- When a cheque was dishonoured "separate liability arose in terms of Section 138" of the Negotiable Instruments Act and the arbitration proceedings and the proceedings under Section 138 arise from separate causes of action.
- The Supreme Court in Trisuns Chemical Industry vs. Rajesh Agarwal and Ors., (1999) 8 SCC 686 has held:
We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for acriminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to anoffence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down thecomplaint at the threshold itself. [The Court also held that quashment of FIR or a complaint in exercise of inherentpowers of the High Court should be limited to very extreme exceptions ]