The skulls were found under a bridge on the Kushbhadra river along with bones, dry flowers and vermillion powder.
Police are questioning a local tantrik, or so-called witch doctor.
Report said the tantrik told police he had been stealing skulls from a graveyard for the past five years.
He is reported to have said that the skulls and bones were dumped under the bridge by his assistant's son who did not approve of his father's work. The assistant died on 13 November.
"We have sent the skulls for forensic examination. We will be able to come to any conclusion only after we get the reports," local police official Subhash Mohanty told BBC Hindi.
Local people say the presence of dry flowers and vermillion powder - used extensively in Hindu religious rituals and regarded as a symbol of fertility - near the skulls suggest they could be related to witchcraft.
"Black magic" is often practised in poorer parts of India - many people believe it can help childless women to bear children, cure illnesses and produce more rainfall.