Supreme Court Quashes Complaint Under Section 138 NI Act for Suppression of Material Documents and Abuse of Process

A bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan heard an appeal challenging the Bombay High Court’s refusal to quash a complaint under Section 138 of the Negotiable Instruments Act arising from the dishonour of a cheque drawn by a borrower in favour of a cooperative credit society. The appellant contested the issuance of process by the JMFC, arguing that the complainant had suppressed material correspondence and thereby abused the process of law.

The Court allowed the appeal and set aside the High Court order, holding that the complaint and the order of cognizance were vitiated by suppression of material documents and amounted to an abuse of the process of court. The bench noted the settled principle that “One who comes to the court, must come with clean hands,” and stressed that complaints which suppressed material facts could not be permitted to set criminal law in motion. The Court, in its reasoning, observed: "While filing a complaint under Section 200 of CrPC and recording his statement on oath in support of the complaint, as the complainant suppresses material facts and documents, he cannot be allowed to set criminal law in motion based on the complaint. Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law." The Court therefore quashed Criminal Case No. 648 of 2016 and the cognizance order dated 2 March 2017, while leaving open the respondent’s civil remedies for recovery.

Background The dispute arose when the respondent cooperative society filed a complaint under Section 138 NI Act alleging that cheque No. 010722 for Rs. 27,27,460/- issued by the appellant was dishonoured. The society asserted that the cheque was in respect of an overdraft facility of Rs. 11,97,000/- allegedly availed by the appellant on 25 July 2008. Earlier, the appellant had faced a separate criminal proceeding in 2007 concerning cheque No. 010721, which she paid before the JMFC and which led to withdrawal of that prosecution and her acquittal.

After the bank returned the second cheque unpaid, the society issued a demand notice dated 11 November 2016. The appellant’s advocate replied on 28 November 2016 stating that documents relied upon in the notice had been demanded and not supplied, and on 13 December 2016 reiterated the non-supply. The complaint, filed on 15 December 2016, did not disclose these letters and the statement on oath in support of the complaint likewise omitted them. The appellant challenged the issuance of process before the Bombay High Court, which dismissed her writ petition holding that the contentions could be considered at trial.

On appeal to the Supreme Court, the appellant argued that the respondent had deliberately suppressed the correspondence showing demand-reply and a request for documents, thereby preventing her from effectively replying to the statutory notice and amounting to abuse of process. The respondent relied on the statutory presumption under Section 139 NI Act and contended that production and contestation of documents were matters for trial. The Supreme Court examined the record and found that the complaint and affidavit did not disclose the letters of 28 November and 13 December 2016, and that the respondent’s later assertion (by way of an additional affidavit filed in January 2025) that documents had been supplied on 29 November 2016 was an afterthought unsupported in the original pleading. Applying settled law on suppression of material facts, and following precedent that a litigant whose case rests on falsehood or suppression may be summarily denied relief, the Court concluded that the learned Magistrate could have and should have considered the nondisclosure and could have exercised powers under Section 203 CrPC. The Court therefore quashed the complaint and cognizance order, while clarifying that the respondent’s civil remedy for recovery remained available.

Case Details: Case No.: 2025 INSC 399; Criminal Appeal No. 724 of 2025 Case Title: Rekha Sharad Ushir …Appellant versus Saptashrungi Mahila Nagari Sahkari Patsansta Ltd. …Respondent Appearances: For the Petitioner(s): [Advocates not indicated in the judgment] For the Respondent(s): [Advocates not indicated in the judgment]