Wednesday, 8 May 2013

Coal Scam: Why India Needs to Revisit Hawala Case?


On 25th March, 1991, one Ashfak Hussain Lone, alleged to be an official of the terrorist organisation Hizbul Mujahideen, was arrested in Delhi. Consequent upon his interrogation, raids were conducted by the Central Bureau of Investigation (CBI) on the premises of Surrender Kumar Jain, his brothers, relations and businesses. Along with Indian and foreign currency, the CBI seized two diaries and two note books from the premises. They contained detailed accounts of vast payments made to persons identified only by initials. The initials corresponded to the initials of various high ranking politicians, in power and out of power, and of high ranking bureaucrats.


The accused included prominent personalities including Sh. Lal Krishan Advani (then Deputy PM), Sh. Sharad Yadav among many others. The prosecution that followed was prompted by a PIL (petitioner : Vineet Narain). The court cases of Hawala scandal eventually collapsed without convictions. Many were acquitted in 1997-98 partly because the Hawala Records (Jain Diaries) were adjudicated as inadequate evidence. The CBI's role was highly criticised.


Vineet Narain & Others vs Union of India & Another
Date of Judgement: 18/12/1997
Full Judgement:
Citation: (1998) 1 SCC 226


The gist of the allegations in the writ petitions was that Government agencies like the CBI and the revenue authorities had failed to perform their duties and legal obligations in as much as they had failed to investigate matters arising out of the seizure of the "Jain diaries" that the apprehension of terrorists had led to the discovery of financial support to them by clandestine and illegal means using tainted funds obtained through ‘havala’ transactions; that this had also disclosed a nexus between politicians, bureaucrats and criminals, who were recipients of money from unlawful sources, given for unlawful consideration that the CBI and other Government agencies had failed to investigate the matter, take it to its logical conclusion and prosecute all persons who were found to have committed and offence; that this was done with a view to protect the persons involved, who were very influential and powerful; that the matter disclosed a nexus between crime and corruption at high places in public life and it posed a serious threat to the integrity, security and economy of the nation; that probity in public life, the rule of law and the preservation of democracy required that the Government agencies the compelled to duly perform their legal obligations and to proceed in accordance with law against every person involved, irrespective of where he was placed in the political hierarchy.


"CBI and other Governmental agencies had not carried out their public duty to investigate the offences disclosed; that none stands above the law so that an alleged offence by him is not required to be investigated; that we would monitor the investigations, in the sense that we would do what we permissibly could to see that the sense that we would do what we permissibly could to see that the investigations progressed while yet ensuring that we did not direct or channel those investigations or in any other manner prejudice the right of those who might be accused to a full and fair trial." .......

"Having regard to the direction in which the investigations were leading, we found it necessary to direct the CBI not to report the progress of the investigations to the person occupying the highest office in the political executive this was done to eliminate any impression of bias or lack of fairness or objectivity and to maintain the credibility of the investigations." ........

"Even after this matter was brought to the court complaining of the inertia of CBI and the other agencies to investigate into the offices because of the alleged involvement of several persons holding high offices in the executive, for quite some time the disinclination of the agencies to precede with the investigation was apparent. The accusation, if true, reveled a nexus between high ranking politicians and bureaucrats who were alleged to have been funded by a source linked with the source funding the terrorists. In view of the funding also through foreign currency, some undesirable foreign elements appeared to be connected. This revealed a grave situation poising a serious threat even to the unity and integrity of the nation. The serious threat posed to the Indian polity could not be underscored. The obvious need for an expeditious and thorough probe which had already been delayed for several years could not but be countenanced. The continuing inertia of the agencies to even commence a proper investigation could not be tolerated any longer. In view of the persistence of that situation, it becomes necessary as the proceedings progressed to make some orders which would activate the CBI and the other agencies to at least commence a fruitful investigation." ......

"It took several years for the CBI to commence investigation and that too as a result of the monitoring by this Court." ........

"Unless a competent prosecution follows a fair and competent investigation, the exercise in the ultimate analysis would be futile. Investigation without improving the prosecution machinery is of no practical significance." .........

"There shall be no premature media publicity by the CBI/Enforcement Directorate.".......

"It is sufficient to say that The Minister’s general power to review the working of the agency and to give broad policy directions regarding the functioning of the agencies and to appraise the quality of the work of the Head of the agency and other officers to the executive head is in no way to be diluted. Similarly, the Minister’s power to call for information generally regarding the cases being handled by the agencies is not to be taken away. However, all the powers of the Minister are subject to the condition that none of them would extend to permit the Minister to interfere with the course of investigation and prosecution in any individual case and in that respect the concerned officers are to be governed entirely by the mandate of law and the statutory duty cast upon them........"



1. For the principal opposition party i.e. BJP, the developments in Coal Scam is like a "Deja Vu" moment. Their senior leaders, entire political executive & CBI were similarly placed in "Hawala Scam then.

2. The above Judgement came in 1997. BJP (NDA) was in Power at Centre from 1996-2004 but did not bring any legislation to prevent any such situation where CBI investigation could be interfered by Political executive or to grant greater autonomy to CBI.

3. The above mentioned were actual orders / judgement and not verbal observations, as are being debated on TV studios currently without waiting for actual court order / judgement.

4. While the court directions were that "There shall be no premature media publicity by the CBI/Enforcement Directorate". The affidavit that the CBI was to file in Supreme Court on 6th May 2013 was already accessible to entire media on 7th May 2013, TV channels were displaying it on camera, debating its extracts, analysing & developing an opinion for themselves as well as general public. The Hon'ble Supreme Court passed observations & orders on the same only a day later on 8th May 2013.

Author: Jeetender Gupta, Twitter: @jguptallb, Email:


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    Best Regards
    Saurabh Singh