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Issues involved: Appeal against quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act, 1981 by the Andhra Pradesh High Court based on the commencement of arbitration proceedings.
Judgment Summary: The Supreme Court allowed the appeal against the judgment of the Andhra Pradesh High Court, which had quashed the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1981. The High Court had based its decision on the commencement of arbitration proceedings by the appellant. The Supreme Court found that the arbitration proceedings and criminal proceedings could proceed simultaneously if they arose from separate causes of action. The Court referred to the decision in Trisuns Chemical Industry vs. Rajesh Agarwal and Ors., (1999) 8 SCC 686, which held that the mere undertaking of arbitration proceedings does not thwart criminal proceedings. The appellant's argument that the dishonored cheques gave rise to a separate liability under Section 138 of the Act, distinct from the arbitration proceedings, was accepted by the Supreme Court. The Court set aside the High Court's order and directed the complaint to be restored before the IInd Additional Chief Metropolitan Magistrate, Hyderabad for further proceedings in accordance with the law.
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