Holding

A special court may not rely on material not included in the police report and its annexures when exercising jurisdiction under section 239 of the CrPC; discharge must be based solely on the chargesheet and accompanying documents.

Summary

The CBI filed an FIR in 2006 alleging that a senior Cotton Purchase Officer and his associates conspired to buy cotton at market rates, hoard it, and sell it to the Cotton Corporation of India (CCI) at the higher Minimum Support Price (MSP) through benami farmers, causing an alleged loss of Rs 21.19 crore. A chargesheet was filed, but the accused sought discharge under section 239 of the CrPC, relying on two letters – one from the CBI to CCI and a reply from CCI stating no loss – which the special court and the High Court accepted, discharging the accused. The State appealed, contending that the special court improperly considered material not part of the police report. The Supreme Court held that at the stage of discharge, a magistrate may consider only the police report and documents filed under section 173, and cannot rely on defence‑sought material such as the letters. Consequently, the discharge orders were set aside and the criminal appeals were allowed, directing the special court to re‑exercise its jurisdiction under section 239 without the disputed letters.

Issues considered

Whether a special court/magistrate can consider documents not part of the police report and annexures, such as letters summoned by the defence, while exercising jurisdiction under section 239 of the CrPC.
Whether the discretion under section 239 of the CrPC was exercised correctly in discharging the accused in this case.

Legislation cited

Code of Criminal Procedure, 1973s. 173, s. 207, s. 207-A, s. 209, s. 227, s. 228, s. 239, s. 240
Indian Penal Code, 1860s. 120B, s. 420, s. 468, s. 471
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2)

Headnote

Issue for Consideration Whether the two letters could have been looked at or relied upon by the Special Court for exercising its jurisdiction u/s.239, Code of Criminal Procedure, 1973. Headnotes† Code of Criminal Procedure, 1973 – – Material to be relied upon – FIR registered by CBI, charges filed u/ss.120B r/w. 420, 468, 471, IPC and s.13(2) r/w 13(1)(d), PC Act alleging that the accused conspired to purchase cotton at lower prices, hoarded these cotton stocks and resold it to Cotton Corporation of India

Subjects

Section 239 of Code of Criminal Procedure, 1973DischargeCotton stocksCotton stocks hoardedHoarded cotton stocks resoldBenami farmersMinimum Support Price (MSP)Higher MSP ratesCotton Corporation of India (CCI)Wrongful lossWrongful gainConspiracyModus operandiForgeryFabrication, Forged documentsAbused official positionAgricultural Market Committee (AMC)Cotton Purchase Officer (CPO)Suo motu FIRReliance on material invited at the instance of the defenceReliance on the documents made available by the accused

Judgment

[2025] 5 S.C.R. 988 : 2025 INSC 758

State Represented By Inspector of Police, CBI,
ACB, Visakhapatnam
v.
Eluri Srinivasa Chakravarthi and Others
(Criminal Appeal No(s). 2784-2794 of 2025)
22 May 2025
[Pankaj Mithal and S.V.N. Bhatti,* JJ.]

Issue for Consideration
Whether the two letters could have been looked at or relied upon
by the Special Court for exercising its jurisdiction u/s.239, Code
of Criminal Procedure, 1973.

Headnotes†
Code of Criminal Procedure, 1973 – s.239 – Discharge –
Material to be relied upon – FIR registered by CBI, charges filed
u/ss.120B r/w. 420, 468, 471, IPC and s.13(2) r/w 13(1)(d), PC
Act alleging that the accused conspired to purchase cotton
at lower prices, hoarded these cotton stocks and resold it to
Cotton Corporation of India (CCI) at higher MSP rates through
benami farmers, causing wrongful loss to CCI and wrongful
gain to the accused persons – Accused persons filed petition
u/s.239 and inter alia relied on letters dtd. 08.01.2007 addressed
by the CBI to the CCI and the reply of CCI dated 31.01.2007
stating that there was no loss caused to CCI – Accused were
discharged relying on the letter dtd. 31.01.2007 – Interference
with:
Held: The discharge was ordered not by referring to any of the
situations referred in s.239, but by relying on the documents made
available by the accused – The procedure followed by the special
court and confirmed by the High Court is illegal and contrary to the
binding precedent – The passing remark by the High Court that
there is no material for cheating and forgery belies the existence
of allegations and documents – For discharge, the special court
and the High Court ought to have considered the chargesheet and
list of documents, in the background of allegations made against

* Author
[2025] 5 S.C.R. 989

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

the accused – However, they considered the material invited at
the instance of the defence for ordering discharge – Discretionary
limit as set out u/s.239 not complied with – Impugned orders set
aside, discharge petitions filed by the accused dismissed – Special
court to exercise its jurisdiction in terms of s.239 uninfluenced by
any of the observations made herein. [Paras 27, 28]
Code of Criminal Procedure, 1973 – s.239 – Jurisdiction
under – Exercise of discretion – Duty of Magistrate –
Discussed. [Paras 25.1-25.3, 26-26.3]

Case Law Cited
Satish Mehra v. Delhi Administration and Another [1996] Supp.
4 SCR 197 : (1996) 9 SCC 766; State of Bihar v. Ramesh Singh
[1978] 1 SCR 257 : (1977) 4 SCC 39; Supdt. and Remembrancer of
Legal Affairs, West Bengal v. Anil Kumar Bhunja and Others [1980]
1 SCR 323 : (1979) 4 SCC 274; State of Orissa v. Debendranath
Padhi [2004] Supp. 6 SCR 460 : (2005) 1 SCC 568; State of
Rajasthan v. Swarn Singh @ Baba, Criminal Appeal No. 856
of 2024; Sheoraj Singh Ahlawat v. State of U.P. [2012] 10 SCR
1034 : (2013) 11 SCC 476; State of Madhya Pradesh v. Rakesh
Mishra [2015] 3 SCR 765 : (2015) 13 SCC 8; State of Rajasthan v.
Ashok Kumar Kashyap [2021] 4 SCR 158 : (2021) 11 SCC 191;
Union of India v. Prafulla Kumar Samal and Another [1979] 2 SCR
229 : (1979) 3 SCC 4 – referred to.

List of Acts
Code of Criminal Procedure, 1973; Prevention of Corruption Act,
1988; Penal Code, 1860.

List of Keywords
Section 239 of Code of Criminal Procedure, 1973; Discharge;
Cotton stocks; Cotton stocks hoarded; Hoarded cotton stocks
resold; Benami farmers; Minimum Support Price (MSP); Higher MSP
rates; Cotton Corporation of India (CCI); Wrongful loss; Wrongful
gain; Conspiracy; Modus operandi; Forgery; Fabrication, Forged
documents; Abused official position; Agricultural Market Committee
(AMC); Cotton Purchase Officer (CPO); Suo motu FIR; Reliance
on material invited at the instance of the defence; Reliance on the
documents made available by the accused.
990 [2025] 5 S.C.R.

Supreme Court Reports

Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No(s).
2784-2794 of 2025
From the Judgment and Order dated 27.12.2021 of the High Court
of Andhra Pradesh at Amravati in CRLRC Nos.3388 and 3393 of
2017, CRLRC Nos. 6, 9, 12, 15, 29, 424, 512, 513 and 861 of 2018

Appearances for Parties
Advs. for the Appellant:
K M Nataraj, A.S.G., Ms. Rukhmini Bobde, Mukesh Kumar Maroria,
Anuj Srinivas Udupa, Ms. Vanshaja Shukla, Ashok Panigrahi,
Ms. Seema Patnaha.
Advs. for the Respondents:
Shoeb Alam, Sr. Advs., Ms. Mahima Pandey, Mullapudi Rambabu,
M/s. M. Rambabu And Co., Rajat Singh, Sarthak Chandra, Dev
Sareen, K V Girish Chowdary, D Satya Sumanth, Ms. Tatini Basu.

Judgment / Order of the Supreme Court

Judgment

S.V.N. Bhatti, J.

1. Leave granted.
2. The criminal appeals arise from the common order dated 27.12.2021
in Criminal RC No. 3388/2017 and ten other cases in the High Court
of Andhra Pradesh at Amaravati. The prosecution/CBI is the Appellant
in the batch of appeals.
3. On 27.06.2006, the CBI, Visakhapatnam registered FIR RC No.
11(A)/2006-CBI/VSP under sections 120B read with 420 of the Indian
Penal Code, 1860 (‘IPC’) and sections 13(2) read with 13(1)(d) of
the Prevention of Corruption Act, 1988 (‘PC Act’). The registration
of crime was against one, Rayapati Subba Rao/A-1 and a few other
unknown individuals.
4. Between November 1994 and May 2006, A-1 served as Cotton
Purchase Officer (‘CPO’) in the Cotton Corporation of India (‘CCI’),
Guntur Branch. The alleged offences for which the suo motu FIR was
[2025] 5 S.C.R. 991

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

registered by the CBI are said to have happened in the financial year
2004-05. The CCI, as part of a policy, buys cotton at the Minimum
Support Price (‘MSP’) on a year-to-year basis. The CCI, for the
financial 2004-05, released the policy of MSP through letters CCI/
HO/PUR/MSP/2002-2003 dated 10.01.2003, CCI/HO/PUR/2004-2005
dated 18.10.2004, and CCI/HO/PUR/2005-2006 dated 26.12.2005.
5. The relevant parts of the above circulars are excerpted below:
“CCI/HO/PUR/MSP/2002-2003
(…)
Through this letter, it is again advised that whenever kapas
purchases are effected under MSP, the same should be
made only from the market yards/functional market yards
and in the presence of representatives of the APMCs so
that cotton farmers get due benefit of MSP operations.
(…)
The kapas produce brought directly by farmers only in the
market yard be purchased and prices be offered based on
the quality of kapas under MSP guidelines so that farmers
get due benefit for their produce.
xxx xxx xxx
CCI/HO/PUR/MSP/2004-05
(…)
The kapas meeting the quality parameters of FAQ grade,
can be purchased at the minimum support price without
any quantitative limits. However, in actual practice, a
good portion of daily arrivals may fall short of the FAQ
grade parameters and in order to help the cotton farmers,
Corporation may purchase below FAQ grade kapas with
suitable discounts from the support price of the concerned
variety.
(…)
Needless to say all purchases under MSP are to be made
strictly through the market yards and in the presence of
APMC representatives.
xxx xxx xxx
992 [2025] 5 S.C.R.

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CCI/HO/PUR/MSP/2005-2006
(…)
As the main objective of MSP operations is to protect
the interests of the cotton farmers therefore through this
circular, it is again advised that whenever kapas purchases
are effected under MSP, the same should be made only
from the market yards/functional market yards and in the
presence of officials/representatives of the APMCs so that
the farmers get due benefit of MSP operations.
(…)
The kapas produce brought directly by farmers only in
the market yard/notified market yards be purchased and
prices be offered based on the quality of kapas under MSP
guidelines so farmers get due benefit for their produce.
xxx xxx xxx”
6. The investigation into RC No. 11(A)/2006-CBI/VSP disclosed a
pattern of buying cotton at the then prevailing market rate, which
is lower than the MSP and selling the hoarded cotton to CCI and
availing the MSP made available for the farmers of cotton. The
investigation revealed an alleged conspiracy between A-1 and one
RVK Prasad/A-3, proprietor of M/s Balachamundeswari Cotton
Company Limited. Notably, A-3 is the son of A-1. The investigation
further implicated Syed John Syda/A-2, a supervisor at the Agricultural
Market Committee (‘AMC’), Phirangipuram and 45 others as accused
in RC No. 11(A)/2006-CBI/VSP.
7. The modus operandi, briefly stated as per the prosecution, is that
A-1 and A-3 allegedly purchased cotton from genuine farmers at
lower prices before the announcement of MSP by the Government
of India, and they hoarded these cotton stocks. Once CCI started
purchasing cotton at MSP, A-1, with the support of A-3, resold
the hoarded cotton under benami names of farmers, A-4 to A-47,
to CCI at the higher MSP rates. These transactions occurred at
Pericherla and Phirangipuram in the Guntur District, and Madhira
in the Khammam District, where A-1 was the in-charge CPO during
the 2004-2005 financial year. Many of the farmers (A-4 to A-47)
allegedly did not have sufficient land to cultivate the large quantities
of cotton they purportedly sold to CCI. A few of the accused did not
[2025] 5 S.C.R. 993

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

have cultivable land at all, while a few others had very small holdings,
and the volume of cotton sold at MSP is disproportionate to their
land holdings. Bank accounts were opened in the names of these
farmers, often introduced by A-3 or his employees. Payments from
CCI (in the form of cheques) were routed through these accounts
and allegedly were encashed and utilized by A-3 and A-2 by forging
the signatures of farmers on takpatties and katachitta (weighment
slips) pertaining to Phirangipuram. The investigation revealed that
the thumb impressions were used on relevant material, whereas
the said person acknowledged through signature in English/Telugu.
8. The prosecution alleges wrongful loss under the MSP for a sum of
Rs. 21,19,35,646/- to the CCI/Government of India, and the wrongful
gain is to the accused persons. The premise of the accusation is
that the MSP is meant and intended for cotton farmers and growers,
and through the alleged modus operandi, it has been subverted by
the accused for gain. On 31.12.2009, chargesheet no. 31/2009,
along with a list of documents (452), were filed before the special
judge for CBI cases against A-1 to A-48. On 09.06.2011, the learned
special court took cognizance of the chargesheet and numbered the
case as CC No. 16/2011. The gist of the chargesheet against the
accused is stated thus:
8.1 The chargesheet first reiterates the conspiracy and modus
operandi. After which, it details the procedure for cotton purchase
by CCI, including (i) testing quality, (ii) fixing rates under MSP,
(iii) weighment, preparation of katachitta, (iv) takpatti, and (v)
payment through cheques via the AMC. The chargesheet notes
that A-1 was in charge of Pericherla, Phirangipuram, and Madhira
centers, and alleges that A-3 connived with A-7 to open bank
accounts in the names of the villagers of Jamalapuram and
Banjara. A-1 and A-3 purchased cotton at lower prices before
the MSP announcement and purportedly resold it to CCI at
MSP through benami farmers. It lists the farmers (A-4 to A-47),
their bank account details, amounts credited, and alleged land
possession, highlighting discrepancies between land held and
cotton sold.
8.2 The chargesheet also specifically mentions that A-2 forged
the signatures of farmers on bidding slips, takpatties and
weighment slips. The Government Examiner of Questioned
994 [2025] 5 S.C.R.

Supreme Court Reports

Documents’ (‘GEQD’) opinion also confirms the alleged forgery.
It also highlights discrepancies in fathers’ names and residential
addresses mentioned in the Bidding Slip versus actual details.
Further, it states that many farmers denied selling such large
quantities or even visiting the market centres. Some stated they
signed blank cheque books at the instance of A-3 or A-7, and
the chargesheet further notes that employees of A-3’s company
(M/s Balachamundeswari Cotton Company) were also shown
as farmers selling cotton by availing the subject MSP.
8.3 The chargesheet concludes that A-1 abused his official position,
conspired with others, and caused wrongful loss to CCI and
gain to themselves to the tune of Rs. 21,19,35,646/- by showing
procurement from traders and fictitious persons under the guise
of small and marginal farmers. Consequently, sanction for
prosecution against A-1 (Rayapati Subba Rao) under Section
19(1) of the PC Act was obtained, and no sanction was sought
for A-2 (Syed John Syda) as he had retired.
8.4 Therefore, charges were filed under sections 120-B read with
sections 420, 468, 471 IPC and section 13(2) read with section
13(1)(d) of the PC Act.
9. The record discloses that before the framing of charges was taken
up by the special court, the accused filed Criminal MP No. 1056/17
to summon the letter dated 08.01.2007 addressed by the CBI to the
Deputy General Manager of CCI, Guntur and the reply of the CCI
dated 31.01.2007 to the CBI. It is contextual to note two aspects of
the matter – (a) documents have been summoned before the charge
is considered by the special court, and (b) the communication by
CBI and the reply given by CCI to CBI.
9.1 The CBI in its letter dated 08.01.2007 to CCI posed questions
pertaining to the difference in purchases made by A-1, the
deviation of rules by A-1, the loss caused by A-1’s purchase,
complaints made by AMC or farmers against A-1, objections
by audits and unsold cotton purchased by A-1 resulting in loss.
9.2 The reply by CCI dated 31.01.2007 replies to these queries by
noting that the purchases were made as per the MSP guidelines
in force for the year, and no loss was caused by A-1. The reply
further notes that no complaints were received from the AMC
[2025] 5 S.C.R. 995

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

against the purchases made by A-1, no objections were raised
by statutory auditors and all the purchases made by A-1 were
sold and lifted by buyers.
10. The Respondent Nos. 1 to 11 filed Criminal MPs in CC no. 16/2011
under section 239 of the Criminal Procedure Code, 1973 (‘CrPC’). The
details of the alleged wrongful gain, Criminal MP, Criminal Revision,
and the Criminal Appeal in the Court are stated in the following table:

Wrongful Crl. M.P. Before the SLP Nos. Respondent -
gain by the Nos in CC High Court Accused
accused. No.16/2011
Rs. 32,72,020/- 827/2016 3388/2017 R1/A-46
Rs. 31,55,052/- 1513/2016 3393/2017 R2/A-24
Rs. 86,72,235/- 243/2017 6/2018 R3/A-15
Rs. 66,72,370/- 245/2017 9/2018 R4/A-40
SLP (Crl.)
Rs. 42,64,355/- 1512/2016 12/2018 R5/A-23
Nos.
Rs. 58,63,905/- 1515/2016 15/2018 5941 to R6/A-41
5951 of
Rs. 33,84,317/- 244/2017 29/2018 R7/A-27
2022
Rs. 61,59,585/- 1510/2016 424/2018 R8/A-17
Rs. 44,00,432/- 1516/2016 512/2018 R9/A-47
Rs. 35,80,291/- 1511/2016 513/2018 R10/A-21
Rs. 49,67,779/- 1514/2016 861/2018 R11/A-26

11. The accused raised the objection that the subject chargesheet is
without merit and groundless, primarily because there exists no case
for framing charges under sections 120B, 420 and 471 of the IPC.
They make this objection by noting that (i) there are no witnesses or
documents that prove wrongful loss to CCI, (ii) there is no specific
overt act of forgery, fabrication, or use of forged documents by these
accused, (iii) the court in Visakhapatnam is jurisdictionally barred
from trying transactions related to Madhira Centre under section 177
of CrPC, (iv) there are contradictions with respect to land holdings
and amounts credited in the chargesheet, (v) the Petitioners are
legitimate cultivators, either holding land personally, or cultivating
on lease and (vi) the CCI letter dated 31.01.2007 states that there
was no loss caused to CCI.
996 [2025] 5 S.C.R.

Supreme Court Reports

12. The CBI opposed the prayer for discharge and the summary of
the objections raised by the accused, noting that there is sufficient
evidence of conspiracy, cheating and forgery, resulting in wrongful
gain/loss as the case may be. The CBI further places stress on the
modus operandi used by the accused to procure cotton at low prices
and sell it to CCI at MSP through benami transactions. It further
stresses the GEQD’s opinion, which supports the allegation of forgery.
Consequently, the CBI alleges that there is a diversion of the MSP
benefit, which has caused a loss to the public exchequer. The CBI
finally notes in its opposition that the application for discharge is
merely an attempt to prolong the trial.
13. The special court, through a similar order and reasoning, allowed
the prayer for discharge under section 239 of the CrPC. The view
of the special court is that the letter dated 31.01.2007 of the CCI
is an important document that categorically states that purchases
by A-1 were as per MSP guidelines, and there were no differences
compared to other officers. Crucially, the court held that no loss was
caused by A-1 in this regard. The special court then found that there
was (i) no wrongful loss, (ii) no prima facie case, and (iii) an abuse
of the process of law by requiring a full trial despite the letter by
CCI dated 31.01.2007. In this light, the special court held that the
threshold under section 239 of the CrPC was met since the material
did not create a strong and serious suspicion. Therefore, the special
court allowed the discharge petition.
14. To appreciate the grounds of challenge to the order of discharge, it
is necessary to reproduce the following paragraphs from the order
dated 05.09.2017 of the special court.
“11. A combined reading of Sections 239 and 240 Cr.P.C.
makes it abundantly clear, that before a charge is framed,
trial Court is expected to consider the material placed
before it to decide whether charges could be framed
against the accused.
12. Bearing the said crucial aspects in mind, if we switch
back to the material placed before the Court, the petitioner
along with some other accused filed Crl.M.P.1056/17 to
summon certain documents from the custody of Cotton
Corporation of India, Guntur.
(…)
[2025] 5 S.C.R. 997

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

17. In the result the petition is allowed with a finding that
the petitioner is entitled to get discharge from main case.
Accordingly, the petitioner is discharged from main case.”
15. CBI filed a criminal revision case before the High Court of Andhra
Pradesh, and through the common order impugned in the criminal
appeals, the revisions were dismissed. The High Court, in assessing
the scope of revisional jurisdiction and the principles of discharge
under section 239 of the CrPC, affirmed that a judge can sift and
weigh evidence to find a prima facie case, justifying a charge if
‘grave suspicion’ exists but allowing discharge if only ‘some suspicion’
arises or if two views are equally possible and the evidence gives
rise to some suspicion but not grave suspicion, the accused can
be discharged. The judge is not merely a ‘post office’ and must
consider broad probabilities and basic infirmities without conducting
a full trial, ensuring that facts at face value disclose all ingredients
of the alleged offense. In this specific case, the High Court relied
on the letter from the CCI dated 31.01.2007, which asserted that no
financial loss to CCI was caused by the accused, that all purchases
adhered to MSP guidelines, and no complaints were received, thereby
directly contradicting the prosecution’s central claim of a Rs. 21 crore
loss and procedural violations. Given the CCI’s exonerating letter,
the High Court found no incorrectness, illegality, or impropriety in
the special court’s order discharging the accused due to allegations
being groundless.
16. We have heard advocate Ms. Rukhmini Bobde for the appellant and
Mr. Shoeb Alam, learned senior counsel, for the respondents/accused.
17. Learned counsel for the appellant, by taking us through, the
chargesheet, the modus operandi allegedly put in place by the
accused, argues that there appears to be conspiracy by A-1, an
officer of CCI, in concert with his son/A-3, A-2/supervisor of AMC
and A-48 who purchased cotton from the farmers at the prevailing
market price, hoarded the stocks by introducing A-4 to A-48 as
farmers, sold the cotton in favour of CCI at the MSP in operation for
the purpose of encashment, facilitated opening of bank accounts and
from the forensic report, there is forgery and impersonation. From
the allegations in the chargesheet, read with the accompanying
documents, the special court should have examined the prayer
for discharge. The order of discharge does not show as one being
998 [2025] 5 S.C.R.

Supreme Court Reports

compatible with an order of discharge, but sounds like an order of
acquittal on merits by appreciating the likely defence of the accused.
The order, both in the procedure stipulated under section 239 of the
CrPC and the available ground, i.e., the allegations being groundless,
has exceeded its statutory discretionary jurisdiction. Consequently,
the order of discharge is illegal. The reasoning in the orders of
discharge is erroneous and based on assumptions. The order of
discharge, in law, has a different connotation, but the discharge
impugned sounds like an order of acquittal. The courts below have
not appreciated the principal accusation of wrongful gain/loss and
the conspiracy to make CCI purchase hoarded cotton from the
accused. A few of the accused do not have agricultural land, and bank
accounts are opened on the same day to receive the MSP. Thus,
there is enough intrinsic material warranting a trial. MSP is meant
for the benefit of farmers, and it cannot be syphoned off, and such
syphoning, if proved, amounts to wrongful gain. The counsel invites
our attention to specific allegations on this behalf and argues that
a case involving triable charges has been abruptly closed through
the impugned discharge orders.
18. Mr. Shoeb Alam, appearing for the accused, in reply, argues that
the registration of FIR, investigation, and the chargesheet are
misappreciated circumstances of the case. The accused in the subject
criminal appeals are small farmers, and the cotton supplied is not
only from the agricultural lands owned by them, and could also be as
noticed by the impugned orders, from the agricultural lands taken on
lease. There is no restriction on the source of procurement of cotton,
and the statement of A-2 demonstrates that the guidelines have been
scrupulously followed. The special court and the High Court have
rightly appreciated the underlying offence for trial, i.e., wrongful gain/
loss. It is argued with sufficient emphasis that the commissions or
omissions do not qualify as a penal act in the circumstances warranting
prosecution or trial. The loss alleged in the purchase of the subject
cotton is denied by the CCI, and consequently, there cannot be a
trial on these charges except to conduct prosecution as an abuse of
the process of law. The CBI, suo motu, registered the FIR, and the
material gathered in the investigation on forgery, misrepresentation,
etc., either from the chargesheet or from the documents, cannot
be made out. Among the Respondents-accused, two of them are
no more. It cannot be gainsaid that the cotton supplied is of lesser
[2025] 5 S.C.R. 999

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

quality or quantity, so a case for examination of cheating needs to
be tried. On the forgery and fabrication, the case is without merit.
The case does not warrant interference under Article 136 of the
Constitution of India.
19. We have taken note of the rival arguments and perused the record.
The chargesheet, read with documents placed on record, runs into
more than a thousand pages. The alleged commonality, participation,
and resultant benefit can be for the limited purpose of appreciating
the correctness in the orders impugned in the succinct way, and is
tabulated thus:

Fact Inference Drawn

A-1 and his son, A-3, allegedly Suggests a pre-planned conspiracy
purchased cotton at low prices to exploit the MSP scheme for
before the MSP announcement personal profit by manipulating the
and resold it to CCI at higher MSP procurement process. A-1’s official
rates through benami farmers (A-4 position provided the means, and
to A-47). A-3’s business potentially provided
the infrastructure/cover.

Many farmers (A-4 to A-47) listed Strong indicator that these individuals
as sellers had insufficient or no land were likely not genuine farmers selling
to cultivate the large quantities of their own produce but were acting as
cotton sold to CCI. fronts or ‘benamis’ for A-1 and A-3 to
channel the previously hoarded cotton
into the MSP scheme.

Bank accounts for many ‘farmers’ Centralized banking operations
opened in Guntur (where A-1 & A-3 facilitated control over funds by
were based), introduced by A-3 or his A-3. Introductions by A-3 and his
employees, despite farmers residing employees suggest direct involvement
elsewhere (e.g., Khammam). Blank in setting up the financial mechanism
cheques obtained. for the alleged fraud. Obtaining blank,
signed cheques implies intent to
control and divert the proceeds meant
for farmers.

Alleged forgery of signatures on Indicates manipulation of official records
takpatties and weighment slips by required for the cotton procurement
A-2 and discrepancies in signatures/ process to legitimize the fraudulent
details across documents (Takpatties, sales and facilitate payments. This
bidding slips, Katachittas, ID cards, points towards an attempt to cover up
Bank forms). the use of benami farmers.
1000 [2025] 5 S.C.R.

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CBI initiates investigation based on Suggests the alleged irregularities
‘source information’, not a complaint might not have been immediately
from CCI or farmers. apparent or reported by the directly
affected entities (CCI/genuine farmers),
requiring external intelligence to
uncover the potential fraud.

CCI’s reply (31.01.2007) to CBI This official communication from
states that no rules were deviated, CCI contradicts the core allegations
no loss was caused, no complaints of the CBI charge sheet (loss, rule
were received, and no audit deviation). This became a primary
objections were raised regarding basis for the Special Court and High
A-1’s purchases. Court discharging the accused.

The Special Court and High Court Courts gave significant weight to CCI’s
discharge the accused primarily assessment (no loss, no rule violation)
based on the CCI letters, finding over the prosecution’s evidence
insufficient grounds/grave suspicion (benami farmers, land records, alleged
based on the material presented by forgeries).
the prosecution.

20. Immediately, we hasten to add that whether the chargesheet in any
way presents a triable charge by the special court or not. The issue
is examined at the stage of section 239 of the CrPC. Therefore,
the present consideration shall not be understood as this Court is
examining the allegations vis-à-vis the lack of grounds for framing
or not framing charges. In other words, we are not delving into the
merits of the matter.
21. Having summarily noticed the contours of controversy between the
prosecution and the accused, we will examine the fundamental
illegality of the courts below while passing the orders impugned.
22. It is noticed that through Criminal MP No. 1056/17, letters
communicated between the investigating officer-CBI and CCI have
been summoned. The petition and the order are referred to in the
orders impugned. The letter sent by CBI to CCI dated 08.01.2007,
and the letter sent in reply to CBI by CCI dated 31.01.2007, were
summoned by the special court. The consideration by the special
court to arrive at a finding where there is no loss to CCI is primarily
based on the reply dated 31.01.2007. Section 239 of the CrPC,
which facilitates discharge of an accused in a warrant case triable
by the magistrate if the charge against the accused is groundless,
reads thus:
[2025] 5 S.C.R. 1001

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

“s.239 When accused shall be discharged: If, upon
considering the police report and the documents sent with
it under section 173 and making such examination, if any,
of the accused as the Magistrate thinks necessary and after
giving the prosecution and the accused an opportunity of
being heard, the Magistrate considers the charge against
the accused to be groundless, he shall discharge the
accused, and record his reasons for so doing.”
23. The question for consideration is whether the two letters could have
been looked at or relied upon by the special court for exercising its
jurisdiction under section 239 of CrPC.
24. The decisions of this Court in Satish Mehra v. Delhi Administration
and another1 and State of Bihar v. Ramesh Singh2 took divergent
views on the competence of a special court/magistrate to look at
material other than the final report read with documents filed by the
prosecution in terms of section 173 of the CrPC. The issue was
referred to a three-judge bench for decision in State of Orissa v.
Debendranath Padhi.3 The full bench in a detailed examination of
the statutory scheme and also the precedents on the point has held
that the accused at the stage of framing of charge does not have a
right to file material or documents. It is apt to excerpt the following
paragraphs from the said decision.
“8. What is the meaning of the expression “the record of
the case” as used in Section 227 of the Code. Though
the word “case” is not defined in the Code but Section
209 throws light on the interpretation to be placed on the
said word. Section 209 which deals with the commitment
of case to the Court of Session when offence is triable
exclusively by it, inter alia, provides that when it appears
to the Magistrate that the offence is triable exclusively by
the Court of Session, he shall commit “the case” to the
Court of Session and send to that court “the record of the
case” and the document and articles, if any, which are to

1 (1996) 9 SCC 766.
2 (1977) 4 SCC 39; see also, Supdt. And Remembrancer Of Legal Affairs, West Bengal v. Anil Kumar
Bhunja And Others, (1979) SCC 4 274.
3 (2005) 1 SCC 568
1002 [2025] 5 S.C.R.

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be produced in evidence and notify the Public Prosecutor
of the commitment of the case to the Court of Session.
It is evident that the record of the case and documents
submitted therewith as postulated in Section 227 relate
to the case and the documents referred in Section 209.
That is the plain meaning of Section 227 read with Section
209 of the Code. No provision in the Code grants to the
accused any right to file any material or document at the
stage of framing of charge. That right is granted only at
the stage of the trial.
15. In State of Maharashtra v. Priya Sharan Maharaj
(1997) 4 SCC 393 it was held that at Sections 227 and
228 stage the court is required to evaluate the material
and documents on record with a view to finding out if the
facts emerging therefrom taken at their face value disclose
the existence of all the ingredients constituting the alleged
offence. The court may, for this limited purpose, sift the
evidence as it cannot be expected even at that initial
stage to accept all that the prosecution states as gospel
truth even if it is opposed to common sense or the broad
probabilities of the case.”
18. We are unable to accept the aforesaid contention. The
reliance on Articles 14 and 21 is misplaced. The scheme
of the Code and object with which Section 227 was
incorporated and Sections 207 and 207-A omitted have
already been noticed. Further, at the stage of framing of
charge roving and fishing inquiry is impermissible. If the
contention of the accused is accepted, there would be a
mini-trial at the stage of framing of charge. That would
defeat the object of the Code. It is well settled that at the
stage of framing of charge the defence of the accused
cannot be put forth. The acceptance of the contention of
the learned counsel for the accused would mean permitting
the accused to adduce his defence at the stage of framing
of charge and for examination thereof at that stage which
is against the criminal jurisprudence. By way of illustration,
it may be noted that the plea of alibi taken by the accused
may have to be examined at the stage of framing of charge
if the contention of the accused is accepted despite the
[2025] 5 S.C.R. 1003

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

well-settled proposition that it is for the accused to lead
evidence at the trial to sustain such a plea. The accused
would be entitled to produce materials and documents in
proof of such a plea at the stage of framing of the charge,
in case we accept the contention put forth on behalf of the
accused. That has never been the intention of the law well
settled for over one hundred years now. It is in this light
that the provision about hearing the submissions of the
accused as postulated by Section 227 is to be understood.
It only means hearing the submissions of the accused
on the record of the case as filed by the prosecution and
documents submitted therewith and nothing more. The
expression “hearing the submissions of the accused”
cannot mean opportunity to file material to be granted to
the accused and thereby changing the settled law. At the
stage of framing of charge hearing the submissions of
the accused has to be confined to the material produced
by the police.
(emphasis supplied)

25. Recently, in State of Rajasthan v. Swarn Singh @ Baba,4 to which
one of us, Justice Pankaj Mithal, was a part of, relied on Debendra
Nath Padhi (supra) to hold that the accused cannot and does
not have the right to invoke section 91 of the CrPC at the time of
framing of charge. Under the statutory scheme of the CrPC, sections
227/239 are positioned in the midway of continuing or abandoning
the prosecution if no case is discernible from the chargesheet and
documents. The common belief of the prosecution/complainant is
that the report filed warrants trial and conviction, which is to be
balanced by the magistrate against the belief of the accused that
every prosecution initiated is false and nothing short of an abuse of
process. The magistrate, at this stage, by exercising the jurisdiction
within the parameters set out by sections 227/239 of the CrPC, decides
whether the narrative of the complainant warrants prosecution/trial or
the accused is entitled to be discharged. The discretion is exercised
in the manner stipulated by sections 227/239. The inner and outer
limits of the discretion under these sections are no more res integra,

4 Criminal Appeal No. 856 of 2024.
1004 [2025] 5 S.C.R.

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and a few of the precedents having a bearing on the conspectus of
the case are referred to hereunder.
25.1 In Sheoraj Singh Ahlawat v. State of U.P.,5 it is observed that
inconsistency in material produced by the prosecution cannot
be looked into for discharge of the accused in the absence of
a full-fledged trial.
25.2 Reiterating the dictum in Debendra Nath Padhi again in State
of Madhya Pradesh v. Rakesh Mishra,6 it has been held that
only the chargesheet along with accompanying materials are
to be considered at the stage of framing of charges, so as to
satisfy the existence of a case for trial.
25.3 Further, in State of Rajasthan v. Ashok Kumar Kashyap,7 this
Court reiterates beyond debate that defence on merits is not
to be considered at the stage of framing of charges/discharge.
26. We do not intend to refer to too many precedents on a well-established
proposition of law on the method and mode of exercising jurisdiction
by a magistrate under section 239 of the CrPC. It is correct that
Union of India v. Prafulla Kumar Samal and another8 lays down the
standard for discharge of an accused under section 239 of the CrPC.
The application of the principle for the documents relied upon by the
special court and the High Court is both debatable. Discharge under
the CrPC is salutary, and the magistrate, through the expression used
in these sections, is under an obligation to discharge the accused
where, from the chargesheet and the appended documents, it is
noticed that the trial of such charges is worthless. Therefore, to
sustain the exercise of discretion, the order of discharge conforms
to the requirements of these sections.
26.1 The jurisdiction conferred on the magistrate by section 239
of the CrPC is appreciated from the language of the said
provision. In a civil suit, the triable issues of fact or law are
culled from a material proposition of fact or law affirmed by one
party and denied by the other, and the issue in a civil suit is

5 (2013) 11 SCC 476.
6 (2015) 13 SCC 8.
7 (2021) 11 SCC 191.
8 (1979) 3 SCC 4.
[2025] 5 S.C.R. 1005

State Represented By Inspector of Police, CBI, ACB,
Visakhapatnam v. Eluri Srinivasa Chakravarthi and Others

an admixture of a case to parties to the lis. In contrast, section
239 of the CrPC, which deals with the trial of warrant cases
by a magistrate, confines the examination to the final report
and documents sent with it under section 173 of the CrPC.
The allegations in the FIR, transformed through investigation
and the collection of evidence, are shaped into a final report.
This receives the attention of the magistrate to decide whether
the charge so presented against the accused is groundless.
26.2 The salutary duty fastened on the magistrate is exercised not
only for aborting unwanted and groundless prosecutions, but
also for ensuring the continuation of prosecution of a final report
with documents presenting a triable charge. Considering the
importance of either discharging the accused or continuing the
prosecution, the magistrate neither acts as a post office nor
conducts a mini-trial of the report and the documents before
it while exercising the power under section 239 of the CrPC.
Stated briefly, the learned magistrate, in sufficient measure,
examines the report and documents while taking a decision for
discharge or for proceeding with the prosecution. We propose
to examine whether the order impugned before us withstands
the scrutiny and requirement of this Court.
26.3 However, since the order of discharge is amenable to the
jurisdiction of the revisional court, the order of discharge must
speak for itself, and only a warranted conclusion is arrived at
by the magistrate. The deviation from the discretionary limits
definitely attracts the supervisory jurisdiction of the revisional
courts. The issue of whether discharge is warranted or trial is
continued depends on the circumstances of each case.
27. Reverting to the circumstances of this case, it is borne out by the
record that the plea for discharge is founded on the correspondence
dated 08.01.2007 and 31.01.2007. Thereafter, by referring to the very
gist of the communication, prayer for discharge has been made. In
clear terms and reasoning, the discharge has been ordered not by
referring to any of the situations referred in section 239 of the CrPC,
but by relying on the documents made available by the accused. The
procedure followed by the trial court and as confirmed by the High
Court is patently illegal, and contrary to the binding precedent. The
passing remark by the High Court in the common order that there is
1006 [2025] 5 S.C.R.

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no material for cheating and forgery belies the existence of allegations
and documents. The consideration of material, i.e., chargesheet and
list of documents, in the background of allegations made against the
accused is the available path for discharge by the special court and
the High Court. But, a path unavailable to the special court and the
High Court is the consideration of material invited at the instance of
the defence for ordering discharge. The orders impugned proceed on
the assumption of the absence of loss to the CCI on the basis of the
letter dated 31.01.2007. The case of prosecution established looks
at wrongful gain through conspiracy and forgery to defraud the CCI
and the farmers to the tune of Rs.21,19,35,646/-. Non-compliance
with the discretionary limits as set out under section 239 of the CrPC
warrants the interference of this Court.
28. Hence, for the above discussion and reasons, the orders impugned
are set aside, and the prayer for discharge of the accused by looking
at the documents brought on record is set aside. Consequently,
the Criminal MPs filed by the accused are dismissed. The special
court is directed to exercise its jurisdiction in terms of section 239
of the CrPC, particularly, uninfluenced by any of the observations
made in this Judgment, and decide whether a case for discharge is
available or charges are to be framed for trial of the alleged offences.
The Criminal Appeals are allowed. Pending applications, if any, are
disposed of accordingly.

Result of the case: Appeals allowed.

†
Headnotes prepared by: Divya Pandey