guranteer under 138

Querist : Anonymous (Querist) 17 November 2009 This query is : Resolved
Respected Experts,
Borrower had taken loan from Agriculture funding from a bank. I am gurantor, and had given 7 blank cheques to the bank at that time.
The borrower & myself had applied for reschedulement to the bank as per RBI guidelines, but the bank did not answer for a long time,so we had gone to the Sr. Civil Court for that and the case is still pending.After that they had given notice under sec. 13/2 of SARFAESI Act.
Now the bank has deposited one cheque of mine in the bank as full & final payment on behalf of borrower.Now their advocate has given notice under sec.138.
Can they take any action under this sec of 138., if the matter is pending in the court.
Thanks.

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Kiran Kumar (Expert) 17 November 2009
first of all civil court has got no jurisdiction in such matters so the choice of forum is not correct in my opinion.

bank has every right to move civil and crimnal proceedings in the instant case.

A V Vishal (Expert) 17 November 2009
The action of the bank is arbitary. During pendency of the case they should not had deposited the cheque. Your advocate can suitably respond to the bank's notice.

adv. rajeev ( rajoo ) (Expert) 17 November 2009
yes bank can initiate the criminal proceedings against you u/s 138 of NI Act. Burden lies on you to prove that blank cheques were issued to the bank at the time sanctioning the loan as gurantor.
Pending case does not affect the criminal proceedings.

Raj Kumar Makkad (Expert) 17 November 2009
The action of the bank is highly arbitrary. The matter is subjudice though the jurisdiction of the civil court is now barred in the matter under dispute but even though untill and unless the matter is finalized from the civil court, the bank should have waited further action. I suggest you to obtain stay order over the proceedings of the bank from the civil court and reply the legal notice properly sent by him stating all the facts in detail so that it may benefit you in future litigation.

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