Concept:
"Lok Adalat" literally means "People's Court." It is based on Gandhian principles and is a key component of the Alternative Dispute Resolution (ADR) system in India, intended to settle cases through compromise and conciliation.
Step 1: Analyzing Lok Adalat as an ADR mechanism.
Lok Adalats are designed to reduce the backlog of cases in regular courts. They deal with cases pending in courts as well as pre-litigation disputes. They are faster, inexpensive, and informal compared to regular judicial proceedings.
$\text{ADR Methods} = \text{Arbitration} + \text{Mediation} + \text{Conciliation} + \text{Lok Adalat}$
Statement 1 is correct.
Step 2: Analyzing the Statutory Status.
Initially, Lok Adalats were voluntary agencies without statutory backing. This changed with the enactment of the Legal Services Authorities Act, 1987. Under this Act, the award (decision) made by a Lok Adalat is deemed to be a decree of a civil court and is final and binding on all parties.
$\text{Statutory Basis} = \text{Legal Services Authorities Act, 1987}$
Statement 2 is correct.
Step 3: Final Result.
Both statements are accurate descriptions of the nature and legal foundation of Lok Adalats in India.
Final Answer: Option C