Lok Adalat



The matter of recovery of the Bank’s dues has been of great concern to all. Recovery performance affects credit deployment in several ways. Low recovery, on one hand, restricts the recycling of funds and proves on the other a limiting factor for the expansion of credit. The court system is already under great pressure as they are clogged with a huge number of other cases. Therefore a permanent mechanism or machinery to recover the BANK DUES THROUGH COMPROMISE settlement at pre-litigation stage becomes necessary so that many bank cases would not find their ways to the courts. Similarly, with a permanent forum to which pending bank cases could be referred for a compromise settlement, the speedy disposal of cases and recovery in litigated cases would be made possible. In order to reduce heavy demand on-court time and litigation expenses, cases for recovery of the Bank’s dues can be resolved by resorting to alternative dispute resolution methods before they enter the portals of court and even after they have so entered alternative methods have to put in place. One such alternative dispute resolution system, which has shown encouraging, results is the system of LOK – Adalat.


The Parliament by enacting the Legal Services Authorities Act, 1987 conferred legitimization and recognition to the system of LOK – Adalat. For Banks the Lok-Adalat is a good alternative dispute resolution machinery through which the Banks can not only get back their blocked money but also save the wasteful expenditure of attending to the pending litigation. Lok – Adalats have now become very popular of Bank dues. LOK – ADALAT is a living legend of Judicial Activism which has proved beneficial in recovery.


The entire procedure and exercise of organizing the Lok- Adalat can be completed

in five stages.


Stage – I: The matter to be discussed with the concerned District Judge of the district with details of a suit filed cases, proposed to be referred, pending in various Courts in the concerned district. R.C. cases proposed to be referred to the LOK-Adalat pending with various

officers in the district. All pre-litigated cases proposed to be referred to LOK-Adalat


Stage – II: After obtaining clearance from the District Judge a formal request has to be made to him giving full details in prescribed proforma. Simultaneously reference will have to be made to the district magistrate also for transferring the R.C. cases to LOK – Adalat.


Stage III: The date of LOK – Adalat is fixed by the District Judge in consultation with the State Legal Services Authority.


Stage IV: Notices to be prepared by the prescribed format in six copies for each defendant. These notices are prepared by branches on behalf of LOK – Adalat


Stage V: These notices are to be signed by secretary, LOK- Adalat Cell and other Judicial Officers.



Thereafter one copy is to be dispatched in a window envelope with the seal of Lok - Adalat. Two copies are to be segregated for servicing by the police. Two copies are too segregated for servicing through the court. One copy is meant for Lok – Adalat record.


As per the notice, one officer of the Branch / nodal Branch has to attend the Lok – Adalat regularly so as to attend the loanees who come for compromise even before the scheduled date. The concerned branch officer deals with the borrower as per the recovery policy. In case the compromise is struck offer will be taken in the prescribed format duly signed by the borrower/guarantor and countersigned by the Bank.


Award is given by the LOK – Adalat only after the entire amount has been received

by the Bank in the prescribed format.

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