U/s 138 of ni act
Querist :
Anonymous
(Querist) 26 September 2011
This query is : Resolved
If there is an agreement between the parties and in the clause of the agreement it is agreed that if any disputes arises than it will be taken to the arbitrator, and on such term and condition the agreement was been made. if in such situation a cheque was issued and got dishonored and matter u/s 138NI act was filed. is there any JUDGMENTS/CASE LAW for defense, taking the agreement in question for jurisdiction of the court as the agreement clause it should be taken for arbitration though the NI act is a criminal proceeding.
R.Ramachandran
(Expert) 26 September 2011
The arbitration clause in the agreement between the parties is to settle the dispute between the parties. In case of issuance of cheque, it is presumed it is in discharge of part/whole of the legal debt. THERE IS NO DISPUTE IN THIS. If there had been any dispute, the cheque would not have been issued. Therefore, once a cheque is issued, the presumption is that it has been issued in discharge of legally enforceable debt, and on dishonour of the same, if the money is not paid in response to the notice issued u/s. 138, then an offence is made out. The arbitration clause cannot be invoked in such a situation.
Raj Kumar Makkad
(Expert) 26 September 2011
You yourself hve replied your query. As NI Act is a criminal offence which cannot be agreed to be referred to arbirator so this is out of perview of such clause of agreement. Even no agreement can be made against public policy so there is no scope of case law required by you.
ajay sethi
(Expert) 26 September 2011
i agree with experts . cheque bouncing is criminal ofence . arbitration clause cannot be invoked to escape crimninal liability for dishonour of cheque
prabhakar singh
(Expert) 27 September 2011
i need nothing to speak other than what Mr.Ramachandran has spoken.
Advocate Bhartesh goyal
(Expert) 27 September 2011
If the suit for recovery of cheque amount would have been fled then certainly the matter could not be decided by civil court as arbitration clause exist in agreement but cheque bouncing is criminal offence for which provisions of Arbitraion and conciliation Act can not be invoked/applied.
Guest
(Expert) 27 September 2011
There are two separate issues, (1) Cheque nouncing to be dealt with under the provisions of NI Act, and (2) dispute about non-fulfillment of conditions of the agreement to be settled under the Arbitration Act. There is nothing in common.
If cheque has been issued, that means there was no dispute for the payment to that extent for which cheque has been issued. The cheque must have been made to honour. If cheque is dishonoured by any reason, relevant provisions of NI Act would be attracted. Sec. 138 applies only to cases of insufficiency of funds, not in all types of reasons of dishonour of cheque.
If any terms and conditions of agreement have not been fulfilled the case would have been referred to arbitration for that purpose only, without affecting payment of cheque.
Arun Kumar Bhagat
(Expert) 09 October 2011
I endorse the views of Mr. Bhartesh Goyal and Mr.PS Dhingra.
