Credit card outstanding, bank letter for arbitration received

I took a CC facility form Kotak bank and lost my Job after some time. i defaulted on the payments and when contacted by the bank i opted for a settlement. hence received a settlement letter. so i started making payments. also i had a personal loan form Kotak bank for which i was in default of 1 emi and paying the subsequent emi's. out of no where i received a letter form the bank that there is 1.27 lac outstanding against your credit card so we are adjusting the said due from your personal loan payments. i dropped a mail to the bank that Kotak is not honoring its settlement letter but got no satisfactory reply. both the credit card settlement letter and the second letter of adjustment against Personal Loan of my Credit card outstanding was signed by the same authority. when i stooped payment of my credit card settlement emi's , the credit card recovery people approached me and i cited them the letter of adjustment. they forced me to pay the credit card emi's but i clearly told them to issue me a written communication form the Letter issuing authority stating the adjustment letter null and void. but they failed to do so. 2 days back i received an arbitration letter that the Credit card outstanding matter will be in arbitration of some bank appointed arbitrator. i am constantly paying my Personal loan's emi .pls guide. what is to be done now. are they going to arrest me...