Arbitration Agreement – Acquittal of offence under Section 138 of the Negotiable Instruments Act, 1881, since nature of dispute is civil and without approaching arbitrator, complaint is not maintainable.
The complainant and the accused entered into joint development agreement dated 27.1.2005. The complainant deposited Rs.27 lakhs as refundable security deposit with the accused. The cheque of the accused for return of security deposit was dishonoured.
The trial Court acquitted the accused vide judgment dated 11.4.2014 on the ground that the nature of dispute is civil action and without approaching the arbitrator under AA the complainant cannot maintain the complaint against the accused for the offence under Section 138 of the NI Act.
In appeals, HELD, that the parallel proceedings under the Arbitration Act and criminal action under Section 138 of NI Act. If at all there is any award by the proceedings before the arbitrator, then at the most, it can be a defence to the accused and cannot be a ground to hold that the complaint is not maintainable. Similarly, if the civil suit is decreed on the same cause of action and for the amount covered by the cheque, the deposit made in criminal case has to be adjusted. The finding of the trial Court on the sole ground that the joint development agreement stipulates for reference of disputes to arbitrator and the matter being civil in nature, the complainant cannot maintain the complaint is not legally sustainable.
Judgment dated 15.2.2024 of the Karnataka High Court in Criminal Appeal No.434 of 2014 of M/s. Durga Projects Inc Vs. Sri B.G.Babu Reddy with connected matter.
