if they have given you a suspension, that means you are not working
still they want to extend your work period with them.
They have issued you a show cause that you have not accepted. They can always show you refused to accept it.
They are refusing to relieve you.
I assume you want to join the next company and the reliving letter and a good background check is needed.
Taking a legal stand is not going to really help if you want a clean release.
Instead you should be sitting with the management and prove to them that you have not done anything wrong and that the allegation is false. Just saying they could not prove it is not going to help you