we run an IT company and do projects outsourcing to entrepreneurs and existing companies in India and abroad. we have a very strong legal agreement with each and every client with Arbitration clause of 1996 in case of disputes. our cleints sign up with end cleint the service level agreements and all quality related issues is thier responsibility and our job is only to get the job and give appropriate training. we just take one time consultancy fees which is only 1 % of the turnover
some companies are not able to reach the quality levels demanded by the cleint and hence do not get the payments from end client. in order to harass us they go to police and confuse them that we have cheated them by getting a fraud process.
under threat of arrest the police makes us give them cheques for the consultancy amt and some times more for no fault of ours.
we would like to know can police arrest in such civil matters and we believe that recently supreme court verdict was passed for IPC 420 that if imprisonment is less than than 7 years than one cannot be arrested pls enlighten us and tell what other precautions we can take from court of law to stop this harrassment once for all . False FIR are filed and then to close it huge money is demanded by them .