Legal Question in Business Law in India

A loan payable by 24 postdated cheques of equated monthly installment was given to Mr. X, the borrower, on the guarantee of Mr.Y. There is an arbitration clause also in guarantee deed as well as terms and conditions of loan. My question is:Whether after dishonour of 3 or 4 cheques of borrower, arbitration proceeding regarding the amount of these 3 or 4 dishonoured cheques can be initiated against guarantor in addition to action u/s 138 against borrower and whenever other more cheques of borrower were dishonoured, another arbitration proceeding can be initiated against guarantor in addition to action u/s 138 against borrower of this second set of dishonoured cheques and so on. As cause of action arise each time whenever cheques are dishonoured.


Asked on 3/05/13, 3:25 am

2 Answers from Attorneys
Fca Prashant Chavan Expert Edge LLP

05.03.2013

Dear Sir / Madam,

Arbitration proceedings have to be lodged just once. The number of cases for cheque bouncing under Section 138 of the Negotiable Instruments Act will increase each time a fresh cheque gets dishonoured. Yes ... proceedings for recovery against the guarantor can be simultaneously initiated.

Regards,

FCA Prashant Chavan

Mumbai

(You can also mail me for any further on-line advice at [email protected])

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Answered on 3/05/13, 5:06 am
Jayesh Desai Jayesh Desai

One needs to examine the Agreement.

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Answered on 3/08/13, 2:38 am


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