The main legal point established is that the arbitration clause in an agreement does not preclude criminal prosecution for offenses, and civil and criminal proceedings can proceed simultaneously.

1. This is a petition under Section 439(2), Cr. P. C., filed by the petitioner, seeking cancellation of anticipatory bail, granted to accused-respondents Nos. 2 to 4, by Additional Sessions Judge, Ferozepur, vide order dated 14-8-2000, in FIR 125 dated 8-11-1999 under Section 406, IPC, registered at Police Station, Guru Har Sahai, District Ferozepur.

2. In the present petition under Section 439 (2), Cr. P. C., filed by Sham Lal, petitioner, seeking cancellation of anticipatory bail, granted to accused respondents Nos. 2 to 4, in the aforesaid FIR under Section 406, IPC, it had been alleged that the aforesaid FIR was registered under the orders of this Court. It was alleged that on the registration of the FIR, accused-respondents Nos. 2 to 4 applied for anticipatory bail before the Sessions Court and that the Additional Sessions Judge, Ferozepur, granted anticipatory bail to them, vide order dated 1-3-2000. It was alleged that the learned Additional Sessions Judge failed to consider that it was a case of embezzlement and even if there was an arbitration clause in the agreement, yet the criminal case was rightly got registered against the rice-millers and it could not be said that it was purely a matter of civil nature. It was further alleged that civil and criminal proceedings, both could go together. It was accordingly prayed that the anticipatory bail, granted to accused respondents Nos. 2 to 4, be cancelled.

3. A reply has been filed by Sh. Manminder Singh, DSP, Jalalabad, admitting therein that the FIR in question was registered after inquiry, in view of the orders passed by this Court. It was alleged that the accused-respondents were granted anticipatory bail by the Additional Sessions Judge, Ferozepur, on 14-3-2000. It was admitted that it was a case of serious nature. It was alleged that the investigation was being conducted by DIG (Crimes), Chandigarh.

4. In the reply filed by accused-respondent No. 2, it was alleged that the petitioner himself was indulging in illegal activities and was involved in various criminal cases. It was further alleged that the petitioner had no locus standi to file the present petition for cancellation of bail. It was further alleged that the dispute was of civil nature and that the arbitration proceedings were going on and as such the learned Additional Sessions Judge had rightly granted anticipatory bail to the accused-respondents. The other allegations contained in the petition were denied and it was prayed that the presentpetition be dismissed.

5. I have heard learned counsel for the parties and gone through the record carefully.

6. Learned counsel for the petitioner and learned counsel for the State have submitted before me that in spite of the arbitration clause in the agreement, the accused-respondents had committed criminal breach of trust by embezzling paddy worth lacks/cores of rupees and as such, the accused-respondents should not have been granted anticipatory bail. Reliance was placed on the law laid down by their Lordships of Hon ble Supreme Court in the case, reported as Trisuns Chemical Industry V/s. Rajesh Aggarwal, 1999 0 CrLJ 4325) on the other hand, learned counsel for the accused-respondents have submitted before me that the learned Additional Sessions Judge had rightly granted anticipatory bail to them. It was submitted that in view of the arbitration clause, the criminal proceedings under Section 406, IPC, were not maintainable. Reliance was placed on the law laid down by their Lordships of Supreme Court in the case reported as Bal Kishan Dass V/s. P.C. Nayar, 1991 0 CrLJ 1837).

7. In 1999 (8) SCC 686 : (1999 Cri LJ 4325) (supra), it was held by their Lordships as under :-

"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 a criminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party af