In a significant judgment reinforcing the principle that a complainant must come to court with clean hands, the Supreme Court of India has quashed a criminal complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The Court held that suppression of material facts while initiating criminal proceedings amounts to an abuse of the judicial process. The decision came in the case of Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari Patsansta Ltd., where the complainant had failed to disclose key communications from the accused before filing the complaint.
The judgment, delivered by a Division Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan, underscores the importance of fairness and full disclosure in criminal proceedings, especially in cheque dishonour cases which are quasi-criminal in nature.
Background of the Case
The dispute arose out of a long-standing financial relationship between the appellant, Rekha Sharad Ushir, and the respondent, Saptashrungi Mahila Nagari Sahkari Patsansta Ltd., a credit co-operative society based in Kalwan, Maharashtra.
In July 2006, the appellant availed a loan of Rs. 3,50,000 through an overdraft facility. At the time of taking the loan, she issued two security cheques. The first cheque was dishonoured in February 2007, leading to the filing of Criminal Case No. 135 of 2007 under Section 138 of the Negotiable Instruments Act. However, the appellant paid the full amount of Rs. 3,88,077 by September 2016, and the respondent withdrew the case.
According to the respondent, the appellant later took another loan of Rs. 11,97,000 in July 2008. Upon default, the respondent presented the second security cheque (No. 010722) dated October 3, 2016, for Rs. 27,27,460, which was dishonoured. A statutory legal notice was issued on November 11, 2016, and Criminal Case No. 648 of 2016 was filed on December 15, 2016, before the Judicial Magistrate First Class, Kalwan.
The Magistrate issued process on March 2, 2017. The appellant challenged this issuance of process in Criminal Writ Petition No. 2316 of 2017 before the Bombay High Court, which was dismissed on December 18, 2023.
Arguments by the Parties
Appearing for the appellant, Anita Malhotra, submitted that the respondent had already been repaid the earlier loan and was misusing the security cheque by presenting it for a second alleged liability. She further contended that her client had written multiple letters to the respondent requesting loan documents necessary to respond to the statutory notice, but no documents were provided. The complaint was filed without disclosing this correspondence, amounting to suppression of material facts.
The respondent’s counsel argued that the cheque carried a presumption under Section 139 of the NI Act and that all ingredients of the offence under Section 138 were present. It was contended that the documents sought by the appellant were supplied, and her signature acknowledging receipt was available on those records.
However, the Court found that no such supply of documents was ever acknowledged in the complaint or in the statement under Section 200 of the CrPC. The case that documents were provided was made only in January 2025 via an additional affidavit, raising serious doubts about the respondent’s credibility.
Legal Issues Considered
- Whether the suppression of letters dated November 28 and December 13, 2016, by the complainant constituted suppression of material facts.
- Whether the complaint was maintainable when the statutory notice was responded to by the appellant seeking documents but was not provided the same.
- Whether setting criminal law in motion without disclosing relevant communications amounted to an abuse of process.
Supreme Court’s Observations
The Court laid emphasis on the conduct of the complainant. It held that the respondent had deliberately suppressed the appellant’s replies, which requested documents necessary to properly answer the statutory demand notice. The Court noted:
“Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law.”
It was also observed that:
“A person whose case is based on falsehood has no right to approach the court. He can be summarily thrown out at any stage of the litigation.”
Referring to the landmark judgment in S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, the Court reminded that the judicial process must not be misused to harass another party by concealing the truth.
The bench noted that if the two letters had been disclosed to the Magistrate at the time of filing the complaint and affidavit under Section 200 CrPC, the Magistrate might have exercised powers under Section 203 CrPC to dismiss the complaint for want of sufficient grounds.
Final Verdict
The Supreme Court allowed the appeal and quashed:
- The order of the Bombay High Court dated December 18, 2023.
- The complaint filed as Criminal Case No. 648 of 2016 before the Judicial Magistrate First Class, Kalwan.
- The order of cognizance dated March 2, 2017.
The Court clarified that its decision does not bar the respondent from pursuing civil remedies for the recovery of any alleged dues, if available under law.
