Accused Has a Right to Respond to Statutory Notice—If Documents Are Denied and Letters Suppressed, Complaint Becomes Abuse of Process: Supreme Court Quashes Cheque Bounce Case

Suppression of Material Facts Defeats Justice—Complainant Cannot Trigger Criminal Law by Hiding Documents - Supreme Court quashed the criminal proceedings under Section 138 of the Negotiable Instruments Act, 1881, observing that the complainant institution had deliberately suppressed material facts, including letters from the accused requesting documents to respond to the statutory demand notice.

 In a strongly worded judgment, Justices Abhay S. Oka and Ujjal Bhuyan held: “Setting criminal law in motion by suppressing material facts and documents is nothing but an abuse of the process of law… A complainant who suppresses material facts cannot be allowed to trigger a criminal prosecution.”

“Cheque Deposited After Years, No Loan Papers Supplied, Reply Ignored—Yet Case Filed Under NI Act Without Disclosure”

 The appellant had originally taken a loan of ₹3.5 lakh in 2006 and issued two cheques as security. One cheque was deposited and paid in 2007, leading to her acquittal in that case. However, nearly a decade later in 2016, the second security cheque was deposited for a much larger amount—₹27.27 lakh—allegedly for a fresh loan taken in 2008.  

On receiving a demand notice, the appellant replied through her advocate on 28 November 2016, seeking the documents relied upon in the notice. She followed up again on 13 December 2016, but no reply or documents were furnished.

 Nevertheless, the respondent filed a complaint under Section 138 NI Act on 15 December 2016, and the Magistrate took cognizance. The High Court later refused to interfere. The Supreme Court disagreed.

 The bench noted: “The complainant deliberately suppressed the replies dated 28.11.2016 and 13.12.2016… The respondent made a false case that the appellant did not respond to the notice. Such falsehood strikes at the root of bona fides.”  

“Criminal Law Is a Serious Weapon—Magistrate Must Ascertain Truth Before Issuing Process”  

The Court reaffirmed that before issuing process under Section 204 CrPC, the Magistrate must examine the complainant under oath to assess whether sufficient ground exists. The Supreme Court criticised the Magistrate for issuing process without knowing that the accused had made a reasonable request for documents.  

Justice Oka emphasized: “Recording the complainant’s statement under Section 200 CrPC is not an empty formality… Had the Magistrate been made aware of the accused’s unanswered request for documents, he might have dismissed the complaint under Section 203.”  

 “Presumption Under Section 139 NI Act Exists—But It Cannot Be Built on Concealment”  

The respondent argued that under Section 139 NI Act, there is a presumption that the cheque was issued in discharge of liability.

But the Court was clear: this presumption cannot arise when the very notice on which the complaint is founded is based on concealment.

 The Court observed: “The documents were not just omitted—they were actively hidden. The complaint falsely suggests no reply was given. That deception vitiates the statutory foundation of the case.”  

The Supreme Court quashed the cognizance order dated 2 March 2017 and dismissed Criminal Case No. 648 of 2016 pending before the JMFC, Kalwan.

 However, it clarified: “The complainant’s civil remedy to recover the money, if any, remains open. But a criminal prosecution based on suppression cannot be permitted.”  

This judgment sets a significant precedent in cheque dishonour cases, where process is often initiated mechanically. The Supreme Court has made it clear that complainants must disclose all material facts, and that criminal law is not a tool for pressure tactics in financial disputes.  

As the Court eloquently reminded: “The law demands fairness not only from the accused, but equally from the complainant. Truth cannot be hidden in the pursuit of prosecution.”

 Date of decision: 26/03/2025