Supreme Court Quashes Cheque Dishonour Case for Suppression of Facts by Complainant

Supreme Court allowed the criminal appeal by overruling the High Court of Bombay's order, thus quashing the criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.

The appellant, Rekha Sharad Ushir, aggrieved by the order passed by the High Court of Bombay which upheld the direction for issue of process by the Judicial Magistrate First Class (JMFC) in a criminal complaint made by Respondent, Saptashrungi Mahila Nagari Sahkari Patsanstha Ltd., under Section 138 of the Negotiable Instruments Act, 1881, against dishonour of a cheque allegedly drawn by the Appellant in favour of the Respondent, a Credit Co-Operative Society.

While the Respondent averred that the cheque was drawn as security when the Appellant availed an overdraft facility of Rs. 11,97,000/- in July 2008. This second cheque was presented in October 2016 on account of a claimed default in repayment and was dishonoured. The legal demand notice was issued by the Respondent, which was objected to by the Appellant, claiming loan documents. Later, the Respondent presented the criminal complaint, which resulted in the current appeal to the Supreme Court. Interestingly, an earlier complaint under Section 138 NI Act concerning a prior loan had been made by the Respondent against the Appellant but was withdrawn thereafter after the Appellant settled the cheque value.

The Supreme Court noted that the respondent-complainant had withheld material facts, namely two letters sent by the appellant's lawyer asking for the loan papers which were used in the statutory demand notice. the Apex Court also ruled that if the two letters from the appellant's advocate requesting documents had been revealed in the complaint, the Magistrate could have asked questions from the respondent regarding the provision of these documents in the statement under Section 200 of the CrPC. The Court reiterated that it was the obligation of the respondent to provide or at least permit inspection of documents used in the demand notice, particularly because the appellant had reserved her right to respond after being given the same.

Because of the respondent's action of concealing these two material letters from the complaint and the oath statement, and further because the respondent described in general terms a 'false notice reply' without including a copy, the Supreme Court categorically declared that a complainant hiding material facts and documents cannot be permitted to institute criminal proceedings since this is an abuse of the process of law.

The Apex Court reiterated that a litigant who conceals material facts while initiating proceedings cannot approach the court for justice. The Court observed that the respondent did not mention these letters in the complaint presented under Section 200 of the Code of Criminal Procedure, 1973 (CrPC) and in the oath affidavit. The Supreme Court opined that had these letters been disclosed, the learned Magistrate could have questioned the respondent on the supply of documents. The Court additionally opined that it was incumbent upon the respondent to provide or at least give inspection of documents upon which the demand notice relied so that the appellant could serve a proper reply, and the Apex Court has held that the High Court could have intervened and quashed the complaint.

Supreme Court held that initiating criminal law by concealing material facts and documents amounts to abuse of the process of law. The Supreme Court accordingly quashed the complaint and the order of cognizance, making it clear that the respondent's other remedies for recovery of the allegedly due amount would be available.

CORAM: Justice Abhay S. Oka and Justice Ujjal Bhuyan
Between: REKHA SHARAD USHIR VS SAPTASHRUNGI MAHILA NAGARI SAHKARI PATSANSTA LTD 2025 INSC 399
Date of Judgment: 26-03-2025