TaxTMI 
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2025 (5) TMI 1685
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....as 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....
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....f cotton they purportedly sold to CCI. A few of the accused did not 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 fo....
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.... 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 against the purchases made by A-1, no objections were raised by statutory auditors and all the purchases made by A-1 were sold ....
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....e 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 ....
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....t 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 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 or....
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....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 purchased cotton at low prices before the MSP announcement and resold it to CCI at higher MSP rates through benami farmers (A-4 to A-47). Suggests a pre-planned conspiracy to exploit the MSP scheme for personal profit by manipulating the procurement process. A-1's official position provided the means, and A-3's business potentially provided the infrastructure/cover. Many farmers (A-4 to A-47) listed as sellers had insufficient or no land to cultivate the large quantities of cotton sold to CCI. Strong indicator that these individuals were likely not genuine farmers selling their own produce but were acting as fronts or 'benamis' for A-1 and A-3 to channel the previously hoarded cotton into the MSP scheme. Bank accounts for many 'farmers' opened in Guntur (where A-1 & A- 3 were based), introduced by A-3 or his employees, despite farmers residing elsewhere (e.g., Khammam). Blank cheques obtaine....
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.... 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: " 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 wheth....
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.... 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....
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....gra, 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., (2013) 11 SCC 476. 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, (2015) 13 SCC 8. 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, (2021) 11 SCC 191. 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 another (1979) 3 SCC 4. lays down the standard for discharge of an accused under section 23....
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.... 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 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 a....