Institute of Legal and Management Studies

The Supreme Court recently set aside an order discharging the accused under Section 239 Cr.P.C., noting that the discharge was based on materials submitted by the defense instead of relying on the prosecution's evidence.

Holding that it is impermissible under the law to rely on the defence materials at the stage of deciding the plea for discharge under Section 239 Cr.P.C., the bench comprising Justices Pankaj Mithal and SVN Bhatti set aside the Andhra Pradesh High Court's decision which had affirmed the trial court's order discharging the accused based on the evidence submitted by him to contradict prosecution's case.

This case involves a criminal appeal by the Central Bureau of Investigation (CBI) against the discharge of several accused persons in a case involving alleged fraud in the procurement of cotton under the Minimum Support Price (MSP) scheme. The accused is alleged to have conspired to purchase cotton at lower market rates, hoard it, and then sell it to the Cotton Corporation of India (CCI) at higher MSP rates through benami farmers.

The prosecution alleged wrongful loss to CCI (₹21.19 crores) and wrongful gain to the accused through forgery, cheating, and criminal conspiracy under Sections 120-B (criminal conspiracy), 420 (cheating), 468 (forgery), and 471 (using forged documents) of the IPC and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988.

The Special Court and High Court discharged the accused under Section 239 Cr.P.C, heavily relying on CCI letter furnished by the defence, which stated that no loss was caused, prompting the Appellant/CBI to appeal to the Supreme Court.

Setting aside the impugned findings, the judgment authored by Justice Bhatti noted that the Special Court and High Court had effectively conducted a "mini-trial" by assessing the merits of the CCI's claims and the accused's defence. The discharge was granted on the basis of the CCI's letter and other defence submissions that were extraneous to the prosecution record, the court said.

“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 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.”, the court observed.

Resultantly, the Court allowed the CBI's appeal and set aside the discharge orders. The matter has been remitted to the Special Court to reconsider the issue strictly in accordance with Section 239 CrPC, without reference to the CCI letter or any other defence materials.

Case Title: STATE VERSUS ELURI SRINIVASA CHAKRAVARTHI AND OTHERS

Citation : 2025 LiveLaw (SC) 633

Click here to read/download the judgment

Appearance:

For Petitioner(s) Mr. K M Nataraj, A.S.G. (N.P.) Ms. Rukhmini Bobde, Adv.(argued by) Mr. Mukesh Kumar Maroria, AOR Mr. Anuj Srinivas Udupa, Adv. Ms. Vanshaja Shukla, Adv. Mr. Ashok Panigrahi, Adv. Ms. Seema Patnaha, Adv.

For Respondent(s) Mr. Shoeb Alam, Sr. Adv.(argued by) Ms. Mahima Pandey, Adv. Mr. Mullapudi Rambabu, Adv. M/S. M. Rambabu And Co., AOR Mr. Shoeb Alam, Sr. Adv. Mr. Rajat Singh, AOR Mr. Sarthak Chandra, Adv. Mr. Dev Sareen, Adv. Mr. K V Girish Chowdary, Adv. Mr. D Satya Sumanth, Adv. Ms. Tatini Basu, AOR