I disagree with some of your answers, but now this will only turn this discussion to a debate involving
egos.

I found the intent of the article as , private judiciary
system can be implemented india because this concept was here in form
of panchayats for a long time.
This was why i was expecting some strong arguments supporting that the panchayat system actually
worked well. And claims to support that if there were any errors in that system, they can be easily removed
in private judiciary system.

I also missed footnotes and references you used for writing the articles. Making us believe
the way you interpreted the facts instead of giving us the chance to look at possible alternative
interpretations.
Some claims like “There was a bit of politics, people made their own groups.” , “this was a perfect system”
“it was totally ruined by the Indian govt by making it an extension of the government.”
required more explanation like what facts or sources lead you to believe this.

here goes the link
http://tinyurl.com/d9vewx

1. What panchayat delivered was justice or compromise.

What is the difference? Lets see in a civil case where two people are having a non-criminal dispute, like over property, land, divorce its obvious that justice and compromise are the same.

In a criminal case, again what would you call as justice?
If a rapist agrees to pay Rs 5 Crore to the rape victim, and rape victim agrees to it, is that justice or a compromise?
If a murderer pays for the rest of his life through his nose to the victim’s family instead of other way around when victim’s family pays to keep the murderer incarcerated. Is that justice or compromise?
If a thief pays back the property he stole with compensation back to the person from whom he stole, is that justice or compromise?

2. What was the compostion of the panchayat. Composition in terms of caste, religion, social status.

Panchayats traditionally excluded the people of the lower castes. We are talking about these Panchayats in times of great apartheid, so these kinds of things against lower castes is not unheard of. But in contemporary times, there is a huge shuffling in the societal structures, those people’s prejudices still remain, its very difficult to actually get away from them(despite of any govt law).

Other than the caste system the Panchayats included all segments of the society, like religions, social status, and this was the biggest reason why anyone would go to a Panchayat. It wasn’t a Hindus-only ordeal or Rich people only ordeal.

3. What was the position of women in those panchayats. Were they having enough involvement in the process.

Women were/are included, though I am not sure if I have heard of a woman Surpanch, but that can be accredited to the backward times. But, a woman can as easily be a party in the third party arbitration as well as any man.

4. Was there any scope for a person to live in the society who defies the social norms of that particular panchayat governed area and chooses to live a life of his own.

Sure its totally possible for a person to totally defy the judgment of a Panchayat, in which case everybody ostracized that particular individual. If that individual did not want to be ostracized he would usually comply with the judgment or else, that individual can choose to move out and live in some other part of the land.
Having such a person move out of the society was enough justice. In some cases these people lived in the jungle and formed their own bands of thugs who would then assault travelers.

These kinds of judgments were only applicable for a civil case where usually both the parties were well grounded and could not afford the losses made by not following the judgment.
In a criminal case, I believe again the same thing followed for the people who were a part of the society. Though I am myself not sure what would be done to an individual who comes from some other part of the country, and say raped a woman of that village. Considering now those kinds of things happen more.

The solution is definitely to have private prisons.

5. Wasn’t the outcome of the panchayat on any dispute highly dependent on the morality of sarpanch and panch.

Exactly that’s why they can choose the Sarpanches. If both parties don’t agree on a Sarpanch then they usually bring someone else from another village, or someone totally random and unknown to both the parties.

Some questions worth considering are:
1. What panchayat delivered was justice or compromise.
2. What was the compostion of the panchayat. Composition in terms of caste, religion, social status.
3. What was the position of women in those panchayats. Were they having enough involvement in the process.
4. Was there any scope for a person to live in the society who defies the
social norms of that particular panchayat governed area and chooses to live a life of his own.
5. Wasn’t the outcome of the panchayat on any dispute highly dependent on the morality of sarpanch and panch.