Orissa High Court
Indrajit De vs Central Bureau Of Investigation on 14 July, 2026
Author: Sanjeeb K Panigrahi
Bench: Sanjeeb K Panigrahi
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
IN THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No.5192 of 2025
(In the matter of an application under Section 528 of B.N.S.S., 2023
read with Section 482 of the Code of Criminal Procedure, 1973.)
Indrajit De .... Petitioner(s)
-versus-
Central Bureau of Investigation .... Opposite Party (s)
(CBI)
Advocates appeared in the case through Hybrid Mode:
For Petitioner(s) : Mr. K. Raghavacharyulu, Adv.
For Opposite Party (s) : Mr. Sharthak Nayak,
Special Public Prosecutor (CBI)
Mr. Manish Dhir, Adv.
CORAM:
DR. JUSTICE SANJEEB K PANIGRAHI
DATE OF HEARING:- 23.06.2026
DATE OF JUDGMENT:-14.07.2026
Dr. Sanjeeb K Panigrahi, J.
1. In this CRLMC, the petitioner seeks a direction from this Court to set
aside the order dated 03.09.2025 rejecting his discharge petition and to
discharge him from the offences alleged in SPE No.05 of 2014, arising
from the supplementary charge-sheet filed by the CBI.
I. FACTUAL MATRIX OF THE CASE:
2. The brief facts of the case are as follows:
(i) The prosecution originates from Baliapal P.S. Case No. 85 dated
15.05.2013, registered against M/s Tower Infotech Ltd. and its directors
Page 1
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
in relation to alleged unauthorised collection of money from members
of the public through prize-chit or money-circulation activities.
Pursuant to the Supreme Court’s order dated 09.05.2014, the
investigation was transferred to the Central Bureau of Investigation,
which re-registered the case as RC 10(S)/2014 on 04.06.2014 for offences
under Sections 420, 120-B and 34 IPC and Sections 4, 5 and 6 of the Prize
Chits and Money Circulation Schemes (Banning) Act, 1978. The
petitioner, Indrajit De, who was a director of M/s Eden Infra Projects
Pvt. Ltd., was neither named in the original FIR nor arraigned in the
first charge-sheet filed on 06.07.2016.
(ii) The material transaction concerns an amount of ₹2.50 crore transferred
during the financial year 2009-2010 from M/s Tower Infotech Ltd. to M/s
Eden Infra Projects Pvt. Ltd. The petitioner describes the amount as part
of a proposed investment of ₹10 crore in a real-estate project and states
that it was received through banking channels and reflected in the
audited accounts of Eden Infra as an unsecured loan. The CBI, however,
treats the transfer as diversion of money allegedly collected unlawfully
from investors, pointing to the absence of any written agreement,
memorandum of understanding or identified commercial purpose
explaining the transfer.
(iii) During the investigation, the petitioner was issued notices under
Section 91 CrPC for production of documents. The parties dispute the
extent of his cooperation: the petitioner claims that he supplied the
documents sought in 2016 and again in 2020, whereas the CBI alleges
that he failed to attend further investigation and did not satisfactorily
Page 2
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
explain the transfer. Bank accounts connected with Eden Infra were
frozen to the extent of approximately ₹1.25 crore and ₹16.85-17 lakh,
and the petitioner subsequently deposited a further ₹1.25 crore
pursuant to an order of the High Court. According to the petitioner,
approximately ₹2.67 crore has consequently been secured, which
exceeds the disputed transfer of ₹2.50 crore.
(iv) Upon further investigation, the CBI filed a supplementary charge-sheet
dated 26.12.2022 against the petitioner, Amitava Patra, M/s Eden Infra
Projects Pvt. Ltd. and others for offences under Section 120-B read with
Sections 420 and 409 IPC and the relevant provisions of the 1978 Act.
An earlier petition seeking quashing of the charge-sheet was dismissed
by the High Court on 28.07.2023, against which an SLP is stated to be
pending before the Supreme Court.
(v) The petitioner thereafter filed an application for discharge under
Section 239 CrPC on 29.01.2025, which the learned Special CJM, CBI,
Bhubaneswar rejected by the impugned common order dated
03.09.2025. The present proceeding challenges that rejection and seeks
the petitioner’s discharge from SPE No. 05 of 2014.
II. ANALYSIS OF THE ORDER OF THE COURT BELOW:
3. The Learned Special CJM made the following observations:
(i) The learned Special CJM approached the discharge applications by
applying the established threshold governing consideration of charge-
sheet materials under Section 239 CrPC. The Court recorded that it was
not required at that stage to undertake a meticulous examination of the
evidence or determine whether the prosecution would ultimately secure
Page 3
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
a conviction. It proceeded on the principle that even a strong suspicion,
founded upon the materials placed by the investigating agency, could
justify framing of charges where those materials permitted a
presumptive view that the accused might have committed the offences
alleged.
(ii) In applying that standard, the Court primarily relied upon the
prosecution’s allegation that ₹2.50 crore collected by Tower Infotech
from investors had been transferred to Eden Infra without a written
agreement or cogent purpose. It noted the charge-sheet’s assertion that
the transfer was made pursuant to a criminal conspiracy to channelise
and siphon illegally collected funds, thereby causing wrongful gain to
the accused and loss to investors. The Court also referred generally to
statements recorded under Section 161 CrPC as indicating the
involvement of the accused persons. On that basis, it concluded that the
charge could not be described as groundless and that sufficient grounds
existed for presuming commission of the alleged offences.
(iii) The order correctly recognised the limited nature of scrutiny ordinarily
permissible at the stage of discharge and avoided deciding the
petitioner’s commercial explanation as though conducting a full trial.
Questions concerning whether the transfer was genuinely an
investment, whether an oral agreement existed, whether the accounting
entries established bona fides, whether the petitioner knew the source
of Tower Infotech’s funds and whether the circumstances established
conspiracy are evidentiary matters that may require examination of
witnesses and documents. The Trial Court therefore treated the
Page 4
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
competing commercial and criminal explanations as matters unsuitable
for final determination at the threshold.
(iv) At the same time, the reasoning in the impugned order is relatively
general and does not separately map the prosecution material onto the
distinct ingredients of Sections 420, 409 and 120-B IPC or Sections 4 and
6 of the 1978 Act. The order refers broadly to witness statements and
documentary evidence without identifying which witness or document
attributes deception, inducement, entrustment, misappropriation or
participation in an unlawful money-circulation scheme to the petitioner.
It also does not expressly address the petitioner’s argument regarding
the temporal gap between the 2009-2010 transfer and the alleged
collection period, the legal effect of the transaction being entered in
audited accounts, or the contention that the prosecution has invoked
cheating and criminal breach of trust on the same factual foundation.
(v) Thus, the impugned order rests on a legally recognised charge-stage
standard but expresses its application in broad terms. Its sustainability
would ultimately depend on whether the charge-sheet and
accompanying materials, read as a whole and without weighing their
probable truth, contain specific circumstances capable of raising grave
suspicion against the petitioner, rather than merely showing receipt of
money from an accused company. The High Court would therefore
have to examine whether the Trial Court merely refrained from
conducting an impermissible mini-trial or whether it failed to perform
the minimum judicial exercise of determining that the basic ingredients
of the alleged offences were disclosed by the prosecution record.
Page 5
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
III. SUBMISSIONS ON BEHALF OF THE PETITIONER:
4. The Learned Counsel for the Petitioner earnestly made the following
submissions in support of his contentions:
(i) The petitioner contends that the disputed payment was a legitimate
commercial transaction between two incorporated companies and not
part of any chit-fund or money-circulation activity. According to him,
Tower Infotech had proposed an investment of ₹10 crore in an
upcoming real-estate project of Eden Infra and transferred ₹2.50 crore as
part payment. Since the full proposed investment was not made, no
formal agreement or MoU was executed. The transfer was made
through regular banking channels, disclosed in the company’s audited
accounts as an unsecured loan and was neither concealed nor
appropriated for the petitioner’s personal use. He therefore argues that
the transaction’s recorded and commercial character is inconsistent with
the prosecution’s allegation of fraudulent diversion or siphoning of
funds.
(ii) It is submitted that the essential ingredients of cheating under Section
420 IPC are absent because the charge-sheet does not attribute any false
representation, deception or dishonest inducement to the petitioner at
the inception of the transaction. The petitioner neither collected money
from the public nor induced any investor to part with property, and the
alleged default or misuse, if any, related to the activities of Tower
Infotech. Relying upon decisions concerning the distinction between a
civil or commercial breach and criminal cheating, he argues that a
Page 6
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18subsequent commercial failure cannot constitute cheating unless
fraudulent intention existed from the very beginning.
(iii) The petitioner similarly disputes the applicability of Section 409 IPC on
the ground that there was no entrustment of property, fiduciary
relationship or dishonest misappropriation. According to him, the
money was voluntarily transferred as an investment or commercial
advance and became part of a disclosed inter-corporate transaction. He
further argues that Sections 420 and 409 rest on conceptually different
foundations, cheating requiring dishonest inducement before delivery
of property and criminal breach of trust requiring prior entrustment
followed by misappropriation and therefore cannot mechanically be
invoked together on the same undifferentiated factual foundation.
(iv) As regards conspiracy, the petitioner maintains that the prosecution
materials do not disclose any meeting of minds, communication,
agreement or concerted conduct between him and the directors of
Tower Infotech to collect, divert or siphon public money. He
emphasises that the transfer occurred in 2009-2010, whereas the period
of the alleged illegal public collections and the investigation is stated to
be from 2012 onwards. He also asserts that the statements of the
witnesses relied upon by the prosecution, including the witnesses
identified in his rejoinder, do not specifically implicate Eden Infra or its
directors in the alleged conspiracy.
(v) The petitioner further relies on the fact that he was not named in the FIR
or the first charge-sheet and was implicated only through a
supplementary charge-sheet filed approximately six years later. He
Page 7
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
alleges that no fresh incriminating material justifying this subsequent
implication has been identified and that the supplementary allegation is
substantially confined to paragraph 16.13 of the charge-sheet. His
cooperation with document-production notices, the freezing and
deposit of an amount exceeding ₹2.50 crore, grant of pre-arrest bail and
release of his passport are relied upon as circumstances demonstrating
bona fides and absence of any likelihood of evasion or personal
enrichment.
(vi) Finally, the petitioner submits that the Trial Court rejected the discharge
application mechanically without examining whether the
uncontroverted prosecution material disclosed the ingredients of each
alleged offence. He distinguishes the present discharge proceeding
under Section 239 CrPC from the earlier quashing proceeding under
Section 482 CrPC, arguing that the two jurisdictions involve different
tests and that dismissal of the earlier quashing petition does not
dispense with the Trial Court’s obligation to independently assess
whether the charge is groundless. He accordingly seeks setting aside of
the order dated 03.09.2025 and discharge from all the alleged offences.
IV. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY:
5. The Learned Counsel for the Opposite Party, CBI, earnestly made the
following submissions in support of his contentions:
(i) The CBI contends that although the petitioner was not named in the
original FIR or the first charge-sheet, his complicity emerged during
further investigation. According to the prosecution, the directors of
Page 8
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18Tower Infotech, acting in conspiracy with the petitioner, Amitava Patra
and Eden Infra, dishonestly diverted ₹2.50 crore collected from
members of the public without regulatory permission. The amount was
allegedly transferred from Tower Infotech’s bank account to Eden Infra
without any written agreement, MoU or cogent commercial purpose,
resulting in wrongful gain to the accused and corresponding loss to the
investors.
(ii) The prosecution disputes the petitioner’s explanation that Tower
Infotech had agreed to invest ₹10 crore in an Eden Infra project. It
characterises that explanation as an afterthought unsupported by
contemporaneous documentation. The CBI argues that the absence of
any prior agreement, project document, utilisation record or subsequent
course of action makes it improbable that ₹2.50 crore would have been
transferred and retained for several years as an ordinary business
investment. The continued possession or use of the amount by Eden
Infra from 2009-2010 until registration and investigation of the case is
relied upon as indicative of deliberate misutilisation rather than a bona
fide commercial transaction.
(iii) The CBI further alleges that the petitioner did not adequately cooperate
with the investigation. While acknowledging that notices were issued, it
asserts that he failed to attend further investigation and did not clarify
why the substantial transfer had taken place or produce documents
substantiating its business purpose. The freezing of the company’s
accounts and the subsequent deposit made pursuant to judicial
directions are described as investigative or judicial measures to secure
Page 9
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18the funds, not as circumstances exonerating the petitioner or negating
the alleged offences.
(iv) The opposite party maintains that sufficient oral and documentary
evidence exists to establish the petitioner’s involvement in the
conspiracy and that the statements recorded under Section 161 CrPC
refer to the involvement of the accused persons. It argues that
conspiracy is ordinarily established through circumstantial evidence
because direct proof of an agreement is rarely available. The
prosecution therefore submits that the absence of an express written or
oral acknowledgment of conspiracy cannot justify discharge when the
transfer, lack of documentation, retention of funds and surrounding
circumstances cumulatively create a strong suspicion of concerted
criminal conduct.
(v) The CBI relies on the settled distinction between an evaluation at the
stage of charge and an adjudication after trial. It submits that the Court
is not required at the discharge stage to meticulously weigh the
evidence, assess its ultimate sufficiency or conduct a mini-trial. The
prosecution materials need only disclose sufficient grounds for
presuming the commission of the alleged offences. It also emphasises
the gravity of economic offences and the Supreme Court’s directions in
the chit-fund litigation requiring investigation of the money trail,
influential participants and entities through which public funds may
have been routed. On this basis, it seeks dismissal of the present petition
and continuation of the trial.
Page 10
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
V. JUDGMENT AND ANALYSIS:
6. Heard Learned Counsel for the parties and perused the documents
placed before this Court.
7. The prosecution arises from the alleged collection of money from
members of the public by M/s Tower Infotech Ltd. through an
unauthorised prize-chit or money-circulation scheme. During the
financial year 2009-2010, an amount stated to be between ₹2.05 crore
and ₹2.50 crore was transferred from the bank account of Tower
Infotech to M/s Eden Infra Projects Pvt. Ltd., of which the petitioner was
a director. The petitioner claims that the amount formed part of a bona
fide investment in a real-estate project and was duly reflected as an
unsecured loan in the audited accounts of Eden Infra. He was neither
named in the original FIR nor arraigned in the first charge-sheet. Upon
further investigation, however, the CBI filed a supplementary charge-
sheet dated 26.12.2022 implicating the petitioner for offences under
Section 120-B read with Sections 420 and 409 IPC and the relevant
provisions of the Prize Chits and Money Circulation Schemes (Banning)
Act, 1978. The petitioner’s application for discharge under Section 239
CrPC was rejected by the learned Trial Court by order dated 03.09.2025.
The present CRLMC calls in question the legality and propriety of the
said order.
8. At the stage of considering discharge under Section 239 CrPC, the Court
is not required to determine the truthfulness, reliability or ultimate
probative value of the prosecution evidence. The police report and the
accompanying materials must be considered at their face value for the
Page 11
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
limited purpose of ascertaining whether the factual ingredients of the
alleged offences are disclosed. The Court may sift the material to that
limited extent, but it cannot compare rival versions, assess the probable
defence or undertake an inquiry resembling a trial.
9. In State of Bihar v. Ramesh Singh1, the Supreme Court held that where
the material gives rise to a strong suspicion that the accused has
committed an offence, it is sufficient to proceed to trial. The Court held
as follows:
“…At that stage the Court is not to ‘see whether there is
sufficient ground for conviction of the accused or whether
the trial is sure to end in his conviction. Strong suspicion
against the accused, if the matter remains in the region of
suspicion, cannot take the place of proof of his guilt at the
conclusion of the trial. But at the initial stage if there is a
strong suspicion which leads the Court to think that there is
ground for presuming that the accused has committed an
offence then it is not open to the Court to say that there is no
sufficient ground for proceeding against the accused. The
presumption of the guilt of the accused which is to be drawn
at the, initial stage is not in the sense of the law governing
the trial of criminal cases in France where the accused is
presumed to be guilty unless the contrary is proved. But it
is only for the purpose of deciding prima facie whether the
Court should proceed with the trial or not. if the evidence
which the Prosecutor proposes to adduce to prove the guilt
of the accused even if fully accepted before it is challenged in
cross-examination or rebutted by the defence evidence, if
any, cannot show that the accused committed the offence,
then there will be no sufficient ground for proceeding with
the trial.”
1
1977 4 SCC 39
Page 12
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
10. Hence, it is imperative to keep in mind that the Court is not a mere post
office for the prosecution.It must apply its judicial mind and determine
whether the material discloses the ingredients of the alleged offence.
Therefore, discharge is warranted where the accusation is groundless or
where the prosecution material, even if accepted without rebuttal, does
not disclose the essential ingredients of any offence. Where the material
raises a grave and legally sustainable suspicion, the matter must
ordinarily be left for trial.
11. To constitute an offence under Section 420 IPC, the prosecution must
prima facie disclose deception followed by fraudulent or dishonest
inducement resulting in delivery of property. The dishonest intention
must exist at the inception of the transaction. A subsequent failure to
fulfil a promise or perform a commercial obligation cannot, by itself,
give rise to the offence of cheating.
12. In Hridaya Ranjan Prasad Verma v. State of Bihar2 by the Supreme
Court explained that the distinction between mere breach of contract
and cheating depends upon the intention of the accused at the time
when the inducement was made. The Court held as follows:
“In determining the question it has to be kept in mind that
the distinction between mere breach of contract and the
offence of cheating is a fine one. It depends upon the
intention of the accused at the time to inducement which
may be judged by his subsequent conduct but for this
subsequent conduct is not the sole test. Mere breach of
contract cannot give rise to criminal prosecution for
cheating unless fraudulent or dishonest intention is shown2
2000 4 SCC 168Page 13
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18right at the beginning of the transaction, that is the time
when the offence is said to have been committed. Therefore it
is the intention which is the gist of the offence. To hold a
person guilty of cheating it is necessary to show that he had
fraudulent or dishonest intention at the time of making the
promise. From his mere failure to keep up promise
subsequently such a culpable intention right at the
beginning, that is, when he made the promise cannot be
presumed.”
13. In the present case, the prosecution alleges that ₹2.50 crore was
transferred from Tower Infotech to Eden Infra pursuant to a criminal
conspiracy. The charge-sheet, however, must disclose some act of
deception or dishonest inducement attributable to the petitioner. There
is no allegation that the petitioner made any false representation to the
investors, induced members of the public to deposit money, or
persuaded Tower Infotech to transfer the amount by concealing or
misstating any material fact. The petitioner was not involved in the
collection of deposits from the public and no representation made by
him to any investor has been identified.
14. The petitioner’s explanation is that the amount formed part of a
proposed investment of ₹10 crore in a real-estate project and was
reflected in the audited accounts of Eden Infra as an unsecured loan.
The accounting entry does not conclusively establish the bona fides of
the transaction. Equally, the absence of a written agreement or
memorandum of understanding cannot, without further incriminating
material, establish deception at the inception. These circumstances may
create doubt regarding the commercial prudence of the transaction, but
doubt cannot substitute the statutory ingredients of cheating.
Page 14
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
15. It is true that where the allegation is of conspiracy, the prosecution need
not establish that the petitioner personally made the representation
which induced delivery of the property. It must nevertheless place some
material indicating that he knowingly joined the agreement to deceive
investors or facilitate the dishonest diversion of their funds. Mere
receipt of money by a company of which the petitioner was a director,
without material showing his knowledge of its alleged unlawful source
or his participation in the inducement, does not by itself attract Section
420 read with Section 120-B IPC.
16. The commercial explanation offered by the petitioner cannot be
accepted as proved at the stage of discharge. The Court must, however,
examine whether the prosecution material independently discloses
deception and dishonest inducement. On the materials referred to in the
impugned order, no representation, inducement or conduct attributable
to the petitioner at the inception of the transfer has been identified. The
prosecution allegation, insofar as Section 420 IPC is concerned, rests
principally upon the receipt of the amount, the absence of
contemporaneous documentation and its subsequent retention.
17. These circumstances may justify further examination of the money trail.
They do not, without material connecting the petitioner with the
original deception or with an agreement to deceive, raise the grave
suspicion necessary for framing a charge of cheating. The basic
ingredients of Section 420 IPC are therefore not prima facie disclosed
against the petitioner.
Page 15
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
18. As regards the allegations regarding Criminal Breach of Trust, it is
imperative to note that Section 409 IPC is an aggravated form of
criminal breach of trust. Its application requires material showing that
property was entrusted to the accused, or that he acquired dominion
over it, in his capacity as a public servant, banker, merchant, factor,
broker, attorney or agent. The prosecution must further disclose
dishonest misappropriation, conversion, use or disposal of that
property in violation of the terms governing the entrustment.
19. In S.W. Palanitkar v. State of Bihar3, the Supreme Court held that
entrustment of property or dominion over property and its subsequent
dishonest misappropriation are indispensable ingredients of criminal
breach of trust. The Court held as follows:
“The ingredients in order to constitute a criminal breach of
trust are: (1) entrusting a person with property or with any
dominion over property (ii) that person entrusted (a)
dishonestly misappropriating or converting that property to
his own use; or (b) dishonestly using or disposing of that
property or willfully suffering any other person so to do in
violation (i) of any direction of law prescribing the mode in
which such trust is to be discharged (ii) of any legal contract
made touching the discharge of such trust.”
20. In the present case, the amount of ₹2.50 crore was transferred from the
bank account of Tower Infotech to the account of Eden Infra. The
prosecution does not allege that the amount was delivered to the
petitioner personally to be retained, administered or applied by him for
any specified purpose on behalf of Tower Infotech. Nor does it identify
any fiduciary obligation under which the petitioner was required to
3
2002 1 SCC 241
Page 16
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
hold or return the money. The transaction, as disclosed by the bank
records and accounts of Eden Infra, assumes the form of an inter-
corporate transfer. Whether it was an investment, an unsecured loan or
a device for diversion of funds is a matter requiring examination. The
mere receipt of money by Eden Infra does not, however, establish
entrustment to the petitioner.
21. The absence of a written agreement or memorandum of understanding
may cast doubt upon the petitioner’s commercial explanation. It cannot
create the legal element of entrustment where the prosecution record
does not otherwise show that Tower Infotech retained ownership or
control over the amount after its transfer, or that the petitioner received
it subject to a specific obligation to apply it in a particular manner.
Likewise, the subsequent freezing or deposit of amounts pursuant to
judicial orders does not retrospectively establish that the original
transfer involved entrustment followed by dishonest conversion.
22. It is true that the petitioner has also been charged under Section 120-B
read with Section 409 IPC. His liability for conspiracy would not
necessarily depend upon personal entrustment if there were material
showing that he knowingly agreed with persons who had dominion
over the investors’ funds to dishonestly misappropriate them. The
prosecution must nevertheless disclose some circumstance indicating
such agreement or conscious participation. Mere receipt of the amount
by a company of which the petitioner was a director, without material
showing his knowledge of its alleged unlawful source or his
participation in a plan to misappropriate it, cannot by itself sustain such
Page 17
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
an inference.
23. The materials noticed in the impugned order do not identify any act by
which the petitioner assumed fiduciary control over the amount,
dishonestly dealt with property entrusted to him, or knowingly joined
an agreement for breach of trust by those controlling Tower Infotech.
The essential ingredients of Section 409 IPC, whether directly or read
with Section 120-B IPC, are therefore not prima facie disclosed against
the petitioner.
24. Now, as regards Sections 4 and 5 of the Prize Chits and Money
Circulation Schemes Banning Act, 1978, they prohibit and penalise the
promotion, conduct, enrolment of members in, or participation in a
prohibited prize-chit or money-circulation scheme. Section 6 fastens
liability upon persons responsible for the conduct of the business of a
company, or whose consent, connivance or neglect contributed to the
offence.
25. To sustain the charge against the petitioner, the prosecution material
must therefore disclose some participation in, assistance to, or conscious
facilitation of the scheme allegedly operated by Tower Infotech. The
supplementary charge-sheet does not attribute to the petitioner or Eden
Infra any role in soliciting deposits, enrolling members, making
representations to investors, managing the scheme or distributing its
proceeds.
26. The mere receipt of funds from Tower Infotech by Eden Infra, without
material showing knowledge of their unlawful source or participation
Page 18
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
in the prohibited scheme, cannot by itself make the petitioner a
promoter, participant or abettor under the Act. The prosecution record,
as noticed in the impugned order, does not disclose the basic factual
ingredients necessary to connect the petitioner with any offence under
Sections 4, 5 or 6 of the 1978 Act. The charge under the said enactment is
therefore not prima facie made out against him.
27. As regards Section 120-B IPC, direct evidence of conspiracy is seldom
available and an agreement may be inferred from proved
circumstances. However, the prosecution must still disclose material
indicating a meeting of minds or conscious participation in the unlawful
design. In the present case, apart from the transfer of funds to Eden
Infra, no communication, conduct or surrounding circumstance has
been identified to show that the petitioner knowingly joined any plan to
deceive investors or divert their money. Mere receipt of the amount by
the company is insufficient to raise a grave suspicion of criminal
conspiracy against him.
VI. CONCLUSION:
28. The charge-sheet, even if accepted at face value, does not disclose the
essential ingredients of Sections 420, 409 or 120-B IPC against the
petitioner. No specific material shows deception, dishonest inducement,
entrustment, misappropriation or conscious participation in the alleged
conspiracy. Mere receipt of funds by Eden Infra, in the absence of
further incriminating material, is insufficient to raise grave suspicion.
Page 19
Signature Not Verified
Digitally Signed
Signed by: BHABAGRAHI JHANKAR
Reason: Authentication
Location: ORISSA HIGH COURT,
CUTTACK
Date: 14-Jul-2026 18:42:18
29. The record also does not disclose any role of the petitioner in promoting
or conducting the alleged money-circulation scheme. The accusations
are therefore groundless within the meaning of Section 239 CrPC.
30. Accordingly, the order dated 03.09.2025 is set aside. The CRLMC is
allowed and the petitioner is discharged from all the offences alleged
against him in SPE No. 05 of 2014.
31. It is clarified that this order shall not preclude the investigating agency
from proceeding against the petitioner in accordance with law if fresh
and cogent evidence subsequently emerges establishing his
involvement in the alleged offences.
32. Interim order, if any, passed earlier stands vacated.
(Dr. Sanjeeb K Panigrahi)
Judge
Orissa High Court, Cuttack,
Dated the 14th July, 2026/
Page 20
