Re-affirming the Evidentiary Boundaries at the Pre-Charge Stage:

State (CBI) v. Eluri Srinivasa Chakravarthi & Ors., 2025 INSC 758

1. Introduction

The Supreme Court’s decision in State rep. by Inspector of Police, CBI, ACB, Visakhapatnam v. Eluri Srinivasa Chakravarthi & Ors. (2025 INSC 758) revisits the compass of a Magistrate’s/Special Judge’s power to discharge an accused under section 239 of the Code of Criminal Procedure, 1973 (“CrPC”). The case arises out of an alleged ₹21-crore minimum support price (MSP) scam in the Cotton Corporation of India (“CCI”) involving its officer Rayapati Subba Rao (A-1), his son (A-3), an Agricultural Market Committee supervisor (A-2) and 45 purported benami farmers (A-4 to A-48).

Both the Special CBI Court and the Andhra Pradesh High Court had discharged eleven of these accused by treating two internal letters exchanged between the CBI and the CCI—letters never filed with the police report—as conclusive proof that no loss had occurred. The Supreme Court has now reversed those orders.

2. Summary of the Judgment

• Leave granted; the Court allowed the CBI’s appeals.
• The Special Court as well as the High Court erred in looking at defence-summoned documents (the 08.01.2007 CBI query and the 31.01.2007 CCI reply) while deciding discharge under section 239.
• Under the binding ratio of State of Orissa v. Debendranath Padhi (2005) 1 SCC 568, the accused has no right to rely on material outside the police report at the framing-of-charge / discharge stage.
• Consequently, the discharge orders were declared “patently illegal” and set aside; the Special Court must now reconsider the matter afresh in accordance with section 239, without being influenced by any observations in the Supreme Court’s judgment.

3. Detailed Analysis

3.1 Precedents Cited & Their Influence

1. State of Orissa v. Debendranath Padhi (2005) 1 SCC 568
   • Three-Judge Bench holding: at the stage of sections 227/228 (Sessions) and 239/240 (Magistrate), the Court can look only at “the record of the case” and the documents sent under section 173.
   • This precedent directly forecloses defence attempts to introduce extraneous material before charge. The present judgment treats Padhi as stare decisis and faults the courts below for ignoring it.
2. State of Rajasthan v. Swarn Singh @ Baba (2024) (Cr. A. 856/2024)
   • Reiterated Padhi; accused cannot invoke section 91 CrPC at pre-charge stage.
3. Union of India v. Prafulla Kumar Samal (1979) 3 SCC 4
   • Laid down the “grave suspicion” test vis-à-vis “some suspicion.” The SC noted that Samal was mis-applied because the foundation of “no loss” was built on inadmissible defence material.
4. Other reminders: Sheoraj Singh Ahlawat (2013) 11 SCC 476; State of M.P. v. Rakesh Mishra (2015) 13 SCC 8; State Of Rajasthan v. Ashok Kumar Kashyap (2021) 11 SCC 191—all strengthen the rule that inconsistency, contradictions or defence evidence cannot be assessed pre-charge.

3.2 Court’s Legal Reasoning

1. Statutory Text Controls.
   • Section 239 allows discharge only upon “considering the police report and the documents sent with it under section 173”.
   • Any material not sent with the final report is legally irrelevant at this stage.
2. Illegality of Considering Defence-Summoned Letters.
   • The two CCI letters were obtained through an application by the accused (Cr. MP 1056/17) before charges were framed.
   • The Special Court’s entire finding of “no loss” rested on those letters—contrary to Padhi and subsequent case-law.
3. Mischaracterisation of a Discharge as De-facto Acquittal.
   • The Special Court weighed probable defence (“farmers were genuine”, “no loss”, “audit clean”) and effectively decided merits.
   • The Supreme Court labels this an “order of acquittal in disguise.” A discharge is meant to test only the existence of a prima facie case, not to adjudicate guilt.
4. Concept of Wrongful Gain v. Proof of Actual Loss.
   • The prosecution theory is that siphoning MSP from intended beneficiaries constitutes wrongful gain (and concomitant wrongful loss), regardless of whether CCI’s balance sheet shows red ink.
   • Whether the CCI ultimately resold the cotton and avoided economic loss is evidentiary matter for trial, not a ground for discharge.

3.3 Potential Impact of the Judgment

• Re-drawing Procedural Lines. Trial courts across India often entertain defence applications under section 91 CrPC (or otherwise) to summon exculpatory material before charge. The present ruling emphatically re-states that such practice is impermissible.
• Higher Threshold for Discharge. Accused cannot rely on internal departmental communications, audit reports, or expert opinions not part of the section 173 bundle to seek discharge. This is likely to reduce successful discharge applications, especially in white-collar crimes.
• CBI & Anti-Corruption Prosecutions. Prosecution agencies may feel emboldened; courts cannot truncate trials merely because the “victim-department” gives a self-serving clean-chit. The focus shifts to statutory wrong (cheating, forgery, criminal conspiracy) rather than to departmental loss alone.
• Farmers’ Welfare Schemes. The judgment underscores that diversion of MSP or similar subsidies is a prosecutable offence even if the implementing agency appears complacent.

4. Complex Concepts Simplified

Section 239 CrPC – Discharge (Magistrate)

A filtering mechanism in warrant cases. If, based only on the police report and its annexures, the charge appears “groundless,” the accused is discharged; else, the case proceeds.

“Groundless”

No reasonable possibility of a conviction even if all prosecution evidence is accepted at face value.

Minimum Support Price (MSP)

Government-fixed price at which agencies like CCI purchase crops to protect farmers; meant exclusively for genuine cultivators.

Benami

A transaction where the real beneficiary is not the ostensible owner; here, fake farmers allegedly fronted for A-1 and A-3.

Takpatti / Katachitta

Local terms for bidding slips and weighment records prepared in agricultural market yards, forming the basis for payment.

Section 91 CrPC

Provision enabling a court or police officer to summon documents or things “necessary or desirable for the purposes of any investigation, inquiry, trial or other proceeding.” Not available to the defence to fish for discharge material before charge, as reaffirmed by this decision.

5. Conclusion

The Supreme Court’s ruling in Eluri Srinivasa Chakravarthi does not decide the guilt or innocence of the accused; instead, it restores the statutory discipline governing pre-trial processes. By disallowing defence-procured documents at the discharge stage, the Court:

• Reinforces the authority of Debendranath Padhi and subsequent precedents.
• Draws a bright procedural line preventing “mini-trials” before actual trials begin.
• Ensures that economic crimes involving public-welfare schemes cannot be summarily quashed on the basis of departmental letters purporting to show “no loss.”

In the broader legal landscape, the decision tightens the screws on early exits from criminal prosecutions, especially in complex economic-offence scenarios where the paper-trail is vast and the prosecution narrative intricate. Trial courts must now confine themselves strictly to the prosecution’s section 173 material when evaluating discharge—any deviation risks being struck down as an error of law.