Full Judgment Text
REPORTABLE
2025 INSC 399
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 724 OF 2025
REKHA SHARAD USHIR …APPELLANT
versus
SAPTASHRUNGI MAHILA NAGARI
SAHKARI PATSANSTA LTD. …RESPONDENT
J U D G M E N T
ABHAY S. OKA, J.
FACTUAL ASPECTS
1. The Appellant is the accused in Criminal Case No. 648 of
2016 pending before the Judicial Magistrate First Class, Kalwan
(for short, ‘the JMFC’). The complaint was filed by the respondent
before the JMFC alleging the commission of an offence punishable
under Section 138 of the Negotiable Instruments Act, 1881 (for
short, ‘the NI Act’) on the basis of the dishonour of a cheque, which
was allegedly issued by the appellant in favour of the respondent,
a Credit Co-Operative Society.
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2025.03.26
17:47:45 IST
Reason:
Criminal Appeal No. 724 of 2025 Page 1 of 17
2. It is alleged by the respondent that the appellant had
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obtained a loan of Rs. 3,50,000/- from the respondent on 3 July
2006 through an overdraft facility. At the time of obtaining the
loan, she issued two security cheques bearing Nos. 010721 and
010722. Due to a default in repayment, the respondent deposited
the first cheque (No.010721) drawn on 10th February 2007 for the
amount of Rs.3,75,976/-, which was dishonoured. Following a
legal demand notice from the respondent’s advocate, the
respondent filed Criminal Case No. 135 of 2007 under Section 138
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of the NI Act on 4 April 2007. The appellant paid the cheque
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amount before the JMFC, Kalwan Court, on 23 September 2016,
following which the respondent withdrew the prosecution, and the
appellant was acquitted on the same date.
3. In the interregnum, the appellant was allegedly granted
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another loan of Rs. 11,97,000/- on 25 July 2008 by the
respondent. Due to an alleged default in repayment of the loan
amount and interest accrued thereon, the respondent deposited
the second cheque (No. 010722) drawn on 3rd October 2016 for
the amount of Rs. 27,27,460/- which was dishonoured on 14th
October 2016. The respondent issued a legal notice dated 11th
Criminal Appeal No. 724 of 2025 Page 2 of 17
November 2016, claiming that the cheque was issued towards
repayment of an overdraft facility of Rs.11,97,000/- allegedly
taken by the appellant on 25th July 2008.
4. While disputing the case made out in the demand notice,
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through her advocate’s reply on 28 November 2016, the appellant
sought the supply of the loan documents from the respondent to
enable her to give a reply to the statutory notice. By writing another
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letter through her advocate on 13 December 2016, she informed
the advocate for the respondent that the documents had not been
supplied to her.
5. The respondent filed the complaint bearing Criminal Case No.
648 of 2016 before JMFC, Kalwan, alleging the commission of an
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offence punishable under Section 138 of the NI Act on 15
December 2016 in relation to dishonoured Cheque No.010722. The
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JMFC issued the process on 2 March 2017. Challenging the
issuance of process, the appellant filed a Criminal Writ Petition No.
2316 of 2017 before the Hon’ble High Court of Bombay, which was
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dismissed by the impugned order dated 18 December 2023. The
High Court found no infirmities in the order of the JMFC issuing
Criminal Appeal No. 724 of 2025 Page 3 of 17
process and held that the contentions raised by the appellant
could only be decided at trial.
SUBMISSIONS
6. The learned counsel appearing for the appellant submitted
that she had already paid the first loan of Rs. 3,88,077/- on 30th
March 2007, and the said loan account was subsequently closed.
Yet, the respondent chose to prosecute her wrongly and was forced
to repay the entire loan again as she did not have the loan
statement then and could not prove her earlier payment. It was
further contended that the respondent, despite having full
knowledge of the repayment, maliciously misused the second
security cheque (No. 010722) to initiate false proceedings by
depositing the said cheque within 10 days after the appellant had
paid the entire amount pertaining to the first loan. The learned
counsel emphasized that such an act amounted to a clear abuse
of the process of law. The learned counsel pointed out that while
filing the complaint, the respondent suppressed the most material
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letters dated 28 November 2016 and 13 December 2016
addressed by the advocate for the appellant to the advocate for the
respondent and the fact that the copies of the documents were
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demanded by the appellant were not furnished by the respondent.
Therefore, the complaint is an abuse of the process of law.
7. The learned counsel appearing for the respondent submitted
that there exists a presumption under Section 139 of the NI Act in
favour of the cheque holder. Thus, it shall be presumed that the
respondent received the cheque for the discharge of debt by the
appellant, and this presumption can only be rebutted by adducing
evidence during the trial. He contended that the complaint
contained all the essential ingredients and that there was no
suppression of material facts warranting dismissal of the
complaint. No provision of Chapter XVII of the NI Act mandates the
supply of the documents relied upon in the demand notice.
Additionally, he submitted that the replies of the appellant to the
respondent dated 15th November 2016 and 28th November 2016
were not material for establishing a prima facie case for issuing the
process. The counsel for the respondent also filed an additional
counter-affidavit, producing a letter dated 29th November 2016,
written by the appellant to the respondent, seeking copies of the
statements of various loan accounts maintained by her and her
husband, which were duly provided. It was submitted that the
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appellant acknowledged receipt of the same by affixing her
signature thereon. It was submitted that the appellant failed to
disclose the same in the memorandum of her Special Leave
Petition.
CONSIDERATION OF SUBMISSIONS
8. Section 138 of the NI Act reads thus:
“
138. Dishonour of cheque for insufficiency, etc., of
funds in the account .—Where any cheque drawn by a
person on an account maintained by him with a banker
for payment of any amount of money to another person
from out of that account for the discharge, in whole or
in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money
standing to the credit of that account is insufficient to
honour the cheque or that it exceeds the amount
arranged to be paid from that account by an agreement
made with that bank, such person shall be deemed to
have committed an offence and shall, without prejudice
to any other provision of this Act, be punished with
imprisonment for a term which may extend to two
years, or with fine which may extend to twice the
amount of the cheque, or with both:
Provided that nothing contained in this section
shall apply unless—
( a ) the cheque has been presented to the bank
within a period of six months from the date on which
it is drawn or within the period of its validity,
whichever is earlier;
( b ) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice
in writing, to the drawer of the cheque, within thirty
Criminal Appeal No. 724 of 2025 Page 6 of 17
days of the receipt of information by him from the bank
regarding the return of the cheque as unpaid; and
( c ) the drawer of such cheque fails to make the
payment of the said amount of money to the payee or
as the case may be, to the holder in due course of the
cheque within fifteen days of the receipt of the said
notice.
Explanation .—For the purposes of this section,
“debt or other liability” means a legally enforceable
debt or other liability. ”
9. A court of the Judicial Magistrate can take cognizance of an
offence punishable under Section 138 of the NI Act based on a
complaint filed under Section 200 of the Code of Criminal
Procedure, 1973 (for short, ‘the CrPC’). The corresponding
provision under the Bhartiya Nagarik Suraksha Sanhita, 2023 (for
short, ‘the BNSS’) is Section 223. After a complaint is filed under
Section 200 of the CrPC, the learned Magistrate is duty-bound to
examine the complainant on oath and witnesses, if any, present
and reduce the substance of such examination into writing. What
is reduced into writing is required to be signed by the complainant
and witnesses, if any.
10. Recording the complainant's statement on oath under
Section 200 of the CrPC is not an empty formality. The object of
recording the complainant's statement and witnesses, if any, is to
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ascertain the truth. The learned Magistrate is duty-bound to put
questions to the complainant to elicit the truth. The examination
is necessary to enable the Court to satisfy itself whether there are
sufficient grounds to proceed against the accused. After
considering the complaint, the documents produced along with the
complaint, and the statements of the complainant and witnesses,
if any, the learned Magistrate has to apply his mind to ascertain
whether there is sufficient ground for proceeding against the
accused. If he is satisfied that there is sufficient ground to proceed
against the accused, then the learned Magistrate has to issue a
process in terms of sub-Section (1) of Section 204 of the CrPC. The
corresponding provision under the BNSS is Section 227. Setting
criminal law in motion is a serious matter. The accused faces
serious consequences in the sense that he has to defend himself
in the trial.
11. It is settled law that a litigant who, while filing proceedings in
the court, suppresses material facts or makes a false statement,
cannot seek justice from the court. The facts suppressed must be
material and relevant to the controversy, which may have a bearing
on the decision making. Cases of those litigants who have no
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regard for the truth and those who indulge in suppressing material
facts need to be thrown out of the court. In paragraph 5 of the
decision of this Court in the case of S.P. Chengalvaraya Naidu
1
v. Jagannath & Ors. , it is held thus:
“5. The High Court, in our view, fell into
patent error. The short question before the
High Court was whether in the facts and
circumstances of this case, Jagannath
obtained the preliminary decree by playing
fraud on the court. The High Court,
however, went haywire and made
observations which are wholly perverse. We
do not agree with the High Court that “there
is no legal duty cast upon the plaintiff to
come to court with a true case and prove it
by true evidence”. The principle of “finality
of litigation” cannot be pressed to the extent
of such an absurdity that it becomes an
engine of fraud in the hands of dishonest
litigants. The courts of law are meant for
imparting justice between the parties. One
who comes to the court, must come with
clean hands. We are constrained to say that
more often than not, process of the court is
being abused. Property-grabbers, tax-
evaders, bank-loan-dodgers and other
unscrupulous persons from all walks of life
find the court-process a convenient lever to
retain the illegal gains indefinitely. We have
no hesitation to say that a person, who's
case is based on falsehood, has no right
1
(1994) 1 SCC 1
Criminal Appeal No. 724 of 2025 Page 9 of 17
to approach the court. He can be
summarily thrown out at any stage of the
litigation . ”
(emphasis added)
12. Section 138 of the NI Act has three conditions incorporated
in clauses (a) to (c) of the proviso. Firstly, the cheque has been
presented to the bank within a period of six months from the date
on which it is drawn or within the period of its validity, whichever
is earlier. Secondly, if a cheque is returned by the bank unpaid,
the payee or the holder in due course must make a demand for
payment of the amount of money covered by the cheque by issuing
a notice in writing within 30 days of receipt of information from the
bank regarding the return of the cheque as unpaid. The third
condition is that the drawer of the cheque must fail to make
payment of the amount covered by the cheque within 15 days of
the receipt of the notice.
13. In the present case, a statutory notice under Section 138 of
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the NI Act was issued by the advocate for the respondent on 11
November 2016 to the appellant. The notice proceeds on the
footing that the respondent, a Co-operative Credit Society, is
providing financial assistance to its members and is also carrying
on banking business. The allegation in the notice served to the
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appellant is that the appellant was a member of the credit society
and had taken an overdraft facility from the respondent in the sum
of Rs.11,97,000/-. Paragraph 1 of the notice specifically relies
upon the fact that the appellant has executed necessary
documents and that the appellant has agreed and acknowledged
to make repayment of the amount advanced with interest.
Thereafter, the notice proceeds to describe how the cheque issued
by the appellant in the sum of Rs.27,27,460/- was returned
unpaid.
14. Within a few days of receiving the notice, on 28th November
2016, the appellant replied to the notice through her advocate in
which it was mentioned that after receiving the notice, a written
application had been made by the applicant to the respondent
calling upon the respondent to provide documents relied upon in
the notice. The appellant stated that the said documents had not
been provided and that she would reply to the demand notice after
receiving the documents. In the reply, she denied the claim of the
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respondent. On 13 December 2016, the appellant’s advocate
addressed a letter to the respondent reiterating that though the
appellant had demanded the documents from the respondent, the
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same had not been provided. Thereafter, the respondent filed a
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complaint on 15 December 2016 before JMFC, Kalwan. The
statement of the respondent-complainant in the form of an
affidavit was filed on the same day.
15. It is pertinent to note that in the counter to the present
appeal, the respondent has not denied the receipt of the letters
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dated 28 November 2016 and 13 December 2016. The
complaint and affidavit in support of the complaint only refer to
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the notice dated 15 November 2016 issued by the advocate for
the appellant to the respondent. What is stated in the complaint
reads thus:
“ ……………………………………………………..
[D] The notice sent on the first address has
been received on 15.11.2016. However,
from the second address, envelope has been
returned on 15.11.2016 with the postal
remark as ‘left’. ”
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However, the respondent suppressed the letters dated 28
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November 2016 and 13 December 2016 in the complaint and its
statement on oath. Now, by filing an additional affidavit, it is
contended by the respondent that certain documents were
supplied to the appellant. A copy of the application dated 29th
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November 2016, submitted by the appellant to the respondent's
manager, is placed on record seeking loan account statements.
Accordingly, certain account statements bearing the appellant's
signature have been produced. The signatures on the account
statements do not bear any date.
16. It is pertinent to note that in the notice under Section 138 of
the NI Act, in paragraph 1, the respondent specifically relied upon
documents executed by the appellant and the acknowledgment of
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the loan made by the appellant. By a reply dated 28 November
2016, the appellant informed the respondent that by filing a written
application, the appellant had demanded certain documents,
which had not been provided. What is pertinent to note is that the
respondent does not deny the receipt of the reply dated 28th
November 2016. No reply was sent by the respondent pointing out
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that the documents were supplied. Even in the letter dated 13
December 2016, the appellant made the same grievance regarding
the non-supply of the documents relied upon in the demand notice.
Before filing the complaint, the respondent failed to respond to the
said letter.
Criminal Appeal No. 724 of 2025 Page 13 of 17
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17. A counter to this appeal was filed by the respondent on 7
August 2024, in which it is not even a case made out that requisite
documents, as demanded by the appellant, were handed over to
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her on 29 November 2016. A case was belatedly made out for the
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first time by filing an additional affidavit on 9 January 2025 that
statements of loan account sought by the appellant were furnished
to her and her signature appears on the statements. As stated
earlier, though it is claimed that the appellant’s signatures appear
on the said documents acknowledging the receipt, no date is
mentioned below the signatures. In the additional affidavit, the
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respondent alleged that by a letter dated 29 November 2016, the
appellant had called upon the respondent to provide the loan
account statements of the six loan accounts mentioned in the said
letter. Therefore, the stand taken in January 2025 that the
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statement of accounts was supplied on 29 November 2016 is
clearly an afterthought.
18. The fact remains that in the complaint, the respondent has
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suppressed the reply dated 28 November 2016 and the letter
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dated 13 December 2016 sent by the appellant’s advocate. These
two documents have also been suppressed in the statement on
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oath. The respondent made out a false case that the appellant did
not reply to the demand notice. Moreover, the case that the
documents as demanded were supplied is not pleaded in the
complaint and statement under Section 200 of CrPC.
19. If these two letters were disclosed in the complaint, the
learned Magistrate while recording the statement under Section
200 of CrPC, could have always questioned the respondent on the
supply of documents to the appellant. What is important is that in
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the reply dated 28 November 2016, the appellant had reserved
her right to give a reply to the demand notice after receiving the
documents. It was the respondent's duty to supply documents to
the appellant or her advocate to enable the appellant to properly
reply to the demand notice. At least, the inspection of documents
could have been provided to the appellant. After noticing the fact
that notwithstanding service of two letters written by the appellant,
relied upon documents were not provided to the appellant, the
learned Magistrate could have dismissed the complaint by
exercising power under Section 203 of CrPC, as the appellant could
not have replied to the statutory notice without looking at the
documents relied upon.
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20. Thus, this was a case where very material documents in the
form of two letters addressed by the appellant were suppressed in
the complaint and the statement on oath under Section 200. In the
statement on oath, the respondent-complainant vaguely referred to
a ‘false notice reply’, but a copy of the reply was not produced by
the respondent along with the complaint.
21. 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.
22. Hence, the High Court ought to have interfered and quashed
the complaint. Accordingly, the impugned order of the High Court
is set aside. The complaint bearing S.C. No. 648 of 2016 pending
in the court of the learned Judicial Magistrate First Class at Kalwan
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and the order of cognizance dated 2 March 2017 are hereby
quashed and set aside.
Criminal Appeal No. 724 of 2025 Page 16 of 17
23. We make it clear that the other remedies of the respondent to
file proceedings for recovery of the amount allegedly due and
payable by the appellant in accordance with law will remain open.
24. The appeal is, accordingly, allowed.
……………………..J.
(Abhay S. Oka)
……………………..J.
(Ujjal Bhuyan)
New Delhi;
March 26, 2025
Criminal Appeal No. 724 of 2025 Page 17 of 17