IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision:- 17.02.2026 SHRIRAM FINANCE LIMITED .... Petitioner Versus PERMANENT LOK ADALAT AND ANOTHER .... Respondents CORAM: HON'BLE MR. JUSTICE SUVIR SEHGAL Present:- Mr. G.S. Sandhu, Advocate for the petitioner.

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1. This petition has been filed inter alia for issuance of a writ in the nature of certiorari for quashing order dated 02.12.2025, Annexure P-3, passed by Permanent Lok Adalat, Public Utility Services, Chandigarh, (for short “Lok Adalat”), whereby application filed by the petitioner under Section 8 of the Arbitration and Conciliation Act, 1996, (for short “Arbitration Act”), has been dismissed.

2. Counsel for the petitioner states that respondent No.2 availed a loan from the petitioner and entered into a loan-cum-hypothecation agreement. According to him, loan was repayable in 60 monthly installments along with interest, cost and other charges, but loanee defaulted in repayment. Counsel states that loanee approached the Lok Adalat by filing a petition, Annexure P- 1, under Section 22-C of the Legal Services Authorities Act, 1987,(for short “LSA Act”). Upon service, counsel states that petitioner filed an application under Section 8 of the Arbitration Act, for referral of the dispute to an arbitrator, which has been rejected by the Lok Adalat, vide order impugned herein. Counsel asserts that the loan agreement, Annexure P-4, contains a provision for the resolution of disputes through the medium of arbitration and Lok Adalat lacks adjudicatory jurisdiction to decide the dispute. He has placed reliance upon M/s HDB Financial Services Ltd. V/s. Arun Mittal and Another (CR No.4979-2015, decided on 31.03.2016) as well as M/s Samar Estates Pvt. Ltd. and Another V/s. Amrish Kumar Bansal and Another, 2019 (1) Law Herald 541

3. I have heard counsel for the petitioner and given a thoughtful consideration to the argument raised by him.

4. After an exhaustive discussion of the statutory provisions of LSA Act, Hon’ble Supreme Court in Interglobe Aviation Ltd. V/s. N. Satchidanand (2011) 7 SCC 463, has come to the conclusion that a Lok Adalat under the LSA Act, cannot qualify as a “Court”. The observations of the Hon’ble Supreme Court deserves to be noticed and are reproduced as under:-

“26…… As noted above, Section 22C of the LSA Act provides for an application to the Permanent Lok Adalat in regard to a dispute before the dispute is brought before any court and that after an application is made to the Permanent Lok Adalat, no party to the application shall invoke the jurisdiction of any court in the same dispute, thereby making it clear that Permanent Lok Adalat is distinct and different from a court.

27. The nature of proceedings before the Permanent Lok Adalat is initially a conciliation which is non-adjudicatory in nature. Only if the parties fail to reach an agreement by conciliation, the Permanent Lok Adalat mutates into an adjudicatory body, by deciding the dispute. In short the procedure adopted by Permanent Lok Adalats is what is popularly known as `CON-ARB' (that is "conciliation cum arbitration") in United States, where the parties can approach a neutral third party or authority for conciliation and if the conciliation fails, authorise such neutral third party or authority to decide the dispute itself, such decision being final and binding. The concept of `CON-ARB' before a Permanent Lok Adalat is completely different from the concept of judicial adjudication by courts governed by the Civil Procedure Code. The Permanent Lok Adalat not being a `court', the provision in the contract relating to exclusivity of jurisdiction of courts at Delhi will not apply.”

5. A Co-ordinate Bench of this Court in M/s Shalimar Estates Pvt. Ltd. and Others V/s. Permanent Lok Adalat, Chandigarh and Others (CWP- 26051-2021, decided on 09.04.2024), noticed that Chapter ‘VI-A’ was incorporated in the LSA Act w.e.f. 11.06.2002, by amending the statute. The Legislature was fully aware of