The Mundhra Scandal 1957

Mundhra Scandal (1957)

TT Krishnamachari and Jawaharlal Nehru

It was the media that first hinted there might be a scam involving the sale of shares to LIC.

Feroz Gandhi sourced the confidential correspondence between the then Finance Minister T.T. Krishnamachari and his principal finance secretary, and raised a question in Parliament on the sale of 'fraudulent' shares to LIC by a Calcutta-based Marwari businessman named Haridas Mundhra.

The then Prime Minister, Jawaharlal Nehru, set up a one-man commission headed by Justice MC Chagla to investigate the matter when it became evident that there was a prima facie case. Chagla concluded that Mundhra had sold fictitious shares to LIC, thereby defrauding the insurance behemoth to the tune of Rs. 1.25 crore.

Mundhra was sentenced to 22 years in prison. The scam also forced the resignation of T.T.Krishnamachari.

The irregularity was highlighted in 1958 by Feroze Gandhi of the Indian National Congress party, who represented the Rae Bareli seat in the Parliament of India. Jawaharlal Nehru was Prime Minister at the time, and Feroze was married to his daughter Indira Gandhi. Nehru, as the leader of the ruling Congress party, wished to have the LIC matter handled quietly since it might show the government in a poor light.

However, Feroze Gandhi was the primary force behind an anti-corruption movement that in 1956 resulted in imprisonment of one of India's wealthiest men, Ram Kishan Dalmia, for defrauding his life insurance company. Subsequently, the parliament had passed the Life Insurance of India Act on June 19, 1956, under which 245 firms were nationalized and consolidated under the Life Insurance Corporation. Hence, he looked upon the LIC as a "child of Parliament". He would have no softpedalling on the matter, and took the case directly to parliament:

"Parliament must exercise vigilance and control over the biggest and most powerful financial institution it has created, the Life Insurance Corporation of India, whose misapplication of public funds we shall scrutinise today." Feroze Gandhi, Speech in Parliament, 1957-12-16.

However, the matter was dramatized further in the public mind by the tense relations between Feroze and his father-in-law.

The Mundhra Scandal 1957

Mundhra Scandal (1957)

TT Krishnamachari and Jawaharlal Nehru

It was the media that first hinted there might be a scam involving the sale of shares to LIC.

Feroz Gandhi sourced the confidential correspondence between the then Finance Minister T.T. Krishnamachari and his principal finance secretary, and raised a question in Parliament on the sale of 'fraudulent' shares to LIC by a Calcutta-based Marwari businessman named Haridas Mundhra.

The then Prime Minister, Jawaharlal Nehru, set up a one-man commission headed by Justice MC Chagla to investigate the matter when it became evident that there was a prima facie case. Chagla concluded that Mundhra had sold fictitious shares to LIC, thereby defrauding the insurance behemoth to the tune of Rs. 1.25 crore.

Mundhra was sentenced to 22 years in prison. The scam also forced the resignation of T.T.Krishnamachari.

The irregularity was highlighted in 1958 by Feroze Gandhi of the Indian National Congress party, who represented the Rae Bareli seat in the Parliament of India. Jawaharlal Nehru was Prime Minister at the time, and Feroze was married to his daughter Indira Gandhi. Nehru, as the leader of the ruling Congress party, wished to have the LIC matter handled quietly since it might show the government in a poor light.

However, Feroze Gandhi was the primary force behind an anti-corruption movement that in 1956 resulted in imprisonment of one of India's wealthiest men, Ram Kishan Dalmia, for defrauding his life insurance company. Subsequently, the parliament had passed the Life Insurance of India Act on June 19, 1956, under which 245 firms were nationalized and consolidated under the Life Insurance Corporation. Hence, he looked upon the LIC as a "child of Parliament". He would have no softpedalling on the matter, and took the case directly to parliament:

"Parliament must exercise vigilance and control over the biggest and most powerful financial institution it has created, the Life Insurance Corporation of India, whose misapplication of public funds we shall scrutinise today." Feroze Gandhi, Speech in Parliament, 1957-12-16.

However, the matter was dramatized further in the public mind by the tense relations between Feroze and his father-in-law.

Cycle import scam

Cycles imports scam took place in 1951. SA Venkataraman who was the industrial minister was bribed and he gave the permission to a foreign country for the sale of their company cycles.

Jeep scandal case

The jeep scandal in 1948 was first major corruption case in independent India. V.K. Krishna Menon, the then Indian high commissioner to Britain, ignored protocols and signed a Rs 80 lakh contract for the purchase of army jeeps with a foreign firm
Corruption allegations

V. K. Krishna Menon, then the Indian high commissioner to Britain, bypassed protocol to sign a deal worth Rs 80 lakh with a foreign firm for the purchase of army jeeps. While most of the money was paid upfront, just 155 jeeps landed,the then Prime Minister Nehru forced the government to accept them.Govind Ballabh Pant the then Home Minister and the then Government of Indian National Congress announced on September 30, 1955 that the Jeep scandal case was closed for judicial inquiry ignoring suggestion by the Inquiry Committee led by Ananthsayanam Ayyangar.He declared that "as far as Government was concerned it has made up its mind to close the matter. If the opposition was not satisfied they can make it an election issue". Soon after on February 3,1956 Krishna Menon was inducted into the Nehru cabinet as minister without portfolio.Later Krishna Menon became Prime Minister Jawaharlal Nehru's trusted ally and the defense minister.

Jeep purchase (1948) 80 lakh (US$144,800)

Jeep purchase (1948)

 

VK Krishna Menon

The history of corruption in post-Independence India starts with the Jeep scandal in 1948. VK Krishna Menon, the then High Commissioner for India in London signed a deal with a foreign firm worth Rs 80 lakh for jeeps for the Indian Army in Kashmir without observing normal procedure.

The then Government announced on September 30, 1955 that the Jeep scandal case was closed, despite the demand of the opposition for judicial inquiry as suggested by the Inquiry Committee led by Ananthsayanam Ayyangar.

Union Minister GB Pant said "that as far as Government was concerned it has made up its mind to close the matter. If the opposition is not satisfied they can make it an election issue."

Soon after, on February 3, 1956 VK Krishna Menon was inducted into the Nehru cabinet as minister without portfolio.