The only thing related to travelling in your question is one statement if I modify it into this:
Is it illegal to travel to the USA as an Indian citizen who holds two passports?
And the answer is: It is not, it is absolutely fine. To be on the least-complicated side, you should show the same passport to the immigration officers when arriving and when departing so the stamps can match. Ideally, use the one that contains your visa if you need/have one. If one of your passports is a US one, always use that. Other than that, the US immigration does not care how many passports the entry-seeking person can produce, as long as the one shown is valid.
The remainder of the question concerns India-internal issues not relevant to travelling.
I think it is not illegal to hold two simultaneously valid passports issued by Indian authorities.
Both the stories liked to by @JoseK relate to fraud, potential fraud or other aberration and do not indicate much about the legality of holding two Indian passports if both obtained legitimately.
Yes, for example immihelp states “Holding more than one valid passport at a time” is a violation “of the provision of Indian Passports Act 1967” but as mentioned by @JoseK, there seems no mention of this in the Act in the version linked to by @JoseK (unless immihelp are referring to passports issued by two different countries – not the issue here).
On the other hand, from long after 1993 which seems the latest update incorporated into the linked version of the ’67 Act, there is this:
I maintain two valid Indian passports, both in my name, and with the complete knowledge and consent of the issuing authorities. Sometimes, it is simply better that some countries not see entry stamps from certain other countries to prevent awkward situations.
by B747-437B Feb 6, 03, 9:22 am which, if not authoritative, is certainly emphatic.
Also, from Passport Rules, 1980:
In India, it is illegal to have 2 Indian passports in your name.
I see some references to Section 12 of the Indian Passports Act, 1967 mentioning this – but I did not find any such text in that Act.
I can see some news items however where the police have arrested persons with two passports
http://www.newswala.com/Hyderabad-News/Person-with-two-Indian-Passports-Held-7543.html
My suggestion is to go to the Passport Seva Kendra and explain your situation to the Passport Officer. Get the older one cancelled.
As @uncovery said, it’s not your mistake.
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