Review: The Scam That Shook a Nation by Prakash Patra and Rasheed Kidwai - Hindustan Times
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Review: The Scam That Shook a Nation by Prakash Patra and Rasheed Kidwai

ByShevlin Sebastian
Jul 05, 2024 07:39 PM IST

An exploration of the Nagarwala scandal of the 1970s when a Delhi branch of the State Bank of India was defrauded of ₹60 lakh

At 11.45 am on May 24, 1971, Ved Prakash Malhotra, the chief cashier of the Parliament Street branch of the State Bank of India, got a call. The caller said, “Shri Haksar, secretary to the Prime Minister of India, wants to talk to you.”  

The original FIR in the Nagarwala bank cheating case of 1971 on display at an exhibition on Delhi Police Day at the Parliament street police station in New Delhi on 16 February 1991. (HT Photo)
The original FIR in the Nagarwala bank cheating case of 1971 on display at an exhibition on Delhi Police Day at the Parliament street police station in New Delhi on 16 February 1991. (HT Photo)

“Put him through,” said Malhotra. 

Haksar said, “The Prime Minister of India wants 60 lakh (today’s value: 170.62 crore) to be sent for highly secret work. She will send a person and you can hand over the money to him.” 

262pp, ₹399; HarperCollins
262pp, ₹399; HarperCollins

Malhotra was not sure. Then Prime Minister Indira Gandhi came on the line and confirmed it, stating this money had to be sent to Bangladesh on an Air Force plane. This time, Malhotra became convinced that the order had come from the highest office in the land.   

With the help of his colleagues, Malhotra collected the money and took it to the Free Church, which was very near the bank. There he met a tall, fair man wearing an olive hat. After exchanging the correct code, they drove for a while in Malhotra’s government vehicle towards Palam airport. 

At the taxi stand on Panchsheel Marg, the man got out of the car and enlisted the help of a coolie to load the box into the trunk of a Fiat taxi. He thanked Malhotra and asked him to go to the Prime Minister’s office to get the receipt. 

When Malhotra went to the Prime Minister’s official complex on 1 Akbar Road, he was surprised to discover that Indira Gandhi had gone to Parliament. It was the first day of the second session of the seventh Lok Sabha. He told the security that he wanted to meet Haksar. But they told him Haksar was also in Parliament. 

Co-author Prakash Patra (courtesy the subject)
Co-author Prakash Patra (courtesy the subject)

Malhotra drove to Gate No 5 of Parliament House and asked to see the PM. He was told both the PM and Haksar were having lunch. Finally, at 1.30 pm, Malhotra met NK Seshan, the PM’s private secretary, and told him about what happened. Seshan informed the PM. When Malhotra told Haksar what had happened, the latter exclaimed, “This is an extraordinary fraud.” Soon, the police launched an investigation. 

All this has been detailed in the book, The Scam that Shook a Nation — The Nagarwala Scandal by senior journalists Prakash Patra and Rasheed Kidwai. 

The book includes the confessional statement of Nagarwala, the prime accused in the case. Here is an extract: “The driver kept watching the road and saw that I was transferring big bundles of currency notes into my suitcase and bag. I wanted him to see all this and feel uneasy, which he did. I abandoned the empty trunk and asked him to take me to Connaught Place. Along the way, the driver was getting nervous and started asking questions about the money. I offered him 500 in cash and told him not to mention it to anybody, only so that in case the police came to him, he could tell. I was sure at the time that this driver would safely lead the police to the Parsi Dharamshala. And this is exactly what happened.”

The question that arises is: why did Nagarwala want to get caught? 

Co-author Rasheed Kidwai (Courtesy the subject)
Co-author Rasheed Kidwai (Courtesy the subject)

KP Khanna, the judicial magistrate first class in charge of the Chanakyapuri area, tried the case. Within hours, Nagarwala was sentenced to two years of rigorous imprisonment with a fine of 2000. He landed in Tihar Jail as a ‘C’ class prisoner. 

Expectedly, there was a gathering storm as the Opposition felt that Indira Gandhi was involved. One of their lawyers filed a revision petition. On June 21, Delhi Sessions Judge RN Aggarwal set aside the conviction. 

This book is riveting, to say the least. The case had many twists and turns. On November 20, 1971, six months after discovering the hoax, Devinder Kumar Kashyap, 31, the chief investigator, died in a road accident near Mathura. The belief was that Kashyap, a 1967-batch IPS officer, who had just got married, knew too much and had been gotten rid of. However, the authors’ research has shown that it could indeed have been an accident.

Following that tragedy, another twist takes place. On March 2, 1972, Nagarwala died of a heart attack at the GB Pant Hospital on his 50th birthday. Again, suspicions were raised, although an autopsy revealed that no poison was present in the body.  

The book includes in-depth profiles of both Nagarwala and Malhotra, which trace their lives before the hoax, the political landscape during that period (1966-71), and details of the P Jagmohan Reddy Commission, which investigated the hoax. Both Indira Gandhi and Morarji Desai also testified. 

The authors’ note states: “The commission set up to probe the scam reached its conclusions, but its assumptions are debatable.” While there was an admission of guilt, the identities of the real culprits remained hazy. The investigation process was too speedy to allay doubts.

In short, there were many questions but few answers. Some of those original questions remain. An interesting re-examination of a forgotten scandal, The Scam That Shook a Nation takes the reader back in time to an era that was, at once, more innocent and perhaps more corrupt too.

Shevlin Sebastian is a senior journalist. He is the author of The Stolen Necklace; A Small Crime in a Small Town.

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