Institutional Emphasis on Mediation in Debt Recovery

In recent years, Indian policy discourse around debt recovery has increasingly recognised the value of alternative dispute resolution (ADR) mechanisms as a complement to formal adjudication. A notable example of this was the Department of Financial Services (DFS), Ministry of Finance’s collaboration with the Supreme Court’s Mediation and Conciliation Project Committee (MCPC) to conduct an intensive 40-hour mediation training programme for presiding officers of Debt Recovery Tribunals (DRTs) and senior executives from public sector banks in late September 2025. The five-day programme, held at the Additional Building Complex of the Supreme Court of India, covered core topics such as the concept of mediation, comparisons between judicial and ADR processes, negotiation and communication techniques, and the stages and roles within mediation1.

Such capacity-building initiatives reflect a concerted effort by judicial and executive stakeholders to incorporate mediation and consensus-oriented dispute resolution into the debt recovery framework, signalling an institutional belief that ADR can play a constructive role alongside formal adjudication in addressing pendency and improving case outcomes.2

Practical Use of Lok Adalats in Debt Matters

Lok Adalats which facilitate amicable settlement between disputing parties, continue to be used as a mechanism to dispose of pending financial disputes, including debt recovery cases. In late 2025, a Special Lok Adalat organised at the Debt Recovery Tribunal in Jaipur successfully resolved approximately 250 debt cases that had been listed for settlement, many involving long-pending disputes between lenders and borrowers.3 Held under the guidance of the Supreme Court and the National Legal Services Authority (NALSA), the Jaipur event drew participation from debtors, banks, and financial institutions and resulted in significant outcomes, including the settlement of a high-value disputes, where dues of Rs. 32 crores were settled for Rs. 20 crores after negotiation. 4

Lok Adalat Activity at DRT-III Mumbai

In September 2025, a National Lok Adalat held at DRT-III resulted in the amicable settlement of 122 cases with recoveries totalling approximately ₹34.69 crore, under the supervision of the in-charge presiding officer and in consultation with the District Legal Services Authority (DLSA).5 Such settlement figures demonstrate that, even in high-caseload tribunals, ADR mechanisms are actively used to resolve disputes that might otherwise remain pending for extended periods. These outcomes suggest that Lok Adalats serve not only as instruments of judicial relief but also as pragmatic tools for case clearance in contexts where traditional adjudicatory timelines are stretched.

Moving from aggregates to case-level analysis

Existing policy discussions and media accounts have been instrumental in highlighting the scale and potential of Lok Adalat settlements, particularly through aggregate figures on the number of cases resolved or amounts recovered. Building on this foundation, the analysis below adopts a case-level approach to further understand how Lok Adalat operates within the functioning of Debt Recovery Tribunals. Drawing on case-level data from DRT-I, DRT-II, and DRT-III in Mumbai between 2022 and 2025, the analysis examines the number of days cases remain pending before being settled through Lok Adalat. The dataset includes 12,121 cases. Of these, 2,100 cases have been disposed of. Among the disposed cases, 642 were settled through Lok Adalat, accounting for about 30 per cent of all disposals.

By situating Lok Adalat settlements within the procedural timeline of individual cases, this approach offers a more granular view of the interplay between adjudication and alternative dispute resolution, helping to piece together how Lok Adalat complements the work of DRTs in practice.