Madras High Court discharges accused in CBI phone exchange case

The Enforcement Action

The Madras High Court has discharged the seventh accused in a Central Bureau of Investigation (CBI) prosecution over an alleged illegal international telephone exchange, holding that no case was made out against him. Justice M. Nirmal Kumar allowed Criminal Revision Case No. 2439 of 2025, filed by Harsha Srinivas Rao, described in the record as a consultant to M/s Nisarga Software Private Limited, by an order dated 9 June 2026. The court set aside a trial court order of 31 October 2025 that had refused to discharge him.

The CBI's Anti-Corruption Branch in Chennai had accused Rao, arrayed as the seventh accused (A7), alongside six others of conspiring during 2000-2001 to route incoming international calls through unauthorised channels, causing wrongful loss to government telecom revenue. The prosecution traces to a first information report against eight persons and to case C.C. No. 2230 of 2003. Rao's name did not appear in the original FIR. Per the order, he was detained at Mumbai airport on 15 July 2025 after more than two decades abroad, was remanded, and was granted bail on 28 July 2025 before moving to be discharged.

In allowing the revision, the court held that the evidence against Rao was, in its words, "inseparable and indivisible" from that already weighed in the main trial, where several co-accused had been acquitted of the conspiracy and cheating charges. Justice Kumar observed that "continuation of proceedings against the petitioner would only amount to abuse". The order discharges and acquits Rao from all charges in the split case (C.C. No. 1016 of 2008) before the Additional Chief Metropolitan Magistrate, Egmore. The CBI, represented by its Special Public Prosecutor, had opposed the discharge; there is no separate public statement from Rao on record beyond his petition.

How the Scheme Worked

According to the prosecution case as recorded in the order, the accused set up an unauthorised telecom network that converted incoming international calls into local calls, bypassing the legal gateways then operated by BSNL and VSNL. The order states the group misused between 26 and 36 BSNL local telephone lines booked from the Flower Bazaar Telephone Exchange, connecting them to broadband infrastructure using voice-over-internet-protocol (VoIP) technology so that calls arriving from abroad terminated as ordinary local calls.

The order records that a 256 kbps broadband line was leased from M/s Satyam Infoways Limited, and that a router, modem, frame-relay equipment, a voice multiplex and UPS systems were installed at offices at No. 9 and No. 10, Kondi Chetty Street, Chennai. The document lists broadband rental of Rs 17,50,000, one-time charges of Rs 2,50,000 and WPC port charges of Rs 36,000. The CBI alleged the arrangement diverted call revenue that should have reached the government, causing wrongful pecuniary loss to BSNL.

The procedural history stretches across two decades. The mother case, C.C. No. 2230 of 2003, was tried against seven accused. When Rao remained absent abroad for more than twenty years, the case against him was split into C.C. No. 1016 of 2008. In the mother case, by judgment dated 30 January 2012, the trial court convicted the first three accused (A1 to A3) under Section 4 read with Section 20 of the Indian Telegraph Act, 1885, sentencing each to one year of rigorous imprisonment and a fine of Rs 50,000, while acquitting them of the conspiracy and cheating charges. The fourth to sixth accused (A4 to A6) were acquitted entirely, and the trial court found that the existence of the company, M/s Nisarga Software Private Limited, arrayed as A6, was itself not proven.

Against Rao specifically, the prosecution relied on purchase orders placed with M/s Satyam Infoways Limited (Exhibit P31), a sales order (Exhibit P32) and an installation report (Exhibit P33), together with the testimony of a SIFY service engineer (PW13) on broadband delivery and installation, and a disputed signature on the installation report. The court noted material gaps: no wire was seized, no mahazar documented any connecting wire between the two premises, and no specimen signature was collected to verify the one attributed to him. As the order puts it, "fixing of broadband in a premises is not an offence", and merely being a contact person with technical knowledge would not amount to criminality.

The Law Invoked

The charges the CBI pressed were Sections 120-B read with 420 of the Indian Penal Code, and Section 4 read with Section 20 of the Indian Telegraph Act, 1885. Section 120-B punishes criminal conspiracy, and Section 420 covers cheating and dishonestly inducing delivery of property; read together they framed the alleged agreement to defraud the exchequer of call revenue. Section 4 of the Telegraph Act vests in the central government the exclusive privilege of establishing, maintaining and working telegraphs, and Section 20 penalises establishing or working an unauthorised telegraph in breach of that privilege, which is the provision under which the first three accused were convicted at trial.

The discharge itself was sought under the trial court's power to discharge a groundless case (Section 239 of the Code of Criminal Procedure), and was carried to the High Court under its revisional jurisdiction invoked through Sections 438 and 442 of the Bharatiya Nagarik Suraksha Sanhita, 2023, the statute that has succeeded the old Code. In discharging Rao, the court applied the principle that evidence in a split trial is indivisible from the mother case, citing its earlier rulings including Tamilmaran v. State (2007).

What Happens Next

A discharge at the revisional stage ends the prosecution against Rao in the split case unless it is successfully challenged. The order set aside the magistrate's refusal to discharge and directed that he stands discharged and acquitted of all charges, closing the connected miscellaneous petitions. In principle, a High Court order of this kind may be tested further before the Supreme Court, though the court here recorded the material against the petitioner as insufficient to frame a charge.

For the co-accused convicted at trial, a conviction is itself subject to the ordinary criminal appellate process. More broadly, the sequence is a reminder of how India's economic-offence prosecutions move: an alleged offence in 2000-2001, a trial judgment in 2012, and a revisional discharge in 2026. At every pre-conviction stage the accusations remained allegations to be proved, and due process, including appeal rights, continues to apply.

What It Means

The order turns on a settled but easily overlooked principle: where co-accused have been acquitted on the same body of evidence, a person tried separately in a split trial cannot be treated differently on that identical evidence. A discharge is not a technical let-off; it is a judicial finding that the material does not even make out a prima facie case fit to go to trial. For readers, the practical lesson is the sharp line the law draws between an accusation and a proven offence. An FIR, a chargesheet or being named as an accused is the start of a process, not its verdict.

The case also underlines how long financial and economic-offence matters can run, and how the strength of documentary evidence, seizures, signatures verified against specimens, and clear proof of a person's role decides outcomes rather than association alone. For anyone following such matters, the safest reading of any pending enforcement action is the one the courts themselves apply: treat allegations as allegations, watch for what is actually proved, and rely on official orders rather than labels. Where an investment or service is involved, verifying a provider's registration with the relevant regulator, and keeping records of every document signed, remains the simplest protection.

FAQ

Has any court found the people named guilty in this matter?

A chargesheet, FIR or prosecution contains allegations, not findings of guilt; the accused are presumed innocent until proven guilty, and due process continues. In this matter the High Court in fact discharged the seventh accused, finding no case made out, while the trial court had earlier convicted three co-accused under the Telegraph Act and acquitted others.

What exactly did the Madras High Court order?

The court allowed a criminal revision and discharged the petitioner, the seventh accused, from all charges in the split case. It held that the evidence against him was inseparable from that in the main trial, where co-accused had been acquitted, and that continuing the prosecution would amount to an abuse of process.

Can the order be appealed?

A High Court order in a criminal revision may, in principle, be challenged before the Supreme Court through a special leave petition. The order itself recorded the material against the petitioner as insufficient to frame a charge, and it set aside the magistrate's earlier refusal to discharge him.

What is a discharge, and how is it different from an acquittal?

A discharge happens before a full trial: the court finds the accusation groundless and declines to frame a charge, so the person does not stand trial. An acquittal comes after trial, when the prosecution fails to prove guilt. Both leave the person without a conviction on record.

Where can I read the official order?

The full order in Criminal Revision Case No. 2439 of 2025 is on the public record and can be read on Indian Kanoon. Reading the primary document, rather than second-hand summaries, is the best way to see exactly what a court has and has not held.

This report is based on the official Madras High Court order dated 9 June 2026 in Crl. R.C. No. 2439 of 2025. It was surfaced via coverage in LiveLaw.