Rameshwar Singh Malik, J.

Present writ petition is directed against the award dated 18.01.2016 (Annexure P-8) passed by the learned Permanent Lok Adalat (Public Utility Services), SAS Nagar (Mohali), whereby application moved by respondents No.2 and 3 under Section 22-C of the Legal Services Authority Act, 1987 (for short 'the Act') was allowed on merits, directing the petitioners to refund the amount of respondents No.2 and 3 along with interest and also to pay compensation.

2. Heard learned counsel for the petitioners.

3. It has gone undisputed before this Court that petitioners were intending to raise construction of residential flats. Respondents No.2 and 3, hereinafter called as the applicants, paid an amount of Rs.18.90 lacs to the petitioners from time to time, as per the terms of agreement between the parties, towards the cost of flat on the ground floor. Its plot number was 2101 measuring 192 square yards in Sector 110, Mohali. The total sale consideration was Rs.35,81,800/-. As per the terms and conditions of agreement, petitioners were to deliver the possession of the constructed flat to the applicants on or before 03.08.2013. In case, the petitioners would fail to hand over the possession upto the agreed date i.e. 03.08.2013, they would pay an amount of Rs.7,000/- per month, on account of default on their part. It is also a matter of record that petitioners did not hand over the possession to the applicants upto the agreed date, despite the fact that the applicants, respondents No.1 and 2 herein, had already made the payment of Rs.18.90 lacs to the petitioners, out of the total sale consideration.

4. Under the abovesaid circumstances, applicants were left with no other option except to move the application under Section 22-C of the Act, before the learned Permanent Lok Adalat (Public Utility Services)-respondent No.1. During the course of proceedings, learned Permanent Lok Adalat, after framing the appropriate terms for possible settlement, supplied the same to both the parties for their consideration under Section 22-C (7) of the Act.

5. Relevant para 8 of the impugned award, in this regard, reads as under:-

“After the close of the evidence by both the parties and going through the application, reply filed by the respondents and the evidence adduced by the parties, there existed an element of settlement in these proceedings which may be acceptable to the parties and following terms of settlement were framed on 10.4.2015:-

1. Whether the respondents have completed the construction within the agreed period?

2. Whether the applicants are entitled to Rs.18,90,000/- from the respondents with interest @18% p.a. and Rs.1,00,000/- as compensation on account of harassment and mental agony with Rs.25,000/- as cost of litigation?

3. Whether the applicant was given opportunities for taking possession by respondents No.1& 2?

4. Whether the conduct of respondent No.4 has any adverse effect on the rights of the applicants?

A copy of terms of possible settlement was supplied to the parties for their consideration. The parties were told that if they reach an agreement they shall sign the settlement agreement on the basis of which award would be passed. During the course of proceedings efforts were made to persuade the parties for settlement but parties failed to reach a settlement and this Adalat was left with no alternative but to decide the case on merits as envisaged under sub section (8) of Section 22-C of the Act. Even otherwise compliance of sub sections (2) to (7) of section 22-C is fully made out in this case.”

6. The primary contention raised by learned counsel for the petitioners before this Court was that the learned Permanent Lok Adalat did not follow the procedure provided under Section 22-C (7) of the Act, which requires formulation of terms of a possible settlement. He submits that in such a situation, learned Permanent Lok Adalat would not have any jurisdiction to decide the case on merits. However, a bare reading of