Existence Of Arbitration Clause Doesn't Automatically Bar Criminal Proceedings: Jharkhand High Court

The Jharkhand High Court, under the bench of Justice Sanjay Kumar Dwivedi, ruled that the presence of an arbitration clause does not automatically preclude criminal proceedings. In the case involving Asit C. Mehta Investment Intermediates Ltd. and others against the State of Jharkhand and another party, the court held that the initiation of arbitration proceedings related to commercial transactions does not necessarily determine the admissibility of criminal proceedings.\r

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Despite the availability of civil remedies for breach of contract through arbitration, the court emphasized that the initiation of criminal proceedings cannot be deemed an abuse of the court's process. The case stemmed from a dispute over share transactions adjudicated through arbitration supervised by the National Stock Exchange of India, resulting in an award in favor of the petitioner company. The High Court observed prima facie evidence of entrustment and cheating, indicating potential criminal liability. It underscored that arbitration provisions do not absolve criminal liability if criminal intent is established. \r

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Consequently, the court dismissed the petitions seeking to quash the criminal proceedings, stating that the determination of criminality should be left for trial, independent of arbitration considerations. The case title is "Asit C. Mehta Investment Intermediates Ltd. And ors vs The State of Jharkhand and Anr. And Connected Matters," with Advocate Mr. Jitendra S. Singh and Mr. Onkar Nath Tewari representing the petitioner.