Please note that arbitration proceedings and the cheque bouce case are two different proceedings and both can take place simultaneously. When a cheque is dishonoured, a separate liability arises in terms of Section 138 of the Negotiable Instruments Act, whereas the arbitration proceedings are conducted under the agreement signed between the two parties and this basically relates to the dispute which may relate to recovery of the money.
In the case of Trisuns Chemical Industry v. Rajesh Agarwal, (1999) 8 SCC 686 : 2000 SCC (Cri) 47, decided by the Supreme Court, a similar question arose in relation to arbitration proceedings taken during the continuance of a complaint filed under Sections 415 and 420 of IPC. In the said decision, it was held that merely because arbitration proceedings have been undertaken, the criminal proceedings could not be thwarted.
Similarly, in the case of Sri Krishna Agencies v. State of A.P., (2009) 1 SCC 69 : (2009) 1 SCC (Cri) 241 : AIR 2009 SC 1011 : 2009 Cri LJ 787, the High Court quashed the proceedings under S. 138 of the Negotiable Instruments Act, 1881 for cheque bounce case, on the ground that appellant had already taken recourse to arbitration proceedings. However, the Supreme Court held that there can be no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding if the two arise from separate causes of action. Accordingly, the High Court order was set aside and the proceedings under Section 138 of the Negotiable Instruments Act were restored.
The above decision of the Supreme Court in the case of Sri Krishna Agencies, is squarely applicable to your case. You can show this case to the high court and get the case filed by the opposite party dismissed.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.
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