In a significant ruling, the Supreme Court of India has quashed a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 after finding that the complainant had suppressed crucial documents while initiating proceedings. The case titled Rekha Sharad Ushir v. Saptashrungi Mahila Nagari Sahkari Patsansta Ltd. underscores the principle that criminal law cannot be set in motion on the basis of concealment or half-truths.
Background of the Case
The dispute arose out of a loan transaction wherein the respondent-credit society alleged that the appellant had defaulted on repayment, leading to dishonour of a security cheque worth ₹27,27,460/-. A complaint under Section 138 NI Act was filed in 2016 after issuance of a statutory demand notice.
However, the appellant contended that she had already cleared her earlier loan obligations and that the complainant had deliberately misused the second cheque. Most importantly, the appellant argued that her letters dated November 28, 2016 and December 13, 2016—wherein she requested copies of the loan documents relied upon in the demand notice—were never disclosed in the complaint.
Supreme Court’s Observations
A Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan held that suppression of such material facts amounted to an abuse of process of law.
Key findings include:
- Recording of a complainant’s statement under Section 200 CrPC (now Section 223 BNSS) is not a mere formality. The Magistrate must be satisfied that sufficient grounds exist to proceed.
- By concealing letters that showed the appellant’s request for documents, the complainant misled the court and deprived the accused of a fair chance to respond to the statutory notice.
- Setting criminal law in motion on the basis of suppressed facts is impermissible.
Accordingly, the Court quashed the complaint and cognizance order passed by the Judicial Magistrate First Class, Kalwan. However, it clarified that the complainant remained free to pursue civil remedies for recovery of dues.
Legal Significance
This judgment is a crucial precedent in cheque bounce cases, reinforcing that:
- Clean hands are essential – Litigants must disclose all relevant material while filing complaints under Section 138 NI Act.
- Magistrate’s duty – Courts must carefully scrutinize complaints and accompanying documents to prevent misuse of the criminal process.
- Right to documents – Where the drawer seeks documents relied upon in a demand notice, the payee must provide them, failing which the complaint may not stand.
The ruling reiterates that suppression of material facts is fatal to criminal proceedings under cheque bounce law. It sends a strong message against misuse of the Negotiable Instruments Act as a tool of harassment.
Advocate Anoop Verma, practicing at the Punjab & Haryana High Court, Chandigarh, and the Supreme Court of India, specializing in criminal law.