Legal Question in Banking Law in India

Hi, I had taken a personal loan from ICICI bank ltd. in 2008 for Rs.2,00,000 and they granted Rs.1,88,000 cutting the rest as taxes. I had been makin payments on them till Oct 2010 and then entered into a settlement agreement with the bank to pay a lumpsum amount that was decided to be the principal which was astonishingly 1,20,000 and some change after three years.....anyways i was skeptical about giving post dated checks and i told them i want to do cash payments or DD's which an executive can collect from me. But the manager who was doing the settlement for me convinced me for checks saying there wont be any extra charge for the bounced checks. So, the first two payments of Rs. 40,000 went smoothly the third check bounced coz the bank didnt have money that day. The fault was mine i hadn't put the money on time for the check to clear. So, I called the bank like a zillion times to tell them the payment has bounced and i even called the executive who setup the settlement for me and told him that check bounced arrange for it to be paid by cash. There wasn't any response from either the executive or the bank itself and now 4 months later the bank manager calls and tells me that i have to pay EMI's. And i told him i won't ill still be ready to pay the agreed amount which is another 40,000 at once but he says i have to write an application and then he'll see if it can be done that way coz according to him is the check bounced then the agreement was void. Now, i don't know much about law but to my understanding i know that if the check bounced then they have to send me some correspondence within some specified time period informing me that the last check bounced and that the agreement was void. They haven't done that inspite of me calling them continously for three months. So, considering the bank decides not to continue with the settlement and asks me to pay the EMI's can i take them to court and get it settled on the previously agreed amount or how does that work. I need help and now. Genuine advise needed please.

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