Section 239 CrPC | Chargesheet Must Stand Alone—Defence Evidence Can’t Kill Trial Before It Begins: Supreme Court Revives ₹21 Crore CCI Fraud Case

“The discharge order reads more like an acquittal… It is settled law that defence material cannot be relied upon at the stage of framing charge”, - In a significant judgment delivered on 22 May 2025, the Supreme Court of India set aside discharge orders passed by the Special CBI Court and the Andhra Pradesh High Court in the case involving a ₹21.19 crore scam in the Cotton Corporation of India (CCI). The bench comprising Justices Pankaj Mithal and S.V.N. Bhatti, in the case titled State Represented by Inspector of Police, CBI v. Eluri Srinivasa Chakravarthi and Others, held that documents relied upon by the defence cannot be the basis for discharge under Section 239 CrPC.

“The discharge impugned sounds like an order of acquittal… The special court has exceeded its statutory discretionary jurisdiction.”

“The consideration of material invited at the instance of the defence for ordering discharge is legally impermissible.”

“MSP Scheme Was Allegedly Subverted by Officer-Son Duo Using Benami Farmers”—Court Finds Prima Facie Case of Criminal Conspiracy

The CBI had filed a chargesheet in RC No. 11(A)/2006-CBI/VSP, alleging that Rayapati Subba Rao (A-1), a senior officer at CCI, Guntur Branch, in collusion with his son RVK Prasad (A-3) and others, hoarded cotton bought from real farmers at below-market prices. Once the Minimum Support Price (MSP) was declared, they resold the same cotton to CCI by projecting fake farmers (A-4 to A-47).

“A-1 and A-3 allegedly purchased cotton at low prices before MSP announcement and resold it to CCI at higher MSP rates through benami farmers.”

The chargesheet indicated that most of the so-called farmers lacked sufficient or any land to produce the volume of cotton claimed, and bank accounts were opened in their names, introduced by A-3’s company, to receive MSP funds.

“Strong indicator that these individuals were not genuine farmers… but acted as fronts to channel the hoarded cotton into the MSP scheme.”

“Forensic Report Confirms Forgery”—Alleged Fake Signatures and Takpatties Used to Route Illicit Payments

The Court took note of the GEQD report, which pointed to forgery in weighment slips and documents used to claim MSP benefits. Thumb impressions were allegedly used where the same individuals had earlier signed documents in English or Telugu—indicating impersonation and document manipulation.

“Forged signatures on takpatties and weighment slips point to a clear attempt to legitimize fraudulent MSP claims.”

“CCI Letter of Exoneration Cannot Supplant Chargesheet”—Court Faults Special Court for Using Defence Material at Stage of Charge

The trial court and High Court had relied heavily on a letter dated 31.01.2007 from CCI, which stated that purchases were within MSP guidelines and no loss was recorded. The Supreme Court categorically ruled that such defence documents cannot be considered under Section 239 CrPC:

“It is settled that at the stage of framing of charge, the court is confined to the final report and documents submitted by the prosecution.”

“Acceptance of the CCI letter amounts to conducting a mini-trial… The order of discharge is procedurally and legally untenable.”

“Magistrate Is Not a Post Office, But Cannot Become a Trial Judge Either”—Court Clarifies Scope of Section 239 CrPC

Relying on its own precedent in Debendranath Padhi and Prafulla Kumar Samal, the Court reaffirmed that discharge under Section 239 CrPC must be strictly based on whether the charges are “groundless”—not whether the accused can already present a defence:

“The accused has no right to file material at the stage of framing charge… defence must wait for the trial stage.”

“To consider defence evidence at this stage would open the door to a ‘mini-trial’, which is impermissible.”

Supreme Court Allows CBI’s Appeal, Directs Special Court to Re-Decide Discharge Uninfluenced by Earlier Orders

The Supreme Court set aside the orders of the Special Judge, CBI, and the Andhra Pradesh High Court, and restored the matter to the special court, directing it to decide afresh the issue of charge or discharge, strictly as per the law.

“The orders impugned are set aside… The Special Court is directed to exercise its jurisdiction under Section 239 CrPC afresh, uninfluenced by any observations herein.”

This judgment marks a critical reaffirmation of procedural fairness in criminal prosecutions and puts a brake on the increasing tendency of discharge being granted on extraneous or defence-driven materials at the pre-trial stage.

Date of Decision: 22 May 2025