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2024 (4) TMI 1 - HC - Indian LawsDishonour of Cheque - MoU between the parties contained an arbitration clause, pursuant to which arbitration proceedings have been initiated - maintainability of complaint under Section 138 NI Act - HELD THAT - The arbitration proceedings as well as the proceedings under Section 138 of the NI Act arise from separate causes of action and the pendency of the arbitration proceedings would not affect the proceedings under Section 138 of the NI Act. There is no merit in the contention of the petitioners that the complaint under Section 138 of the NI Act is not maintainable in view of the ongoing arbitration proceedings between the parties. Additionally, whether the aforesaid cheque was given as a security or not is something which can only be proved as a matter of defence during trial. There is no merit in the present petition - the present petition is dismissed.
Issues involved:
The petition seeks quashing of a complaint u/s 138 of the Negotiable Instruments Act, 1881 filed by the respondent company against the petitioners. Details of the Judgment: Issue 1: Arbitration Clause and Maintainability of Complaint u/s 138 NI Act The main submission is that the MoU contained an arbitration clause, and since arbitration proceedings have been initiated, the complaint u/s 138 NI Act is not maintainable. It is argued that the amount due will be determined only upon conclusion of arbitration. The respondent relies on a Supreme Court judgment to assert that arbitration and proceedings u/s 138 NI Act can proceed simultaneously. The Supreme Court judgment cited clarifies that arbitration and criminal proceedings under Section 138 of the NI Act are separate and independent proceedings. The Court notes that the pendency of arbitration proceedings does not affect the proceedings under Section 138 of the NI Act. The contention that the complaint u/s 138 NI Act is not maintainable due to ongoing arbitration proceedings is dismissed. The Court emphasizes that whether the cheque was given as security can only be proven as a matter of defense during trial. Conclusion: The Court finds no merit in the petition and dismisses it, along with disposing of all pending applications.
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