicial Officers.
  2. A senior counsel or a lawyer of standing or
  3. A senior officer of the Government or
  4. A person of repute who is specially interested in the implementation of Legal Services and Programmes or
  5. An eminent social worker who is engaged in the upliftment of the weaker sections of the society or a medical or any other expert as deemed fit, by the State Authority.

Method of organizing Lok Adalat:

The manager of the Bank shall contact the borrowers and negotiate with them the terms of settlement. The Manager should convince the borrowers about the benefits of settling the matter via Lok Adalat.  The branch office has to take their higher office permission/sanction wherever necessary, with regards to proposed terms of settlement.

The Legal Service Authorities shall be approached by the bank to conduct Lok Adalat along with a list of the accounts where settlement is feasible. The Legal Service Authority fixes the date of Lok Adalat and informs the same to the bank. The bank in tern shall service notice to all the parties concerned. The concerned branch of the bank should personally contact the borrowers and ensure that all parties be present at Lok Adalat on the date fixed.

The Lok Adalat will be convened on the date fixed and same day award will be passed. The award is final and binding on all the parties.

Advantage of Lok Adalat:

  1. Every award of the    Lok Adalat is equivalent to a decree of a Civil Court.
  2. OTS (One Time Settlement) can be put through Lok Adalat, so that on default, the award could be executed by the Court (Like execution of decree).
  3. No appeal will be entertained against the award of Lok Adalat.
  4. No case could be instituted in any Court with regard to case decided by Lok Adalat.
  5. Entire Court fee paid for filing suit will be returned back and no lawyer fee is payable.
  6. The award can also be passed on a holiday.

The other LOK ADALATs which are popular.

  1. Insurance Lok Adalat
  2. Pension Lok Adalat
  3. Railway Lok Adalat
  4. Telecom  Lok Adalat
  5. Electricity Lok Adalat
  6. Muncipal Corporation Lok Adalat
  7. Marriage Lok Adalat
  8. Prison Lok Adalat

(53) Comments

  1. navneet kumar

    sir main lok adalat se kaise frofit le sakta hun as a ,mere father par 150000 ka 360000 loan ho gaya to mujhe direct lok adalat jana chahiye ya ya bank manager se baat karni chahiye mera loan ek tractor loan hai jise lagbhag 6 years ho chuke hai so pls sir tell me about it early

    1. Surendra NaikSurendra Naik - Post author

      You need to contact bank manager and inform him about your intention to settle the loan. After negotiating with you to close the loan for specified amount the manager will take yo to Lok Adalat.

  2. Raman

    Sir maine sbi se 2009 me 3.41 lakh rupees education loan liya tha but abhi tak unemployed hoon, Father v chhote farmer hai, ghar ki financial status v thik nahi hai, but I want to repayment loan to bank immediately, Bank sends notices for repayment of loan. Loan amount increases monthly and current outstanding amount is around 4.30 lakhs. Kaise settle ho sakta hai, Please suggest

  3. Raman

    I met with bank official but they are not agree with settlement, They pressured me to deposit full amount at any cost, otherwise Bank file a case against you. They are not clearing me about current Outstanding 426000 and over due 59000.

    1. Surendra NaikSurendra Naik - Post author

      Since you or your father have not offered any collateral security to the bank (Banks cannot take collateral security for education loan amount below 7.5 lakh) and you are unemployed the bank can't do much to recover money from you. They may at the most file a case against you and your father. In such cases also, in my experience the borrower pleads his helplessness to repay the entire loan amount in one shot and request the the court to permit him to repay in installments. The court may deliver judgment to repay the loan in installments after assessing your family income and funds required for survival of the family. In that case bank will be at loss. If they do not agree for one time settlement now, wait for some more time, the manager may again approach you for one time settlement, instead of fully write off the loan amount.

    2. Raman

      Sir, aapse pahle v education loan ke regarding suggestion loyalty tha, Many Many thanks to you. Sir, actually Aapke advice ke according maine Bank official ko one time settlement ke liye convince karne ki kosis ki thi, but bank official fully amount deposit Karne ko kah rahe the, Ab bank ne mere loan account ko suit filed or written off kar diya hai, kuchh clear jankari v bank se provide nahi ki ja rahi hai. Sir, ab kaise loan repayment ya settle hoga, Please suggest

  4. Arun Kumar mishra

    Hi sir I am bought a loan of 295000rs on 2012 but now days loan amount 457244rs I am pay 50000rs I am received normal interest or penalty interest every month how to remove penalty interest i am already talke with bank manager his told me I can't able to help you and I am not received any subsidy from govt what I am do

    1. Surendra NaikSurendra Naik - Post author

      It's the banks discretion to agree or decline compromise proposal submitted by you. Nobody else can help you in this matter. Regarding subsidy, I have no idea under which subsidy scheme you have availed loan.If you were entitled for subsidy you should have inquired with the bank why subsidy is not credited/received by the bank.

  5. Neeraj

    Sir, if i pay the bank through lok adalat, will it hamper my chances of getting loan in future? Will it hamper CIBIL score? I have taken an education loan amounting to 4.9 lacs

    1. Surendra NaikSurendra Naik - Post author

      I'm not sure how your loan application will be considered in future. Though bank might have closed your loan through Lok Adalat, it has to sacrifice certain amount of loan outstanding towards one time settlement. Thus, report from the bank to CIBIL indicates that loan is closed under 'settlement'. Therefore it will reduce your credit score to some extent. CIBIL report gives the past history of 3 years of loan transactions.

  6. Raj

    Sir i have taken a loan of Rs 500000 in Syndgate bank my EMI is 13000 K... after paying for 20 months now i find it very difficult to repay since my business is down.... is it possible to extend the tenure of the loan? please suggest me... this is unsecured loan... what will happen if i cannot pay the loan for some time..... if i go to lok adalat how much concession i will get..... after lok adalat is it possible to reduce monthly EMI or only one time settlement ? Please suggest me thanks

    1. Surendra NaikSurendra Naik - Post author

      Give an application to the bank to reschedule your loan repayment period, explaining the difficulties. Bank may acceed to your request on merit.You cannot directly go to Lok Adalat. if the borrower and the bank mutually agree for one time settlement then both will go to Lok Adalat for obtaining legal sanctity to their mutual agreement. if the bank files a case against you then you can request the court to allow you repay the loan at lower EMI.

  7. Deb

    My father has taken home loan form HDFC by keeping house documents few years before. My father was unwell and due to huge medical bills he could not pay emi further. Right now the outsanding amount is 5 lacs. so bank sent firstly demand notice and then possesion notice. however bank representative came couple of months ago and they said they are ready to settle for 2 lacs. They told us to meet them on 19th january 2018 and they said there will be other officers to whom i can appeal. i assumed that this case is going to lok adalat. i arranged the amount and appeared there with a written application. How ever there was no other officers except for 1 HDFC officer who misbehaved with us and even did not take a look on the application. they initially said that we have to pay 2.60 lacs and after 1 hour of arguement they said that they got confused with some other client and we have to pay 2.10 lacs. they also stated that now the case in under section 14. i dont find these people trustworthy and although i am ready to pay the amount but they are saying they will not provide any insant documents. it will take 2-3 months to get the documents. i think these people are not genuine. i really want to get out of this case. please sirr guide me how should i proceed.. can i independently appeal for lok adalat

    1. Surendra NaikSurendra Naik - Post author

      Catch hold of a good lawyer and send reply/objection to possession notice sent by the bank. If you fail to respond, the bank may publish the auction notice in the news paper and on a given date property may be auctioned.

  8. Arun Kumar mishra

    Ok sir i want to know my loan amount is 460000/- and my actual loan amount is 250000/- rest 210000/- is my intrest if i am visit lock adaalat then how many intrest relief by lock adaalat full or some amount

    1. Surendra NaikSurendra Naik - Post author

      Lok aadalat does not hear the case and give judgment like a court. The bank and yourself have to negotiatee and come to an agreement for one time settlement. If the bank agrees for your proposal of one time settlement, it will take you to LOK ADALAT to give legal sanctity to the agreement.

  9. Kumar

    Sir i am reading your forum regularly ... its so useful thanks for your great job... my issue is i have taken loan of Rs 400000 and paid 15 months regularly... but now the business is not as smooth as it was...... i am finding it difficult to run for even for my daily expenditures.....i know the consqunses what will happen if i do pay loan. my question is if i do not pay loan for sometime will they stick my name with photograph in bank notice board.... ? next question is they come to my officer and shout at me.... i am slowly loosing my temper.... if i tell dont come to my office and shout at me... .. if i say so will they take sever action against me...? please suggest me.... because coming to my workplace and shout at me leads many problem in my house.... my wife looks depressed i am fearing that she will commit something i hope you understand .... this is something serious i fear... please answer me.... what should i do ..... thanks in advance

    1. Surendra NaikSurendra Naik - Post author

      You can discuss with the Manage about your difficulties and take his advise in the matter.Bank normally do not react with the loan defaulters the way you are guessing. Banks are committed to ensure that all written and verbal communication with its borrowers will be in simple business language and will adopt civil manners for interaction with borrowers. Borrower’s requests to avoid calls at a particular time or at a particular place would be honored as far as possible. i'm sharing here following link to enable you understand the process. In case you observe intimating by the bank officials/agents that the conversation is being tape recorded, etc.and complaint may be lodged to Head office of the bank/RBI/BCSBI etc.

      1. Kumar

        Sir thanks for you reply... I have gone through your link.... those are valuable... it really helps.... Sir my question is will they stick my name with photograph in bank notice board....?

        1. Surendra NaikSurendra Naik - Post author

          Bank cannot simply take drastic steps of sticking the photographs of their defaulters in their notice board. If they have taken undertaking letter from the borrower at the time of granting loan to display borrower's photo in case of default they may survive the defamation case. Even if they are allowed to display photographs it shall be for very large borrower, not for small borrowers like you.

  10. Kowsik

    Sir i took loan for Rs 456000... paid back for about 15 months... for the last two months i could not pay the EMI because of my family situation infact literlly speaking I have nothing in my savings.... but bank comes to me and ask for atleast 1 due so i can escape from NPL..... but i know that i cannot pay back anything as far as situation concerning.... so its going to be NPL... what will happen next...... i am ready to pay but definelty after 4 months... not now... what will be the consequences ....

    1. Surendra NaikSurendra Naik - Post author

      It is a tough time both for you and the bank. Bank's concern is real for not allowing your account slip into NPA. Once your account slip into NPA your credit rating will drastically fall and it will be difficult for you to get future loans from any bank or financial institution. Further, the bank may initiate legal recourse against you to recover their dues. Try to get temporary finance from any other source (including availing gold loan) and regularise the account or contact the manager and discuss with him whether he can assist you in any other form of loan so that you can overcome from the present phase of your financial difficulties.

  11. Rajput

    Sir, I took loan of Rs 200000 from Punjab Nationol bank.... i did not pay for sometime ... my CIBIl score is low now..... my doubt is i have other loan in Central Bank for 500000 morgaging my building then i took the loan.... the manager converted that to OD account... so evey year i have to renewal it .... the doubt is since my credit score is low... will they renewal my account... i am maintaining that account very well... also if i settle the loan through lok adalat does it show in Cibil report... if it shows then how long it will show....? Also if i goto Lok Adalat can i talk to manager to continue my loan in EMI or only one time settlement available....? Also i have plan of taking loan after 6 years to build the house ... if i settle through Lok Adalat before that will it affect my future loans? please do the needful by replying my doubts thank u in advance...

    1. Surendra NaikSurendra Naik - Post author

      If your existing OD/CC account with Central Bank is regular, then there may not be any problem in renewing your limit by Central Bank. If you are ready to regulaise your account with PNB there is no need of going to LOK ADALAT. If you want to go for one time settlement with PNB then discuss with the Manager and settle the matter at Lok Adalat. Your CIBIL score card will show lower rating for a period of 3 years. If you are regular in repayment for another 3 years, your rate will be improved and you may be able to borrow without much constraint after 3 years.

  12. Usha

    Sir I have met an accident and my case is finalised with 400000 in lok adalat I september2017 within 4weeks but the amount is not paid till now Wat can I do now plz tell me

    1. Surendra NaikSurendra Naik - Post author

      Every award of Lok Adalat is deemed to be decree of civil court as per section 21 of Legal Services Authorities Act. Hence every award made by Lok Adalat is final and binding on all the parties to the dispute.Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no appeal shall lie to any court against the award. You have to move for execution of decree if insurance company fails to pay as per judgment. Take the help of of a lawyer.

  13. Raju

    Sir, if one couldnot attended the lok adalath due to some reasons even after receiving notice from court, what are the risks involved in it, what are legal rights bank can have in this regards.

  14. Atul Sharma

    Dear Sir, In 2003, my mother was a school teacher. Her female colleague took a personal loan of 50000/-. School principal gave affidavit to cut the amount from borrower's salary and deposit in loan account. Further her husband was guarantor for the loan along with my mother. The School management never deposited the instalments violating the affidavit. Now in 2017, loan amount is about 2 lakh and original borrower never paid anything and even refused to pay at many occasions to the bank. Borrower is also adamant and never listens to our requests too despite borrower is well capable due to children being well employed. Now case is going on in District court. My mother became guarantor on good faith but now the borrower is hostile. Our financial situation is not that good. Can Lok Adalat help here ? Bank officials are pressurizing my mother for payment unnecessarily.

  15. Deep Sen

    Sir, I have taken education loan of Rs. 1,03,650, as on 2003-2006, till date Bank has not fix any emi amount and I had paid earlier approx Rs. 30,000 as on 2009. Bank send me a demand notice where it was mention NPA as on January 2018. They are asking for 1,30,000 plus 4,20,000 as interest say for total Rs.5,70,000. I have spoken with the BM for OTS (1,30,000) but he denied and asking for full amount to be paid in emi. But his recovery agent asking me to provide 20% of the principal amount which is Rs. 26,000 for applying under OTS Scheme. They will return my money if OTS scheme will reject by bank. Now my question is should I take this offer or should I go for Lok Aadaalat, and what is the procedure for applying in lok aadaalat if bank is denied for OTS scheme.

    1. Surendra NaikSurendra Naik - Post author

      It is dangerous to negotiate with the bank through third party (agent). Once your education is completed (including moratorium period) you should have started repayment as per sanction terms. Anyway, bank may agree for OTS if the bank manager feels recovery from you is impossible (if you are unemployed) and there is no collateral security available to the bank either from you or your guarantor to encash the same.

  16. CHAKRI

    Sir, My father had taken a loan of Rs.21 lacs for business purpose and could not pay back. The case has been in DRT for quite a long time . in the mean while my father passed away and i was impleaded as a legal heir. the DRT passed a decree which amounts to Rs.1crore approx. after the decree was passed a Lok Adalat was conducted and i had agreed to pay 65 lacs as settlement amount and i was given time for 3 months . i was not able to mobilise the money . Now the bank has come up with Special settlement scheme and i have agreed to pay 23 lacs and i have paid the amount . bank has given me a no due letter and has filed a petition with the DRT for retreival of property documents from DRT. Now the bank says that the DRT is questioning that when there is a lok adalat order for 65 lacs how the bank can settle the matter for 23 lacs. is this possible?

    1. Surendra NaikSurendra Naik - Post author

      It was the sole discretion of the banks' Board which decided to accept Rs.23 lakh from you as a one-time settlement/out of court settlement.When Bank has closed your loan and issued you the no due certificate, you need not worry much. As per my knowledge is in the property documents must be in the custody of bank not with the DRT. Even if the DRT is holding your property documents they have to release the same as the bank has closed the loan.

  17. Kalaiyarasi

    Sir, I'm having one doubt.. if it renewal document is mandatory for bankers to issue lok adalat notice to npa borrowers. If loan account is time barred, can we able to issue lok adalat notice .. whether the account can be settled in lok adalat by judge??

  18. Parwez khan

    Sir, I need your valuable suggestions regarding home loan... my dad had taken loan of 5lac from the syndicate bank, that time our business was going a good marketing but unfortunately after a year we couldn't to repay the interest so that now my total amount of the loan with interest became 28 lac n we couldn't to solve the problem because the amount is more than our capacity. Day before yesterday we got a notice from the lok adalat to meet in the court but I was working in mumbai so my father couldn't to get reached the court on te date so what to do now and suggest us what is the procedure to re getting the date and we want to know that upto how much amount will be reduced from the bank....I am waiting to your valuable answer thanks

    1. Surendra NaikSurendra Naik - Post author

      Since Lok Adalat is a voluntary process and works on the principle that both parties to the dispute are willing to sort out their dispute amicably without Court intervention, you may contact the manager, over the phone and appraise him of the financial difficulties and your willingness to close the account, if the bank provide sizeable concession to you.

      1. Parwez khan

        Sir, we tried many time to short out the case and whenever we got notice from the bank we tried to solve our but nothing happened because that time the manager are forcing us u must to pay full amount so the amount getting increased, we said them many times to please proceed my case to the court but they didn't, so this time we short out the problem so please guide us now how can I get the solution n what we should do now... I will wait for your valuable guidance thanks

        1. Surendra NaikSurendra Naik - Post author

          Since Lok Adalat is a voluntary process and works on the principle that both parties to the dispute are willing to sort out their dispute amicably without Court intervention, you may contact the manager, and apprise him of the financial difficulties and your willingness to close the account, if the bank provides sizeable concession to you.All the best.

    2. Surendra NaikSurendra Naik - Post author

      Since Lok Adalat is a voluntary process and works on the principle that both parties to the dispute are willing to sort out their dispute amicably without Court intervention, you may contact the manager, and appraise him of the financial difficulties and your willingness to close the account, if the bank provides sizeable concession to you.If the agrees for the amount you are ready to pay, they will arrange for Lok Adalat settlement.

      1. Kalai

        Sir, I'm having one doubt.. if it renewal document is mandatory for bankers to issue lok adalat notice to npa borrowers. If loan account is time barred, can we able to issue lok adalat notice .. whether the account can be settled in lok adalat by judge??

        1. Surendra NaikSurendra Naik - Post author

          Lok Adalat does not entertain time-barred debt. However, as per section 25 (3) of the Contract Act, a fresh promise made for repaying the time-barred debt is a valid consideration and the same is enforceable in a court of law. Therefore, it is possible to revive a time-barred debt by obtaining a fresh express promissory note from the borrower(s) and Guarantor(s) promising to repay the time-barred dues. To know more, click below link. However, when the debtor gives it in writing that he/she is ready to repay the time-barred debt, t


            Sir! I have a question. Is a lok Adalat order duly accepted by debtor and bank be considered as acknowledgement of debt? Will bank proceed for execution to court for non-complying of orders by the borrower?

          2. Surendra NaikSurendra Naik - Post author

            Every award of the Lok Adalat is equivalent to a decree of a Civil Court. The bank may proceed for execution of decree if the borrower does not comply the order of Lok Adalat.

  19. Parwez khan

    Thank you sir for your valuable information it's really appreciated to sharing your valuables informations thanks a lot and I will let know the after discussion with branch manager...

  20. Rajkumar

    Sir, two years ago,my father had taken a loan of rs.3 lakhs but the manager made an agreement with my father to give only the subsidized amount of the loan i.e rs.105000 only.but now the new bank manager comes and inquire to to repay the amount back.The manager finally told to settle through lok adalat.what should i do now?

  21. Mohsin

    Sir, I had taken an education loan of 205000 started from Oct 2008 and my study continues up to 2012. I did not got any job. Since now I am unemployed.My father is a farmer and he worked on others field. Loan recovery people came to us and told us to deposit at least 10000.But when I checked with the Bank manager he told me that the outstanding balance has reached 416000 on April 2017and he told me to pay the entire .I did not receive any notice from lok adalat but the agent is insisting me to appear the lok adalat for Ots. Please advise me what to do.

    1. Surendra NaikSurendra Naik - Post author

      Directly deal with the bank manager and inform him about loan recovery agents. You will not receive Lok Adalat unless both the bank and the borrower agree for one-time settlement either proposed by you or the bank.

  22. Shekhar

    Sir, Recently i lost job due to health issue and i am aged 38, i have taken personal loan 3 lac for 5 years and was regular for 1 year till i had job but now i am jobless and could not continue. i have no money, left the family and doing simple job for daily survival. banker had sent me a lok adalat date but i have clearly informed him that i do not have anything now to repay. sir kindly advice me if i do not attend the lokadalat will it impact me - i have not accepted for any mutual settlement till now and i have been repeatedly informing him my inability to repay the loan.

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